There's much ado about innovation during turbulent times. It's ruffling up organizations of all sizes and sectors. But with all the radio noise and flaming bandwagons out there, no one really knows what it means anymore. Businesses fight for relevance as the economic environment morphs beyond their foresight. And nonprofits find themselves stuck in the firestorm as they try to "think differently" about solutions to delicate issues. Feelings of irrelevance and ennui loom. Talks of change and innovation can be empowering -- that is, until the questions of "how" and "where" arise.
Change ignites from strong self-knowledge. It takes more than a single change agent. Without a culture of change, big ideas never happen.
Innovation just becomes pep talk.
- Do operations seem stale, and the trouble spots elusive?
- Is the mission drifting off like flotsam?
- Is there a need for resuscitation to stay relevant with the changing times?
Those are the first clues.
Business Models as a Starting Point
Imagine: There's a steady drop in donations or a break in grants. When the clamp tightens on cash flow, something must get cut, or else. Operational expenditures come to mind. So do administrative expenses. The physical resources used to house and execute your activities. The list goes on.
All enterprises -- whether for-profit, non-profit, or government entity -- need a viable business model to do more than just survive, but to also thrive. There still needs to be a way to sustain the processes for doing good.
There's a way to see how all your resources and activities are intertwined. It's a method that's simple but highly surgical. And it starts by painting the flow of your business model on a canvas.
The Concept of the Business Model Canvas
The original Business Model Canvas was first introduced in "Business Model Generation" by Alexander Osterwalder and Yves Pigneur. It visualizes the basic logic of how an organization creates and delivers value to its customers while financially sustaining itself. For the nonprofit, the "customers" may be the clients or the beneficiaries that receive services.
Why Should You Use It?
We can talk money, but it's just one enabler for social impact.
The top reason for using this concept is that it helps envision the organization's business logic in a language that everyone can understand.
Where are the gaps and chasms in your organization? In the way you deliver value to stakeholders?
You know your organization better than any consultant out there. And that's the benefit of the canvas: It evokes the interdisciplinary input of everyone involved and merges it within a simple but structured framework. You can start to see your organization's "big picture" and begin the process of remodeling operations and services to your stakeholders.
Plus it's easier to visualize things, anyway.
Download the Nonprofit Version
I gave this some deep thought for the small-to-medium nonprofit milieu. The original canvas can be used, it just needed a few tweaks. Osterwalder's original canvas was fortunately released under the creative commons which allows unfettered remixing and sharing under certain circumstances.
So, I redesigned it and posted it below this post. Or, you can just make a stop over here and preview it, then nab it.
More Thoughts on the Tweak
Two big issues on why I tweaked the original:
- Nonprofits have dynamic relationships with its stakeholders.
- It's not strictly about financial outcomes: You also need volunteers, membership sign-ups, behavior change, etc. You'll adhere to your own metrics for measuring impact, too.
A broad example: a donor might not just be a donor, but also be a beneficiary of services. The complexities become more palpable when considering nonprofits with hybrid models.
Oct 1 Update: A lot has happened to the original design. Visit the nonprofitcanvaskit.com for more information.
A Simulation - The Canvas as a Diagnostic Tool
Here's a rough scenario: One organization has a pretty worn out legacy IT infrastructure. Email and website hosting is outsourced, too. Cloud computing comes to mind as a better alternative. But see, the underlying issue is that the organization is growing fast which implicates lots of other areas. Scalability is becoming a nightmare.
The house file is expanding which is managed on an Excel spreadsheet (!!!), but it's hard to manage and track. Staff is also growing, scattered throughout different locations, and they're looking for better ways to collaborate on marketing projects like blogging and newsletters.
In canvas-speak, the current IT infrastructure is a Key Resource. It helps staff carry out staff's Key Activities like donor management, blogging, newsletters, and other marketing. Key Partners are strategic partnerships with people and institutions. They provide Key Resources or do those Key Activities in which you can't do in-house. Here, it's the local print shop and the outsourced IT company who handles their email and website hosting. Cost Structure deals with the stuff that has substantial costs in maintaining your operations. In this case, it's the general stuff like salaries, office leases, and the fees associated with that local IT services company.
Could moving some operations to the cloud have more implications than previously thought?
The conversation might carry on like this:
How does it impact overhead costs? Administrative costs? Switching costs? And in the long run? How does it affect our staff and their Key Activities? Or even our relations with stakeholders?
Techsoup could be a viable Key Partner from whom you can obtain free subscriptions and licenses for some cloud services.
If you gradually segue into a cloud application portfolio, you may still depend on the local IT company to provide technical services when something breaks, but maybe for email and website hosting, you've found something better. Thus, the Cost Structure eases up.
Or maybe hiring an in-house IT person might become a likely possibility soon.
Or maybe you can start shifting into email newsletters, rather than doing print all the time.
Also, there needs to be a better way to manage donors and constituents. Here's one possibility: CiviCRM
Yellow Post-it: Unchanged
Green Post-it: Improvement (cost reduction)
Blue Post-it: New Addition
As you plot on the canvas, continue to think about how other blocks of the organization are amplified.
The next post will be a more thorough tutorial where the 2nd part of the canvas is filled out.
What are your thoughts so far? Feel free to share or ask questions.
UPDATE: 2nd part of the tutorial is up.
Speaking of Key Activities: