Results Now for Nonprofits EDITOR’S DRAFT page 1
Preface .......................................................................................................................................................... 4
Author Biography .......................................................................................................................................... 7
Acknowledgements....................................................................................................................................... 8
Part I: Setting the Frame ............................................................................................................................... 9
Chapter 1 The Four Pillars of High-performance ........................................................................................ 10
Defining High Performance ............................................................................................................ 10
The Third Envelope ........................................................................................................................ 15
Chapter 2 Planning Rules ............................................................................................................................ 20
Just Say No ..................................................................................................................................... 21
Just Say Yes .................................................................................................................................... 26
Show Me the Money...................................................................................................................... 29
Bottom Lines .................................................................................................................................. 32
Chapter 3 All Together ................................................................................................................................ 35
Master Plan .................................................................................................................................... 36
Be Quick ......................................................................................................................................... 37
Part II: Purpose............................................................................................................................................ 42
Chapter 4 Values ......................................................................................................................................... 44
Getting Real ................................................................................................................................... 45
Talk that Walks............................................................................................................................... 47
Chapter 5 Mission ....................................................................................................................................... 53
Who are our customers? ............................................................................................................... 55
What difference do we make?....................................................................................................... 57
How are we better than our rivals? ............................................................................................... 59
The Sweet Spot .............................................................................................................................. 64
Hoop Dreams ................................................................................................................................. 68
Part III: Strategic Plan .................................................................................................................................. 70
Chapter 6 Lines of Business ........................................................................................................................ 73
What Are We Doing Now ............................................................................................................... 73
Means and Ends ............................................................................................................................. 75
Making Lines of Business ............................................................................................................... 76
Chapter 7 Success Measures ...................................................................................................................... 79
Measuring Unmeasurable.............................................................................................................. 79
Why Measure ................................................................................................................................. 80
Making Success Measures ............................................................................................................. 83
Mission Success Measures ................................................................................................ 84
Lines of Business Success Measures ................................................................................. 86
Chapter 8 Vision Statement ........................................................................................................................ 89
Vision Types ................................................................................................................................... 89
Making Statements ........................................................................................................................ 92
Ready Your Mind............................................................................................................... 95
Reaffirm Your Purpose ......................................................................................... 96
Listen to your Customers ..................................................................................... 97
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Know the Best of Best in Your Field ..................................................................... 99
Understand Your Risks ....................................................................................... 101
Make Your Statement ..................................................................................................... 103
Chapter 9 Vision Strategies ....................................................................................................................... 108
Making Strategies ........................................................................................................................ 108
Generate Your Ideas ....................................................................................................... 109
Vision Statement................................................................................................ 109
BAM ................................................................................................................... 110
Good Questions ................................................................................................. 111
Make Your Strategies ...................................................................................................... 114
Intuitive and Analytic ......................................................................................... 114
Directive and Participative ................................................................................. 115
Start, Stop, and Continue................................................................................... 116
Fast and Slow ..................................................................................................... 119
What Next ....................................................................................................................... 120
Part IV: Operating Plan: ............................................................................................................................ 122
Chapter 10 Goals....................................................................................................................................... 125
Department Map ......................................................................................................................... 126
Making Goals ............................................................................................................................... 127
Generate Your Ideas ....................................................................................................... 128
Make Your Goals ............................................................................................................. 130
Chapter 11 Budget .................................................................................................................................... 134
Part V: Governance Plan ........................................................................................................................... 138
Seven Realities ............................................................................................................................. 141
Chapter 12 Delegation .............................................................................................................................. 148
Low Hanging Fruit ........................................................................................................................ 149
Puzzles............................................................................................................................. 149
Levers .............................................................................................................................. 152
Duties ........................................................................................................................................... 157
Board Duties ................................................................................................................... 158
Board.................................................................................................................. 158
Committees........................................................................................................ 160
Officers ............................................................................................................... 166
Board Member Duties..................................................................................................... 168
Executive Director Duties ............................................................................................... 170
Guidelines .................................................................................................................................... 172
Board Guidelines ............................................................................................................. 172
Board Member Guidelines .............................................................................................. 173
Executive Director Guidelines ......................................................................................... 175
Chapter 13 Accountability ........................................................................................................................ 182
Agendas........................................................................................................................................ 184
Annual Agenda ................................................................................................................ 184
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Board Meeting Agenda ................................................................................................... 188
Assessments ................................................................................................................................. 189
Board............................................................................................................................... 189
Board Member ................................................................................................................ 192
Executive Director ........................................................................................................... 195
Chapter 14 Smart Board ........................................................................................................................... 198
Help Me Help You ........................................................................................................................ 199
Adding Value ................................................................................................................................ 202
Boards ............................................................................................................................. 203
Board Members .............................................................................................................. 204
Executive Director ........................................................................................................... 206
Appendixes................................................................................................................................................ 209
Appendix A—BAM .................................................................................................................................... 209
Appendix B — First Cut ............................................................................................................................. 211
Strategies ..................................................................................................................................... 212
People ............................................................................................................................. 212
Product............................................................................................................................ 213
Place ................................................................................................................................ 214
Price ................................................................................................................................ 214
Market.......................................................................................................................................... 216
Probabilities .................................................................................................................... 216
Proposition ...................................................................................................................... 217
Muscle .......................................................................................................................................... 218
Context............................................................................................................................ 218
Capacity........................................................................................................................... 219
Internal Analysis................................................................................................. 219
The Iron Triangle ................................................................................................ 221
Comparisons ................................................................................................................... 225
Match ........................................................................................................................................... 226
Appendix C: Final Answer ......................................................................................................................... 227
Strategy ........................................................................................................................................ 227
Marketing..................................................................................................................................... 228
Money .......................................................................................................................................... 229
Management................................................................................................................................ 231
Final Answer................................................................................................................................. 233
Contingencies.................................................................................................................. 233
Business Plan................................................................................................................... 235
Final Answer.................................................................................................................... 237
Appendix D: Board Meeting Advance Information Template .................................................................. 239
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Preface
The main thing is to make sure that the main thing
is still the main thing.
