the aspeninstitute in pursuit of scale and sustainability for non-profit organizations kirsten moy
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THE ASPEN INSTITUTE
In Pursuit of Scale and Sustainability for
Non-Profit Organizations
Kirsten Moy
THE ASPEN INSTITUTE
What is Scale?• More capital
• More customers
• More effectiveness
“Economies of scale” usually refers to the
development of mass markets and progressive cost reduction through
increased business volume. Can the industry groups assembled
achieve this kind of scale?
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Why Pursue Scale?
• To reach more people
• To provide access to services to as many low income people and communities as possible on a permanent and sustainable basis
• To tap into economies of scale
• To become more sustainable
• To have greater impact in low income communities
THE ASPEN INSTITUTE
Case Comparisons Undertaken
• Banknorth Group
• 7-11 (Vcom Expansion)
• ACE Cash Express
• Allied Capital and BLX
• VISA Credit Card
• Self-Help (Fannie Mae SF Mortgage Program)
• ACCION
• The Reinvestment Fund
• Dell Computer
• Unified Western Grocers
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Innovation -- and Scale -- Occur at Three Levels:
Product Innovation
Organizational Innovation
Industry Innovation
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Product Innovation Organizational Innovation
Industry Innovation
Design for scale (e.g., standardization, simplification &
refinements)
InfrastructureTechnology
CapitalPartnering
ManagementNew organizational structures
Regulatory policyStrategic positioning
Industry intermediariesIndustry infrastructureNew sources of capital
imp
ac
t
New Pathways to Scale for Community Development Financea
cti
on
s
Graphic Representation Courtesy of Langdon Morris, InnovationLabs, April 2004
THE ASPEN INSTITUTE
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
INVESTORS & FUNDERS
INVESTORS & FUNDERS
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Basic Model of Key PlayersIndustry leaders play a powerful role in setting standards and creating standardization in the industry.
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Industry Structure 1
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
INVESTORS & FUNDERS
INVESTORS & FUNDERS
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Industry Structure 1: The Corporation -Customer Dynamic
In most industries, direct interaction between the customer and the industry member is a primary factor.
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ii
Industry Structure 2
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
INVESTORS & FUNDERS
INVESTORS & FUNDERS
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Industry Structure 2: The Small Players Dynamic:Industry Associations/Intermediaries Help the Many Small
Members Compete with the Few Large Members
THE ASPEN INSTITUTE
Industry Structure 3
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
Investors/Funders/3rd Party Payers
Investors/Funders/3rd Party Payers
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Industry Structure 3: Subsidy Dependent:Behavior of Industry Members Driven More by
Funders/3rd Party Payers & Policymakers/Regulators than Customers
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Implications of the Industry Analysis and Linked-Scale Model:
• Different activities are required at different levels;• Scale at the product level contributes to scale at the
organizational level;• But working at the product and organizational levels
gets you only so far – to reach scale in a fragmented sector comprised of many small local organizations, we must ultimately work at the industry level – the level least attended to in grantmaking;
• Subsidy and 3rd party payments have a disruptive effect on relationships with customers;
• Collaborative business models: e.g., cooperatives, networks and alliances may provide a viable structure for working at the industry level
THE ASPEN INSTITUTE
Collaborative Business Models Could Help Organizations:
• Retain local control and ownership
• Lower cost of operations
• Access larger pools of capital
• Reduce effort devoted to fundraising
• Access better management talent and specialized expertise
• Increase ability to reach more people
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Collaborative Business Models Could Help Organizations:
• Produce higher quality programs
• Provide more diversified and comprehensive programming
• Access more up to date technology and infrastructure
• Promote long term sustainability
• Ultimately, create greater impact
THE ASPEN INSTITUTE
Three Examples of Powerful Collaborative Models:
Unified Western Grocers
Housing Partnership Network
CCA Global Partners
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• Wholesale grocery co-op; distributor to independent grocers…..
…..Largest in Western United
States
Graphic presentation provided courtesy of Unified Western Grocers, Inc.
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The NetworkPeer alliance of 87 high performing nonprofits; network is a 501c (3)
600,000 affordable homes created
2 million low - income families served
Foster innovation & entrepreneurship
Create & operate social enterprises for wholesale access to capital markets
Peer Exchange – Network meeting
Graphic presentation provided courtesy of Housing Partnership Network
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Creating the Magic Zone
Ow
ners C
CA
Empathetic Owner & Staff
Professional & Knowledgeable
Passion for Business
Professional Training
World-Class Marketing
Lower Operational
Costs
Maximization of Profits
• Best Service
• Straight-shooters
• Innovative
• Respects and likes their customers
• Honest
• Confident
• Real People
• Smart Business People
• Know Product
• Staff Works Like a Team
• National Programs
• Real Estate Services
• Store Design
• Buying
• Member Services
• Training
• Research
• National Accounts
• Information Technology
• Human Resources & Hiring
• Product & Merchandising
• Marketing & Advertising
Growth of Business
Increase Customers &
Profit
Magic Zone
CCA Global Partners
Graphic presentation provided courtesy of CCA Global Partners
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Attributes that Work and Don’t Work
Relation to Members Non-Responsive
Members Own
Doesn’t Work Works
Initiators
Ownership
Management
Membership
Entity Type
Revenue Stream
Driving Rationale
Value Proposition
Large Groups
Third Party
Amateur
Anyone
Trade Association
Donations
Weak
Nice to Have
A Few Leaders
Very Responsive
Must Have
Strong
Earnings
Operating Entity
By Design
Professional
Representative Anyone CEO or Principal
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Organizational Models
Nonprofits
Cooperative
Corporations
Combinations
Membership Organizations
Network of Affiliates
Peer Alliances
Co-Ops
Credit Unions
Multiple Locations
Franchise
Licenses
Cri
teri
a fo
r M
em
be
rsh
ip
Ow
ner
ship
Go
vern
an
ce /
Co
ntr
ol
Deg
ree
of
Pro
fess
ion
al
Man
ag
emen
t
Wh
ere
Do
es t
he
$$ G
o
