Teaching Note: Case 7 United Way

Teaching Note: Case 7 United Way Case Objectives 1. To apply the concepts of strategic management to a non-profit organization. 2. To e amine ho! the e ternal and internal en"ironment affects a non-profit #$siness model gi"en the c$rrent state of U.%. economic and philanthropic acti"ity. &. To disc$ss the many decisions and actions that a non-profit organization has to $nderta'e to s$stain a competiti"e ad"antage. (. To e"al$ate the impact of negati"e p$#licity on a non-profit organization and the implications for strategic leadership in s$ch a case. %ee the ta#le #elo! to determine !here to $se this case: Chapter Use 1: %trategy Concept 2: , ternal ,n"ironment Key Concepts %trategic management) "ision* mission* strategic o#+ecti"es , ternal en"ironmental forces* 0orter1s fi"e forces model Additional Readings or Exercises %ee NO E! video inter"ie! !ith C,- .rian /allagher %ee NO E additional information. 2lso see 0orter1s 1334 5.6 article 7What is strategy89* and 0orter : ;ramer1s 1333 5.6 article 70hilanthropy1s Ne! 2genda: Creating <al$e9

&: =nternal 2nalysis (: =ntellect$al 2ssets >: .$siness?e"el %trategy 3: %trategic Control 11: %trategic ?eadership Case "ynopsis

<al$e chain* reso$rce-#ased <6=N analysis 5$man capital) intellect$al capital /eneric strategies .eha"ioral control) corporate go"ernance ?eadership capa#ilities) ethical orientation %ee NO E United Way ratings #y !atchdog gro$ps

The United Way Case ill$strates the pro#lems that ha"e #een created d$e to a !ellesta#lished #$siness model* in a challenging en"ironment* facing the possi#ility of declining gro!th* and competition from ne! directions* all $nder the threat of eroding tr$st. This case sho!s ho! a mat$re #rand* !ith a po!erf$l and mostly honora#le history* can still st$m#le. %ince the year 2@@@* United Way had seemingly reached a platea$ of f$ndraising in the U.%. Certainly there !ere options for gro!th #$t charita#le donations still had not topped the inflation-ad+$sted increases of the 133A-1333

Teaching Note: Case 7 United Way

campaigns. =n addition* "eteran f$nd-raisers on all fronts !ere citing challenges s$ch as competition for donations* diffic$lty recr$iting and 'eeping "ol$nteer staff* and a gro!ing foc$s on large gifts from "ery !ealthy indi"id$als* !hich* !hen p$#licized* co$ld red$ce the moti"ation for smaller donors to contri#$te. The e plosi"e gro!th of single-foc$s nonprofits since 3B11 meant more choices for donors !ho increasingly !anted a connection to a ca$se. Co$pled !ith the !ell-p$#licized scandals in organizations s$ch as the Nat$re Conser"ancy* 6ed Cross* and United Way of 2merica itself* tr$st !as eroded* legitimacy of mission !as C$estioned* and go"ernance iss$es !ere at the top of the to-do lists of nonprofit C,-1s. =n this en"ironment* .rian /allagher* United Way of 2merica C,- since 2@@2* esta#lished ne! mem#ership standards to enhance the le"el of acco$nta#ility and transparency in United Way affiliates1 operations* re-#randed United Way as doing 7!hat matters9 in the comm$nities it ser"ed* and $pdated the 7standards of e cellence9. These ne! standards pro"ided a description of #est practices to #etter reflect the organization1s strategic shift. United Way !as transitioning from its traditional role as strictly a f$ndraiser to a ne! mission foc$sed on identifying and addressing the long-term needs of comm$nities. These initiati"es reC$ired that the United Way affiliates #$y into the change effort* since the po!er of the parent organization !as limited to remo"ing the affiliate from United Way mem#ership if it didn1t comply. =t !as imperati"e for a nonprofit organization to get the necessary s$pport at the local le"el in order to achie"e stated organizational goals. Wo$ld /allagher1s strategy #e s$ccessf$l8 Was the shift in strategy s$fficient to ens$re the contin$ed "ia#ility of the United Way* or !as its "ery mission perhaps no longer rele"ant8 eaching #lan This is a comprehensi"e case and can #e $sed for the f$ll arc of strategic analysis* form$lation and implementation. 2s s$ch* this case is #est positioned at least mid-!ay thro$gh the co$rse* after st$dents ha"e had e pos$re to the concepts of strategy analysis and form$lation. ,specially if st$dents ha"e already st$died a for-profit organization trying to de"elop a s$staina#le competiti"e ad"antage in its ind$stry* t$rning this disc$ssion to a non-profit may help them f$rther refine their strategic management tool set. 2s a comm$nity ser"ice e ercise* after disc$ssing the case* the instr$ctor can enco$rage st$dents to ma'e themsel"es a!are of the local charities s$pported #y their comm$nity United Way. %t$dents might #e enco$raged to participate in comm$nity ser"ice acti"ities as a res$lt of this ne! 'no!ledge. "$%%ary o& 'isc$ssion ($estions 5ere is a list of the s$ggested disc$ssion C$estions. Do$ can decide !hich C$estions to assign* and also !hich additional readings or e ercises to incl$de to a$gment each disc$ssion. 6efer #ac' to the Case -#+ecti"es Ta#le to identify any additional readings andBor e ercises so they can #e assigned in ad"ance.