- James Barksdale
Results Now® is the quick and practical process for strategic, operating, and
governance planning. Put simply, Results Now builds capacity, which the Alliance
for Nonprofit Management defines as the organization’s ability “to achieve its
mission effectively and to sustain itself over the long term.”1
Capacity building can be a challenge given the seven realities of nonprofit
leadership. Board members are part-timers with limited time, which can lead to
imperfect knowledge for fact-based decision making. The size and composition of
the board often has more to do with “affluence and influence” than governance,
but board members’ fund ability to give or get revenues is limited. Term limits and
short officer tenures work against continuity meeting-to-meeting and year-to-year.
The seventh reality is executive director inexperience. Not all organizations
experience these realities, but it’s a rare one that doesn’t encounter a handful at the
same time.
Results Now addresses these difficulties by beginning with the belief that
leadership should focus its energy on making sure that the job gets done, that the
organization brings its purpose to life. For an organization using Results Now, the
right answers come from the right questions:
Why?
Where to go tomorrow?
What gets done today?
Who does what?
When did it happen?
To address these questions, Results Now creates a unified frame – a Master
Plan – to guide the work of the organization. Most methods focus only on strategic
planning; operations and governance are ignored, but Results Now is different. It
puts strategic, operating, and governance planning under one in one package that
the board can pass in a single vote and the organization maintains as a regular part
of its yearly work.
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Noted expert Henry Mintzberg advises, “All viable strategies have
emergent and deliberate qualities.”2 Thus, the trick is to find a process that offers
enough structure to be purposeful, but not so much that the organization loses its
adaptability. Results Now strikes that balance.
Results Now can deliver many benefits including fostering a welcome
climate for give-and-take strategic thinking instead of the usual show-and-tell
monotony of rubber-stamping. Results Now can build capacity, clarify the
organization’s story for the community, and keep people on point about what’s
important. It can build team cohesion, orienting newer leadership members and
recharging seasoned ones. Making Results Now worth its weight in gold is the
evidence that funders reward those who plan.3
Relying on the rule of “What you measure is what you get,” Results Now
has a strong bias for accountability in general and performance measurement in
particular, which increases the level of “effectiveness in strategic decision
making.”4 Because informed board members make better decisions, the Master
Plan is often used as a centerpiece of the Board Meeting Advance Information sent
a few days prior to meetings. In this way, the busy board members have
everything they need at their fingertips including the Master Plan; just toss it in
your briefcase or backpack and read when time permits.
Unlike traditional methods, Results Now is an ongoing way of doing things,
an essential part of day-to-day organizational life. First, the Master Plan is part of
an overall approach to Board Meeting Advance Information that puts everything
in one document including agenda, minutes, and self-assessments for the board,
board members, and executive. Second, the Master Plan is refreshed annually as a
regular part of day-to-day operations; gone is the “strategic plan articulating where
the company expects (or hopes or prays) to be in three, five and ten years [that
then sits] on executives’ bookshelves for the next 12 months.”5
Governance experts John and Miriam Carver argue that the job of
leadership is to ensure that “the organization produces what it should . . . while
avoiding situations and conduct that should not occur.”6 William Bowen, President
Emeritus of The Andrew W. Mellon Foundation, says, “Perhaps the overriding
obligation . . . is to require that a sensible plan of some kind be in place and that it
be monitored carefully.”7 For the Carvers, accomplishing the mission is the end;
for William Bowman, the plan is the means to that end. For organizations looking
for a quick and practical way to do both, Results Now is the answer.
This book is organized in five parts. The first section – Setting the Frame makes the case for and introduces Results Now. The following four sections
present the elements of the Results Now Master Plan: Purpose, Strategic Plan,
Operating Plan, and Governance Plan.
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The renowned quality expert Philip Crosby once said, “Good things only
happen when planned; bad things happen own.”8 It is my hope that good things
happen for you and your organization as a consequence of Results Now.
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Author Biography
All you need to be assured of success in this life is
ignorance and confidence.
- Mark Twain
Mark Light has more than 20 years of frontline leadership experience. Known for
his contagious enthusiasm and high energy, he is president and founder of First Light®
Group LLC, which is Putting Your Future Within Reach® with client-centered services.
As a practioner, Mark's past experience includes 15 seasons as president of the
Victoria Theatre Association where he inaugurated its famous "You are the star" mission
and led its turnaround into a top-30 performing arts center with audiences up five-fold to
900,000, annual income boosted 24-fold to $21.3 million, and the opening of three new
venues including the $130 million Schuster Center. He was a decade-long Tony Awards®
voter and won the first Outstanding Achievement in Presenter Management Award from
the League of American Theatres and Producers, whose members vote on the Tony's.
