Platt Perspective on Business and Technology

Nonprofits and blue ocean strategies

Posted in book recommendations, business and convergent technologies, nonprofits by Timothy Platt on January 11, 2010

One of the lessons I learned very early in working with startups is that it does not make a lot of sense to set out to become the 37th best business in a competitive field. Startups should set out to become the very best, or at least one of the two or at most three best in their particular niche in the overall marketplace. If your goals are set lower you will not succeed. This means differentiating yourself from your competition and from likely potential competition in both goals and priorities, and in strategy and operational execution.

Kim and Mauborgne outline one basic approach to this in their book:

• Kim, WC and R Mauborgne. (2005) Blue Ocean Strategy: how to create uncontested market space and make the competition irrelevant. Harvard Business School Press.

For a nonprofit, goals and priorities always center on mission and vision so this is a good place to start in setting out to develop a blue ocean capability. As a first objective here, this would mean addressing a unique challenge, not currently being addressed by other nonprofits. That can mean:

• Addressing a problem or issue that is not being addressed in general.
• Seeking to address the needs of an under-served and perhaps unappreciated population or community.
• Or both.

In healthcare orphan diseases and disorders immediately come to mind, but this can mean focusing on a population or community that is in need of support but that no one else is looking out for too. It can even mean addressing a problem that no longer really even exists for more economically enriched communities or by communities with more effective public services but that is still present, persistent and of grave impact for communities in need and that lack such capabilities and opportunities.

I find myself thinking of a very wide range of issues and at-risk populations as I write this, from communities in countries like Bangladesh that rely for drinking water on heavy metal contaminated shallow wells to the ongoing childhood mortality from rotavirus infection and more. There are a great many unmet needs and underserved, marginalized peoples. But a nonprofit can and should look beyond simply targeting an otherwise unmet need and community if it really wants to succeed. It also needs to approach its selected mission and vision with strategic and operational excellence and those with an eye to creating new levels of value. That might in fact be requisite if they are to effectively tackle their mission and vision goals with any hope of real success.

Rather than addressing strategic and operational differentiation and distinctiveness in the abstract, I want to focus on a very specific, mission-centric aspect of this – operationally defining and reaching out to a community in need and to communities of those who would be concerned about that. And the bottom line for what I would write here is that everything should connect into a consistent metric or set of metrics that is mission directed.

A logical place to start on this is with a set of basic questions, beginning with the issues of demographics, impact and reach.

1. Who is affected by this problem, facing it directly as a challenge?
2. How common or prevalent is the underlying condition or problem that the mission focuses on, for this demographic population?
3. How serious are the consequences for this not being met any better than it is now?
4. How much potential is there for addressing this with current technology, and in ways that could be applied now to affected communities and individuals?
5. How much potential is there for effectively creating new approaches to address this with research and/or with development of new manufacturing or distribution systems?
6. What populations and communities as characterized by demographics would be effective marketing targets in seeking support to address this problem for this afflicted community?
7. What are the most effective ways to reach out to these potential donors to share information and to elicit feedback? Where, in that regard do they go online and otherwise network now and what other issues are they already responding to and how?

Bangladesh was established with the partition of Bengal and India in 1947, initially as a geographically separated part of Pakistan and then as a separate nation in 1971. It is currently the seventh most populous nation on Earth and it is among the most densely populated countries on the planet. Per capita inflation adjusted gross domestic product has more than doubled since 1975 and the poverty rate has dropped by some 20% in that period, but most of the country rests on costal and river delta flood plains and rural and village Bangladesh relies to a very large degree on shallow-dug wells as a sole source of potable water. An alarming percentage of those wells are contaminated and even heavily contaminated with heavy metals like arsenic, cadmium and lead – a distinct and even devastating set of poisons for babies and children with their developing brains.

Worldwide, millions of children die of rotavirus and other intestinal infections every year and primarily in the underdeveloped and bottom of the pyramid countries.

In order to address these or other problems, it is first necessary to know them and to know who is afflicted by them and with what severity. It is also necessary to know, picking up on points 6 and 7 above:

• Who would at least on a demographics level have both the wherewithal and the interest to participate in trying to develop and distribute a response?
• Who on a demographics level could be brought to be so concerned and involved?
• This includes identifying potential major contributors including both individuals and families, and foundations and other organizations.

But lets assume that the new nonprofit is being formed to meet a really compelling mission and vision, with a well understood afflicted community in need of help. Let us further assume that the nonprofit’s founders have a sufficient understanding of who they need to reach out to for initial funding and launch to achieve launch and early stage benchmarks.

• Nonprofits as stated in earlier postings in this series need real organizational effectiveness in directing as much of their gross income as possible towards mission (see Nonprofits and Mission Centered Operations).
• The key differentiator of success can be in finding operational processes and approaches that increase efficiency in making this possible.
• This can on an ongoing basis mean reducing any area of fixed or other ongoing operational expenses.
• In this, blue ocean means identifying and addressing points of operational inefficiency and friction.
• A crucial area to look for these opportunities is in standard practices of other nonprofits where technology has created new opportunities and methods for creating efficiency that have not effectively entered into nonprofit practices.
• A great source for this type of innovation is in best practices in the for-profit sectors.
• Here, growth strategy businesses are a logical place to start with their emphasis on rolling income back into the organization for meeting and advancing its goals, as opposed to extracting profits from the system for external distribution.
• This requires both a solid, clear understanding of nonprofits and how they work, and a clear contextual understanding of how best practices are developed and implemented in other markets and business types as well.

And I come back to the point I started this posting with about being best, or at least one of the very best in addressing the marketplace and here, in meeting the demands of mission. Basic strategy as an ongoing act in progress has to include an ongoing search for both operational friction points and new and untapped best practices for meeting them. And I will add that mission and vision have to be kept in focus too and certainly for benchmarks and achievable priorities as circumstances and opportunities change. This is where blue ocean strategies are to be found, and in building and maintaining a business model that supports an evolving reach for these new market opportunities.

The next posting in this series is going to look into the issues of volunteers and volunteerism.

Addendum note added September 11, 2019:
I initially wrote and offered this posting early on in my writing to this blog. And while I have seen at least some interest in it since then, the volume of that interest and its diversity of sources have changed and a lot recently, and particularly in the last five or six months. And that got me thinking. I have begun posting to a new series of postings that directly relates to this one, and that will focus on actually building a blue ocean strategy-oriented nonprofit. I will post that to the same directory page that you can find this one at Nonprofits and Social Networking. And you can find the first installment to that now, at Nonprofits as Businesses: more effectively connecting mission and vision, strategy and operations 1.

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