Wednesday, April 13, 2016

Blue Oceans in Not-for-Profit Markets

The concept of blue oceans and the need for management that succeeds in fast-moving industries can easily be applied to the nonprofit and government sectors. The best nonprofits and their programs fill a need that is not being addressed in a novel way. Much like markets that don’t exist, if the service doesn’t exist and there’s no precedent, it’s impossible to say for sure whether the program can find & sustain funding, and if the program will actually achieve the desired positive social impact.
Habitat for Humanity is an excellent example of a nonprofit that was able to make a blue ocean out of a fairly saturated nonprofit market. Affordable housing has been an issue since cash-based economies existed, and the nonprofit sector started to focus on safe, affordable housing with the advent of the Industrial Revolution and with renewed focus during the Great Depression. Habitat for Humanity began in 1973 to address the exclusion of families from housing markets by building houses financed with no-interest mortgages. While providing housing for low-income families was nothing new, the model for using volunteers to construct houses and selling it to low-income families at cost created a new market which has made Habitat for Humanity one of the most successful nonprofits in existence today.

On the other side, nonprofits have dissolved because of their inability to deal with change. For example, Hull House, a nonprofit founded in 1889 by Nobel laureate Jane Addams, worked in Chicago to provide foster-care services, job training, counseling, and literacy and other education programs. In 2012, the organization shut down. They were not able to provide the breadth of services they had in the past because they weren’t able to find funding when other providers could offer the same services more efficiently, and at a lesser cost. The organization’s longevity speaks to the strength of management, but the organization was unable to recognize the changing dynamics of philanthropy and where the organization was making the decisions that lead to its demise even while being recognized as a successful NPO.

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