As an author, John Wiley & Sons published his first book, The Strategic Board
and BoardSource published his Executive Committee. His writing has appeared in Board
Member magazine, the Nonprofit Management and Leadership Journal, and the
Nonprofit Quarterly, which is home to Mark's Dr. Conflict advice column.
As an educator, Mark is a faculty member at the Mandel Center for Nonprofit
Organizations at Case Western Reserve University where he is the 2010 Mandel Center
Teaching Award recipient. He holds a BFA from Drake University, an MBA from
UCLA, and a Ph.D. from Antioch University.
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Acknowledgements
If at first you do succeed – try to hide your astonishment
- Harry F. Banks
On summer vacation years ago, my then four-year old son, David, and the
rest of our family were walking along the Lake Michigan beach near Sleeping
Bear National Seashore. David knew of my passion for collecting beach glass.
Beach glass is the ultimate detritus of humanity. People carelessly toss their empty
bottles into the water and the waves gradually break the glass into small pieces.
And then something wonderful happens; over time the sharp edges are smoothed
out and wonderful small treasures are created.
Beach glass on Lake Michigan to the north is really quite rare, but wonder
of wonders, David found a piece of opaque white glass almost two inches long. It
was a marvelous find. As we walked along the beach, David would bury the piece
of glass, walk a bit, and then go back to dig up his treasure. This act of rediscovery
obviously delighted him and it went on for quite some time. Then the inevitable
come to pass and the glass was lost.
As we dallied on the beach that beautiful August afternoon, I did my best to
find that piece of beach glass. Back and forth, I walked along the stretch of sand
my son had been playing on. To make my search more fruitful, I began praying.
“Lord, please return my treasure to me. You made the earth in just seven days, so
this should be well within your powers.” Alas, my prayers went unanswered.
As I walked along the beach for what would have been my final search, I
begged one last time to get my treasure back. Suddenly out of nowhere, there was
little David, looking up at me, reaching his hand into mine as only a small child
can do, saying, “Here I am.”
Such is the way of life. The riches we seek are momentary and shallow; the
real treasure has been here all along in our relationships with those closest to us.
That is why this book is dedicated to my wonderful family, my three boys –
William, Michael, and David – and glorious Joni – soul mate, mother, and dear
friend.
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Part I: Setting the Frame
The chief limitations of humanity are in its visions,
not in its powers of achievement.
- A. E. Morgan
Leading nonprofits is hard work. It shows in the median executive director
tenure of four years or less, the 65 percent who are first timers in the job, and the
less than half who want to play the role again.9 Working in the sector is a mixed
bag for executive directors who “enjoy their jobs as a means of addressing
important community needs (mission) but don’t want to do it again because of the
high stress involved (burnout).”10
The typical executive faces challenges of “high stress and long hours,
anxiety about agency finances, fundraising, and managing people.”11 The chief
executives of nonprofits – whether called CEO, president, director, or the widelyused executive director – confront “funding cuts, rising demands for performance
measures by foundations, corporations that want strategic benefits from their
philanthropy, new forms of competition from the business sector, and serious
questions about the effectiveness and appropriateness of traditional charitable
remedies for social problems.”12
Though many experts on nonprofit bemoan the state of the field,13 there is
much to celebrate when it comes to leading nonprofits. Most executives take the
job because of the “mission of their agencies as well as their own desire to help
others and to give back to their communities.”14 As a result, almost all experience
a high level of enjoyment in their work.15 Executive directors are not alone.
Nonprofit employees are “highly motivated, hard working, and deeply committed
[and are] motivated primarily by the chance to accomplish something
worthwhile.”16 Perhaps this is why only 16 percent of the nonprofit workforce is
motivated by the paycheck compared to nearly half of those who work in the
private sector.17
To be sure, nonprofit executives have to make do with limited resources
and many “small, community-based groups are organizationally fragile. Many
large groups are stretched to their limits.”18 The good news here is that when it
comes to working conditions, it’s better than the private sector or government.19
Compared to these other sectors, people who work in nonprofits were less likely
than “federal or private-sector employees to say their work is boring and their jobs
are a dead-end with no future, and were much more likely to say that they are
given a chance to do the things they do best.”20
Parade’s 2008 annual report on what people make closes by saying, “in any
economy, the best jobs provide emotional as well as financial rewards.”21 This
statement reflects what workers in the nonprofit sector already know: almost all
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who work in the sector experience a high level of enjoyment in their work.22
Indeed, nonprofit workers may be living the dream job if a survey commissioned
by Parade for its special issue gives voice to truth: the number one attribute of a
dream job was making a difference in people’s lives.23
If it is true that “in our hearts, we would all like to find a purpose bigger
than ourselves,”24 where better to find it then the nonprofit sector? But what if that
purpose is embedded in an organization, how do you bring it to life in that
context?
This book is about how to do bring an organization’s purpose to life using
Results Now. Understanding this quick and practical process begins with setting
the frame. In the first chapter, you will learn about four pillars of highperformance and be introduced to the Results Now model. Chapter two makes the
case for why you should embrace planning, but not get too carried away with it.
Chapter three pulls everything together and introduces the Results Now Master
Plan.
Chapter 1 The Four Pillars of
High-performance
It’s amazing what ordinary people can do if they set
out without preconceived notions.
- Charles F. Kettering
At a BoardSource conference some years ago, Vartan Gregorian, President
of the Carnegie Corporation, told a story about a board member at the University
of Pennsylvania from when he was a dean. The board member asked a question
about student/faculty ratios. Dr. Gregorian replied with pride that there was a oneto-one ratio in the department of Siberian studies. Not surprisingly, this disturbed
the board member very much because it seemed a wasteful use of resources. Dr.
