The Strategic Planning

Process of Hybrid
Organizations using the
Theory Of Change
EVIDENCE FROM PASSO POSITIVO

Mariana Correia Martins da Luz Costa, 31287

Advisor: Miguel Alves Martins

January 18, 2019

INTRODUCTION
ONSET OF THE PROJECT
ORGANIZATIONS INVOLVED
ONSET OF THE PROJECT
The Working Project is part of a strategic
planning project co-developed with Stone
Soup Consulting for Passo Positivo.

The project started in July, 2018 and was

concluded in December, 2018.

The project was split into two parts: 1) a

strategic plan and 2) a financial sustainability
plan for the long-term.

3
ORGANIZATIONS INVOLVED

4
LITERATURE
REVIEW
APPROACHES I AND II
MAIN CONCLUSIONS
 APPROACH I
SOCIAL PURPOSE
ORGANIZATIONS
Community Focus
Sustainable solutions
Systems of cooperation (intra- and
inter-organizations)
Run to benefit users and
community
Empowerment of people
PROFIT DRIVEN
ORGANIZATIONS
Self-interest
Sustainable competitive advantage
Organization-centered
Run to defend the interest of their
stakeholders, including
shareholders
Controlling systems
6
APPROACH II

STRATEGIC FRAMEWORKS THE THEORY OF CHANGE

Set of beliefs and assumptions

Strategic Horizons
Backward-mapping tool (Social
Balanced Scorecard Value Chain)
Ansoff Matrix Impact-focused
Stakeholder Model Links long-term goals to change
that needs to happen

7
MAIN CONCLUSIONS
Social Impact

Extreme I Extreme II

Income
Generation

Hybrid Organizations can be Passo Positivo can be placed as

placed somewhere between an “Extreme II” organization,
the extremes shifting to a hybrid state.

8
THE PROCESS
CONTEXT ANALYSIS
PROCESS: THE THEORY OF CHANGE
 PEST Analysis
The PEST Analysis was used to assess the external context of NGDOs in Portugal, considering the
Political-Legal, Economic, Social and Technological factors that affect the sector.

Tax benefits of organizations with legal Portuguese economic growth

status of NGDO Economic
Political-Legal

Current dependence on public funding, up to Lack of government support in some

85%, of some organizations social areas
Political-Legal Social

10
 SWOT Analysis
The SWOT analysis of Passo Positivo allows to position the organization according to its main
strengths and weaknesses, given the external context’s opportunities and threats presented in the
PEST analysis.

▪ The managing team, fully ▪ Lack of funding

committed to the organization’s
mission ▪ High dependency on specific
▪ Diverse background of the team donors
members
▪ Partnerships and network ▪ Limited taskforce (number
▪ Fidelidade Comunidade and BPI and working hours)
Senior awards

11
 Stakeholder Level of interest
Mapping
Low High
Internal Stakeholders: members (board, staff,
interns and volunteers);
Connected Stakeholders: partners, suppliers, Local community
individual donors, funders, competitors and Government
beneficiaries; Low General public
Individual Donors
External Stakeholders: Portuguese government, the Competitors
local community, the general public and the media. Power

Minimum effort: general public; Partners Members

High Suppliers Funders
Keep informed: local community, government, Media Beneficiaries
individual donors and competition;
Keep satisfied: partners, suppliers and the media;
Let participate: members, beneficiaries and
funders. Table 1: Mendelow’s Matrix
12
THE PROCESS

The Theory of Strategic

Bottlenecks
Change Change

13
 Impact
Improvement of the children well-being
Decrease of social isolation and exclusion
Increase of physical and psychological well-
being
THE THEORY
Better quality of life
Increase of physical and psychological well- OF CHANGE
being
Improvement of the global citizenship
competences

14
BOTTLENECKS

BROADNESS OF THE
PROJECTS

High dependency on Managing team

external funding working part-time

Each project tackles a LACK OF FINANCIAL AND

different area: poverty, HUMAN RESOURCES
social exclusion and
education

15
 STRATEGIC CHANGE

Refiguring of Values, Vision

and Mission statements

Definition of Strategic
Goals, SMART
Objectives and
Activities
Definition of results to
achieve in the future
and performance
metrics
Prioritization of
Change will be structured as the
initiatives
backward mapping of the Social
Value Chain
Revision of resource
(human, partnerships and
financial) allocation 16
RECOMMENDATIONS
RECOMMENDATIONS

HIRE THROUGH ORGANIZATION OF HAVE ONE STAFF

NATIONAL AND TRAINING INITIATIVES WITH MEMBER RESPONSIBLE
INTERNATIONAL OTHER NGOS FOR GRANT
GOVERNMENTAL APPLICATION
PROGRAMS