Teaching Note: Case 7 United Way

This case can start !ith an icebreaker. %tarting from the perspecti"e of a c$stomer may ma'e it easier for st$dents to transition to a strategic analysis. 2ll st$dents sho$ld #e a#le to identify !ith the concept of non-profit missions and charita#le gi"ing. Choosing any of the follo!ing C$estions can get st$dents thin'ing a#o$t their e periences !ith the prod$cts and the ind$stry: Have any of you ever given to United Way or know someone who has? Based on what you know, even before reading the case, what is your opinion of United Way and other broad-based charities such as the American ancer !ociety and the !a"vation Army? Have you ever used their services or do you know someone who has? #o you trust them? $f asked, wou"d you donate to them? Wou"d you rather donate to some other charity? Why? 'isc$ssion ($estions) 1. What are the c$rrent challenges facing United Way8 What are 'ey iss$es in the general and non-profit charita#le gi"ing ind$stry en"ironments that affect United Way1s operations8 2. What are United Way1s most important internal reso$rces and capa#ilities8 &. What #$siness is United Way in and ho! sho$ld it compete8 What are United Way1s core capa#ilities8 What strategies ha"e United Way1s leadership tried in the past* and ho! s$ccessf$l ha"e they #een8 What additional strategies might yo$ s$ggest8 (. What $niC$e responsi#ilities does United Way ha"e regarding ethical #eha"ior and 7#est practice9 go"ernance and financial acco$nta#ility models8 5o! s$ccessf$l !ill United Way #e in creating change at the local le"el8 =s United Way1s mission still "ia#le8 'isc$ssion ($estions and Responses 1. What are the current challenges facing United Way? What are key issues in the general and non-profit charitable giving industry environments that affect United Way s operations?

&

Teaching Note: Case 7 United Way

Re&erencing Chapter *) +ntrod$ction and Analy,ing -oals and Objectives %ee Chapter 1* , hi#it @1: !trategic management consists of the ana"yses, decisions, and actions an organi%ation undertakes in order to create and sustain competitive advantages& strategy directs the organization to!ard o"erall goals and o#+ecti"es) incl$des m$ltiple sta'eholders in decision ma'ing) incorporates #oth short-term and long-term perspecti"es) recognizes trade-offs #et!een efficiency and effecti"eness. %ee Chapter 1* , hi#it @4: 'he primary ro"e of the organi%ationa" "eader is to articu"ate vision, mission and strategic ob(ectives. ?eaders m$st also #e proacti"e* anticipate change and contin$ally refine changes to their strategies. United Way may need to e"al$ate its initial vision of the organization1s p$rpose: !hat !as the original goal that !as )massive"y inspiring, overarching, and "ong-term*, that represented a destination that is driven by and evokes passion? =s the original "ision still applica#le gi"en the present circ$mstances8 United Way1s organizational mission needs to #e considered: a mission encompasses #oth the purpose of the company as we"" as the basis for competition and competitive advantages. -rganizations m$st respond to m$ltiple constit$encies if they are to s$r"i"e and prosper* and the mission pro"ides a means of comm$nicating to di"erse organizational sta'eholders. 2ltho$gh "ision statements tend to #e C$ite end$ring and seldom change* a firm1s mission can and sho$ld change !hen competiti"e conditions dramatically change or the firm is faced !ith ne! threats or opport$nities. United Way leadership m$st esta#lish strategic ob(ectives to operationalize the mission statement. That is* o#+ecti"es operationa"i%e the mission statement* and help to provide guidance on how the organi%ation can fu"fi"" or move toward the )higher goa"s* in the goa" hierarchyEthe mission and "ision. The #asic C$estion strategic management tries to ans!er is: How can we create competitive advantages in the marketp"ace that are not on"y uni+ue and va"uab"e but a"so difficu"t for competitors to copy or substitute? NO E . A''+ +ONA/ E0ERC+"E") =n !riting a mission statement* it is important to $nderstand the definition of the #$siness: 1F !ho are its c$stomers* 2F !hat c$stomer need is the organization trying to f$lfill* and &F ho! does the #$siness create and deli"er "al$e to c$stomers and satisfy their needs. <isit the United Way of 2merica1s !e# site to "ie! its mission and "ision at: http:BB!!!.li"e$nited.orgBa#o$tBmiss"is.cfm. Watch the follo!ing video inter"ie! of C,- .rian /allagher from Gecem#er 2@@4 on ho! United Way reaches o$t for donations: http:BB!!!.for#es.comB"ideoB8"ideoHf"nB#$sinessBa#Icharity121&@4

