Defining strategic direction can be a major challenge for any organisation. Igor Ansoff, US strategy guru, developed a matrix which helps to focus your attention and resources. This matrix, commonly used in commercial settings, has been adapted by =mc to make it relevant to a wide range of not-for-profit organisations.
For fundraisers it’s especially useful to identify how we balance the benefits and payoffs of current versus future fundraising developments – essentially where should we invest most time and resources to be most effective?
Ansoff argues that you basically have two main issues to consider when planning strategy. In the commercial setting he calls them markets/customers and products/services. For the purpose of this download, which is specific to fundraisers, we’ll talk about donors and offerings:
Ansoff then goes on to say each of these issues can only exist in one of two states:
This combination of Customer/Offering/Existing/New means that you only have four strategic options when planning new directions. And the power of this approach is its ability to simplify and focus your thinking and action.
Igor Ansoff is a Russian-born pioneer of strategic management and corporate planning. He was born in Vladivostok and lived there until he was 16 when he moved to New York. He studied mechanical engineering and a doctorate in applied mathematics.
After joining the Lockheed aerospace company, he gained management experience that helped him to write his seminal book ‘Corporate Strategy’ in 1965. This book involves what Mintzberg calls ”the most elaborate model of strategic planning in the literature” And it is indeed very complex. But Ansoff made up for this – at least in part – by developing tools like the matrix, which forces you to make simple choices.
Ansoff’s Matrix is a complement to the Boston Matrix explored in another of these Big Idea downloads. While the Boston Matrix is very useful for assessing how well your current fundraising offerings or donor clusters are doing, Ansoff is most useful for:
Note also that Ansoff’s Matrix, like the Boston Matrix, is a useful ‘top table’ tool – that is it can be used in the formulation of strategic plans for service-led parts of the organisation.
For example, in a theatre it can be used to decide whether to concentrate on:
These are really policy decisions, but Ansoff helps us with those too.
As indicated above, Ansoff really developed the model for commercial settings. In these, he says, there are two key dimensions to consider:
In a charity fundraising setting we can substitute parallel ideas:
The matrix is below. Notice that by placing these dimensions on a matrix we essentially come up with four choices. Each of these choices has a specific name – explained more fully below – to describe the strategic approach within the matrix.
The matrix’s four choices could more accurately be called ‘emphases’ since we may well do a number of these at the same time but to different degrees.
The choices are:
Obviously since the matrix might be working across a wide range of your activities you’ll probably find that you have initiatives in all the quadrants. What’s interesting is whether your current plans have a bias towards one or more of the quadrants. Also interesting – again see below – is whether you have the competencies to be effective in all the quadrants.
Ansoff’s Matrix can be used very simple or in a sophisticated way. This download highlights the simple ways to use it. There are essentially five key steps:
Job one is to focus your attention on Quadrant 1 called donor penetration. It’s a very attractive quadrant in many ways. You know the donors and you know all the offerings. You’re probably competent and confident here. Deciding to move outside quadrant 1 at all is a key decision and you need good reasons to do it – aside from a desire for novelty. Let’s explore why you might want to do that.
Let’s assume, as the Director of Fundraising, your strategic plan for existing offerings to existing donors allows you to project accurately total income and expenditure. Why move?
There are four main reasons to work outside quadrant 1:
Let’s consider a fundraising gap for a midsized charity, Charity Co. Charity Co. wants to grow fast. In fact, it wants to double its size in ten years. It enacts to do this by improving the contribution it’s thrift or charity shops make. Question one, is can it fill the income gap using the donor penetration strategy?
In donor penetration you look for ways to increase your market share of current offerings in your current markets. There are three major ways to do this.
Charity Co. could apply this discipline across all its divisions but let’s assume that they plan to begin with the retail division. The retail division of Charity Co. makes its money by running a network of charity shops. These shops sell a mixture of donated and bought goods to raise funds for their mental health work in developing countries. So for Charity Co. to follow a quadrant 1 focus, it could try:
Importantly these examples show that the phrase existing donors can be used in two ways. One is to define actual current customers/donors or customers/donors in the same broad class or type. (So they can be ‘existing’ in the sense that they are the same type of donors.) It’s not necessary to get very hung up about this kind of differentiation – you can use the matrix at different levels.