18
RECOMMENDATIONS

FOCUS ON THE TWO MOST Logistics

RELEVANT PROJECTS

Knowledge Partnerships

Materials

Stronger position among ENHANCE THE POTENTIAL OF THE

SHARED RESOURCES BETWEEN
internal and external
PROJECTS
stakeholders

19
CONCLUSIONS
LIMITATIONS AND PROPOSAL
MAIN CONCLUSIONS
LIMITATIONS AND PROPOSAL
The PEST Analysis, the SWOT Analysis and the Stakeholder Mapping presented
some limitations and were not enough to depict the context of Passo Positivo in full

Stakeholder
Individual
Circle + Value
SWOT Analysis
PESTE Analysis Creation
+ SWOT Action
Framework
Plan
(Five Forces)

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PESTE ANALYSIS
Economic
Political-Legal
What are the Political-
• Portuguese economic growth
• Stable governmental structure; Legal factors?
• Positive expectations of growth on the
• External policies leading to the hosting of P contributions for social causes;
refugees and greater investment in
professional training; • More donations and volunteering taskforce.
Which social values What are the
• Benefits of the NGDO legal status; define the sector? economic impacts?
• Scarce and limited financing options for
NGDOs; Technologic
E E
• High dependency from public funding
• Information “one click away”;

• Faster and more effective ways of internal and

external communication;

Social • Risk of software hacking, leading to fraud;

• General Data Protection Regulation.

• Significant level of poverty according to T S

the national index – 27% in 2016;
What ethical Ethical
• Growing aging index of the Portuguese How will technology
aspects should be
population; affect the sector? • Beneficiaries are expected to be treated equally and
considered?
fairly;
• Sector’s image tarnished by recent
corruption cases. • Some organizations still struggle to prove their
reliability;

• There are ethical standards established for product

donation.

January 18, 2019 22

INDIVIDUAL SWOT ANALYSIS

1. Banco de Fraldas 2. Vizinhos 3. Humanitus

1. Main 1. No 1. Relevance of 1. Very time and

1. Attractive for 1. Costly
initiative; warehouse the topics; resource-
investors service;
2. National level; available; 2. Income consuming
(Fidelidade and 2. High
3. Attractive for 2. Similar generation; events.
BPI); demand of
investors initiatives 3. Partnerships; 2. Competing
2. Fee charging & human
(e.g.: Novo (Liga 4. Scaling. with partners.
partnerships. resources.
Banco). Renascer).
1. Government 1. Similar 1. Growing aging 1. Lack of 1. Refugee 1. There is a lot
involved and initiatives index; governmen Support of offer in the
supportive; “competing” 2. Population’s t support Platform. market.
2. Population’s for the same need - +45,000 for similar
need. audience. elders living initiatives.
2. End of the alone in 2017.
goods
donated may
be unclear.

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SWOT ACTION PLAN
Opportunities Threats

Challenges Warnings

S1.2: + O1.1: Scaling Banco de Fraldas in partnership S1.2 + T1.2: Reliability of the sector concerning the donated
Strengths

with local governments and municipalities; goods;

S2.2 + O2.1: Exploitation of income generation in
growing population;
S3.1 + O3.1: Explore training opportunities with local
governments (private + public education)
S1.3 + T1.1: Limited funding to organizations with similar
initiatives;
S2.1 + T2.1: Difficult to explore properly with government
involvement – ideas may be biased to investors’ needs.
S3.3 + T3.1: Develop stronger partnerships for growth.

Limitations Risks

W1.2 + O1.1: Government unable to support all W2. 1 + T2.1: Services may lack some internal capability,
Weaknesses

initiatives – count on private funding; making government solutions more workable.

W2.2 + O2.1: Training initiatives + hire more staff
members.

January 18, 2019 24

 STAKEHOLDER CIRCLE

Beneficiaries

Fidelidade
Comunidade, BPI

Staff Members
Direction of influence: upwards, outwards or downwards
Interpretation:
• Senior management (upwards):
orange
• External stakeholders (outwards):
blue
• Project team (downwards): green
• Project management peers: purple

January 18, 2019 25

COLLABORATIVE FORCES ANALYSIS

Rivalry
Engage collaborating
organizations.
Partner organizations collaborating
Suppliers R and working as a network (nationally
and internationally).
Empowerment
Suppliers take participation in the Empowerment of
and engagement
activities and are perceived as key- suppliers.
of clientes. Clients
stakeholders.
S C The outcome of each project is
expected to empower the main
New Entrants beneficiaries: elders and low-mobility
individuals, low-income families and
humanitarian workers.
Partner with organizations with similar
services, like Misericórdias and Substitutes
municipalities.
Invite other The organization
organizations to E S only competes
join. with itself. Engaging and collaborating with
similar organizations allows to reduce
the risk of substitution.

