Introduction

Traditional models of strategic planning that attempt to predict the environmental landscape and beliefs about the value of core competencies are being challenged by the easy flow and assimilation of information from organization to employee and from one organization to another. The shelf life of any advantage your organization had over competitors has changed from years to months and now seems like only a few weeks before it is being copied. There are solutions to these strategic issues. This article is a discussion of one such solution.

Strategy and the problem of the changing world

Most organizations continue to use a traditional method of planning that takes the Board (and sometimes the management and/or staff) offsite for a day or two to work through a facilitated discussion on mission, vision, values, strategies and objectives. What is often not discussed is that the strategic planning process is based on the concept that the external environment will unfold in a relatively organized and predictable manner – that in some way we have knowledge about how the world will unfold. For larger organizations, which are not usually quite as nimble as their smaller counterparts, this false assumption can have significant detrimental impacts. Strategy development processes used in the for-profit sector illustrates that reliance on processes that assume environmental stability are losing favourability.

Organizationally-based approaches to strategy development

This realization and acknowledgement that traditional strategic planning processes were flawed because of the assumption of environmental stability initially resulted in a more organizationally-based perspective. The organizational-based approaches basically said that the ability to be successful was due to the internal capabilities of the organization. The most commonly used and well-known approach is core competencies. A key assumption with core competencies is that they are difficult to duplicate and by definition provide a sustainable advantage. With the increased mobility of workers, and information transfer and assimilation becoming easier and faster, the idea that core competencies provide a sustainable advantage is no longer as widely or readily accepted.

Eventually we end up at the place where we started

Many years ago, the concept of strategic planning was based on the individuals you serve. In the not-for-profit world that includes those who use your programs and services, and those who provide the funding for your organization. As such, we end up looking at strategy again from the place we started – “the customer”. However, this time it’s with a little more insight and knowledge. (Please note that for ease of reference the balance of this article will use the word “customer” to mean donor and/or individual who uses your programs or services.

Understanding the customer’s issues

Over time we have learned that when customers solve a problem, especially if it is a large or complex one (to them), they break it down into smaller, more easily addressed issues. This results in a hierarchy of issues that the customer is trying to solve, commonly known in marketing as the customer’s hierarchy of needs. This hierarchy of needs is in constant adjustment based on the accumulation of knowledge. As a customer increases his or her knowledge, it results in a customer experience effect that, everything else being equal, generally moves the customer to a more commoditized solution. In other words, as the customer learns more and more they are unwilling to pay the higher price (whether that be in money, time, resources, etc.) for the incremental benefits beyond the commodity solution.

Customer value

There is no doubt that customers are seeking to obtain the best value possible. For donors that may be the greatest impact for their contribution, while for program participants it may be the satisfaction of a set of needs. In either case, both are constantly searching to enhance and maximize the value they receive. In the last section, I outlined how knowledge can lead to customer experience, and in turn, the trend toward more commoditized solutions. While this has been the generally accepted wisdom for many years, recent research suggests that it can instead (or also) result in a greater definition of the customer’s issues that requires a further degree of customization in order to provide a greater degree of value.

Commodity vs. innovation

From the organization’s perspective, the transfer and increase of a customer’s knowledge results in the organization being forced into adding value through innovation or having their solution become increasingly commoditized. Therefore, if we believe that the customer’s focus is to constantly increase the value they receive, then the solution you offer must also continue to provide greater benefit. The ultimate solution has five basic characteristics:

1. The highest degree of customization relative to the customer’s needs.
2. The customer is provided with the greatest degree of knowledge so that he/she is informed to understand the benefits of the greater degree of customization you are offering.
3. The solution can be economically delivered to the smallest customer base. This requires increased efficiency in the delivery of the solution and in turn, a lower cost structure.
4. It provides the greatest level of comparative differentiation. This allows a meaningful separation (in the customer’s terms) between what you deliver and what your competitors deliver.
5. It provides the highest returns possible. In terms of donors, this could mean a larger donation that previously received, and for program users this could be the ability to demonstrate meaningful impact and thereby increase or improve sustainability of funding levels.

Integrating the new strategic framework

The new strategic framework is based on a deeper understanding of the customer’s issues, development of a choice of solutions, and the alignment of these with the organization’s resources. Integrating this framework into the traditional model would result in the assessment of customer issues, development of solution strategies, and alignment with organizational resources prior to setting objectives and the implementation plan. This process is represented in the diagram below:

Summary

Focusing your strategies on addressing customer issues and developing meaningful solutions to those issues ensures that you are constantly adding value to those you serve. When you define both your funders and your program participants as customers, you develop a strategic plan that adds meaningful value to your most important stakeholders. For more information on how ABARIS Consulting Inc. can incorporate its Strategic Value© approach to help your organization develop more meaningful strategic plans, please contact Ron Robinson at 519-472-9788.

Ron Robinson is the president of ABARIS Consulting Inc. He can be reached at (519) 472-9788 or rrobinson@abarisconsulting.com. This article is provided free of charge, for information purposes only and is not intended, represented or to be inferred as providing advice. ABARIS Consulting Inc. makes no warranty, express or implied, or assumes any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.

ABARIS Consulting Inc. is credited as the source on all copies, reproductions and distributions, and CharityVillage.com is credited as the original publisher.