Boston—August 14, 2019—The Bridgespan Group today released a new report, Operating Models: How Nonprofits Get from Strategy to Results, that describes the critical role operating models play in mobilizing people and resources most effectively. As such, they are a bridge connecting strategy and results.
“Working with hundreds of organizations, Bridgespan has found that most nonprofits stand in the way of their own success by not paying adequate attention to their operating model,” said Bridgespan Partner and coauthor of the report Leslie MacKrell. Bridgespan defines an organization’s operating model as the blueprint for where and how critical work gets done to achieve an organization’s goals.
The benefits from investing in an operating model upgrade are well established in the business world. Bain & Company’s research across eight industries in 21 countries, for example, has shown that redesigning an outdated operating model to align with evolving strategies may be one of the smartest investments a company can make. Bain data established that for-profit companies rated in the top-quartile of operating model performance have five-year revenue growth and operating margins significantly higher than for those in the bottom quartile. Bridgespan adapted and applied Bain’s operating model framework to the social sector and has found that “nonprofits can gain similar benefits in productivity and impact,” said Marcia Blenko, an advisory partner at Bain & Company and coauthor of the Bridgespan publication.
Bridgespan’s operating model framework includes four interrelated elements: structure and accountabilities; management systems; ways of working; and “enablers” that support key capabilities, such as recruiting, talent development, and technology. “The value of using an operating model approach is that it helps us understand that for every action we take in one area of our model, there are impacts and trade-offs on the other aspects of the model,” explained Michael Holscher, chief strategy and resource officer at Population Services International (PSI), an international leader in delivering affordable health products and services in developing countries. PSI’s operating model redesign journey is profiled in the Bridgespan publication.
Since the operating model concept is new to most nonprofits, many leaders will have questions about how to design or revise a model to achieve better results. The report describes eight best practices and illustrates them by drawing on the experiences of three nonprofits—PSI; Project ECHO, a New Mexico-based telementoring organization that trains physicians in more than 35 countries; and The Ounce of Prevention, a national nonprofit that supports early childhood development through research, advocacy, professional development and direct services. Among the eight practices are:
- Start with strategic clarity. For example, when Project Echo set a goal of reaching one billion patients globally by 2025, they then clarified how they would achieve this massive scaling through more decentralized decisionmaking, empowering a wide range of global actors such as universities, NGOs, and doctors to adopt their model. With greater specificity around the strategy, the organization then created a network of branch offices and regional super hubs, adjusting decision roles and processes to facilitate clear decision-making across all the stakeholders.
- Use design parameters to define what matters most. Design parameters translate strategy into a set of 10–15 specific requirements of the operating model.The parameters also serve as criteria for evaluating operating model design choices.
- Prioritize must-deliver capabilities over those that can be “good enough.” It’s important to name and prioritize those few capabilities most essential to delivering your strategic goals. The Ounce identified the critical capabilities (customer and market analysis, business development, and user-driven design improvement) it needed to achieve nationwide impact. It redesigned several elements of its operating model explicitly to ensure these capabilities could be delivered.
- Work with a small group before going organization-wide. Start with a small group of leaders that can safely learn, debate, and experiment. Once the core team has designed a high-level blueprint, a broader group of management can be engaged in adding details to aspects of the model relevant to their work.
To guide nonprofits leaders in deciding whether it’s time for an operating model update, the report provides seven diagnostic questions to facilitate discussion to determine whether a nonprofit’s current model aligns with its strategic goals and is ready to execute. “If significant issues surface, the time may be right for an operating model refresh,” said MacKrell. “The effort to design the right operating model pays dividends in productivity, alignment, and impact.”
About The Bridgespan Group
The Bridgespan Group (www.bridgespan.org) is a global nonprofit organization that collaborates with mission-driven organizations, philanthropists, and investors to break cycles of poverty and dramatically improve the quality of life for those in need. With offices in Boston, Mumbai, New York, and San Francisco, Bridgespan’s services include strategy consulting, leadership development, philanthropy and nonprofit advising, and developing and sharing practical insights.