Dynamic Systems and Organizational Decision-Making Processes in Nonprofits

Abstract

Social purpose organizations (SPOs) are nonprofit organizations that fulfill their social missions by seeking revenue from traditional business activities. SPOs often face difficulties attracting and retaining organizational members with the necessary mix of social and business skills and values. When coupled with resource limitations and an unstable environment, these issues create serious strategic challenges for leaders of small SPOs. In the present article, the authors describe several systems thinking concepts that may enable leaders to understand and therefore more effectively contend with the challenges of the SPO context. The authors also present a case study demonstrating the utility of systems thinking and system dynamics modeling as decision-making tools leaders can use to analyze the impact of alternative strategies on the financial well-being of the SPO. The modeling process may facilitate organizational learning as leaders use the insight gained from adopting a systems approach to make effective strategic decisions.