Gregorian immediately understood that the best student/faculty ratio for that
individual was the 1-to-400 ratio in the Psychology 101 class. In other words, Dr.
Gregorian and his board member had very different opinions about what high
performance meant.
Defining High Performance
As Dr. Gregorian’s experience with student/faculty ratios illustrates,
helping your nonprofit become a high performer begins with being clear about
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what high performance means. For many us, high performance is equivalent to
effectiveness.25 And for the late great Peter Drucker in the mid-seventies, the
definition couldn’t have been any simpler, “Efficiency is concerned with doing
things right. Effectiveness is doing the right things.”26 The Achilles heel was in
knowing what things are right to do. For a decade the debate raged with expert
Kim Cameron finally throwing in the towel by declaring that “agreement about
effectiveness is mainly an agreement to disagree.”27
If you think that defining high performance in the nonprofit sector has been
any easier, think again.28 A decade or so ago, Daniel Forbes reviewed empirical
studies of nonprofit organizational effectiveness over a 20-year period and
determined that high performance has “been a subject of controversy and
confusion, and it is difficult to identify any signs of theoretical progress in our
understanding of the concept.”29
Though there is a good deal of opinion about what constitutes nonprofit
high performance, there isn’t much in the way of empirical research on the topic
and so we must inevitably turn to the for-profit sector.30 Certainly this is nothing
new. Just ask eBay founder Pierre M. Omidyar who wants to “persuade charities
to run like businesses.”31 And why shouldn’t he? As Robert Herman and David
Renz observe, “many ideas first instituted and popularized in business (such as
strategic planning, visioning, total quality management, benchmarking, and others)
are later adopted by NPOs.”32
Some of this for-profitizing of nonprofits may be due to the belief that there
is little difference between one business and another. As Peter Drucker puts it,
“Ninety percent or so of what each of these organizations is concerned with is
generic. And the differences in respect to the last 10 percent are no greater
between businesses and nonbusiness than they are between businesses in
difference industries.”33 Although mice and humans share 99 percent of their
genetic code34 (and we’re certainly not mice), maybe there really isn’t much
difference between for-profit and nonprofit agencies.
Assuming that the for-profit and nonprofit sectors mirror each other can be
temping, but it is faulty logic.35
First, “effectiveness measures applied in the private and public sectors are
significantly different.”36 Second, we know, for example, that 64 percent of 1,072
respondents to a national study of nonprofit executive directors were outsiders
when they took their position,37 inverse to the 36 percent rate of outsiders in forprofit successions.38
Third, we know that “the centrality of mission for nonprofit organizations
places limitations on their flexibility of action”39 compared to for-profits that can
simply shut down or sell off a line of business or even the entire operation. It may
be true that the “success rate for nonprofit enterprises is the same as small
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businesses: a large share fail. The difference is, with the social mission attached, it
is harder for nonprofits to let go.”40 Perhaps this is why Robert Shriner argues that
“Running a non-profit is VERY MUCH HARDER than operating a similar sized
for-profit business.”41
So what do nonprofits use to gauge effectiveness? A great many things is
the short answer. Daniel Forbes gives the long answer: goal attainment, system
resource, reputational, multidimensional, and emergent. Goal attainment is the
degree to which the organization achieves its goals; system resource measures
how well you use resources; the reputational approach is based upon how others
see you. Multidimensional approaches “recognize that NPOs have multiple
performance criteria (related to programs, finances, advocacy, etc.).”42 Emergent
approaches are, well, emergent.
Rather than try to make a case for one definition of high performance over
another, Robert Herman and David Renz simply say that “NPOs have multiple
performance criteria (related to programs, finances, advocacy, etc.), and these
criteria often are independent of one another . . . assessments that focus on a single
criterion (e.g. fund balance, a program outcome) are inadequate.”43 These two
experts are among the more prolific advocates of the multiple constituencies
approach to high performance wherein “an organization comprises multiple
stakeholders or constituents who are likely to use different criteria to evaluate its
effectiveness.”44
The argument here is that nonprofit executive directors should understand
that “different constituencies are judging their organizations’ effectiveness in
difference ways and that they (the managers) should find out what criteria are
important to the different constituencies and provide favorable information on how
their organizations are doing on those criteria.”45 Remember the story told by
Vartan Gregorian and his board member that begin this chapter, the one where the
board member valued larger class sizes and Gregorian thought smaller were
better? This is how the multiple constituencies approach works.
In 2004, Robert Herman and David Renz supported their position in a
longitudinal study of 64 locally based, United Way-funded health and welfare
organizations by saying “In short, we adopt the view that overall nonprofit
organizational effectiveness is whatever multiple constituents or stakeholders
judge it to be.”46 Early in 2005, they found an apt analogy to illustrate this method:
One way we explain this notion is to share the story of the three
baseball umpires and how they call balls and strikes. The first said,
“I just call ‘em as they are.” The second said, “I call ‘em as I see
‘em.” The third, the social constructivist, declared, “They ain’t
nuthin ‘til I call ‘em!” Of course, unlike baseball, NPOs have no
single umpire. All stakeholders are permitted to “call”
effectiveness, and some will be more credible or influential than
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others. We have found that different stakeholders who are judging
the same nonprofit often do not agree on that NPO’s effectiveness.