Teaching Note: Case 7 United Way

.ased on this* ho! do yo$ feel a#o$t the mission of United Way8 Wo$ld yo$ feel !illing to gi"e* #ased on !hat yo$ 'no! a#o$t them8 Re&erencing Chapter 1) Analy,ing the External Environ%ent To ans!er the C$estion a#o$t the key issues in the genera" and non-profit charitab"e giving industry environments that affect United Way,s operation! it1s necessary to assess the segments of the e ternal competiti"e en"ironment that incl$de competitors* c$stomers* and s$ppliers* s$#stit$tes and ne! entrants. 0orter1s fi"e forces model allo!s strategists to anticipate !here the ind$stry might #e most "$lnera#le. 5ere1s !here the ans!er to the C$estion: !hat #$siness are yo$ in8 #ecomes most important* since identifying the !rong ind$stry can create pro#lems for crafting an effecti"e strategy. 5elp st$dents apply 0orter1s "ive "orces of competition #y dra!ing a diagram on the #oard similar to the follo!ing* and ha"ing st$dents fill in the details:

!uggested& Jany ri"als compete for donors. %ho!ing ho! programs are different and e plaining the c$rrent change in United Way mission is diffic$lt !hen some competitors are also pre"io$s partners.

Threat of %$#stit$tes
5igh

!uggested& Gonors can s!itch to #eing program pro"iders on their o!n) recipients can raise their o!n f$nds.

6i"alry
%$ppliers1 .argaining 0o!er
None !uggested& There are no traditional s$ppliers in the nonprofit philanthropic ind$stry. .oth donors and recipients can #e considered 7c$stomers9. 5igh

.$yers1 .argaining 0o!er

5igh !uggested& Gonors enco$nter almost no s!itching costs* so loyalty cannot #e ass$med. 6ecipients ha"e less #argaining po!er.

Threat of Ne! ,ntrants

5igh

!uggested& 2lmost no reso$rces are needed to start $p a nonprofit.

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Teaching Note: Case 7 United Way

6egarding the genera" e-terna" environment* United Way m$st consider the politicalBlegal* economic and glo#al* socioc$lt$ral and demographic* and technological forces that might affect the a#ility of the firm to deli"er its ser"ices and s$stain its #$siness. %ee !hich factors in the general environment st$dents might pic' that ha"e a significant impact on the nonprofit philanthropic ind$stry. %t$dents might respond as follo!s: #emographic& Certainly the demographics had changed. Jergers and acC$isitions !ere red$cing the n$m#er of corporate partners a"aila#le in local areas* and* altho$gh these larger corporations had significant assets and employees a"aila#le for potential donations* many s$ch corporations !ere considering creating their o!n charita#le arms* preferring to $se these to promote their o!n social responsi#ility !hile retaining control of the ca$ses they s$pported. 2lso* the rich indi"id$als !ere getting richer* the #a#y #oomers !ere getting older and staying acti"e longer* all good for non-profits loo'ing for large indi"id$al donors and "ol$nteers. 5o!e"er* the poor !ere getting poorer and more in need of help. !ociocu"tura"& %ocio-c$lt$ral iss$es incl$ded the traditional highly philanthropic nat$re of the a"erage 2merican citizen Kfirst noticed #y 2le is de TocC$e"ille in 1A&1* !ho !rote 7= m$st say that = ha"e seen 2mericans ma'e a great and real sacrifice to the p$#lic !elfare) and ha"e noticed a h$ndred instances in !hich they hardly e"er failed to lend faithf$l s$pport to one another9* the top United Way donors !ho contri#$ted at least L1@*@@@ ann$ally !ere honored #y #eing ind$cted into the TocC$e"ille %ocietyF. 'echno"ogica"& Technology* especially the gro!th of the =nternet had #een a significant #oon to all nonprofits* especially in accomplishing administrati"e d$ties and in comm$nicating !ith c$rrent and potential donors. United Way appeared to #e a!are of these #enefits. .o"itica"-/ega"& 0olitical-legal iss$es had an effect not only on United Way* #$t also on the nonprofit philanthropic ind$stry as a !hole. Changes in ta la!* pension reg$lations* potential legislation of go"ernance controls similar to %ar#anes-- ley for nonprofits* all these !ere #eing disc$ssed. United Way had dedicated p$#lic policy ad"ocacy personnel to monitor and lo##y for these iss$es* #$t changes here ma'e it diffic$lt to anticipate the f$t$re.