Next, the fundraising director and colleagues should consider some new offering development possibilities for the shops. Again there are a number of ways to do this.
For example if it already sold ethically-sourced coffee in its shops, it could develop new offerings, such as decaf, organic blends, or coffee for expresso machines. It could develop other quality levels of coffee, such as a higher-quality coffee for coffee gourmets and a lower-quality coffee for the mass market.
And there are other options – it could also consider developing a catalogue-based or online range of goods – lets say Christmas gifts – aimed at existing donors and using this as a new offering approach.
In each case Charity Co. has to be concerned that the new approaches fit with the interests of the customer/donor and that it isn’t simply cannibalising its existing work i.e. that customers/donors are buying the same things online rather than going to shops. (Unless this improves margins of course.)
Our director could also look at quadrant 3 for new customer/donor markets whose needs might be met by the current offerings. So Charity Co. could:
This is the most challenging and risky of the four quadrants. Essentially our fundraising director needs to be entrepreneurial to work here. But it’s also the quadrant in which really creative ideas take off. Typically fundraisers work here because:
Each of the quadrants has different characteristics:
In general quadrant 4 is seen as the hardest and most risky quadrant to work in and quadrant 1 is the easiest and least risky. The reasoning behind this is fairly simple. In quadrant 1 you are familiar with both the donors and the ways you raise money. It’s possible to work here as part of Ken Burnett’s famous relationship fundraising approach. A classic example might be asking existing £/$10 a month donors to up their donation to £/$15 a month.
In quadrant four you’re not familiar with the potential donors or the fundraising technique. So your great idea to hold Gala Dinners to attract major donors might indeed work brilliantly. But if you’ve never run a Gala Dinner or successful worked with major donors it could be a disaster.
The secret of success is partly to know what competencies, skills or knowledge you need to work effectively in each quadrant.
|1. Donor penetration||For the charity the ability to maintain good current donor relationships is key. On the donor side there needs to be an ability to continue giving money – have they plateau-ed? And a continuing interest in the existing offering – has the sponsored run had its day?|
|2. Offering development||For the charity the key ability is to come up with new approaches and fundable programmes that connect to donor relationships. On the donor side an ability to give more money and a willingness to give it for different things or in different ways.|
|3. Donor development||For the charity the central ability is to be able to identify donor clusters who might be interested in the same offerings. And an ability to market to them remembering that donor acquisition is very expensive. On the donor side a willingness to engage with the charity and an ability to give.|
|4. Diversification||For the charity the ability most needed here is to come up with or adopt radical new ideas and make a success of them. You need money – capital – usually in this quadrant and a cultural ability to handle and manage risk as well as an ability in innovation.|
Another way to consider this is to look at the lens of the 5Cs of strategy. In every quadrant you need to explore five big issues. Let’s change examples and talk about major donors. (HNWI)
Welcome to another Big Idea download from =mc. These downloads are designed to share with you some of the classic and contemporary techniques we’re using to help transform the results of major charities in the UK and internationally. Collect the set!
Even if you don’t want or need Ansoff’s Matrix, why not let =mc help unlock your fundraising potential?
=mc has a team of unrivalled fundraising consultants able to assist with the biggest and smallest campaigns. Between us we share experience in large charity work, international development, arts and culture, disability and the environment.
=mc consultants have worked with many of the world’s major charities on their strategy or fundraising. We’re proud to be helping or have helped Oxfam, UNICEF, the World Health Organisation, the Federation of Red Cross and Red Crescent Societies, Greenpeace International, WWF, Concern Worldwide and Amnesty International. In the UK, we’ve worked with Imperial War Museum, Alzheimer’s Society, Oxford University, Care, WWF, Science Museum and the National Trust for Scotland.
To find out how we’ve helped these organisations achieve their big ideas – and how we could help you – call Angela Cluff, Principal Partner Consultant on +44(0)20 7978 1516. Alternatively, send Angela a message by clicking here.
We run several training programmes available in-house or as scheduled public dates to help participants understand strategic tools like Ansoff’s Matrix and how to use them. For further details, dates and prices for these programmes, click on the links below:
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Yvette Gyles, Director