Furthermore, their judgments often will change over time.47
How to operationalize this multiple constituencies approach is
straightforward. Step one is to keep in mind that high performance is always an
issue of comparison. Sometimes you compare yourself to others as Michael Porter
recommends in his modification of Peter Drucker’s doing-things-right approach
by defining organizational effectiveness as “performing similar activities better
than rivals perform them.”48 Sometimes it’s that and more as David Renz and
Robert Herman describe:
The comparison may be to the same organization at earlier times,
or to similar organizations at the same time, or to some ideal
model, but effectiveness assessments are always a matter of some
kind of comparison. And the basis for the comparison is a key
(though sometimes hidden) element in defining effectiveness (and
why we often disagree about it).49
This certainly appears to be the case with the Alliance for Nonprofit
Management – an association of capacity builders serving nonprofits – where the
test of capacity building is “whether organizations and the sector as a whole have
become stronger and more effective in their efforts.”50 How do you know you’ve
become stronger unless by comparing yourself to an earlier time or to something
else? And the essential test of organizational change efforts in general? Just one
question: “Are we better today than we were yesterday?”51
In other words, “You’re either getting better or you’re getting worse each
day. There’s no such thing as staying the same.”52 This is certainly what Jerry
Porras and Jim Collins found in their study of built-to-last companies that “focus
primarily on beating themselves [by] relentlessly asking the question ‘How can we
improve ourselves to do better tomorrow than we did today?’”53
In step two, you don’t ask the stakeholder how the agency is doing with
regard to this or that characteristic (e.g. fundraising); you ask instead “how well
the organization has been doing on whatever is important to them.”54 Add up the
scores to get an average and you’re good to go. Because comparison is always a
part of effectiveness, how that average moves up or down over time becomes a
“useful overarching criterion for resolving the challenge of differing judgments of
NPO effectiveness by different stakeholder groups.”55 And even though everyone
is probably using a different criterion for what is being evaluated, that’s the nature
of the multiple constituencies approach; doing anything else is a waste of time
since not everyone will buy into it.56
This approach to understanding high performance – that it is whatever
stakeholders say it is – is not new by any means. Nearly 25 years ago, Kim
Cameron argued that the goal approach itself is a social construct that is subject to
same realities of all approaches, “Criteria for judging organizational effectiveness
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are founded in the preferences and guidelines of individuals. Individual
differences preclude consensus regarding one universal set of criteria.”57 At about
the same time, Anne Tsui asserted that managers “gain and accrue a reputation for
being effective by meeting the expectations of each of the multiple
constituencies.”58
Rosabeth Moss Kanter and Derick Brinkerhoff take this viewpoint as well,
“Effectiveness appears to be less a scientific than a political concept . . . Multiple
constituencies and multiple environments require multiple measures.”59 Melissa
Stone and Susan Cutcher-Gershenfeld also found this in a review of ten studies on
high performance in nonprofit organizations.60 Ditto for Barbara Blumenthal who
reviewed over 100 articles on organization high performance and organization
change, more than 30 assessments of capacity building, and had interviews with
more than a hundred people practiced in capacity building. And which were the
most important high-performance factors? She found that “it all depends.”61
This is certainly what the folks at the Stanford Social Innovation Review
learned when they evaluated the Review’s performance at the one-year
anniversary and learned that “depending on their perspective and interests,
different stakeholders have widely divergent definitions of performance, and as a
result, multiple and sometimes incompatible metrics for which they would like to
hold us accountable.”62
Multiple constituencies – which some call social constructivism instead –
may indeed be the way of the future, but the practical challenges of “They ain’t
nuthin ‘til I call ‘em” are obvious. Nonprofits have multiple constituencies with
vastly differing viewpoints and levels of experience. Stakeholders include clients
who may be impoverished and living in ghettoes and funders who may be very
wealthy individuals living in gated enclaves. Just picture “the dangers of a
situation where a single nonprofit has multiple funders, all of which put a high
priority on building capacity and effectiveness but each of which favors a different
path to enlightenment.”63
Making sense of all of these viewpoints is difficult for many especially
given the inherent conflicts. It may be true as that whatever works, works when it
comes to determining high performance, that no “one approach to effectiveness is
inherently superior to another.” 64 Even so, how can we make sense of the obvious
contradictory nature of the goal attainment approach when compared to the “I calls
‘em as I sees ‘em” social constructionist method? In the former, you made the
stated goal or you didn’t. In the latter, the answer you get on a rainy Monday
morning from your board chair may differ significantly with the answer on a
sunny Friday afternoon.
Given the foregoing, it is little surprise that Rick Cohen, executive director
of the National Committee for Responsive Philanthropy, says, “There is still no
hard-and-fast definition through the philanthropic world as to the parameters and
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indicators of nonprofit effectiveness.”65 Like Kim Cameron’s declaration that
“agreement about effectiveness is mainly an agreement to disagree,”66 when it
comes to the nonprofit sector, “little consensus has emerged, either theoretically or
empirically, as to what constitutes organizational effectiveness and how best to
measure it.”67
After reading this, one cannot help but feel sympathy for Sara E. Meléndez
– former executive director of Independent Sector – who said in an outgoing
interview, “Some people would probably see me walking on water and say, ‘See, I
told you she couldn't swim.’”68
Thus, whether your organization is a high performer is in the eyes of the
beholder; the criteria she will use are going to be hers and hers alone. It may be the
goal model, it may be the quality of the leadership of the agency, it may be the
organization’s reputation with funders, or it may be something else entirely. What
matters is not what you think constitutes high performance, but what your
stakeholder thinks. And as you will soon see, what they think about how to
become high-performing is quite specific.
