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A complete set of tools for applying entrepreneurial strategies and techniques to your nonprofit
As a follow-up to their book Enterprising Nonprofits, the authors of Strategic Tools for Social Entrepreneurs provide a full set of practical tools for putting the lessons of business entrepreneurship to work in your nonprofit. The book offers hands-on guidance that helps social sector leaders hone their entrepreneurial skills and carry out their social missions more effectively than ever before. This practical and easy-to-use book is filled with examples, exercises, checklists, and action steps that bring the concepts, frameworks, and tools to life. Detailed explanations of all the tools and techniques will help you personalize and apply them to your nonprofit organizationmaking it stronger, healthier, and better able to serve the needs of our communities.
Praise for Strategic Tools for Social Entrepreneurs
"I search constantly for resources that can help provide insight and guidance to take Teach For America to a higher level; Strategic Tools for Social Entrepreneurs does this and more. The book takes the best practices of for-profits and social enterprises and adapts them to the needs of entrepreneurial, mission-driven nonprofits. Strategic Tools for Social Entrepreneurs is a tremendous contribution to social entrepreneurs and to the nonprofit sectormany thanks to the authors for identifying this need and filling it!"
Founder and President, Teach For America
All of the royalties from this book will be used by the Ewing Marion Kauffman Foundation to support continuing work on social entrepreneurship.
James L. Heskett, Professor Emeritus, Harvard Business School
IN THIS CHAPTER
Understanding the strategic service vision Defining the value equation Involving multiple constituencies in the strategic service vision Satisfying conflicting constituencies Considering the implications for social entrepreneurs
Social entrepreneurs come from a wide variety of backgrounds, they have widely varying interests, and they apply their talents to an equally broad set of challenges. But those who are truly successful share at least one thing in common: They have a strategic service vision. Consider these people:
Dr. Byrnes Shouldice-treating wounded soldiers in World War II, and applying principles learned from veterinary and pediatric medicine-found that patients who take responsibility for their own recovery early in the process not only recover faster but recover with a greater degree of success. He built an extremely successful medical/surgical service around the idea.
Commissioner William Bratton-as head of the New York Police Department from 1994 to 1996-developed a strategy around the concept that crime could be managed and that a police force should measure, manage for, andreward results rather than effort-a concept that bordered on the heretical among many criminologists and sociologists at the time. As a result, New York City became one of the safer U.S. cities after only a few short years under his leadership.
Frances Hesselbein-as executive director of the Girl Scouts of the USA between 1976 and 1991-led the organization through a transformation centered around the concept of the individual girl as the client, with all planning, organization, and implementation directed toward helping each Girl Scout achieve her full potential. The organization achieved these goals while broadening its ethnic and racial constituency.
Bill Strickland, Jr.-founder of the Manchester Craftsman's Guild in his native Pittsburgh-has implemented a vision intended to help at-risk youth achieve recognition in their community through the study, production, and display of art in a setting in which excellence in surroundings as well as execution communicates a stronger set of messages than their more traditionally oriented public school teachers were able or willing to do.
While these social entrepreneurs represent different backgrounds, interests, and efforts directed to varied challenges, they all share a common philosophy, something I have called a strategic service vision-a set of ideas and actions that maximizes the leverage of results over efforts directed toward well-defined targets and supported with highly focused operating strategies.
Entrepreneurs, whether in the for-profit or the social sector, build visions around core ideas. At the outset of their efforts, however, they are unable to foresee and plan all elements of strategies with which to achieve their goals. As James Collins and Jerry Porras have suggested in their book, Built to Last, they try a lot of things and keep what works. The end result is made up of a number of self-reinforcing, internally consistent elements-a thing of beauty. But we often forget that the process by which it is achieved requires not only great ideas but the willingness on the part of a leader with stamina and determination to engage in a great deal of trial and error, another common trait of social entrepreneurs.
Having a framework to guide such trial and error can make the process more efficient. Hence the importance of the concept of a strategic service vision. This framework has evolved from my efforts to document factors in the success of outstanding entrepreneurial endeavors, those that have literally changed the standards for performance in their chosen fields. The original inspiration for this effort was an opportunity to observe the workings of a hospital in the suburbs of Toronto, Canada.
