Strategy as a Human Challenge

For long-time readers, the title of this post is a common theme of Monday Musings. I was reflecting on it recently, because when reading an early draft of the nonprofit strategy book I’ve been working on, a friend said, “I notice that you include a lot of business examples. Is it your argument that nonprofit strategy is the same as for-profit strategy?” 

After thinking about it for a second, I said, “Basically, yes.”

But it was helpful to reflect on why I believe that. 

First, it’s worth stipulating that every sector, and industry within those sectors, has unique strategy dynamics. The way technology companies compete to win in, say, cloud computing, is vastly different from how nonprofits “compete” for their customers, employees, and donors. 

Similarly, a nonprofit running a soup kitchen is going to have different strategic concerns than a nonprofit that is running schools, as their funding and operational models differ substantially. 

But despite those technical differences, my experience is that the core ideas of strategy and the human experience of setting strategy are similar across sectors. 

1. Every organization should have a clear purpose and a crisp definition of success.

Nonprofits, of course, are mission-driven, but many companies also realize that purpose is important to attracting customers and employees. As Fred Reichheld writes in the book Winning on Purpose, “Today, targeting the maximization of shareholder returns, especially short-term returns, leads quickly to mediocrity and decline. Why? Customers are not loyal when they don’t feel loved. But additionally, talented employees are the precious and constrained resource, and few people today embrace enriching shareholders as their life’s work. Almost every company is desperately seeking the talent required to move more processes to digital platforms and to take advantage of cloud computing—and we’ve seen ample evidence that people in this Millennial and Gen Z talent pool want to work only for companies with an inspiring purpose.”

Still, many organizations and teams, regardless of sector, struggle to keep their purpose and strategic vision front of mind. It’s easy for everyone to get caught up in their day-to-day to-do lists, what their colleagues want from them, and organizational politics—everything happening today and everything inside of the organization. 

This is a phenomenon of humans and of groups, not specifically a function of the sector. 

2. Every organization has customers, and keeping them centered in the strategy is challenging.

When I talk to nonprofit leaders, the language of “customers” doesn’t always resonate. That’s partly because it has a commercial ring to it, and partly because nonprofits have multiple stakeholders—the people they serve, the people who fund them, and the larger community they are trying to improve with their services. 

But it’s worth thinking with a customer lens for this simple reason: If the people you need to join the effort have a choice, then it’s worth understanding what matters to them and how they’ll make that choice.  

This applies equally to those you serve, to donors, and even to critical suppliers. 

Interestingly, most of the organizations and teams I’ve worked with have a much clearer sense of what external customers need than what their own employees need, even though the employees have choices as well. 

If you don’t treat all of those stakeholders’ decisions with the same rigor that you’d apply to paying customers, there’s a higher risk of missing something important in strategy. 

3. Effective strategy is about choosing between competing priorities and aligning activities across the organization, and every kind of group faces that challenge.

The challenges to effective alignment and prioritization are things like: 

• People have a greater instinct to add rather than to subtract.

• It’s easy for sub-groups (e.g., departments in an organization) to focus on their respective goals and only talk to each other rather than being focused on organizational goals. 

• Performance management systems often reward individual achievement more than team achievement. 

Those are issues that one finds in almost every group of people. There’s nothing inherent about the nonprofit or for-profit sectors that makes them easier or harder.  

Margaret Wheatley argues in Leadership and the New Science that thinking of organizations in primarily technical or mechanical terms leads to poor strategy and failed change efforts. She writes: “We tried for many years to avoid the messiness and complexity of being human, and now that denial is coming back to haunt us. We keep failing to create the outcomes and changes we need in organizations because we continue to deny that ‘the human element’ is anything but a ‘soft’ and not-to-be-taken-seriously minor distraction.” 

This matches my experience. Optimizing interactions of the humans in an organization–regardless of sector—is typically the primary strategic challenge to solve.