The Sustainability Mindset

Using the Matrix Map to Make Strategic Decisions

Steve Zimmerman, Jeanne Bell

• Publisher: Jossey-Bass
• Year: 2014
• ISBN:
  9781118767313
• Edition: 1
• Topic: Business
• Subtopic: Nonprofit Organizations & Charities
• Index: Business

The Matrix Map—a powerful tool for nonprofit strategic decision-making

Nonprofit sustainability lies at the intersection of exceptional impact and financial viability. The Sustainability Mindset offers nonprofit professionals and board members a step-by-step guide to move your organization towards this intersection. As outlined in the bestselling book Nonprofit Sustainability, " The Matrix Map" is an accessible framework that combines financial and programmatic goals into an integrated strategy. In this next-step resource, the authors detail a rigorous process to develop a meaningful Matrix Map and engage leadership in setting an organization's strategy.

Nonprofits that thrive in today's environment are adaptable with a clear understanding of their impact and business model. This book offers nonprofit boards and staff a framework to do so. Drawing on their in-depth experience, the authors provide an easy-to-follow process complete with tools and templates to help organizations visualize their business model and engage in strategic inquiry. The book provides a variety of illustrative examples to show how the Matrix Map works for all types of organizations. Nonprofit executives and board member are sure to benefit from The Matrix Map analysis.

• Offers step-by-step guidance for creating a Matrix-Map, a visual representation of an organization's business model
• Helps organizations assess how each of their programs contributes toward their desired impact and their financial bottom-line.
• Filled with compelling examples of how The Matrix Map helps nonprofits with strategic decision-making
• Written by the coauthors of the groundbreaking book Nonprofit Sustainability

This comprehensive resource will give any nonprofit the framework they need to make decisions for sustainability and the templates and tools to implement it and help leaders address the challenges inherent in balancing mission impact with financial viability.

Chapter 1
Introduction

In the five years since we wrote Nonprofit Sustainability, we’ve had the opportunity to share the book’s core messages about strategy formation and the matrix map tool for nonprofit business model analysis with thousands of nonprofit leaders across the country and internationally.¹ So today, we have a much deeper understanding of how and why the tool is a powerful catalyst for change in an organization—how, for instance, it can support a staff and board in deciding to end the “untouchable” program that hasn’t been relevant for years and bring leaders to acknowledge that their fundraising programs don’t yield sufficient surplus to subsidize their government funding—and get them talking honestly about what to do about it. Indeed over the past five years, the matrix map process has ignited candid self-reflection and bold decision making in organizations of all types and sizes, from direct service, to advocacy, to the arts.

While the matrix map tool is meant for episodic analyses of the strengths and weaknesses of a nonprofit’s current business model, the thinking that undergirds it is essential for leaders to promote every day across their staffs and boards. It is a mindset that examines both the mission impact and the economics of a given strategy or decision. It is a mindset that does not pit these two forces against one another but instead holds them as powerfully interdependent. It is a mindset we call the sustainability mindset.

Defining Nonprofit Sustainability

The definition we offered in our previous book of sustainability for nonprofits as shown in the sidebar, holds true today.

This definition does not encompass two separate, complementary ideas. Rather, the two ideas are of one piece and are not independent of one another over time. Great organizations develop, mature, and innovate their mission-specific programs in concert with the continuous development, maturation, and innovation of their fund development programs. Leaders who deeply understand this are able to guide their organizations to achieve deep impact and modest profitability.

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Definition

“Sustainability encompasses both financial sustainability (the ability to generate resources to meet the needs of the present without compromising the future) and programmatic sustainability (the ability to develop, mature, and cycle out programs to be responsive to constituencies over time).”²

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This harkens to Jim Collins’s invaluable monograph, Good to Great and the Social Sectors, in which he argued that greatness is at the intersection of what we care deeply about, what we can be best in the world at, and what drives our resource engine.³ In other words, for nonprofit organizations, being great at something includes being great at resourcing it through direct payment, such as contracts, restricted grants, or fees, or indirect payments by donors inspired to contribute because of a program’s relevance and impact. Though times are changing, this idea—this integration of impact and how we resource it—remains a radical one in many parts of our sector. That’s why the matrix map process, done thoughtfully and rigorously, is transformative for many leaders. It forces them to acknowledge that mission and resources cannot be separated in any useful or logical manner. Achieving great results requires great resources—time, money, partnerships, and community will—all of which must be intentionally and continuously cultivated.

In fact, this notion of continuous is central to our point of view on sustainability. While the matrix map process of assessing the impact and net financial return of each program in an organization’s business model engages an organization’s leadership in an intensive inquiry over several months, sustainability is an orientation, not a destination. It is not a one-time thing, not an episodic thing, not a senior management thing or a board of directors thing. It’s really a mindset and way of organizational being. The way of thinking about two bottom lines in a holistic way, the sharp financial analysis, and the co-created language around impact all live on well past the creation of the matrix map. When we do this work well, they become inextricably woven into the fabric and culture of the organization.

The Context Today

Nonprofit Sustainability sought to contribute three core ideas to the discourse and practice of nonprofit strategy formation. First, we offered a definition of sustainability around which we believe all strategy should be created. Second, we added our voices to a growing choir questioning traditional approaches to nonprofit strategic planning, arguing for much greater emphasis on decision making, execution, and learning. And third, we offered the matrix map tool for analyzing the impact and financial return of a nonprofit’s current business model. In the five years that we have been deploying these concepts and tools, the sector-wide discourse about strategy and sustainability has continued to deepen and evolve. We look next at five aspects of that discourse because we think they relate directly to the matrix map process. Leaders and capacity builders who draw on these linkages will be better poised to use our framework effectively.

On Strategy

The momentum of rethinking nonprofit strategy has only grown since we wrote Nonprofit Sustainability in 2010. Across all sectors, there is widespread sentiment that traditional strategic planning often does not respond effectively to the strategic questions organizations face now nor to the dynamic external context to which they must adapt and on which they must exert influence. The 2013 article by the Monitor Institute’s O’Donovan and Flower in The Stanford Social Innovation Review captures this thinking well and offers a very useful reframe of classic planning activities. The authors contrast classic strategy with the more current adaptive strategy. The former is characterized by “predictions, data collection, and execution from the top down,” while the latter is characterized by “experiments, pattern recognition, and execution by the whole.”⁴ In this definition, the authors speak to a number of concurrent shifts in management and leadership thinking, including “failing fast” through experimentation and “shared leadership” to continuously refine strategies—concepts that deeply influence our thinking about strategy as well. For us, it is not a question of whether to call a given process “strategic planning” but, rather, of ensuring that any process fosters honest analysis and courageous decision making, leading to deeper relevance to our causes and the financial health to resource that relevance over time.

In Nonprofit Sustainability, we expressed this idea that strategy is first and foremost about execution, not predictions (see figure 1.1), which continues to resonate deeply for us and our clients. When leaders empower people across the whole organization with the opportunity and responsibility to act strategically in their everyday roles, strategies come to life and get refined as needed in real time.

Figure 1.1 Nonprofit Strategy: From an Implementation...