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Why Competitive Advantage Matters. Even for Nonprofits.

As Summer hinted in her post last week, some people in the social sector simply don’t like to talk about competition.  But in reality, all nonprofits compete with each other for needed resources: donors, sponsors, clients and consumers, staff, volunteers, nearly anything and everything needed for success.

Organizations that actually dedicate time and energy to truly understanding and internalizing their position in the collaborative / competitive landscape are best able to achieve sustainability and to help those in need. Competitive analysis helps you to:

  • Identify where your program fits into the broader environment
  • Identify the forces that cause consumers not to choose your product/services or attend your programs
  • Understand the gap/s in needs of consumers or clients, and work to fill those gaps
  • Define your niche

Ultimately, such analysis allows you to identify your competitive advantage. Competitive advantage is something that is derived from your organization’s strengths, making you different from the competition and more effective at achieving impact.  Competitive advantage allows you to set the work of your organization apart.

We have seen the benefits of competitive analysis play out time and time again with the participants of our Community Wealth Collaborative program. The Community Wealth Collaborative is a 10-month business planning process that helps high-performing nonprofit organizations develop and grow social enterprises. During the program, we coach organizations on analyzing their competitive landscape and determining their competitive advantage.

The results achieved by St. Martin de Porres High School, a graduate of the 2009 Cleveland Collaborative program, stand as strong proof of how powerful understanding one’s competitive landscape can beSt. Martin de Porres High School was founded in 2004 to provide high-quality college-preparatory education to young people in Cleveland, OH, who would not otherwise be able to afford such an education.  The school leverages an entrepreneurial Corporate Work Study Program – that places students as part-time employees at local businesses – to both provide skills training for the schools’ students and to generate revenue for the school.

Richard Clark, the school’s President, cites the Collaborative’s lessons on markets as the most revolutionary for St. Martin.  In Clark’s words, “We looked at our market in a whole ‘nother way!  We had been thinking other schools were our competitors, but we realized that groups like the American Staffing Association saw us as a competitor.”

As contrary as it might sound, understanding your competitive advantage is not necessarily about being competitive.  Rather, it’s really about helping you maneuver within the competitive / collaborative landscape. And often this actually results in a strengthened ability to harness opportunities for collaboration. Understanding your competitive advantage allows you to go back and determine how to collaborate with partners who have different niches. It allows you to identify organizations with which you can develop mutually beneficial partnerships, reinforcing the services and benefits of one another and cost-effectively driving greater social impact.

The most effective nonprofits are able to balance these competitive / collaborative dynamics. They know when to compete fiercely and when to partner.

In the case of St. Martin de Porres High School, the Collaborative helped the organization understand how they could best partner with the local businesses participating in the Corporate Work Study Program.  Previously, they had emphasized in all of their marketing materials the “win-win-win” nature of the Corporate Work Study Program: the businesses get dependable, low-wage employees, the students develop valuable work skills, and St. Martin earns revenue necessary to keep the school in operation.  By conducting interviews with potential business partners, St. Martin learned that this value proposition was too complex and really not very compelling for the businesses.

The team learned that success truly hinged on pulling the heart-strings of potential employers; businesses joined the program because “it was the right thing to do.”  They won over businesses by emphasizing the social impact they could have by collaborating with each other.  In order to retain these businesses in subsequent years, however, the school has learned that they need to emphasize their competitive advantage in pricing: “it makes financial sense to choose St. Martin de Porres over other staffing agencies.”

As Richard Clark explains, “The Collaborative opened up for us all these tools that businesses have been using to make money which we’ve used to increase our social impact.” After participating in the Collaborative and engaging in additional business planning, the school’s revenue from the Corporate Work Study Program grew by $750,000, the school was able to support over 150 new students, the evaluation of study performance by employers grew from 83% to 90% and student attrition dropped by over 10%.

You can read more about the experiences of St. Martin de Porres and other Collaborative participants in our Collaborative Outcomes Report.

 

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Sara Brenner

About Sara Brenner

As President, Sara Brenner leads the firm’s consulting business. Sara helped develop and is implementing the firm’s new strategy to solve social problems at the magnitude they exist, while leading a sales team that grew revenue by more than 45%. Sara oversees the implementation of the new strategy-aligning products, impact measurement, and talent initiatives with a results-based culture to deliver exceptional value to partners. With over 15 years’ experience in consulting for nonprofits, for-profits and the government, Sara worked extensively in the health and human services including at the Advisory Board Company and The Gallup Organization. See Sara's full bio

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