January 18, 2019 26

MAIN CONCLUSIONS
Strategic The Theory of Change
Horizons
comes as a more
Ansoff Matrix Extreme I meaningful strategic
Balanced framework for
Scorecard ,
Stakeholder
Extreme II
according to the case of
Model Passo Positivo

Hybrid organizations lack formal frameworks that consider both their

need for

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MAIN CONCLUSIONS

Input Activity Output Outcome Impact

aligned with
The Theory of
Change Limitations:

PDOs shifting to hybrid business models limited to sustainability or social responsibility

departments’ strategy

Conglomerates may not be able to generate an overall Theory of Change as each

initiative or project may run independently with specific goals and a different impact

Future research:
• Application of the given tools and methodology to other hybrid organizations placed in between Extreme
I and Extreme II;
• It would also be valuable to understand how the Theory of Change triggers strategic change in
individual initiatives of conglomerates.
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THANK YOU
Backup
Slides
 CONTEXT ANALYSIS
PEST Analysis

Political-Legal Economic Social Technological

• Stable governmental structure
(+);
• External policies leading to the
hosting of refugees, (Refugee
Support Platform) (+) and
greater investment in
professional training (+);
• Benefits of the NGDO legal
status (+);
• Scarce and limited financing
options for NGDOs (-);
• High dependency from public
funding of some social
organizations (up to 85%) (-).
• Portuguese economic growth • Relevant level of poverty
(+); according to the national index
– 27% in 2016 (+);
• Positive expectations of growth
on the contributions for social • Growing aging index of the
causes (+); Portuguese population (+);
• More donations and • Sector’s image tarnished by
volunteering taskforce (+). recent corruption cases
involving important
organizations (-).
• Information is “one click away”
(+);
• Faster and more effective ways
of internal and external
communication (social
networks, email, mobile
phones) (+);
• Risk of software hacking,
leading to fraud (-);
• The General Data Protection
Regulation may hold back
some external communication
and marketing processes (-).

January 18, 2019 31

CONTEXT ANALYSIS
SWOT Analysis
SWOT Analysis

Strengths Weaknesses
Internal Analysis

• Strong managing team, fully committed to the organization’s mission and
the background diversity of the team members;
• Relevance of the projects and awareness towards the population’s needs;
• Successful performance record;
• Important partnerships and strong network & known initiatives, like Banco
de Fraldas.
• Selected for Fidelidade Comunidade and BPI Senior awards.
• Lack of funding & high dependency on grants and punctual
donations;
• Managing team working on a volunteering/part-time basis;
• Lack of human resources – members and volunteers;
• Daily tasks are more time-consuming and sometimes ineffective;
• Lack of physical materials – e.g. office.

Opportunities Threats
External Analysis

• Portuguese economic growth;
• Increasing awareness towards social issues;
• Technological progress and the internet have allowed to
reach and attract more volunteers and investors;
• Growing demand (demographic factors);
• Lack of government solutions for the social needs tackled.
• Lack of government funding for social organizations & limited private
financing;
• Large number of NGOs (45.7% of the whole social economy in 2013) and
other social organizations (IPSS, Misericórdias, etc) competing for the same
type of funding (private and public);
• Loss of credibility of third sector organizations due to recent situations of
corruption;
• Easy to copy initiatives – no “copyrights” protection in the third sector.

January 18, 2019 32

CONTEXT ANALYSIS
Stakeholder Mapping
Stakeholders Groups
External Stakeholders
Connected
Stakeholders
Internal Stakeholders
January 18, 2019
Internal Stakeholders
• Passo Positivo’s internal stakeholders are its members, such as the board
of directors, staff, interns and volunteers.
Stakeholders who are not
directly connected to the
organization but have a direct
interest in it.
Connected Stakeholders
Individuals taking part of the • Connected stakeholders of Passo Positivo are its partners, suppliers,
organization that directly individual donors, funders, competitors and beneficiaries.
affect and are affected by it.
Stakeholders that have na External Stakeholders
economic or contractual
• The external stakeholders of Passo Positivo are the Portuguese
relationship with the
government, the local community, the general public and the media.
organization.
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THE THEORY OF CHANGE

Resources Activities Direct Results Outcomes Impact

• Improvement of the
Banco de Fraldas children well-being;

Financial Vizinhos # of collected and • Decrease of social

Low-income families,
distributed diapers isolation and exclusion.
Humanitus children and elders
# of families and babies • Increase of physical
Workshops Elderly people with low
Human with access to the and psychological well-
mobility, technicians,
Training sessions diaper bank being.
caregivers
Psychological support # of people trained • Better quality of life.
Material Volunteers and
# of workshops professional • Increase of physical
Awareness campaigns humanitarians
at schools and psychological well-
# of people with being.
Strategic partners psychological support Teachers and students
Fundraising campaigns
• Improvement of the
Scientific events global citizenship
competences.

