Disruptive innovation for nonprofits in 2016
Wednesday, January 13, 2016
As we enter another year, how do we innovate and disrupt in our nonprofit organizations in order to increase relevance and value to our members so we don't continue to do the "same old, same old"?
Disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances, as per Wikipedia. A famous quote from Henry Ford sums up the thinking around automobiles and how the company thought differently than what the market was anticipating: "If I had asked people what they wanted, they would have said faster horses."
Ford, through Ford Motor Corporation, disrupted the horse-and-buggy market as well as introduced the assembly line, which revolutionized manufacturing in the United States and abroad. That feat allowed a 1908 Model T to be produced every 24 seconds.
How does a nonprofit organization disrupt the market it serves as an innovator in a crowded field offering similar or complimentary services? As per the Nonprofit Center for Charitable Statistics, there are approximately 1.5 million nonprofit organizations in the United States that are potentially competing with our organizations today as well as for-profit companies.
Regardless of the size of your nonprofit organization, it has the ability to disrupt and lead the market it serves. These are four suggested areas of focus to begin with in 2016 and develop based upon your organization’s mission, vision and values:
1. Get the data you need to understand your market and members' needs
In a previous article, we talked about the importance of data. Without data, we are blind to the ever-evolving needs of the market we serve and the markets that are emerging. Data helps to drive thoughtful decision-making and takes the emotion out of making the hard decisions while taking down "silo" thinking.
2. Listen to your members, but feel free to ignore them as well
In a Harvard Business Review article, Patrick Vlaskovits, a New York Times bestselling author ("The Lean Entrepreneur") and entrepreneur notes that data is important as an innovator "should have understanding of one's customers and their problems via empirical, observational, anecdotal methods or even intuition. They should also feel free to ignore customers' inputs."
The last sentence is important in that your organization should feel free to ignore customers' or members' inputs when they do not align to the other data collected. Member input is critical in shaping the thinking of the leadership of the organization but is only one element. As we have already discussed, there are empirical, observational, anecdotal methods mixed with intuition to drive change in a good and disruptive way in the market.
Member input then is one element of the data collection and is then merged with other data collected. This is the data the board and leadership review in total to make fact-based, data-driven decisions.
3. Dissect your competition (including for-profit companies) and make it better
Data is the driver to understanding how our members and prospective members would like to engage with our organizations. Through this data, we can also better understand why they are not engaging and what are their most valuable resources.
An article in Allbusiness.com, "5 Steps to Disrupt Markets," provides keen insight into how companies (which also translates well to nonprofit organizations) can view competitors and markets to identify opportunities. I have substituted "nonprofit organization" for "company" and "member" for "customer" in the key points below):
- Take a hard and detailed look at the markets your [nonprofit organization] serves, the products [services] that are sold and the competitors that are active.
- Understand the "trajectory" of increased product [service] performance over time in each market your [nonprofit organization] serves.
- Research [member/prospective members] buying behavior in each market — determine what changes are evident in the performance of products demanded by [member/prospective members].
- Find opportunities for disruption when the product performance offered by sellers exceeds the performance demanded by [member/prospective member] — in other words the trajectories are different.
- Now your [nonprofit organization] can work to develop products or services that meet the performance demanded by customers at a lower price and offer a better perceived value. These products will disrupt competitors who have overshot with their offerings [and have under-delivered value].
4. Speed is not always a friend, and resources are not unlimited
Take the time to do the analysis and the work to determine if the new or improved product or service will be successful and profitable in your market, but most importantly, valuable to your members and prospective members. Take the time to do the work in collecting data, as it will help to either validate or invalidate a strategy moving forward. It provides for a more global view of the opportunity and how it fits into the mission of your nonprofit organization.
Another impediment to any nonprofit organization or company is that resources are not unlimited (both staff and volunteer time). So, how does an organization disrupt and become more valuable to its members and prospective members if resources are stretched thin? The answer is to review everything your organization is doing and determine the return on investment and shift resources from products and services that are not performing to those that are or to those that are potentially new.
"The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption," says Clayton Christensen, a Harvard business professor and an authority on disruptive innovation.
The final point is to think differently and to find and develop nimbleness in your nonprofit organization in order to impact change and create value. How will your organization disrupt the industry or profession you serve in 2016?
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