Teaching Note: Case 7 United Way

NO E . A''+ +ONA/ E0ERC+"E" and O# +ONA/ REA'+N-") The ongoing challenge of philanthropic organizations is to maintain the pace of donations. =n 2@@4* 2.C1s 2@B2@ did an in"estigation into !hy people gi"e* and !ho gi"es the most. The f$ll story is a"aila#le at http:BBa#cne!s.go.comB2@2@Bstory8 idH24A27&@:pageH1. With the U.%. economic do!nt$rn in 2@@A* !hat has happened to charita#le gi"ing trends8 %ee this additional story from 2@@3 !hich incl$des an interesting graphic a"aila#le in the left side#ar: http:BB!!!.nytimes.comB2@@3B@4B1@B$sB1@charity.html 2nd here listen to or read a#o$t ho! charita#le contri#$tions dropped in 2@@A: http:BB!!!.npr.orgBtemplatesBstoryBstory.php8story=dH1@>17AA@(

=n addition* st$dents can #e gi"en an assignment to read the 1334 article #y Jichael 0orter* 7What is strategy89* Harvard Business 0eview, 12K4F: 41-7A* and the 1333 article #y 0orter and ;ramer* 70hilanthropy1s Ne! 2genda: Creating <al$e9* Harvard Business 0eview* 77K4F: 121-1&@. Concepts from these articles !ill allo! the st$dents to f$rther de"elop their $nderstanding.

#. What are United Way s most important internal resources and capabilities? Re&erencing Chapter 2) Analy,ing the +nternal Environ%ent To f$rther e"al$ate the challenges facing United Way* the organization m$st assess the relationships #et!een the elements in its va"ue chain. ,"ery acti"ity sho$ld add "al$e. Ta'e a loo' at Chapter &* , hi#it &.1 to see the "al$e chain acti"ities. 5ere is !hat an assessment of this might loo' li'e for United Way:

Teaching Note: Case 7 United Way

3al$e chain activity #ri%ary) =n#o$nd logistics Kf$ndraising tacticsF -perations Kefficient processing of donations* C$ality control systemsF -$t#o$nd logistics Kdistri#$tion to recipientsF Jar'eting and %ales Kmoti"ated representati"es* inno"ati"e ad"ertising : promotionF %er"ice Ka#ility to solicit feed#ac' : respondF "econdary 9or s$pport:) 0roc$rement K!in-!in relationships !ith partners and other alliances for proc$rement of program componentsF Technology de"elopment Kstate of the art hard!are : soft!are* inno"ati"e c$lt$re : C$alified personnelF 5$man reso$rce management Keffecti"e recr$itment* incenti"e : retention mechanismsF /eneral 2dministration Keffecti"e planning systems to esta#lish goals* access to operating capital* effecti"e top mgmt comm$nication* relationships !ith di"erse sta'eholdersF

