Special to the Philanthropy Journal

By Phyllis Stephenson

The ability to successfully transform an organization in our fast-paced, rapidly communicating and changing world is essential. This applies to all types of businesses, including nonprofits. The product, service or process delivered by your business, 25, 5 or 1 year ago has likely changed due to a variety of reasons. Organizations seeking survival must identify the need and complete the transformation prior to depleting revenues. In my career, I have been challenged with leading transformations and have identified four key steps to success.

Step one – Recognize the need to transform. Many leaders refuse to acknowledge pervasive trends for elongated time frames. Major indicators are reduction in services or products, inefficient processes and continually shrinking revenues. Typically, an initial response is to reduce cost to realign the profit margin on the services provided for sustainability. However, if there is no transformation and this continual reduction continues, it is only a matter of time before the business dissolves.

Strong leaders will analyze these trends at the onset and begin a transformation process to align their business for the current and future operational environment. It is essential that the board of directors or governing body support the transformational process and understand the potential crisis for the agency. This phase must include some hard questions such as:

• Are we effectively administering our mission? 
• Is there a need for the delivery of our mission or product?
• Where are the cost and process inefficiencies?
• What is the cost to realign to meet this need?
• Is it cost effective to transform to meet this need?
• What amount of time and operational financial reserves are needed for transformation?

Once you have analyzed these questions, and others from your leadership team, you will have the insight to decide if your organization is prepared to engage in the transformation process.

Step two – Establish a survival plan for operations. It will take time to develop the longer-term plan but you must first get a realistic survival plan operational. This step is essential for leaders, whether addressing the need for transformation early through forecasting or at an emergent state – you must secure operational funding to support the time required for transformation.

This process begins with an analysis of the financial resources available and the length of time they can support operations. In most instances, nonprofits and small to mid-size businesses do not have the depth of operating reserves to fund the twelve to eighteen months of transformational operations. This reality requires additional components in the survival plan. For most organizations, this means you will need to evaluate your cash reserves, fundraising and financial investors to determine who may be willing to support operations during the transformational phase. Additionally, you will need to analyze your organization’s processes, service delivery and staffing patterns to reduce costs and strengthen the transformational agency success. Any financial drainers must be addressed and realigned.  

In some instances there may be large donors with a heart for the mission who are willing to invest in a well-designed transformation plan. Engagement with these donors must be honest, informative and include the transformation plan and mapping for the future successful delivery of the mission. If you utilize this process be certain to prepare the future vision of the agency, a timeline of activities, benchmarks and quarterly reports on the transformation progression. Donors and fundraising partners do not want to fund the closing of the organization! Maintain interval engagement with them to strengthen the transformation and provide accountability of their investment.

Regardless of how you design the financial support for the transformation, the essential component is the implementation process. This requires the ability to implement the change in services or product harmoniously with the financial resources. This alignment is essential for the organization to survive. The transformation is from a low product demand and low revenue to a higher demand and revenue organization. This step is based on research, long-range projections and sustainable service delivery. The ability to provide attention to details, address what if scenarios and answer the hard questions will align your organization to increase its potential to survive and thrive. It is important to invest time and resources in this process to ensure that the organization does not go out of business while striving to transform its services or products. Successful completion of this process prepares the organization for the next transformational phase. 

Step three – Transitional operational phase. With the organization utilizing the secured financial resources to operate, it’s time to begin the real transition of the organization from the prior services, products and process to the new and improved ones identified in the transformation analysis plan. This implementation process will include extensive communications and “buy in” from both the internal and external stakeholders. There will be numerous questions, push backs and even some refusals. It is advantageous to be aware of the stress on stakeholders and team members in this step – for many people this is asking them to do their job differently, do more or do something new. The ability to address the stress, tension and concerns effectively will support the operational phase across the organization. It is imperative that there is a sense of preparedness for the transitional operations by the leadership team. Questions and concerns need to be addressed promptly without delaying the advancement of the operational phase. There must be continual forward movement to align the transformation timeline and financial resources. The inability to maintain the progression may result in extinguishing the financial resources prior to completion. The ability to manage the transformation plan and the financial resources are essential keys to success.   

Step four – Successful operation begins as the transformational implementation process is completed.  This operational step requires a continual analysis of operations, process and staffing patterns. This analysis requires ongoing attention to streamlining processes, reducing costs and adding complimentary services and/or products. Key components in this step are a documented disciplined review process with defined measurable metrics managed by an engaged analytical leadership team. This operational analysis supports quick response, realignment and preparation for future success for the organization.   

Outcome – A thriving organization! Having successfully transformed and established a sustainable financial foundation, transformation from a financially challenged organization to a thriving entity is now complete! To get to this point, it has required dedication, perseverance and adherence to this process. The essential ingredient is a leadership team with a deep commitment to its mission to guide the transformational process. I’ve used this process a few times throughout my career working for various nonprofits and my hope is that it will be a guide to others who believe deeply in their mission and the power of philanthropy to change our world for the better.   

Phyllis Stephenson is the executive director of Carolina Adoption Services and ABC Adoption Services. She leads these agencies to support United States citizens with international adoptions and an array of domestic adoption supports in the Carolinas and Virginia. Phyllis is a passionate advocate for vulnerable children and provides solutions to families, especially those brought together by adoption. For more than 25 years, Phyllis has focused her career on child welfare, mental health, and adoption services. The hope for the best possible future for families is her driver, guided by organizational management experience.