Nonprofit Disruption: 5 Choices for Nonprofits

Nonprofit Disruption
Reading Time: 4 minutes

This article was originally published in FORUM Magazine as A Tale of Two Disruptions

The Truth About Nonprofit Disruption

Nonprofit disruption has been a topic of conversation for what seems like forever, but at what point does a disruption become the status quo for nonprofits?

We used to talk about disruptive technology. Now, we call them iPhones. Demographics are shifting, markets are globalizing, and social trends are reshaping our world. 

On top of all that, those dang Millennials disrupt everything they touch. We’ve been talking about them forever, too, but Millennials are now turning 35 and firmly entrenching themselves in all sectors of business and society. 

Disruptions surround us. We are immersed in the constant, rapid change of nonprofit disruption. The question is, “Which ones truly matter?” 

Not all change is disruptive, and not all disruptions change things. Humans are constantly looking for patterns and tend to find them, whether they are genuinely there or not. Unfortunately, not everything has a pattern. 

The following are two examples of nonprofit disruptions that upend our perceived patterns. 

A Disruptive Exit

Membership drives products, advertising, fundraising, and everything about membership as an ecosystem. The more people engage with the ecosystem, the better for membership and vice versa. If you disrupt one part of the system enough, the whole system gets disrupted. 

That’s what makes it so complex. 

For example, look at insurance. Many associations offer insurance, and it is often one of the top reasons to join. It is also one of the strongest predictors of renewal: Non-buyers renew at 70 percent, one product renews at 90 percent, and more than one renews at 95 percent or more. This is especially true with first-time members. 

Some of these relationships go back decades. Hundreds of millions of dollars of business are shoved off onto other carriers or left behind. What gives? For one, it’s a lot riskier than it used to be—a raft of new regulations in the last few years.

AARP invented the affinity insurance model in the 1950s to get insurance for retired teachers, and we’ve all been doing it pretty much the same way ever since. We let an insurance carrier use our brand and member list, and they do most of the work; we get paid a royalty, and our members like it. 

So, insurance is an excellent thing. It makes money, and it drives membership. If it ain’t broke, don’t fix it. 

In the last few years, most major insurance companies have either exited the affinity business or are headed for the door. Voya is out. AIG is out. Hartford dumped a massive chunk of business. AXA left the US life business. MetLife and Transamerica rolled it into their employer business, as did Assurant. Liberty Mutual stopped doing direct mail.

Some of these relationships go back decades. Hundreds of millions of dollars of business are shoved off onto other carriers or left behind. What gives? 

For one, it’s a lot riskier than it used to be. In the last few years, a raft of new regulations has made life a lot harder for insurers, and it’s made associations scarier to do business with. 

Of course, if you dig deep, the truth is it’s just not worth it for insurance companies anymore. Your list is not as valuable as it used to be. They can find your members for themselves, and they probably know more about them than you do because they’ve invested millions in data and analytics. 

Frankly, your brand isn’t what it used to be either. Research shows that 67% of consumers would buy insurance from Amazon or Google, never mind an insurance company, and never mind you. 

Don’t get me wrong, there is $60 billion of affinity insurance premiums out there. Carriers are not walking away from that. They are walking away from you — and going after it themselves. 

“Understanding how these nonprofit disruptions are affecting your organization is the first step in creating new patterns that will keep you ahead of the curve.”

A Disruptive Entry

Most associations have a handful of products or partnerships that drive their business. Content. Publishing. Advertising. Education. What if someone could disrupt every piece of that equation in one fell swoop? 

Much to the chagrin of organizations that have been around for decades, a six-year-old online startup has a 60 percent market share of one of the most prominent professions. As a result, it is now aggressively stealing business from dozens of leading associations. 

Worse yet, they’re getting away with it. 

Doximity launched in 2011 as the “LinkedIn for doctors.” Since then, they have grown to 600,000 members by building on groundbreaking partnerships and platforms that: 

    • Allow doctors to text and fax securely from their phone 
    • Form HIPPA-compliant online communities at will 
    • Deliver continuing education for free 
    • Rank and navigate residency programs and hospitals 
    • Curate hundreds of medical journal feeds for
    • you, as an individual
    • Provide authenticated medical credentials accepted almost everywhere
    • Deliver customized employment and referral opportunities for physicians and hiring managers 
    • Provide a comprehensive list of medical facilities and pharmacies nationwide they can speed dial

You could try to beat them on price point, except that membership is free. All members have to do is validate their profile because Doximity already has their data. 

The company currently has 180 employees, half of whom are developers, and a cool $80 million in funding. They’ve partnered with US News, Cleve- land Clinic, and others, and now they are expanding to include all licensed medical professionals. 

Nurses, dentists, pharmacists, social workers, physical therapists, chiropractors — anyone licensed by the state. This year alone, they’ve added 200,000 members. 

