... where visionaries, game changers, and challengers discuss business models
This is my first post and I am excited to be here!
I am looking for some guidance for the following scenario:
I work for a non-profit, that has no business models documented. I would like us to be around in the next 5 years so I think we need to start creating business models, via canvas, empathy maps, etc.
My question is this: Should we create business models for all our units, even the ones that don't directly generate revenue?
Here is a list of BUs:
$$ Fund Raising Dept
Membership Services & Support Dept
$$ Member Recruitment Dept (Sales)
There are a few aspects to this question that need to be considered.
If it is the existence of the organization is your focus, then I would begin with the 'whole' or top level business model. It is critically important the organization have a common point of view and an understanding of why it exists, for whom it creates value and what value you create that is important to your target audience. From there each unit can build out how it helps to deliver on the organization's business model.
As an example my not-for-profit, volunteer-based organization uses the business model canvas as a strategic tool. At each annual planning session we look at the current state business model for what worked well and what was weak. We examine changes in the environment that could influence our next couple of years. Then we plan the changes and priorities for the next year. We use the canvas as a tool to communicate with our membership. We also use it as part of the orientation of new board members so they quickly and completely understand the business we are in and the logic of how we operate.
Each business unit can look at their own slice of the business and model out how they create value and for whom, internally or externally. Every unit has a revenue whether it comes from external sources or is a budgetary allocation. If it is internal, the customer is the person(s) deciding on the allocation of the funds. The unit must then understand how and why value it is creating for the person(s) deciding on the allocation and how they go about receiving the money.
Far too often, particularly in government, organizations or units assume their money because it is an appropriation, grant or allocation, and forget there is a funder and you have to be creating value for that funder to warrant receiving the money. Human resources is a very good example of this, and I have worked with HR business units to detail out their value to the organization and their business model.
My recommendation, start with representatives of a cross-section of the business units to build the organization's business model. Socialize that model across the organization so there is a common language and shared understanding of the whole business. Train the various business units to use the canvas, then have them start to detail out how they create deliver value, whether it is to external targets or other units within the organization.
Thanks, Mike. That helps me a lot!