Why Your Nonprofit Needs a 21st Century Business Model - Part 1
Updated: Apr 11, 2019
The phrase “Business Model” sends chills down the spine of many nonprofit executive leaders. “We’re not a business!” is the common response. Really? You mean you don’t have staff? You don’t have an office? You don’t have people you serve? You don’t have a bank account, pay utility bills, salaries, or insurance? Of course you do! No matter how much you resist the notion, you do have a business model - a way of operating your nonprofit. Just because you don’t call it a business model doesn’t mean it isn’t one. It may not be a clearly articulated business model but it is one none the less.
Here’s the challenge I’ve seen as I work with nonprofit executive leadership teams. Many nonprofits are trying to survive in a 21st century world relying on a 20th century business model. And we’re already 14 into the 21st century! David Rose in his book, Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups says, “Any company designed for success in the 20th Century is doomed to failure in the 21st.” The same is true for nonprofits. While that might sound like less than good news, I think it is indeed good news! It’s a wake-up call and the last time I checked, a wake-up call is usually good news, if you take it to heart.
So what are some of the characteristics of a 21st century business model that might help nonprofits not only survive but thrive?
Strategic Priorities Shaped by Trends Not Status Quo
The easiest way to identify strategic priorities is to look back, identify what’s worked in the past and then tweak a few things to address identified deficiencies. There’s only one small problem with that approach. What worked yesterday has probably in some way contributed to today’s challenges! The world is changing so rapidly that looking back rarely serves the organization well in terms of identifying strategic chess moves that can help your organization going forward. What are the trends that are most impacting the world your organization operates in?
Question: Is your organizational default to look back and tweak what’s worked in the past, or do you recognize that you need to develop and implement new ways of doing things to respond to the changing world in which you operate?
20th century business models are built on structures with clearly defined hierarchies. It wouldn’t be unfair to characterize that paradigm as “command and control”. That model no longer works in the 21st Century. Many organizations have resisted moving away from the “command and control” model fearing they’ll lose control. Actually the opposite is true. The more tightly they hold on to control, the less they actually retain control, and the more they diminish the talent pool in the organizations. Given the rapidly changing world that organizations operate in, those that do best in adapting to the changes are organizations who have abandoned the “command and control” paradigm for an organizational structure that is nimble and flexible with structures that not only facilitate that nimbleness but actually proactively force it.
Question: Nimble or “Command and Control”? Which is it for your organization? Risk asking your people. They’ll tell you! It may be the best advice they give you!
If your organization’s business model is based on a 20th century paradigm, it won’t be long before you’re on organizational life support.
Ken Thiessen is a certified coach with Gravitas Impact Premium Coaches. Using the Four DecisionsTM Planning Model he works with executive leadership teams of nonprofit organizations to help them achieve strategic alignment and maximize their positive social impact. To find out how Ken can help your organization maximize its strategic alignment visit the website at www.powerofoneconsulting.ca or contact him at 306.531.4020 or firstname.lastname@example.org