They, and other groups like them, are coming after parts of the core association value proposition with a radically different, never-before-seen model, and they are doing it at internet speed. 

What Can You Do To Solve It?

There are several different ways to address the coming nonprofit disruptions: 

    • Rest on your laurels – Rely on “safe” sources of income and assume they always will be. Also known as the “Ostrich Strategy.” 
    • If you can’t beat ‘em, join’em – find ways to partner with new entrants 
    • Circle the wagons – protect the core of value propositions that only you can provide
    • Outflank ’em – find holes in their offerings you can attack by doing it different or better 
    • Back to the drawing board – radically rethink what you do and how you deliver it 

There is no one correct answer, and none of them are easy, but understanding how these nonprofit disruptions affect your organization is the first step to creating new patterns that will keep you ahead of the curve. 

 

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3 Ways to Tell If Your Nonprofit Alignment is Inside Out

Nonprofit Alignment
Reading Time: 3 minutes

How Can You Know if Your Nonprofit Alignment is Inside Out?

Most organizations are unconsciously designed to be inside out. 

I say “unconsciously” because no leader would intentionally blinker their organization. I say “designed” because layers of decisions stack up to create a nonprofit alignment built to spend most of the time thinking about itself—decisions about how to communicate, what gets rewarded, and what information is essential. 

A history of malalignment can be challenging to turn around. These three questions will help you figure out how to get started.

Eighty percent of executives say creating an “outside-in” culture is a high priority for the future. Outside is where the good stuff happens. Buyers buy. Inventors invent. Competitors compete. An outward-focused organization has its eyes on the action. They see what’s happening now and what’s coming down the pipeline.

But, equally important, it sees itself the way it is, how it stacks up, and what futures are possible. Looking from the outside in brings a clear view of whether what you’re trying to be stacks up with what you are to your members. 

Stepping back and looking at your organization from this new perspective will allow you to define what’s stopping you from achieving the growth you know you’re capable of. 

How can you know if your nonprofit alignment is inside out? Start by asking yourself these questions.

1. What do people say are the three most important things to do for the future?

If all three are process, organization, or cultural changes, you might be inwardly focused.

2. What data do people bring to meetings?

If almost all of it is about your own performance, you might be inwardly focused.

3. Who do you focus your research on?

Ben Franklin once said: “three things are extremely hard: steel, a diamond, and to know one’s self.” Once an organization has turned inward, it often clings to that view for dear life. 

In one extreme example, a prominent membership organization had seen a start-up insurgent out-innovate them. It grew to three times its size in a few years. Alarmed, one leader commissioned a detailed study of their new competitor. They wanted to know how they had built a new digital model that had undermined the way they did business. 

The rest of the leadership not only dismissed this reality but denied it. They refused to believe it was happening. External perspective becomes threatening if it challenges the status quo. These leaders failed to recognize that denial is just as dangerous, if not more.

Another client, a large membership organization, was long mired in old ways. We helped them take a radically inclusive and transparent approach to make external perspectives a lever for real change. The process was exhaustive. It encompassed their entire profession, members and non-members alike. They held in-depth conversations with admired and like-minded organizations outside their own space. 

A profound reflection on their competitors and similar, more successful organizations ensued. As a result, they came to an entirely new vision of who they needed to be and where they needed to focus. With great fear, the leadership opened themselves up to an outside view, only to be pleasantly surprised at the clarity it brought them.

You can’t read the label while you’re sitting in the jar. To improve, you first have to understand who you are from an outsider’s perspective. Becoming intentional about turning your nonprofit alignment outward could be the most strategic move you could make.

Nonprofit Integration: 4 Signs You’ve Overdone It

Nonprofit Integration
Reading Time: 2 minutes

Nonprofit Integration Has Been the Holy Grail of Organization Success. But What Does it Mean?

Integration means many things: Coordinating across multiple channels, cooperating as separate teams, bridging divides between disciplines, and coherently communicating around shared ideas. But ultimately, it means a unified member experience. 

Nonprofit organization leaders have tried long and hard to deliver on nonprofit integration in their organizations. They have revised processes, workflow, and organizational charts. They have created positions dedicated to facilitating integration. They have invested time, energy, and money into the quest. But, too often, it results in thoroughly produced and documented yet ineffective nonprofit integration processes. 

Integration is one of the chief concerns leaders bring to nonprofit organization performance consultants. They are struggling to achieve intelligent, efficient, and effective integration. Many are overwhelmed and fear they are doing too little. Unfortunately, it’s just as likely that they are doing too much. Yes, there is such a thing as over-integration. Here is what it looks like.

Over Engineered Process

A common pitfall is trying to employ a unified, well-structured, thoroughly documented process that looks great on paper. All too often, these plans never work in practice. 

It is not how the work gets done that needs to be super-structured and highly monitored. It is how people work together that does. Though simple, a framework defining how independent processes come together can be profound.