The Third Envelope
A retiring executive director left three sealed envelopes for his successor to
open in case of emergency. Sure enough, within her first year, the new executive
director was forced to tear open the first envelope as the result of declining
revenues. Inside was the sage advice to announce a new fundraising campaign.
She did just that, the board and community cheered her initiative, and the crisis
abated.
Less than a year later, the campaign results were found to be lacking and
the new executive was forced to open the second envelope. When she announced
the cost-cutting campaign, the praise was loud and clear except of course for the
folks who lost their jobs. Thankfully, the crisis subsided, but the peace was short
lived as the cost-cutting only forestalled and intensified the crisis. With trembling
hands and her two-year anniversary just weeks away, the executive director ripped
open the third envelope which said quite simply, “Prepare three envelopes.”
So, what now? Is it time for the third envelope when it comes to what it
means to be a high performing nonprofit? Must we live in a cynical world where
“good managers are ‘spin doctors’”?69 Why should we care at all about what high
performance means? The reason is simple:
The need to demonstrate that one structure, reward system,
leadership style, information system, or whatever, is better in some
way than another makes the notion of effectiveness a central
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empirical issue . . . Practically, organizational effectiveness is not
likely to go away because individuals are continually faced with
the need to make judgments about the effectiveness of
organizations.70
The trick is to do exactly what Robert Herman and David Renz’s
recommend and “find out what criteria are important to the different
constituencies.”71 Thus, we can turn to experts in the field who have identified
levers for building the capacity to be effective; in other words, the criteria of high
performance.72 That’s because capacity at the most general level is described as an
organization’s abilities to accomplish its mission.73
Because of the broadness of the term, we often describe capacity by the
interventions that build it. These include “strategic planning, board development
and technology upgrades,”74 a “blend of sound management, strong governance,
and a persistent re-dedication to achieving results,”75 and the “development of an
organization’s core skills and capabilities, such as leadership, management,
finance and fundraising, programs and evaluation.”76
In the funding community, Barbara Kibbe, former Vice President, Program
and Effectiveness of the Skoll Foundation, defines capacity as “the ability of an
organization to define a meaningful mission, generate the tangible and intangible
resources to advance that mission, and deploy those resources efficiently and well
in the accomplishment of its work.”77 For Kevin Kearns, former President of the
Forbes Funds that dedicated all annual funding to capacity building efforts in the
Pittsburgh region, capacity building includes “activities such as direct consulting
with nonprofit organizations on specific operational or policy issues, training
seminars and other professional development programs to enhance the skills of
staff and volunteers.”78
The Alliance for Nonprofit Management defines capacity as the
organization’s ability “to achieve its mission effectively and to sustain itself over
the long term.”79 Giving an indication of how broad the concept can be is the
following statement from the Alliance:
Capacity building refers to activities that improve an organization's
ability to achieve its mission or a person's ability to define and
realize his/her goals or to do his/her job more effectively. For
organizations, capacity building may relate to almost any aspect of
its work: improved governance, leadership, mission and strategy,
administration (including human resources, financial management,
and legal matters), program development and implementation,
fundraising and income generation, diversity, partnerships and
collaboration, evaluation, advocacy and policy change, marketing,
positioning, planning, etc. For individuals, capacity building may
relate to leadership development, advocacy skills,
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training/speaking abilities, technical skills, organizing skills, and
other areas of personal and professional development.80
Grantmakers for Effective Organizations takes the prescriptive path by
recommending that the effective nonprofit “fulfill its mission by measurably
achieving its objectives through a blend of management, strong governance, and a
persistent rededication to assessing and achieving results.”81 Jamie Lee of the
Kauffman Foundation prescribes six attributes of the effective organization:
mission directed and vision driven, outcomes oriented, sustainable,
entrepreneurial, adaptable, and customer focused.82 Barbara Kibbe says that
planfulness, effective leadership, and strong governance are the three central
features of high performance.83 Christine Letts, William Ryan, and Allen
Grossman talk about the ability of organization to fulfill their mission in a
dynamic world where they “not only develop programs, but also operate, sustain,
improve, and grow them – eventually replacing them with new approaches.”84
As obviously illuminated in the foregoing and as Paul Light observes,
capacity building includes “dozens, if not hundreds, of applications, from training
programs to strategic planning, board development, management systems,
leadership recruitment, organization restructuring, and fund-raising.”85 No wonder
that “the most important challenge faced by those who would focus on NPO
effectiveness is that of the criterion. Is it possible to settle on a small number of
fairly easily measured indicators”?86
Grouping the ideas around common themes brings order to the many ideas
from the capacity-building experts above plus Paul Light’s Pathways to Nonprofit
Excellence study87 and Robert Herman and David Renz’s objective effectiveness
criteria.88 As shown in Table 1.1, what one finds in the third envelope are the four
pillars of high performance: purpose, strategy, operations, and governance:
Table 1.1 Four Pillars of High Performance
ADVICE
LEVERS
USES
the ability of an organization to define a meaningful mission,
mission directed, mission statement
Mission
PURPOSE
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-
leadership, effective leadership
Leadership
adaptable, entrepreneurial, develop programs, customer
focused
Strategy
Planning
-
STRATEGY
