Competitive Advantage

The processes are the tools you use to serve the needs of others.  When your mission is perceived as approximately the same as others and your processes are similar, it is unlikely your nonprofit will have much of a competitive advantage.  Because of the potential someone will develop a process advantage, mission sustainability will be low.

Your nonprofit needs to have two types of competitive advantages.  One is through the process you use and the other is how you do what you do.  Both are important to sustainability.

Process advantages are often short lived.  Most processes can be duplicated with a little time and effort.  Therefore, keeping a process advantage requires constant monitoring and innovating.  When the advantage is well-maintained it significantly enhances sustainability.

A process advantage is the one most people think of when they think of a competitive advantage.  In most cases, a nonprofit must have several.  Hiring, fundraising, and client services are especially important areas.  The process advantages are usually the ones that attract the attention of outsiders.  They are also the ones that typically establish an organization’s reputation.

How you do what you do is also important.  It is usually only recognized by the service recipient (donor, client, or employment candidate).  It is also usually very difficult for a competitor to duplicate or recognize.  This competitive advantage is created and maintained through your culture (hospitality, grace, warmth, sincerity, kindness, thoughtfulness, flexibility, creativity, individual attention, etc.) and the care with which things are handled (different than excellence and attention to detail but they are part of it).  It is often referred to as the ‘secret sauce’.  While there is nothing secret about it, it is typically invisible and can best be understood by experiencing it.

The lack of visibility often results in it being overlooked.  Unfortunately this advantage must be constantly nurtured and must evolve with the tastes (not needs) of the service recipient.  Because of its lack of visibility, it is often lost when a new leader arrives.  The ongoing rotation of board members can also undermine it.

It is important to define it and protect your ‘secret sauce’ as you would any asset.  Since its success depends on keeping it current with the evolving tastes of the service recipient, it is important to keep it from becoming stagnant.  This means that with each change in leadership (board or staff), every effort must be made to work with the leader on the preservation and evolution of the ‘secret sauce’.

Often when you look back on a nonprofit’s history and you find a period of unusually high success but no one is able to explain why success was unusually high, it is because the ‘secret sauce’ was especially good during that period.

Rarely is there a budget impact when effort is expended to keep the ‘secret sauce’ tasty.  This is another reason that the ‘secret sauce’ is barely visible within a nonprofit and receives very little discussion or attention.

Next Step:

Make creating and protecting your competitive advantages a priority

Find ways to measure the competitiveness of your nonprofit

Track and report how each of your competitive advantages is trending

Your nonprofit has two types of competitive advantages (process and ‘secret sauce’).  Within each type, there are multiple potential advantages because there are multiple service recipients.  The competitiveness of your processes depends on innovation.  The competitiveness of your ‘secret sauces’ depends on your sensitivity to your recipients’ tastes.

Take It Further:

Raise everyone’s (donors, clients, staff, board, other volunteers, and other stakeholders) awareness of your various competitive advantages within each type (process and ‘secrete sauce’)


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