Many nonprofits don’t see themselves as being in competition. They focus on doing good work and don’t think in terms of being competitors. The reality is that nonprofits compete everyday—for top notch staff members, for sufficient funding, for engaged board members. Those that realize they are in competition for these resources often try to attract staff, funders, and board members by being better than other nonprofits in some aspect.

Don’t try to be the best.

Michael Porter, renowned for his groundbreaking ideas on competition and strategy, warns businesses and nonprofits against trying to compete by being the best. He says that if an organization sets out to be the best, it sets itself an impossible goal. Porter suggests that instead of competing to be the best, organizations should compete to be unique.

He explains that competing to be the best feeds on imitation; whereas, competing to be unique thrives on innovation.

How does your organization create more value? The best question you can ask is: Does the way we do our good work meet needs more effectively and efficiently?

Creating competitive advantage focuses on being unique.

Twenty-five years ago, Porter coined the term competitive advantage. It has come to mean anything an organization thinks it is good at. “Competitive advantage is not about trouncing rivals, it’s about creating superior value,” explains Porter.  The measure of nonprofit performance should be whether it uses resources effectively. He posits that “measuring performance in the social sector is a tall order, one that is not undertaken as often or as rigorously as it should be.”

The measurement for nonprofit performance is the degree to which your activities result in higher value for those you serve or lower costs in serving them.

Value chain thinking has hidden advantages.

Porter first laid out the concept of the value chain in his 1985 book, Competitive Advantage. This type of thinking, which has become very familiar in business today, forces us to look beyond the boundaries of our own organization and its activities to see that we are part of a larger value system involving other players.

Value chain thinking calls us to look carefully at each step along the way toward creating value for our clients. We begin to match the activities performed inside our organization to our client’s definition of value rather than our own perceptions.

Duplication of services is a common complaint.

Nonprofit leaders often field questions from donors about duplication of services. It can be frustrating to continuously explain how your services are different from other organizations. Think of all the various youth serving groups or the mentoring programs that abound or the plethora of arts groups.

The truth is most of these nonprofits are actually different from one another in their approach to their mission delivery. However, most don’t take the time to define their value proposition—how they are unique. They don’t define their competitive advantage or assess the steps in their value chain.

As competition increases, it becomes more important to clearly differentiate your organization’s work. Describe how you are unique. What exclusive value does your nonprofit bring to the community?

Girl Scouts provides an example of differentiation.

I recently attended a national conference for Girl Scouts of the USA (GSUSA). Over 200 Girl Scout council CEOs from all over the country received a clear, compelling message from Sylvia Acevedo, CEO for GSUSA. She explained that while Girl Scouts does an excellent job of serving girls, the fact is that several other organizations deliver similar services. “Our base is focusing on girl potential and girl-specific programming,” said Azevedo. “But this is common to some other organizations. We must focus on how we are different—how the Girl Scout experience is unique. No other organization combines the Girl Scout Leadership Experience (GSLE) with the power of caring adults serving as troop leaders,” she explained.

Once all the Girl Scout council CEOs understand the importance of differentiation and how it applies to their council, they can communicate this vital message to their staff, to their board members, and to their volunteers. This critical piece sends a clear message to staff about the importance of delivering high quality GSLE programming. And troop leaders feel pride and inspiration when they understand the significance of their role.

In thinking about competition for staff, funders, and board members as I mentioned above, it becomes clear that staff will be drawn to join Girl Scouts because their work is so valued; funders will be attracted to Girl Scouts because it provides a unique service; and board members will want to align with an organization that brings such a distinct competitive advantage to the community.

So sharpen your pencil and begin to identify how your organization is inherently different. Don’t try to be the best, strive to be unique.