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Tools to assess the internal environment

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Tools and methods to help you analyse your organisation's strengths and weaknesses in order to develop a realistic and achievable strategy.

Three of the many tools have been selected here to give an overview of the different approaches.

The Capacity Assessment Grid

This is a great tool to help you understand your organisation's strengths and weaknesses.

The US-based 'Venture Philanthropy Partnership' (VPP) asked the consultancy firm McKinsey to design an internal assessment tool specifically for non profits - 'Effective Capacity Building in Nonprofits'.

The capacity assessment grid is quite a complex tool but it can also be used in small bites. Why not get one of your colleagues to interview you using some of the questions and see what learning you get from it?

The most important question to ask as you carry out the assessment is: how fit are we to take advantage of the opportunities and overcome the threats that we face?

McKinsey 7-S

The international consultancy firm McKinsey has pioneered many new approaches and tools to help consider future strategic options, including the Capacity Assessment Grid above. The 7S framework is a bit more straightforward.

It helps you get to grips with a range of different aspects of your organisation. Understanding how it 'ticks' gets you one step closer to understanding what you need to do to improve performance.

The language and examples are from US corporates but the principle is relevant for a UK charity. If you try the tool out, use the comment facility to report on what worked well, and what could have worked better.

Core competencies

The core competencies technique focuses on an organisation's internal resources to identify what makes that organisation unique. It involves reviewing the organisation's skills, competencies and expertise, both as a whole staff team and as individual team members.

The aim of the exercise is to analyse the specific elements that make an organisation distinctive or different from others in its sector. A competence which is central to an organisation’s operations, but which isn’t exceptional in some way, shouldn’t be considered as a core competence, because it will not distinguish the organisation from others.You can use the technique to identify what makes your own organisation unique and also to analyse what makes other organisations in your field particularly successful. It can help link staff recruitment and development to the strategic planning process. It can help you to pinpoint competitor advantage – yours and other organisations’.

Core competencies can be a useful way to look inside your organisation to assess your strengths and weaknesses. You could also use the technique as part of a competitor analysis when scoping your external environment.

Appreciative inquiry

Appreciative inquiry involves identifying the past or current strengths of an organisation. Focusing exclusively on positive experiences, these insights are used as a starting point to build a picture of the organisation’s future. Because this vision is grounded in real experience and history, people know how to repeat or build on the organisation’s success.

The core principle is to build your organisation around what works, rather than trying to fix what doesn't. Appreciative inquiry attempts to counter-act the tendency of many organisations to focus more readily on the negative or less successful elements of their work. The technique assumes that an organisation’s outlook will be self-fulfilling. By encouraging people to take an exclusively positive stance towards their work, the technique aims to boost people’s ambition for creating an even better, more successful organisation.

The technique can also be used to identify what you admire in other organisations, as a way of opening up options and choices for your own future. It can help to  clarify your organisation’s purpose and to look inside your organisation to assess your strengths.Taking a positive starting point to thinking about future direction can bring energy and excitement to your strategic planning process.

Acknowledgement and celebration of achievements is important. Many organisations do not take time to reflect on how far they have come, or to celebrate their progress. Appreciative inquiry can re-motivate your team, putting them in a positive and more aspirational frame of mind for moving forward.

It can be particularly useful for exploring the values of your organisation.Although appreciate inquiry provides an opportunity to counter-balance negativity, this doesn’t mean you should ignore aspects of your work which haven’t gone so well in the past.

Portfolio analysis

A portfolio analysis helps you to look at all your existing products and services and to rate them according to demand and how much of the market each service holds. Mapping your services in this way can help you to decide where to invest more or less time and money, or whether to drop particular services.

Each product and service is plotted on a 2x2 matrix with an axis for market growth rate and another for your market share. Each product will fit into one of four categories:

  • Dog (minor player in a static market): you may want to consider dropping these products, but only if they are no longer useful to your existing service users or cause
  • Problem child (minor player in a high growth market): you may invest a lot of money and get nowhere, so assess carefully whether it’s worth the effort
  • Gold mine (market leader in a large or fairly static market): the best place for your product to be. You should probably invest significant time and money here, and defend these products vigorously.
  • Star offering (market leader in a new high growth market): to ensure you retain your market lead position, you will probably need to invest heavily to attract the majority of the new customers in this market.

This tool helps you to consider the benefits of each of your services in the light of current demand and other players offering similar services.

The tool was developed with an assumption that long-term profitability is the main goal and existing customers are secondary. Keep your mission clearly in mind to ensure your users or cause are centre stage when you reach decision-time.

The NPC Blue Book

New Philanthropy Capital have developed 'the little blue book' to give an overview of how they analyse charities. It's really useful to see their insights into charity effectiveness – and then to look at your organisation through their lens.

Use the framework to see how fit you are to maximise impact for your beneficiaries and deliver your strategy.

Page last edited Nov 05, 2018

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