4o5 does United Way create val$e &or the 6c$sto%er78 What challenges does United Way have in its val$e chain8 =t appears that relationships !ith long-time donors are a strength* partly gi"en the long history of the organization. No e"idence that this has e"er #een a systemic !ea'ness e cept !here #latant misappropriation has occ$rred d$e to lac' of monitoring of e isting controls. Gistri#$tion efficiency is one of the hardest things to assess* e cept #y e ception. Gonor segments seem !ell identified and $nderstood. Jany affiliates seem to ha"e dedicated and 'no!ledgea#le representati"es. 2d"ertising and promotion campaigns appear to lac' inno"ati"e appeal. Consistent C$ality g$aranteed #y long-time relationship !ith most f$nd recipients. Gonor relationships are changing and may reC$ire ne! s'ill sets and reso$rces in order to ser"ice these appropriately. ?ong-term relationships directly !ith partners* #oth corporate donors and program allies s$ch as the 6ed Cross create tr$st and !illingness to negotiate for needed goods and ser"ices* and to create +oint initiati"es s$ch as relief efforts post;atrina. 2ttention seems to #e paid to =T $pgrades and inno"ations* especially regarding the =nternet as a cond$it for #oth donations and management of affiliate operations. <ol$nteer recr$itment is essential to United Way s$ccess* as is the a#ility to attract s'illed f$ndraising professionals. 2 long history and traditional formal recognition of these "al$a#le !or'ers appears s$ccessf$l at retaining talent. 5ere is !here United Way of 2merica has faltered in the past. ?ac' of appropriate control systems has led to m$ltiple misappropriations of f$nds* miscomm$nication of mission and goals and effecti"e standards* lac' of appropriate in"ol"ement of 'ey sta'eholders in top le"el planning. C$rrent leadership seems a!are of the need for attention* here.

Teaching Note: Case 7 United Way

=n addition* it1s important to consider the concept of the resource-based view of the firm* and the three 'ey types of reso$rces: tangi#le reso$rces* intangi#le reso$rces* and organizational capa#ilities. Getermining !hether the internal reso$rces are "al$a#le* rare* diffic$lt to imitate* or diffic$lt to s$#stit$te K30$4F can help a firm s$stain a competiti"e ad"antage. %ee Chapter &* , hi#it &.4. United Way1s profile might loo' li'e this: angible Reso$rces) 5inancia"& The consistently reported administrati"e costs at aro$nd 1@-1>M of total contri#$tions ma'es it appear that United Way of 2merica and its affiliates are financially responsi#le. 5o!e"er* reports of the inflation of re"en$es to achie"e this admira#le lo! cost contin$e to s$rface. ,"en !ith possi#le misstatement* it does appear as if United Way falls #elo! the .etter .$siness .$rea$1s e pense g$ideline of 2@M* ...1s point at !hich charita#le gi"ing organizations are s$spected of administrati"e inefficiencies and possi#le mis-management. .hysica"& No significant physical assets in"ol"ed. 'echno"ogica"& 0artnerships !ith corporate donors pro"ided United Ways !ith access to some significant technological reso$rces. Ja+or long-time donors incl$ded Jicrosoft* U0%* and the NN?* all of !hom co$ld ha"e helped in many different !ays. 6rgani%ationa"& The federation go"ernance model is #oth a strength and a !ea'ness. 2 strength #eca$se the affiliates are allo!ed significant a$tonomy to de"elop alliances !ith di"erse donors) a !ea'ness #eca$se it ma'es change harder to instit$tionalize. +ntangible Reso$rces) Human& 5ighly "al$a#le* and rare in the case of dedicated "ol$nteers. 2lso* many United Way affiliate administrators had #een !ith the organization their entire !or'ing li"es* and !ere therefore "ery 'no!ledgea#le and loyal. $nnovation and creativity& .eca$se of the history and longe"ity of the organization* not 'no!n for inno"ation. Nollo!ing the same #asic mission for years and years does not pro"ide m$ch opport$nity for creati"ity. 0eputation& This !as United Way1s most significant strength* #$t also a most potential !ea'ness. =ts #rand !as "ery !ell 'no!n. 2ny st$m#le* as in the past* !o$ld pro"e costly. Organi,ational Capabilities) !pecific ompetencies or !ki""s& .eing a "enera#le #rand !ith a solid "ol$nteer and donor #ase gi"es United Way an ad"antage o"er possi#le competitors.

