Sustainable business model development for multi-stakeholder organizations

Health Business Group has provided technical assistance in sustainable business model development and strategic planning under the auspices of a major philanthropic foundation. Since 2009 we have worked with grantee organizations in California, Maine, Massachusetts, Michigan, Minnesota, New Mexico, Ohio, Pennsylvania, Tennessee, Washington, and Wisconsin.We employ a six-step approach, which we customize based on the needs of individual alliances:

• Characterize stakeholders –by conducting in-person interviews with 20-50 current and potential stakeholders to understand their motivation for participating in the alliance, determine how the alliance fits into their overall objectives, generate suggestions for areas of focus, and to obtain initial buy-in to support sustainability
• Develop value proposition –by determining the value that each stakeholder group assigns to each current and potential activity, using best practice findings from the Health Business Group knowledge base, and developing a map of value creation potential by stakeholder
• Determine scope –by identifying the key dimensions for strategic decision making, specifying the discrete choices that can be made on each dimension, documenting the advantages and disadvantages inherent in each choice, and deciding which choices to make. The deliverable is a one-page summary of strategic alternatives with more detailed rationale pages for each choice
• Define the business model –by specifying the service offerings to be delivered, defining ways those offerings could be paid for, and identifying who is likely to pay and how much. The deliverable is a simple business model schematic
• Identity risks –by probing for potential weaknesses in the business model and considering the macroeconomic and political context. The deliverable for this step is a risk assessment and mitigation plan
• Prepare transition plan. Most alliances can expect to continue to receive funding from the foundation for three or four years beyond our engagement. This provides the opportunity to develop a transition plan, which includes identifying gaps between the future sustainable state and the current state, developing a plan to close key gaps, outlining a process for monitoring and making course corrections