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Kimetrica White Paper: Defining What You Do Best: Rationalization for Non-Profits

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INTRODUCTION

In any sphere of human activity, success requires focused effort and specialization. Socrates makes the point in Plato’s Republic, written around 360 BCE. People and organizations should do more of what they do best, yet nonprofit organizations working in international development are often unfocused and unspecialized. Defining focus is the most crucial strategic set of decisions that an organization takes, but nonprofits face formidable incentives to lose focus.
This paper argues that if organizations are interested in achieving high and measurable performance, they need to resist the temptation to drift and take deliberate and regular steps to focus and refocus.

Section 2 examines the extent of institutional drift in nonprofits and identifies some probable causes. Section 3 highlights the negative consequences of drift for measuring and improving performance. We outline the main steps toward rationalization in Section 4. Business rationalization is about resisting the urge to do everything and defining a narrow set of products and services. Having a narrow and relatively stable set of products and services allows organizations to measure performance and adjust their methods and processes based on performance information, as we describe in Section 5.

When organizations take on ambitious, complex and abstract goals, like reducing poverty, they are tempted to do everything it takes to achieve the desired results. Specialisation and rationalisation do not mean giving up on dreams of big impact, it means refocusing impact strategies around collaborative partnerships with other high performance but specialized organizations, as we discuss in Section 6.