Teaching Note: Case 7 United Way

apacity to combine resources& 5o! to com#ine the a#o"e competencies to re"italize and gro! and differentiate !hate"er ne! initiati"es that may #e de"eloped depends on United Way1s a#ility to contin$e a foc$s on anticipating social trends* and a !illingness to ta'e some ris's* #oth in the U.%. and internationally. There can #e great di"ergence in ho! "ario$s gro$ps !o$ld mar' these reso$rces as va"uab"e, rare, inimitab"e and non-substitutab"e 730$48. The instr$ctor !ill pro#a#ly #e a#le to engage the st$dents in de#ate and enco$rage disc$ssion as to !hether or not the indi"id$al "al$e chain acti"ities can lead to ad"antages that are s$staina#le. The instr$ctor may also pose C$estions a#o$t ho! the interrelationships among s$ch acti"ities !o$ld #e the so$rce of s$staina#le competiti"e ad"antage. That !o$ld help dri"e home the idea of O$niC$e #$ndles of acti"itiesBreso$rces1 as the #asis of s$staina#le competiti"e ad"antage m$ch more strongly. This analysis may highlight the diffic$lties facing United Way. 0ossi#le responses are listed #elo!: Reso$rce;Activity +s it 3al$able8 93: =n#o$nd logistics Des -perations Des -$t#o$nd logistics Des Jar'eting and Des sales %er"ice Des 0roc$rement Des Technology Des de"elopment 5$man reso$rce Des management /eneral No administration +s it rare8 9R: No No No No No No No Des No +s it di&&ic$lt to i%itate8 9+: No No No No No Des Des Des No Are there &e5 s$bstit$tes8 9N: No No Des No Des Des Des Des No

Re&erencing Chapter <) Assessing +ntellect$al Capital Consider the concepts of inte""ectua" capita" and human capita"* #oth of !hich are intangi#le assets that a company s$ch as United Way needs to ha"e in order to compete s$ccessf$lly. =ntellect$al capital is a meas$re of the "al$e of a firm1s intangi#le assets* its rep$tation* employee loyalty and commitment* c$stomer relationships* company "al$es* #rand names* and the e perience and s'ills of employees. 5$man capital in"ol"es the indi"id$al capa#ilities* 'no!ledge* s'ills* and e perience of the company1s employees and managers. United Way has n$mero$s partners to help it carry o$t its mission: http:BB!!!.li"e$nited.orgBpartnersB What other reso$rces does United Way need in order to #e effecti"e* and !hich might #e their most important reso$rces gi"en their c$rrent challenge8

1@

Teaching Note: Case 7 United Way

$. What business is United Way in and ho% should it compete? What are United Way s core capabilities? What strategies have United Way s leadership tried in the past! and ho% successful have they been? What additional strategies might you suggest? Re&erencing Chapter =) >or%$lating ?$siness./evel "trategies =n order to craft a s$staina#le competiti"e strategy* United Way has to assess its a#ility to contend !ith many other philanthropic organizations. %ee this list from Nor#es at http:BB!!!.for#es.comB2@1@B11B14Bfor#es-charity-2@@-personal-finance-philanthropy2@@-largest-charities-charity-1@-intro.html. This story pro"ides additional information to s$pport , hi#it ( from the case. %ee if st$dents can identify the differences #et!een the top rated charities ho! do they compete8 The C$estion of ho! to compete in a gi"en #$siness to attain competiti"e ad"antage reC$ires an assessment of the types of competitive strategies* incl$ding the three generic strategies that are $sed to o"ercome the fi"e forces and achie"e a competiti"e ad"antage: -"erall cost leadership o ?o!-cost-position relati"e to a firm1s peers o Janage relationships thro$gho$t the entire "al$e chain Gifferentiation o Create prod$cts andBor ser"ices that are $niC$e and "al$ed o Non-price attri#$tes for !hich c$stomers !ill pay a premi$m Noc$s strategy o Narro! prod$ct lines* #$yer segments* or targeted geographic mar'ets o 2ttain ad"antages either thro$gh differentiation or cost leadership ,nco$rage st$dents to de"elop their o!n ideas* $sing information gained from the disc$ssion of the internal and e ternal en"ironment. 2s' the st$dents !hich strategy they thin' United Way sho$ld p$rs$e* and !hy. Their ans!ers may incl$de some of the follo!ing points: ost /eadership& This is traditionally !here United Way has e celled* $sing its to$ted lo! operating costs to demonstrate ho! it co$ld f$nnel more money to s$pport programs. 5o!e"er* this is also !here creati"e acco$nting practices may ha"e lead to misrepresentation and s$#seC$ent loss of tr$st. =f United Way !ants to contin$e to compete here* adherence to the ne! standards #y all affiliates is essential. #ifferentiation& United Way1s original rep$tation !as #$ilt on its 7comm$nity chest9 model of pro"iding f$nds to selected ser"ice pro"iders rather than pro"iding ser"ices itself. The 7federation9 model of go"ernance !as rather $niC$e at the time* #$t may #e the #arrier for needed change going for!ard. United Way of 2merica1s nation!ide initiati"es s$ch as 2-1-1 may #e s$fficient to differentiate it from others at the corporate le"el* #$t the local affiliates ha"e little a#ility to distance themsel"es from local competition.
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Teaching Note: Case 7 United Way

