Balanced Scorecard for Non Profits

Many organizations are finishing up 2008 as not only the end of their calendar year, but their fiscal year as well. Hopefully a new or updated annual plan is in place, but I suspect some may be looking to put final touches on one in January. Sadly, some will continue into 2009 with really no clearer definition of what they're doing than just repeating the prior year and hoping for the best.

One of my favorite tools for mapping out the strategy of an organization, and its corresponding implementation plan is the Balanced Scorecard® developed by Kaplan and Norton. There is a wide amount of literature and content available on the use (and misuses) of this tool so I'll leave it to you to Google the subject to your heart's content. You can also read my blog from November 20 on the subject. However, I wanted to provide some extra content for your consideration.

I've attached a white paper written by Joel Zimmerman, Ph.D. of Creative Direct Response, Inc. He provides a succinct perspective on how non profits might look at this tool and offers up specific modifications that focus on the unique nature of non profits. The suggestions are helpful but not required. At a minimum, a non profit should change the leveling of the four categories to have customers at the top followed by financial as second. This modification is justified given the nature of the organization. But Zimmerman suggests six additional mods that merit consideration – especially if you have a strong donor/fundraising emphasis in your strategic plan.

But a plan is useless if it's left on the table to collect dust, and so is this tool. From my experience in working with non profit boards across the country, you have to work your plan and refer to it on a consistent and regular basis. The reason I like the Balanced Scorecard is that it can also be used as a measurement tool to identify progress toward your strategies; as well as a performance plan for staff and volunteers.

-- David Kinard, PCM

The Power of a Plan

We create plans all the time: plans to go to dinner and a movie with friends, plans for an exotic vacation, we plan our household budgets and plan for our retirements. In all, every plan we make is an attempt to help us move from where we are to where we want to be in the most convenient, effective and efficient way possible.

Surprisingly, however, many organizations are operating without one of the most important plans they need—a strategic plan. As a critical business development tool, the strategy plan is a keystone to evaluating future growth and providing a roadmap on how to achieve it. It helps us to see our companies from an objective impartial manner and strategize the direction of our efforts.

Strategic plans articulate the past and present, and provide a sense of direction for companies that enables growth from better use of existing resources, and identification of needed new ones. In its simplest form, a good strategy plan will provide an objective view of the world, allowing a company to make informed decisions.

But perhaps the most important value of the strategy plan is its ability to organize a business around the characteristics of its markets. The plan brings to life the true bottom-line value of keeping customers for life and identifies the areas where customer relationships can be enhanced.

One of my favorite tools for strategy building is the Balanced Scorecard™ created by Robert Kaplan and David Norton out of Harvard. The tool asks you to look at the business in terms of four key categories: financial, customer, innovation/infrastructure, and learning and growth. Basically, working from the bottom up you identify what knowledge and skills your teams must have to generate the innovation and systems needed to serve your customers and manage markets, while providing a financial return that satisfies all stakeholders.

Perhaps the most clear and appropriate explanation of the value of a strategy plan can be found in the story of Alice in Wonderland. Alice, who is lost and doesn’t quite know what to do asks the Cheshire Cat for directions.

“Would you tell me, please, which way I ought to go from here?” said Alice.
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where…,” said Alice.
“Then it doesn’t matter which way you do,” said the Cat.

If it doesn’t matter which way your organization goes, then perhaps creating an adaptive and strategic marketing plan is not a good idea. But, if you want a roadmap for success then there’s no better tool than a well developed strategy plan.

-- David Kinard, PCM