a persistent rededication to assessing and achieving results,
goals or objectives, have a strategic plan for the future, organization
restructuring, persistent re-dedication to achieving results,
planfulness, planning document, statement of organization
effectiveness criteria, strategic planning, vision driven, development
of an organization's core skills and capabilities, organization's abilities
to accomplish its mission, collaborate with other organizations
cost-cutting, deploy those resources efficiently, finance
Budgeting
are good fundraisers, fundraising, generate at least some
unrestricted income, generate the tangible and intangible resources
to advance that mission, have a diversified funding base, sustainable
Fundraising
management, management systems, sound management,
technology upgrades, use information technology such as e-mail and
the internet to enhance performance, use data to make informed
decisions
board development, board development, board
development/governance, by-laws containing a statement of
Purpose, board manual, have a clear understanding with their boards
about their respective roles, hold regular board meetings (at least 4
times a year), leadership recruitment, list or calendar of board
development activities, strong governance
OPERATIONS
Management
Board
Staff
GOVERNANCE
Delegation
encourage staff to work in teams, executive transitions /
successions, foster open communications, give staff authority to
make routine decisions on their own, have a participatory style of
management, know how to motivate people, leadership / mentoring
/ coaching, have few barriers between organizational units, have few
layers of management between the top and bottom of the
organization, have position descriptions for their staff, have programs
or resources for staff training, organizational assessment and
development, training programs
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-
independent financial audit
Finance
description of or form used in CEO performance appraisal
evaluation, have experienced significant growth in demand for their
programs and services over the past five years, measure the results or
outcomes of what they do, outcomes oriented, programs, regularly
survey clients regarding programs and services, report on most recent
needs assessment, use of form or instrument to measure client
satisfaction, operate-sustain-improve-grow
Assessment
Accountability
Translating these uses into a graphical representation reveals the Results
Now model as shown in Figure 1.1.
Figure 1.1 Results Now Model
STRATEGY
OPERATIONS
PURPOSE
Delegation
Accountability
GOVERNANCE
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Chapter 2 Planning Rules
Good things only happen when planned;
bad things happen on their own.89
Philip B. Crosby
It should come as no surprise that the foundation of the four pillars has a
planning sensibility. Along with opposable thumbs, planning is one of the
essential characteristics of being human. As opposed to simplistic behaviorism
wherein we are slaves to the stimuli around us, George Miller, Eugene Galanter,
and Karl Pribram argue in their landmark book that complex human behavior is
governed by plans we make, from the mundane – getting up and going to work in
the morning – to the momentous – winning the gold medal in an Olympic event.90
David Lester goes even further to remind us that the “plans are being executed as
long as we are alive. The question is not ‘Why are plans being executed?’ but
“Which plans are being executed?’”91
No practitioner or scholar would disagree that the making of plans, the
essence of which is setting goals, is a fundamental obligation of leadership. The
notable James McGregor Burns says, “All leadership is goal-oriented.”92 This is
true whether it is a solution to an intractable problem, a goal, or dealing with
things that need to be done.93
Clearly leaders are listening. Results from a survey of 708 for-profit
companies on five continents in 2003 placed strategic planning at number one on
the list of management tools with a usage ranking of 89 percent,94 which was the
same position as it was in 2000.95 The first place position of strategic planning did
not change in 2007.96 Though strategic planning ceded its highest-usage position in
2009 to benchmarking, it still earned top billing for overall satisfaction.97
The nonprofit sector reflects the for-profit sensibility to plan and highperforming executive directors wholeheartedly endorse the practice. When asked
what below-average organizations could do to improve performance, strategic
planning garnered the highest marks for what worked by these best-of-class
executives.98 And when these same executives were asked what particular
management tool had most improved the performance of their own organizations,
strategic planning again received the highest marks. These high-performing
executives clearly walk their talk given that 91 percent had strategic plans in place
at their own organizations.99
Strategic planning is not only a high-performer attribute; three out of five
do it. A study of 1,007 nonprofit organizations found that almost 60 percent of all
nonprofits had strategic plans and the bigger the organization, the more likely it is:
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52 percent of organizations with budgets under $250,000 have them compared to
80 percent of organizations with budgets of $10 million and over.100
Not only do nonprofits endorse the practice, management services
organizations surveyed by the Alliance for Nonprofit Management rank strategic
planning as the number one item on the capacity building menu. What makes this
made even more significant is that help with fundraising is the most sought after
by their clients, but it was tied for fifth place with management and human
resources.101 Though you might be hungry for fundraising, strategic planning is the
featured item on the capacity building menu.
Independent Sector, a “nonprofit, nonpartisan coalition of more than 700
national organizations, foundations, and corporate philanthropy programs,
collectively representing tens of thousands of charitable groups in every state
across the nation”102 also recommends strategic planning. Doing so, it says, will
help organizations “be more efficient and effective in mapping out a system for
achieving organizational goals and making the best choices to fulfill their
missions.”103
Just Say No
Does establishing a disciplined framework for thinking about the future
have to be painful? Is it true that the thicker the document, the more successful the
outcome will be? Does any disciplined approach to planning, including Results
Now, have any real value?
