No wind blows in just one direction. There will always be winds coming from the left and right, crosswinds and tailwinds. Knowing the Strategic Variables that will work for and against you, unique only to you, serve much like wind vanes guiding you as you navigate your course. It helps you know what and where to leverage, and where to steer clear. Any sound strategy must allow the organisation to successfully deal with its environment.
3.1 Beyond SWOT Analysis!
A SWOT Analysis, as you may be familiar, is a study undertaken by an organisation to identify its internal strengths and weaknesses, as well as its external opportunities and threats. Walk with us through the sections below and you can see how our methodology of analysing your Strategic Variables is much more rigorous than what you would typically do in a SWOT Analysis.
3.2 Our Eight Strategic Variables explained
At DPI, we say there are eight Strategic Variables which, from our analysis across For-profit as well as Non-profit organisations around the world, remain by and large the same.
The eight Strategic Variables are:
3.2.1 Success and Failures
The first step is for an organisation’s leadership to suss out the Common Success and Failure Characteristics of each of the following, drawing from your Current Profile (see article #1 at dpi-asia.com/articles.html.)
(a) Programmes/ Services
(b) Geographic Markets
(c) Clients/ Service Users
An example is shown below.
This is usually the most sensitive and difficult exercise to go through in the whole strategic review and formulation process. It gets rather personal as nobody wants the programmes, markets, clients, or partners that they are working on to fall within the “failure” category. But if you can establish the trust and openness to examine yourselves with non- judgement, you will have that much more emotional capital, unity and confidence to move forward as a team.
Then, looking at the Common Characteristics of all successful programmes/ services, geographic markets, clients/ service users, and partners, what would you list as must-have/ must-do requirements for future success? What then would you say are the red flags? i.e. the indicators that will likely lead to failure?
Examining our Success/ Failure Characteristics is like taking a lesson from History, “our best teacher”. Tip!: Do this well and this check list of “Requirements for Success” and “Indicators of Failure” can serve as a Strategic Filter in the future, for whether you should pursue some programmes/ partners or not, whether you should go into certain geographic markets, and which clients you should focus on.
3.2.2 Strengths and Weaknesses
Strengths and weaknesses are what is internal to your organisation. One common confusion is in telling the difference between weaknesses and vulnerabilities. A vulnerability is an exposure to the possibility of something negative happening, a weak link, but not a weakness in and of itself. An organisation having a well-regarded, long serving and technically strong practitioner-leader is a good thing! However, when the whole set up hinges on the leadership of that one person without someone from the management ranks groomed for succession, it is at once a Unique Strength and also a vulnerability.
At DPI, we emphasise the need to suss out leverageable Strengths – the strengths that you can use to gain a more advantageous position within the context of your playing field. And, unique to our process, we also identify Strengths and Weaknesses in three separate areas – Unique, Relative, and Latent.
Amongst all of your Strengths, Unique Strengths are those that are second-to-none. They are what makes you distinctly relevant and gives you a more sustainable edge over “competitors”. A Unique Strength is one which you must maintain and sharpen (in as long as it remains relevant to your mission). It is what will sustain your strategy over time. A Unique Weakness, you must work to eliminate.
A Relative Strength is a strength which you have to a greater degree than your “competitors” but belong more in the class of “me-too” strengths. In any organisation, there will be Relative Strengths vis a vis players in the sector, and so too Relative Weaknesses. But, in a more complementary than competitive non-profit sector, each organisation needs to find their Unique Strengths so that each can bring its unique value to the web of social purpose ecosystems.
A Latent Strength, finally, is one that is not yet developed, dormant or hidden but has the potential to become a Relative or Unique Strength when cultivated. An organisation’s access to a large database of primary clients/ service users and their networks is often an untapped strength for internal survey, analysis and research into client knowledge, behavioral or longitudinal studies to access impact, uncover motivations, patterns, and insights that can influence programme design, effective outreach and even policy.
A Latent Weakness, not properly held in check or thoroughly eradicated, can be a dormant volcano, threatening to cause catastrophic damage to your strategy and operations in time to come. Compliances lapses or not having the proper checks and balances in place for sound governance, are latent structural weakness that even the smallest for- or non-profit organisations in this connected age cannot overlook.
