Sunday, April 1, 2012

Reinventing business model in tiny Non-profits

In the Reinventing Your Business Model[1], the authors claim that one secret to maintaining a thriving business is recognizing when it needs a fundamental change. Certainly, business model innovation might be important for success. Redefining a business model and / or rebuilding great business process might be essential especially when creating new growth or facing financial crisis.

However, it is quite difficult for small non-profit organizations to redefine it's business model and implement a new business process even if they are in crisis. In my own personal experience, when I began working for non-profit organization which provides educational services, I found the company in the midst of a financial crisis. The root cause was due to its ambiguous pricing policy for services. The pricing policy was formulated by the chairman who established this non-profit. After investigating the current business model of this non-profit, I proposed a new profit formula to the chairman. Although he agreed with my proposal, he and I were both blamed by other staff when we explained the new profit formula and in turn we asked them to think of a new business model together.

One of the most and ultimate reasons why other members disagreed with my idea was that they dont like business style. Most people who work in non-profit sectors focus on achieving their mission, but they tend not to care about business sustainability. Unlimited bottom lines distract them from what's important. Whether they understand it or not, it is very rare for them to be motivated in terms of redesigning or implementing a new business model.

Although Getting the right people on the bus is essential to reinvent business models, it is very difficult for tiny non-profits to find the right people even if we can find a bus driver. Considering this aspect, I think non-profits need more sophisticated strategic plans for motivating people to implement new business models. While strategy should be based on their mission they want to achieve, goals and objectives should include the concept of business sustainability. Moreover, non-profit leaders might be required to have strategic skills to involve staff members into business style with controlling rejection.   



[1] Johnson, Mark W., Clayton M. Christensen, and Henning Kagermann. "Reinventing Your Business Model." Harvard Business Review December 2008

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