January 18, 2019 34

VISION, MISSION AND VALUES
The Theory of Change sets the vision of an organization as the long-term impact it aims to achieve. The
Mission statement embodies the vision and the long-term outcomes of the organization.

Values Accessibility; neutrality; self-determination; clarity and accuracy; empowerment and training; equality.

Promoting the exercise of the global citizenship by ensuring the safety and well-being of vulnerable people
Vision
and the ones working on situations of crisis.

Ensuring the safety and well-being of vulnerable people or the ones working on situations of crisis and thus
Mission empower them, while mitigating the lack of formal support, in partnership with other institutions, and
impacting the future generations in the context of global citizenship.

January 18, 2019 35

STRATEGIC GOALS & OBJECTIVES

Strategic goals are medium- to long-term outcomes that embody the mission’s statement. Objectives are
specific and concrete outcomes an organization aims to achieve in the short-term (one to three years).

Strategic Goal I • Ensure the financial sustainability of the organization.

Strategic Goals of Passo Positivo

• Strengthen internal processes that will allow better communication (internally and
• To each strategic goal, two or Strategic Goal II externally).
more objectives correspond.
• Each objective follows the Strategic Goal III • Empower people so they can exercise their human rights on their daily life.
SMART methodology, meaning
they are specific, measurable,
attainable, relevant and time- • Guarantee the safety and well-being of vulnerable people or the ones working in crisis
limited. Strategic Goal IV situations.
• Each objective will be
attainable through a specific Strategic Goal V • Ensure the scientific basis of Passo Positivo’s work.
activity.

Source: Passo Positivo

January 18, 2019 36

RESULTS & OPERATIONS

The operational results are the outputs measured by the amount of goods and services provided.

1. increase the number of direct beneficiaries;

2. expand the field of action; Expected impacts:
3. identify new strategic areas; greater strategic coherence; financial sustainability; greater quality of services
4. develop new strategic and fundraising
methodologies.

Change can only be effective if organizations start by prioritizing their tasks and main activities. Projects
were prioritized as follows:

Contribution to sustainability Contribution to Mission

1) Banco de Fraldas, 2) Vizinhos, 3) Humanitus 1) Vizinhos, 2) Banco de Fraldas, 3) Humanitus

January 18, 2019 37

OPERATIONS
Two Positioning Matrixes were developed: one that considers “Easiness of Implementation” and
“Contribution to Sustainability”, and another that crosses “Easiness of Implementation” and “Contribution to
Mission”. Criteria was evaluated on a 0 to 5 scale.

Project Positioning Project Positioning

5.0
5
4.5 Vizinhos, 4.6
4.5 Vizinhos, 3.7 Humanitus, 3.7
Humanitus, 3.1 4.0
4
3.5
3.5 Banco de Fraldas,
3.7
Banco de Fraldas, 3.0
3 4.4
2.5
2.5

2 2.0

1.5 1.5

1 1.0

0.5 0.5

0 0.0
0 1 2 3 4 5 0 1 2 3 4 5

Contribution to Sustainability Matrix Contribution to Mission Matrix

January 18, 2019 38

RESOURCES

Resources of Passo Positivo

Revision of the resource management process Main achievements

Financial • Internal changes in the human resources

management; ‒ Greater alignment with the
organization’s vision and
• Recasting of the existing partnerships and mission
Human Partnership Mapping;
‒ Clearer reasoning for future
• Development of a fundraising strategy in strategy implementation
Material cooperation with Stone Soup Consulting.
‒ Prioritization of the main
funding sources and most
important investors.
Strategic partnerships

January 18, 2019 39

THE STRATEGIC HORIZONS FRAMEWORK
The Strategic Horizons framework targets growth and revenue streams for existing initiatives and future
market opportunities, adapting to changes in the environment.