One Team In Name Only

A common pitfall is trying to employ a unified, well-structured, thoroughly documented process that looks great on paper. All too often, these plans never work in practice. It is not how the work gets done that needs to be super-structured and highly monitored. It is how people work together that does.

Though simple, a framework defining how independent processes come together can be profound. 

Technology As A Panacea

Implementing a software solution that forces everyone to share one system is not a fix for poor collaboration. Automation may help drive structure and standardization. But these things aren’t the key to integration. 

When striving to offer your members a unified experience, you most need agility and adaptability. You need to be equipped to tackle any challenge that might arise, which doesn’t necessarily begin with technology. Instead, it starts with people striving to accomplish the same goals.

Nonprofit Integration For Its Own Sake

Integration is not an end in itself—too much focus on how the team works can be a fatal distraction from how teamwork happens. Internal alignment is essential. Yet fixating on the logistics of how a team functions should not take precedence over enhancing the member experience.

Effective integration will remain the goal for nonprofits and can significantly benefit your members. Without internal obstacles bogging you down, your organization will have the freedom to turn outward.

Nonprofit organizations that are most successful at integration have a philosophy and a checklist. They don’t focus on designing time-consuming, exhaustive processes with multiple steps. Influential leaders and innovators work against a framework rather than a rigid process. They have significant values and demonstrate their commitment to pursuing them through their mission. 

In the tech world, for example, Apple has a laser focus on humanity-driven and intuitive design. GE strives to make life easier.

The key is to integrate what matters and only what matters — the defining ideas and the member’s experience.

Nonprofit Strategy: 3 Signs Your Nonprofit
Needs to Start Stopping

Non Profit Strategy
Reading Time: 3 minutes

Get Your Nonprofit Strategy Focused

There is a saying called Parkinson’s Law: “Work expands to consume the available resources.” Which is to say, your entire team will always be busy, and your total budget spent. This is especially true of nonprofit strategy.

So the question is, how do you ever do something new? Starting anything means stopping something else, which is often more complicated than it sounds.

In our nonprofit strategy work, we often hear leaders lament the difficulty of freeing up resources or concentrating on fewer but more important things. The status quo has a healthy immune system. The “corporate antibodies” swiftly move in to attack attempts at making way for the new.

Do You Need To Start Stopping?

If you don’t recognize this dynamic in your organization, ask yourself if the following are true:

    • No one knows when or why some of your programs started in the first place. Unfortunately, many nonprofit programs take on a life of their own, to the point that no one remembers how they started. If you can’t remember why you started, it may be because it’s time to stop.
    • None of your programs have ever missed their goals (because no one can measure them). Often the goals of the nonprofit strategy are vague and subjective. It can be impossible to measure results genuinely, so it ends up appearing that no one ever misses a “goal.” As a result, these programs may not provide the value they seem to, and the resources to keep them alive may have more of an impact elsewhere.
    • “But we’ve always done it that way” is often a winning argument. Unfortunately, nonprofits can be slow to change and often fall back on the way things have always been done, even if it is not the best way. However, just because that’s the way it’s always been doesn’t mean there isn’t an option that provides your organization with more value.

If you answered yes to any of the above, it might be time for you to start stopping.

But how?

Focus on the Bottom Lines

Jazz great John Coltrane was known for his long-winded saxophone solos. When Miles Davis complained, Coltrane said:“I just don’t know how to stop!” Miles replied, “Try taking the horn out of your mouth!”

It’s a funny quote but an insightful one. It reframes the problem as something (in Coltrane’s case, pretty quickly) solvable. Organizations that succeed with nonprofit strategies do the same. They refocus from activities to outcomes.

In other words, asking not “why are we doing X, Y, or Z?” but “how do X, Y, and Z create the outcomes we want?” You don’t measure strategic outcomes by work done but by a change in the business or world that moves the strategy forward

Nonprofit Strategy

 

“The key to nonprofit strategy success is to agree on the bottom lines before making resource decisions.”

We encourage clients to look at outcomes on a “triple bottom line.”

    • The first is impact – how big a splash something makes in the market, the community, etc.
    • The second is alignment — how closely something is tied to the top-level strategies of the organization.
    • The third is value – how much does it deliver in revenue or other quantifiable contributions.

Agree On Outcomes First

In the words of Meghan Trainor: “Thank you in advance; I don’t want to dance. ” Successful organizations focus their strategic planning on the outcomes they want and how they will measure them instead of what they want. As a result, they have a clearer view of things that are not delivering for them and an easier time saying no to them.

One large organization we worked with reduced its dashboard goals from more than thirty to six. By linking the budget process to the six top-level goals, resources with little impact or value did not get funded. This happened as a matter of principles established in advance, not on a case-by-case basis.

It is not easy. The example above profited from solid leadership, board partnership, and sustained planning discipline. The fruits of this effort are a strong focus on things that matter, the ability to shift resources among them as things change, and a level of organizational clarity that keeps everyone aligned when change happens.