For any nonprofit organization, results start with a strong strategic principle—a shared objective about what the organization wants to accomplish. A strong mission and clear vision lead the way, but setting the strategy demands more. Leaders of successful organizations realize that they can’t just run fast; they have to make sure everyone runs in the same race—the right race—without tripping at the finish line. A clear strategic principle helps everyone realize what that means.
The strategic principle guides the company’s allocation of scarce resources—money, time, and talent. But it doesn’t merely aggregate a collection of objectives. Rather, this simple statement captures the thinking required to build a sustainable futures that forces trade-offs among competing resources, tests the soundness of particular initiatives, and sets clear boundaries within which decision-makers must operate.
Creating and adhering to a concise, unforgettable, action phrase can help everyone keep morale high and direction clear as the race becomes more difficult and daunting. For example, Habitat for Humanity offers one of the most well-known strategic principles: Giving a hand up, not a hand out. This never changes, even when economic, social, and political forces around the organization do.
A well-thought-out strategic principle pinpoints the intersection of the organization’s passion, excellence, and unique contribution. As you can see, success lies at the intersection of the three.
If your organization operates in section one, you will probably experience some short-term success. People who can do work they feel passionate about and engage in work that rewards efforts with large monetary compensation or recognition can often stay in the game for the short run. But if you don’t offer your “customers” the best, they will choose other avenues for their contributions. In other words, no matter what your organization does, people expect and want you to do it well. Most nonprofits have competitors—other hospitals, universities, or charities—that offer similar kinds of services. But even if you have no “competitors,” you compete for donations, volunteers, talent, and other resources.
Passion and excellence without a unique contribution, or section two, won’t even allow you a short run. This undisciplined orientation—to do what you like and are good at—without consideration of the “market,” won’t provide anything other than some short-lived fun, which should last right up until the time your bills come.
Section three offers a recipe for burn out. You can work hard at something you’re good at and that brings you success, but you won’t excel at it for long unless you feel some passion for it.
Sustained success lies in area four, the intersection of passion, excellence, and unique contribution. Only here can your organization thrive as you work diligently to produce a product or service that others can’t match.
To think about your strategic principle differently, consider the world with your organization versus without it. The difference defines your unique added value—what would be lost to the world if your organization disappeared. To discover this unique added value, ask yourself the following:
- If we stopped doing what we’re doing, to whom would it matter?
- Who would miss us most?
- How long would it take another organization to step into the void?
The answers to these questions will help you understand and recognize the unique contribution your organization makes.
When organizations face change or turmoil, the strategic principle acts as a beacon that keeps the ships from running aground. It helps maintain consistency but gives leaders the freedom to make the right decisions and adjust direction for the organization. Even when the leadership changes, or the economic landscape shifts, the strategic principle remains the same. It helps decision-makers know when to develop new practices, products, and markets. When they face a choice, decision-makers will be able to test their options against the strategic principle by simply applying the three-part litmus tests:
- Are we passionate about his work?
- Can we do it better anyone else can?
- Will it make us enough money to keep doing what we need to do?
When designed and executed well, a strategic principle gives people clear direction while inspiring them to be flexible and take risks. It offers a disciplined way to think about decisions, strategy, and execution and challenges people to play an ever-evolving better game.
“Strategic” is probably one of the most overused and misrepresented words in today’s organizations. Executives use it to denote anything they consider important, yet true strategy is limited to those situations that affect critical outcomes. Strategy identifies your unique contribution—something you can do that others cannot match. It defines the nature of your organization, impacts financial performance, and guides your choices. Done well, it allows you to go beyond surviving to thrive, no matter what changes the economy or other forces bring to the future.