Reimagining the INGO business model

International nongovernmental organizations need a new business model.

For several decades, project-focused funding in global health and development has shaped an INGO operating model that often fails to achieve results in the most efficient and scalable manner. We need a new model that goes beyond siloed, short-term projects and fosters large-scale, sustainable innovation to deliver increased impact, smarter investment in INGO talent, and improved outcomes for donors.

Traditional donor funding strategies have emphasized accountability for reaching defined goals and enabled cost comparisons. But they have many shortcomings. For example:

● Tackling big issues — such as developing a vaccine where markets have failed or strengthening a health system weakened by epidemics — requires multiple project cycles of planning, proposal, startup and closure. These cycles incur huge transactional costs that detract from the ability to drive impact.
● As these cycles and the grants that support them get shorter and smaller, significant talent management issues arise as highly skilled staff with critical knowledge can be idled for months between projects.
● These cycles can detract from a clear line of sight to the end goal, as investments and metrics become fragmented and misaligned across multiple projects.

In 2013, PATH embarked on a journey toward a new operating model that uses a platform-based approach to accelerate innovation to reduce morbidity and mortality among women and children. One goal in implementing the new model is to improve the line of sight from development to impact. Another is to more quickly apply learning from projects, improving our ability to develop and deliver innovative, sustainable solutions at scale.

Our vaccine platform is one example. Rather than independently managing each of our 56 vaccine projects, we are building a robust cross-cutting vaccine competency that improves our ability to retain and leverage both talent and knowledge. This platform strategy has led us to rethink existing funding and seek new types of support to help us strengthen cross-programmatic practice areas, be more agile in responding to new opportunities and threats, and leverage partnerships and knowledge more effectively.

With this new strategy, we are exploring ways to ensure consistent investments and capabilities in clinical trial sites so that staff are fully engaged between projects. This approach will bridge key people from project to project to retain critical talent and knowledge. We’re also improving our knowledge of staff members’ skills so we can apply those skills across the organization and provide more career opportunities. In addition, more nimble financial systems will help us manage the complexity of tracking costs across multiple donors and donor types, and ensure accurate reporting.

Designing a new operating model didn’t require starting from scratch. Technology firms provide one example of how to shift from a project-by-project mentality to a strategy that deploys a common core of functional capabilities to sustain a range of products and services.

Consulting firms have developed more agile ways to manage people across projects and programs. Investment firms have used portfolio management to shape work streams and manage risk. The corporate world offers tools and ideas for incorporating broad institutional outcomes into strong matrix management. All of these tools and approaches have relevance for INGOs, which can integrate them with the unique aspects of our work.

But the shift to a platform approach is not easy. Requirements include:

● A shift in mindset from managing projects to managing a strategic portfolio. This shift includes saying no to projects that don’t fit the platform.
● Sufficient scale to optimize the cross-project functional expertise of the organization.
● Capabilities that do not come cheap — including good talent management, project management, and financial management tools.
● An overarching, coherent strategy to rationalize the approach and investments, and a serious commitment to ongoing strategic mapping across functions, disciplines, and geographies.
● Substantial flexible funding to ensure that all these pieces can fit together and be leveraged.

By adapting our business models as the landscape for global health and development continues to evolve, PATH and other INGOs  will build agile, robust capabilities that drive value, attract a diverse donor base, deliver most efficiently on donor funding, retain talent and — most importantly — increase our impact for those we serve.

Devex, in partnership with the Shared Value Initiative, FSG and Global Impact, is examining how the world’s largest international nongovernmental organizations are transitioning their partnership strategies from traditional corporate partnerships to more scalable initiatives. We’ll look at how these initiatives accelerate both social impact and a business return on investment, while highlighting engagement in shared value during this special series “The Future of International NGOs.” Join the conversation using #FutureINGO.