This book will be useful to any nonprofit leader who lacks formal business training or just isn’t sure how to apply business strategy to a nonprofit sector.
The author, an associate professor of organizational behavior at Stanford Graduate School of Business and co-director of Stanford’s Center for Social Innovation, spent most of his career in general business education before turning his attention to nonprofits. This dual view has helped him point out stumbling blocks and offer solutions.
Phills begins by discussing the difficulties many nonprofit leaders have in drawing on a common understanding of key concepts such as strategic management and change implementation. He advises nonprofits to avoid dismissing business ideas, and to apply such business essentials as analysis of the competitive environment to improve their performance. While he does spend time explaining the concepts behind the development of an organizational mission and strategy, the book isn’t too academic; all the advice is clear and practical.
One of the most interesting chapters focuses on industry analysis. Nonprofits often overlook such analysis to their detriment, since industry context can have “dramatic effects” on nonprofits within it, says Phills. Nonprofits need to assess their strategy on two distinct fronts: the group they are serving and their ability to cultivate donors. So industry analysis for nonprofits can actually be more important and complex than for commercial enterprises. Once nonprofits have completed an industry analysis, discussions of strategy and even the decision to enter or exit a segment become more focused.
If your industry is education, for instance, you’ll need to follow the activities of other educational organizations and also take a broader view of the business environment in general since all groups, no matter their industry, are often competing for the same donors.
Despite Phills’ focus on business strategy, he is refreshingly cognizant of the real reasons why people interact with nonprofits. “Donors to nonprofits contribute not for financial return, but for the satisfaction and pleasure of aiding the creation of social good,” he writes.
- Manda Salls