The Shouldice Hospital was and is a highly focused institution. It does one thing well: It fixes one type of hernia experienced predominantly by men, the inguinal hernia. And it does it with a recurrence rate that is about one-twelfth the rate of the average of North American hospital. It has come to represent the apotheosis of a social "focused factory," using a term from the production management literature to denote an organization, process, or facility designed to do one thing very well. It places a great deal of emphasis on self-help and camaraderie among patients, offering a social as well as a medical experience. In fact, many of its patients don't want to leave the hospital at the end of their three to four day stay. The working lifestyle of its employees is also addressed, with an emphasis on counseling as opposed to some of the more menial nursing tasks and a regular operating schedule for surgeons. And to complement the strategy, the "hospital" is much like a country club, equipped with facilities to encourage patients to exercise constantly in order to hasten their recovery.
Although social entrepreneur Byrnes Shouldice and his successors may not have known it, as the hospital's strategy slowly took shape over several decades, it had developed a number of concepts that illustrate what I have come to call a strategic service vision, a framework that has now been tested against best practice in many organizations and actually used as the basis for developing strategic direction for profit-making and not-for-profit organizations alike.
The Strategic Service Vision
Entrepreneurs employing a strategic service vision target their markets very carefully, both in demographic and in psychographic terms. For years demographics (age, education, income, etc.) have been used for this purpose, probably because the information, while not always of high relevance, was more accessible. Recently more effort has been made to collect information regarding psychographics (lifestyle, likes and dislikes, fears, etc.), which can have higher relevance than demographics. For example, at Shouldice, it is important to know a person's height-to-weight ratio as well as general health characteristics in order to assess the risks associated with a surgical procedure. The hospital screens for these factors, often recommending a diet to overweight aspirants for the operation. However, Dr. Byrnes Shouldice learned early on that many of his patients selected his treatment, originally carried out in a house in downtown Toronto, because of word of mouth about the effectiveness of patients taking charge of their own recovery, beginning with their walk from the operating table on his arm.
Shouldice Hospital's Operating Strategy
Today Shouldice Hospital is not for all clients, particularly those who do not wish to travel to Toronto, those who don't have the time to become involved in the Shouldice experience, those who are not interested in the social aspect of the service, and those who are not particularly risk-averse. For them, same-day outpatient surgery at or near their home is preferable. But nearly 8,000 people make the trek to Toronto from all over the world annually, often queuing for weeks on the hospital's waiting list to do so.
As a result, Shouldice has positioned itself to meet the needs of a targeted group of clients who self-select (both physically and psychologically) into its service.
Nor is Shouldice for all employees. Surgeons work in teams and perform essentially the same relatively simple operation over and over. They have to take a great deal of pride in their work, enjoy working with patients, value regular operating hours, and have a high tolerance for boredom. Staff members self-select themselves into Shouldice just as patients do.
For patients, Shouldice offers both a high probability of operating success and an enjoyable social experience. For employees, it offers a high-quality, team-oriented, somewhat democratic working environment at above-market wages. These are neither products or services; they are results. One of the real lessons from observing this organization over time is that, consciously or not, it has developed a service concept (similar to a business definition) based on results, not products or services. It reflects what clients of a wide range of organizations have told us repeatedly: that they primarily buy results, not products or services.
In order to achieve these results, Shouldice has designed a process for achieving them, something we have come to term an operating strategy. Further, it's an operating strategy that leverages results over costs.
For clients, Shouldice involves them in their medical procedure from start (self-diagnosis) to finish (self-recovery). In the meantime, it creates a social atmosphere in which patients counsel each other and provide peer pressure for involvement in activities requiring exercise, critical to recovery. This is economic in two ways: It both costs little and actually substitutes client labor for staff labor. The hospital's focus on one kind of operation assures the repetitive work that contributes to outcome quality throughout medicine. For staff, Shouldice defines jobs that are pleasant, encourage teamwork, and provide ample compensation for regularly scheduled work. The result is a productive and relatively low-cost leveraging of results over costs for both clients and staff.
Shouldice Hospital's Social Delivery System
All of this is supported by a service delivery system designed to complement the operating strategy. It starts with the physical facility, a former estate situated on ample, well-manicured grounds. And it continues with furnishings not reminiscent of a hospital as well as devices, such as stairways with low risers, to facilitate patient mobility and exercise.
Real social entrepreneurship addresses each of the several constituencies important to a not-for-profit organization. In the case of Shouldice, for example, we have seen how it has been applied to both patients and staff. The needs of families of young children being treated at Shouldice are addressed as well, with free accommodations provided for them. In the spirit of the strategic service vision, it should be noted that this also reduces care costs for a group of patients who often require a great deal of attention; their parents provide the care.