5ocus& Unless United Way decides to di"ersify and inno"ate* and s$ccessf$lly create ne! prod$cts and ser"ices* it appears that it is limited to its niche of #road-#ased comm$nity s$pport. =nternationally United Way may ha"e more opport$nity to foc$s on a co$ntry or region1s specific needs* especially in emerging nations* !here it may pro"ide a $niC$e and competiti"e choice for programmatic assistance. -ther options firms sometimes p$rs$e incl$de: ombination of #ifferentiation and ost /eadership, ombination of 5ocus and ost /eadership, ombination of #ifferentiation and 5ocus& 2s stated a#o"e* United Way does not no! appear to ha"e a s$fficiently $niC$e position in the mar'et for it to achie"e o#"io$s ongoing competiti"e leadership* e cept as a res$lt of its history and rep$tation. Will its com#ined strategy #e s$ccessf$l against any competitor8 0ro#a#ly not e cept !ith international partners. !tuck in the 9idd"e? What does United Way need to do to ma'e s$re it is not st$c' in the middle8 =ts history and rep$tation are a strength* #$t also a !ea'ness here* d$e to inertia and change resistance. =t appears .rian /allagher is trying to !or' !ith all sta'eholders to #e creati"e and identify inno"ati"e program ideas for the f$t$re. This might also reC$ire ne! or reconfig$red reso$rces* an additional challenge. N$rther ideas to e plore might incl$de di"ersification. =n addition* #rand e tensions can #e a !ay to gro! as long as the target is "ery clearly defined* and the program offerings are clearly distinct from competitors1 offerings. =nternationally* United Way is playing a nontraditional role in some co$ntries doing no f$ndraising* #$t instead acting as a coach and co$nselor and reso$rce pro"ider for infrastr$ct$re s$ggestions. This appears to #e a core competency of United Way. 2nother idea might in"ol"e increasing e isting alliances and partnerships !ith other nonprofits and go"ernmental agencies to pool reso$rces* s$ch as !ith the 2-1-1 initiati"e. =n addition* since the older demographic is one that1s gro!ing* it might ma'e sense for United Way to de"elop a specific campaign to attract this gro$p* as either donor or "ol$nteer. The organization is already reaching o$t to the college age pop$lation* most recently thro$gh the 2lternati"e %pring .rea' initiati"e helping st$dents spend their #rea' doing good deeds in re#$ilding the /$lf Coast region. What other alliances or partnerships might United Way !ant to p$rs$e8 &. What uni'ue responsibilities does United Way have regarding ethical behavior and (best practice) governance and financial accountability models? *o% successful %ill United Way be in creating change at the local level? +s United Way s mission still viable?

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Teaching Note: Case 7 United Way