In the resource-tight Non-profit sector, where we exist for ‘the common good’, we prefer to see “competition” as peers who are complementary in serving unmet needs in society e.g. same needs, different catchment areas.
In understanding the Strategic Variables around our “competition”, we can look at fellow organisations in our sandbox or sector, existing to serve close-to similar missions. Chart out in simple terms, the strengths of your top three to four “direct competitors” and identify the strengths that are common across all of these organisations. Do the same for Weaknesses.
What are the Unique Strengths that you can cultivate and leverge that will differentiate you from others and allow you to contribute to or raise the sector in a way that only you can? How can you tap into your strategic capabilities to plug sector weaknesses and gaps?
We also need to look at “competitors” of the future. Who will almost be another you in the foreseeable future (i.e. future direct competitor)? Are there certain types of trends (e.g. technology) that could disrupt or radically change the space that you serve, the way services are delivered, or displace you? Could there be new forms of alliances that might suddenly envelop your “territory” or “threaten” to serve your target clients/ service users better than you? Might there be present clients, suppliers or partners who, because of forward or backward integration, come to “compete” with you?
Some of these trends you may already have identified earlier in the process when you were making a scan of the Future Operating Environment.
What could be an example of vulnerabilities? Scandals, corruption, data compromises, and increased negative client complaints are all areas of vulnerabilities where there is an exposure or risk, or where “cracks” are showing. For an organisation whose programmes run on funds that come exclusively from one corporate donor, it could be especially vulnerable when corporate HQ restructures or changes its giving policy, or, if the economy takes a down turn.
When we look at Areas of Vulnerabilities, we need to take a short-term (0-5 years) and long-term (>5 years) perspective into the areas of strategic vulnerabilities such as in Technology, Labour, Legislation/ Policies, and Funding.
When we talk about opportunities, we often only really think about external opportunities. How about internal opportunities, those that are within your control? I serve on the Board of the Assumption Pathway School (APS) and Chair the F&B Committee. Land is one of the resources we are blessed with at APS and at The ART (Assumption Restaurant for Training), we have some 5000 square feet of space to work with for restaurant programmes such as An Evening @ The ART, Food Street @ The ART, and house-grown herbs for cooking, to mention a few. How we use the space is an internal opportunity fully within our control.
When listing and analysing an Internal Opportunity, write in a clear, succinct statement what the specific internal strategic opportunity is for you. I stressed two words in the sentence above – specific and strategic. A three word statement like “Enhancing office ambience” is general, does not point to any specific opportunity or action, and neither is it strategic.
Firstly, it helps to start your statements with a verb. Next, you may ask ‘What counts as a strategic opportunity?’. Generally, it would be one that relates to programmes and services, clients, partners and geographic markets.
Next, we ask, what is the probability of it happening? When do we see it happening? Where in our geographic markets do we see this opportunity mapping into? What are the likely impact/ effect(s) if we do it? You can capture the answers into a table much like the one here.
With external opportunities, you want to first ask yourself ‘What are the key external events/ trends that could spell opportunities for you?’. Again, take a look at what you’ve scanned to be emerging in your Future Operating Environment. Then, examine and list the specific external strategic opportunity that corresponds to each trend.
Threats are external to us (vs. internal – vulnerabilities). The same method above (i.e. external opportunities) applies. It is inadequate to simply stop at listing the Threats. More needs to be understood – What are the external events or trends that may pose a threat to our organisation? What is the specific strategic threat? What is the probability of it happening? When? Where/ in which geographic markets would it pose as a threat? What is the impact or effect on the organisation?
At this stage, after having taken a look at your internal ‘as is’ and the look of the Future Operating Environment, understanding the Strategic Variables funnels your thinking through a process of crystalising the factors that will work for and against you, allowing you to more clearly distill the paths you can take forward towards greater Distinct Relevance!
‘Determining the Strategic Variables that will Work For And Against You’ is the third of an article series from DPI Asia to aid Non-profits in their strategic thinking.
The materials provided herein are for Non-profit organisations’ internal use and reference only. Training using materials from this article is expressly forbidden except by facilitators certified by DPI Asia pursuant to the terms and conditions of a Licensee Agreement (License) between DPI Asia and the entity.
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© Decision Processes International Asia. All Rights Reserved. Octotber 2018