Dr. Byrnes Shouldice and his successor provide a working example of the strategic service vision, diagrammed in Exhibit 1.1. Since becoming aware of Shouldice, I've encountered a select group of entrepreneurs who understand implicitly these concepts and employ them to deliver superior results at low cost, proving that quality doesn't have to be traded off against costs in delivering a service. In fact, in a majority of cases, the handful of "breakthrough" service organizations they have created has actually changed the rules by which service is delivered in their respective industries, whether for-profit or social in purpose.
The strategic service vision provides a framework for developing a set of shared "core" values, practices, and measures as part of an overall strategy. But how do entrepreneurs implement the strategy? For this we focus on the operating strategy and a concept my colleagues and I have come to call the value equation.
The Value Equation
Whether purchasing a product or service, entering into an employment agreement, or making a grant to a not-for-profit organization, people want value. But just what is value? While social entrepreneurs rarely take time to define it, they implicitly understand and endeavor to deliver it. The value equation, based on extensive observation, makes an effort to define it. It can be depicted as:
Value (for clients, staff, volunteers, = Results + Process Quality donors, etc.) Cost + Ease of Access
This doesn't, of course, include all the considerations involved in a particular transaction, but it highlights the most important ones. The experience of the New York Police Department, under the leadership of Commissioner William Bratton between 1994 and 1996-which we'll refer to throughout this section-clearly illustrates these concepts.
The Role of Process Quality
Process quality has received perhaps more attention than any other element of the value equation, primarily from a number of researchers interested in service marketing. The primary findings of this research are that there are five elements of service quality of greatest importance to customers. They are:
1. Dependability (doing things you say you will do)
2. Timeliness (doing them when you say you will do them)
3. Authority (doing them in ways that tell customers you know what you are doing)
4. Empathy (doing them with an eye to the needs of customers)
5. Tangible evidence (doing them in a way that lets customers know a service has been performed).
Elements of process quality clearly place limits on ways that a police department might deliver value to its constituents, particularly if the constituents include citizens under suspicion and even criminals.
The Bottom Line
The value equation-oriented approach to policing in New York City produced dramatic results, far exceeding the expectations of the mayor's office and academic critics of the effort. Over three years, the department achieved a 50 percent reduction in major crimes, far greater and far sooner than that experienced in other parts of the United States, providing some support for the belief that crime can be managed. The accomplishment has become somewhat obscured by the fact that other major cities are now achieving significant reductions in crime as well. What is not as well known is the fact that a number of cities have adopted the practices and measures associated with the NYPD's value equation. Many have actually employed the former commissioner and members of his staff as consultants to help them implement results-oriented, value-driven methods.
In this case, the benefits for citizens are clear: greater safety at affordable costs. Evidence suggests that those citizens in high-crime areas have experienced a greater improvement in safety than those in other precincts. How about other constituencies? The police have received more support for and interest in their work. Larger numbers have been freed up to do the kind of on-the-ground work needed to understand neighborhood challenges and crime sources. The city has benefited in a number of ways, not the least of which are increasing revenues from tourism, rising occupancy of both office and residential space, a higher tax base, and a higher bond rating that has produced lower interest costs on the city's outstanding debt.
Excerpted from Strategic Tools for Social Entrepreneurs by J. Gregory Dees Jed Emerson Peter Economy Excerpted by permission.
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About the Authors.
PART I: CREATING A STRATEGIC SERVICE VISION.
Chapter 1: Developing a Strategic Service Vision (James L. Heskett).
Chapter 2: Developing an Entrepreneurial Competitive Strategy (Jerry Kitzi).
Chapter 3: Cooperative Strategy: Building Networks, Partnerships, and Alliances (Jerry Kitzi).
Chapter 4: Leading, Retailing, and Rewarding People Entrepreneurially (Peter Economy).
Chapter 5: Managing Your Board Entrepreneurially (Jerry Kitzi).
Chapter 6: Treating Your Donors as Investors (Kay Sprinkel Grace).
Chapter 7: Working with Community.
Chapter 8: Performance Information that Really Performs (Fay Twersky and Jill Blair).
PART II: GROWING AND EXPLORING NEW DIRECTIONS.
Chapter 9: Developing Viable Earned Income Strategies (Beth Battle Anderson, J. Gregory Dees, and Jed Emerson).
Chapter 10: The Question of Scale: Finding an Appropriate Strategy for Building on Your Success (Melissa A. Taylor, J. Gregory Dees, and Jed Emerson).
Chapter 11: Managing Organizational Change (Betty Henderson Wingfield).
Chapter 12: Growing with an Entrepreneurial Mind-Set (Steve Roling).