Strategic Horizons Framework Passo Positivo’s strategic horizons

• Horizon I: Maintain & Defend Core Initiatives

• Focus on day-to-day activities – operations (good collection, installment of security materials
III and awareness campaigns); serving the beneficiaries; screening for and applying to funding
programs.
• Main Goals: improve processes and raise more funds.
II • Horizon II: Nurture Emerging Initiatives
Value

• Development of the existing initiatives that have proven to be successful.

• E.g.: expand the Vizinhos project services to other municipalities of the district of Porto.
• Horizon III: Create New Initiatives
I • This stage introduces new initiatives and components and requires upfront investment and pilot
testing.
• E.g.: Passo Positivo launches a new project to help homeless people (collection of garment,
food and essential utilities).
Time

The Strategic Horizons Framework does not add value to organizations like Passo Positivo. As an organization that is still struggling with the main tasks of
the first horizon, targeting Horizons II and II is not a priority, mainly due to lack of funding.

January 18, 2019 40

THE BALANCED SCORECARD FRAMEWORK

Measures Targets

Measures: 1. Percentage of people getting house adjustments 1. 85% in 2019

services (% of the marked situations); 2. % of successfully 2. 90% in 2019
evaluated risky situations; 3. increase of psychosocial
3. 15% in 2019
competences (%); 4. Growth in the satisfaction rate (%) of the
partnering organizations (Banco de Fraldas). 4. 10% in 2019

Measures: 1. Decrease of the dependency on external funding

1. 25/75 ration until 2020
(% of the overall funds); 2. growth percentage (%) in income
generation; 3. reduction of overhead expenses (%). 2. 25% in 2019
3. 10% in 2019

Measures: 1. Scale the existing initiatives; 2. improve the

operational methods (measured by the success rate of the 1. Reach two more municipalities in the
services). Vizinhos project by 2020
2. Overall success rate of at least 85%

Measures: 1. Have at least % specialized staff on the 1. 85% in 2020

humanitarian field; 2. increase the percentage (%) of paid staff; 2. 90% in 2019
3. grow the staffing number.
3. Hire two more staff members in 2019 and
one more in 2020.

January 18, 2019 41

THE ANSOFF MATRIX FRAMEWORK
The Ansoff Matrix was design to help organizations growing based on the markets and products they
currently or intend to address.
News

The Ansoff Matrix framework applied to Passo Positivo

• At its current state, Passo Positivo is not able to expand to new markets, due to its
Market
strong dependency on external funding. Besides, the existing projects have room for
Development
Diversification future exploitation and new approaches.
• E.g. 1: Passo Positivo charges for its services to individuals and families, based on their
income bracket, and also to insurance companies and public-private entities. House
Markets

auditing in the Vizinhos project is supported and payed by the municipalities.

• E.g. 2: Passo Positivo implements new training packages in the Humanitus project,
targeting schools, universities and companies.
• These two scenarios fit in the “Market Penetration” quartile, where two existing services
Market Product are further explored and able to generate more income. This strategy is focused on the
Penetration Development
same group of consumers, i.e. beneficiaries, however, it aims to increase the number of
individuals reached.
Existing

• A Market Penetration strategy usually entails low risk and return.

Atuais Products & Services News

Given the context of Passo Positivo, the Ansoff Matrix is not enough to trigger change in its main strategy. Even though it focus on the main strengths of the
organizations, the Ansoff Matrix does not take into account one of the main objectives of social organizations: social impact. It would be interesting to
test the framework individually in each project.
January 18, 2019 42
THE STAKEHOLDER MODEL
The Stakeholder Model prioritizes stakeholders according to their importance level (0 to 5) and
considers the way strategy is contributing for each group of stakeholders.
Level of importance: 3. Suppliers are a component of each service, however, strategy is not
Suppliers designed to satisfy them in full.
Level of importance: 3. The organizational strategy is not completely designed to meet the needs
Society of this group, however, society has its say.

External Government Level of importance: 2. As a private organization, Passo Positivo does not depend on the state.
Stakeholders
Level of importance: 5. Stakeholders with a great level of power, some define the strategy of the
Investors & Donors
organization – BPI and Fidelidade.

Beneficiaries Level of importance: 5. The end purpose of Passo Positivo is to benefit its beneficiaries.

Level of importance: 5. The values that shape the overall strategy are much aligned with the
Employees employees’ values.
Level of importance: 5. The values that shape the overall strategy are much aligned with the
Internal Board of Directors managing team’s values.
Stakeholders
Founders Level of importance: 5.

The Stakeholder Mapping is an interesting tool for organizations positioned in both extremes (I and II) and, if tested, for hybrid organizations
as well. Nonetheless, as these combine income generation with social impact, the Stakeholder Mapping might be too superficial.

January 18, 2019 43