One of the key articles in the Summer 2008 issue of the Stanford Social Innovation Review is titled Achieving Breakthrough Performance, and is written by Gottfredson, Schaubert, and Babcock (two partners at Bain and one CEO of a nonprofit). In this article, they argue that there are 4 principles that nonprofits should follow to achieve performance.

The article argues that all nonprofits should consider four influencing factors on performance. The first is that organizations should always seek to lower their "cost to serve". In the for profit world, this would be lowering your unit cost, and in the nonprofit sector, it is similar. A soup kitchen should focus on the cost per meal delivered for example. The authors argue that social organizations tend to focus on the top line, "focusing on what's new and different", rather than the bottom line.

The second item principle is that Market Position Determines Your Options. Here the discussion is about how a nonprofit can have influence in an area based on their "market share". This concept of market share can help with economies of scale and with advocacy. The third principle is that Clients and Funding Pools Don't Stand Still. The authors here clearly define two types of customers: funders and recipients of services. The principle here is that managers of nonprofits need to continually assess the changing needs of both groups to ensure what worked in the past is still the best for the future.

The fourth principle is that Simplicity Gets Results. To quote directly from the article, "A nonprofit with too many disparate services usually drives up costs and confuses its donors."

The principles are nice and the article not only references many cases, but also gives a checklist for nonprofits to think about how they are applying the principles. In my opinion, a nonprofit can leverage these ideas within the Balanced Scorecard framework. A potential financial metric could be "cost to serve", and understanding market position could affect goals set around advocacy and customer strategy. During the strategy refresh and review process, nonprofits should look closely at clients and funding pools, and overall they should consider their capacity for complexity. Frankly, the BSC should allow an organization to depict their "business" in a simple manner and focus on serving their constituents in an effective manner.

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