Oxford dictionaries defines “strategy” as “a plan of action designed to achieve a long-term or overall aim.” This is a good working definition, with plenty of flexibility for different situations. Any organization with a long-term “big picture” purpose would seem to benefit from a strategy. However, the inherent flexibility of the term and the lack of an industry standard add up to a wide bell curve of possibilities.
How do you know a good strategy when you see one?
Public Interest Management Group has analyzed the associations of over 30 organizational characteristics and practices with nonprofit organizational success using our Success Factor Analysis methodology. We’ve just completed a pilot study in partnership with the Nonprofit Association of Oregon (you can see the report here). After assessing the characteristics and practices of a set of Oregon nonprofits, we now have data on 60 organizations. (Our Exploratory Analysis report from earlier this year is another discussion of the data we’ve been crunching.) An overarching goal is to understand which practices are closely associated with success.
Several trends are emerging from our data...
One prominent theme is that strategy appears to be of huge importance to overall organizational success.
But not just any strategy. Plans with certain characteristics appear to be superior to those without these traits. And relatively weak plans appear to be better than no plan at all (though not by much).
Our data suggest that strategies with these characteristics correlate highly with organizational success (which we measure using PIMG’s Organizational Success Index):
- A clear underlying theory of change with proof of concept (evidence backing up its validity)
- Specifically defined targets for programmatic and financial results
- A plan for investing resources in activities that will generate revenue (e.g. fund raising and sales)
- Engagement of external stakeholders as a core method of achieving results.
In other words, the most successful organizations are laser-sharp about what they’re trying to accomplish and why, as well as the validity of the methods they’re employing. They get the importance of financing their work and put money into this function. They also embrace others who share their objectives.
If this seems obvious to you, consider yourself enlightened. Most strategic plans we’ve reviewed (and we’ve looked at many) lack some or all of these features. Having a strategic plan in itself shows a statistical correlation with success, but this is largely because (a) the strong plans are highly linked to organizational success, and (b) nonprofits without any plan at all were generally among the weakest performers. Vague plans that lack detail and rigor, flawed as they are, appear to have a modest positive effect, though this benefit may not necessarily justify the time and effort that goes into them.
The good news here is that plans with a consistent set of characteristics appear to make a positive contribution to nonprofits—the statistical correlations are very strong. When you consider that a strategy, by itself, is just concept, which can be developed at a small fraction of the cost of day-to-day operations, this is quite a powerful endorsement of the value of time and effort invested in strategic thinking.
PIMG is committed to an approach that uses hard data to inform nonprofit management. The successful Oregon pilot project has contributed to this effort, and helps clarify our understanding of what makes nonprofits thrive.
This is the first of a series of reports on data findings to date, so if this wonky stuff intrigues you, stay tuned for more in the months ahead… And drop me a line if you’d like to chat – I can’t get enough of it!