Re&erencing Chapter @) "trategic Control A Corporate -overnance !trategic contro" in"ol"es the process of monitoring and correcting a firm1s strategy and performance. =t foc$ses especially on the roles of informational and #eha"ioral control in the form$lation and implementation of strategies. %ee Chapter 3* , hi#it 3.2. $nformationa" contro" is concerned !ith !hether or not the organization is 7doing the right things9* !hile behaviora" contro" is concerned !ith !hether or not the organization is 7doing things right9 in the implementation of its strategy. United Way needs to ma'e s$re eno$gh information of the right 'ind is a"aila#le to monitor acti"ities this is !here things s$ch as financial* C$ality control* and c$stomer feed#ac' is essential) and that the appropriate role models and re!ards are a"aila#le to 'eep employees moti"ated. United Way has a $niC$e challenge #eca$se of its str$ct$re of affiliates. To !hat degree do the role models at United Way of 2merica seem to affect the #eha"ior at the local affiliates8 NO E . A''+ +ONA/ E0ERC+"E" United Way is go"erned "ia a federation of affiliates. To see ho! the United Way in yo$r area is rated* search #elo!: http:BB!!!.charityna"igator.orgBinde .cfm8 'ey!ordIlistH$nitedP!ay:%$#mit2H/-:#ayHsearch.res$lts United Way World!ide is rated per #elo!: http:BB!!!.charityna"igator.orgBinde .cfmB#ayBsearch.s$mmaryBorgidB(423.htm The .etter .$siness .$rea$ p$#lishes standards for charita#le acco$nta#ility* a"aila#le here: http:BB!!!.###.orgB$sBCharity-%tandardsB United Way meets these standards* per #elo!: http:BBcharityreports.###.orgB0$#licB6eport.asp 8Charity=GH133( .ased on the reports from these !atchdog gro$ps* ho! does the United Way of 2merica appear to handle its financial responsi#ility8 Re&erencing Chapter **) "trategic /eadership) Excellence! Ethics A Change The concept of "eadership in"ol"es the process of transforming organizations from !hat they are to !hat the leader !o$ld ha"e them #ecome. This in"ol"es: %etting a direction Gesigning the organization N$rt$ring a c$lt$re dedicated to e cellence and ethical #eha"ior ?eaders need to contin$ally scan the en"ironment to de"elop 'no!ledge of all sta'eholders* and 'no!ledge of salient en"ironmental trends and e"ents. Then leaders m$st integrate that 'no!ledge into a "ision of !hat the organization co$ld #ecome. ?eaders reC$ire the capacity to sol"e increasingly comple pro#lems* and m$st #e proacti"e in their approach so they can de"elop "ia#le strategic options. Giffic$lties in implementing the leader1s "ision and strategies incl$de a lac' of $nderstanding of responsi#ility and acco$nta#ility among managers* re!ard systems that

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Teaching Note: Case 7 United Way

do not moti"ate indi"id$als and gro$ps to!ard desired organizational goals* inadeC$ate or inappropriate #$dgeting and control systems* and ins$fficient mechanisms to coordinate and integrate acti"ities across the organization. C,- .rian /allagher has ac'no!ledged the potential diffic$lties of his plan to change the !ay #oth the national United Way and its local affiliates plan for and deli"er ser"ices. 6ead the article from 2@@2 in .$siness Wee' #elo!: http:BB!!!.#$siness!ee'.comBmagazineBcontentB@2I11B#&77(@7(.htm8chanHsearch What strategies might /allagher $se to get the chapters to #$y into his strategic "ision8 ?eaders* especially those !ho ha"e responsi#ility for some degree of p$#lic tr$st* as United Way does* m$st also maintain at least the o$t!ard appearance of an ethical #$siness c$lt$re. When n$rt$ring a c$lt$re dedicated to e cellence and ethical #eha"ior* managers and top e ec$ti"es m$st accept personal responsi#ility for de"eloping and strengthening ethical #eha"ior) consistently demonstrate that s$ch #eha"ior is central to the "ision and mission) de"elop and reinforce role models* corporate credos* codes of cond$ct* re!ard and e"al$ation systems* policies and proced$res that s$pport the ethica" orientation. 5ere1s a ne!s story from 2@@3 a#o$t ho! Washington GC area charities are s$spending their mem#erships !ith the local United Way and partnering !ith another f$ndraising gro$p* 2merica1s Charities* partly as a res$lt of United Way1s past financial scandals: http:BB!!!.!ashingtonpost.comB!pdynBcontentBarticleB2@@3B@(B2AB262@@3@(2A@&7@1.html What sho$ld non-profits do to ens$re that temptation doesn1t res$lt in inappropriate #eha"ior from indi"id$als in leadership positions8 ?et st$dents 'no! that at this point* it is not clear !hether .rian /allagher1s strategy is s$fficient for enlisting the local affiliates1 s$pport. They don1t ha"e to identify one #est strategy* +$st $se this disc$ssion to e plore the implications of ho! strategy is de"eloped* and !hat are the pros and cons for each #$siness decision. Whate"er decisions st$dents come to can #e chec'ed #y as'ing 7is this strategy s$staina#le9* and 7!ill the need for United Way still e ist ten years from no!98 -ne interesting disc$ssion might #e regarding United Way1s international o$treach. The mission and role of United Way in de"eloping co$ntries !as more of a cons$ltancy model* !hich might #e more rele"ant than the traditional role played in the 2merican philanthropic mar'et. United Way did ha"e some e tensi"e e perience creating and ser"ing m$ltiple constit$encies. Using that e perience to coach others to pro"ide for $niC$e comm$nity needs might #e a !orth!hile and s$ccessf$l approach !orld!ide* therefore contin$ing to 'eep their o"erall mission "ia#le.

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