Disruption and Your Nonprofits Business Architecture

Disruption occurs when an incumbent, or more likely an agile & responsive startup, introduces products or services that changes the market. This ability to disrupt the marketplace requires the willingness to serve unmet needs and an ability to deliver on short notice. Change and agility to respond to changes in the marketplace is key.

The tech sectors is more likely to benefit from an agile or lean approach (such as LeanUX), which supports multiple iterations and agile thinking throughout the lifecycle of the business, than the nonprofit sector. This is because the nonprofit sector is heavily dependent on resources and is considerably less efficient in engaging additional customers than the tech sector. Whereas the tech sector has the potential of increasing efficiencies in an effort to roll out a particular product, the service sector often receives diminishing returns in quality as more and more customers are engaged by the same employee. Ratios of staff to customers are often considerably lower in the nonprofit industry.

The initial stages of disruption are leaner for technology driven projects than nonprofit sector driven projects which require considerably far more resources. This does not mean that a lean or agile methodology is not useful in executing nonprofit projects. Iterative validation of the customer requirements and service specifications has always been central to individualized service delivery in the nonprofit sector. It requires ongoing communication, teaming, and modification of nonprofit specifications in order to insure the service are meaningful, relevant, and useful to the customers. But the nonprofit industry has more difficulty creating full system changes.

When applying LeanUX or more agile methodologies in order to avert disruption the following nonprofit organization challenges must be addressed:

Challenges Legacy Nonprofit Providers face:

• Existing architecture is often outdated and matched to support outdated specifications
• Existing models often incorporated outdated practices and guidelines that struggle to incorporate changes

Challenges nonprofit providers face when implementing the LeanUX methodology:

• Silos that interfere with cross collaboration and movement, as well as organizational learning and transfer of knowledge (synergy)
• Heavy resource dependency with limited opportunities for efficiencies

Challenges driving forward with an MVP that ‘changes the game’:

• Competitive nonprofit models are easily replicated
• Existing nonprofit models always require individualization, limiting opportunities to be unique or distinctive
• Any changes to an existing nonprofit model will often require regulatory and stakeholder approval; yet this approval does not necessarily mean execution of changes will be successful, or adequately supported. Change is often resisted

Challenged faced with the guideline to always have a reversible decision by the end of the CEO’s meeting:

• Organizational culture supports a democratic and collaborative approach to decision making; sometimes to a fault
• Challenges that are championed are thus not always reflective of a sustainable direction

Challenges with scaling to build up efficiencies:

• Heavy resource dependency limits efficiencies for scaling
• Regulatory frameworks and relationship with funders often limit opportunities for scaling due to fixed specifications and cross system interdependencies

The result with all of the above creates challenges for nonprofits hoping to modify their business model.

The following practices can help nonprofit incumbents protect their market share or new entrants to gain advantages when entering a new market:

• Make the guidelines and topics of Agility & Lean part of the organizational lexicon
• Limit silos and other barriers to a multi-disciplinary approach to those that are absolutely essential
• Increase use of available (and new) feedback mechanisms to cultivate information and evaluate current product & service offerings
• Formally clarify priorities, and identify ways to increase buyin while limiting the reinforcement of dissension
• Strengthen the connection between recruitment, retention, training, strategy, and the development of the organization’s culture
• Increase the use of mechanisms that help celebrate success, reinforce relevant organizational customs & rituals, and produce lasting artifacts that help guide & align future efforts

These suggestions are not a panacea for everything that stalls organizational alignment. But they are a start. Move to slow and your customers are under served. Move to fast, particularly in a nonprofit business environment, and your resources may get left out in the rain. A balance must be struck. But first nonprofit organizations need to identify what keeps stalling their efforts and identify existing models are available to help them become ‘unstuck.’ Looking at the startup and entrepreneurial business environments provides numerous examples of how to get there.

Nonprofit services are often not a ‘one size fits all,’ and so developing the ‘perfect-market-fit’ is often not realized at the model building stage. It’s realized during implementation as awareness of the project’s disruption on existing processes, priorities, and outcomes. The larger model’s framework can be designed through an iterative process based on customer feedback – but this will often limit it applicability and relevance over time.

Shifts that cause disruption are necessary to bring the nonprofit industry forward. Some may call this putting the ‘cart before the horse,’ but it works as long as nonprofits are sharing some responsibility for incorporating iterative design processes when building the larger framework in the beginning.

Travis Barker, MPA GCPM

Innovate Vancouver

consulting@innovatevancouver.org 

References:

Dhunay, N. (2016, March 7). The Art to Disrupting Legacy Industries. Retrieved March 11, 2016, from http://www.techvibes.com/blog/the-art-to-disrupting-legacy-industries-2016-03-07

Innovate Vancouver is a business development & consulting service and technology startup located in Vancouver, BC. Contact Innovate Vancouver to help with your new project. Innovate Vancouver also gives back to the community through business consulting services. Contact us for more details.