Boards and executive directors that are considering engaging in a planning
process can understandably become concerned about the investment of time and
resources. Questions will arise about whether there is value in having a framework
at all. After all, to achieve its chosen destiny, organizations must be strong and
stable while at the same time quick and innovative. The job is complicated and
often contradictory:
Organizations are supposed to be simultaneously loose (that is,
decentralized into relatively autonomous units) and tight (strongly
controlled from the top); big (possessing extra money for good
ideas) and little (with everyone having a stake in the organization’s
success); young (characterized by new people and new ideas) and
experienced (stocked with seasoned professionals who know what
they are doing); highly specialized (with individual employees and
units focused on narrow pieces of the organization’s overall job)
and unified (with everyone sharing in the mission).104
Building an organization that can achieve a chosen destiny is a perplexing
challenge. The people that are needed to push the envelope for innovation chafe
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under the very structure required to support the innovation once born. In the
contradictory environment, the value of imposing the structure of any disciplined
approach to planning is often hotly debated.
With all due respect to the three out of five who do it and the near
unanimity of recommendations, there are a number of complaints people raise as
justification for not joining the cause. The most prevalent is that few people
actually use their strategic plans in the here and now, that they really do gather
dust. Here’s how it all works according to balanced scorecard experts Robert
Kaplan and David Norton:
To formulate their strategic plans, senior executives go off-site
annually and engage for several days in active discussion
facilitated by senior planning and development managers or
external consultants. The outcome of this exercise is a strategic
plan articulating where the company expects (or hopes or prays) to
be in three, five and ten years. Typically, such plans then sit on
executives’ bookshelves for the next 12 months.105
Unfortunately, a study of human service executives by Karen Hopkins and
Cheryl Hyde lends support to this viewpoint. It found that only 27 percent reported
using strategic planning as way to address real agency problems.106 The authors of
the study suggest that the cause for this “may be that managers are overwhelmed
with the problems with which they have to contend, and that may interfere with
strategic problem-solving.”107 Or it could be that the Henry Mintzberg is right, that
the “nature of managerial work favors action over reflection, the short run over the
long run, soft data over hard, the oral over the written, getting information rapidly
over getting it right.”108
Going with your gut is human nature and it is often done with very little
hard information: “Study after study has shown that the most effective managers
rely on some of the softest forms of information, including gossip, hearsay, and
various other intangible scraps of information.”109 Add a bias for intuition to
reliance on soft information and you come up with the planning fallacy where
“managers make decisions based on delusional optimism rather than on a rational
weighting of gains, losses, and probabilities. They overestimate benefits and
underestimate costs. They spin scenarios of success while overlooking the
potential for mistakes and miscalculations.”110
The second major complaint about planning is that the very organizations
that need it most can least afford to do it from money and time perspectives. After
all, four out of five nonprofits have expenses of less than $1 million, three out of
five are less than $500,000, and 45 percent are smaller than $100,000.111 These
numbers cover only the 1.4 million public charities that filed form 990s with the
IRS and does not include the other 1.6 million flying under the radar.112
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Staffing, especially the paid full-time variety, is in short supply since half
of all nonprofits reporting have five or fewer full-time staff members and nearly
30 percent have one or none.113 Complicating matters is that board members, who
many experts argue should be very involved in strategic planning, are strapped for
time to put it mildly. Hoping that the nonprofit executive director brings planning
expertise to the table is wishful thinking since most are first-timers in the job.114
Juxtapose these realities against the time required by most planning
processes. John Bryson’s highly respected nonprofit strategic planning model
requires a meeting agenda of 18 to 20 hours over three months.115 Michael Allison
and Jude Kaye’s moderate approach requires a time-frame of one to three months;
the extensive method needs four to eight months.116 Not including homework,
Bryan Barry’s compact protocol takes 18 to 20 hours over 5 months; his longer
version requires 60 to 65 hours over 15 months.117
Looking to the private sector offers little hope for anything faster: The
ironically titled Simplified Strategic Planning: A No-Nonsense Guide for Busy
People Who Want Results Fast calls for a seven-day, 56-hour agenda spread out
over three months.118 Making matters worse, most of these strategic planning
processes deal with strategy only; the operating plans and governance matters of
delegation and accountability aren’t included.
It’s not so much the amount of time that gives one pause; it’s what can
happen during those long stretches. If you’d decided to use a three-month
approach in the late summer of 2008 when the Standard & Poor’s 500 stood at
nearly 1,300, you would have been living in a decidedly different world then right
before Thanksgiving when the S&P 500 was down nearly 40 percent to about 750.
Those that do not want to invest time in building a framework often
recollect their own personal experiences that were painful and led to little or no
impact on the organization. They remember the exquisite misery of working for
months and months on programs that were never utilized. As one trustee said, “I
can still recall the endless hours of meetings with the consultant pounding away at
us about strengths and weaknesses. It led to a document so thick that it made for a
better doorstop than a plan of action. The bulk of the board didn’t understand it,
that was okay, but what really hurt was that the staff didn’t understand it either.
They simply discarded it and went about their business just as they had before we
began the process.”
The third major reason that people give for avoiding planning at all costs is
that planning isn’t fluid enough to allow for the unexpected. No one wants to work
on things that end up as wasted efforts. Many of the opportunities that arise cannot
be anticipated in formal planning processes. A competitor loses its executive
director and thus creates a chance for merger. A foundation board changes its
focus in a way that invites a new program. Why not just wait for these sorts of
opportunities to come up and then seize upon them?
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This is certainly the observation that gurus Jim Collins and Jerry Porras
make:
Visionary companies make some of their best moves by
experimentation, trial and error, opportunism, and – quite literally
– accident. What looks in retrospect like brilliant foresight and
preplanning was often the result of ‘Let's just try a lot of stuff and
keep what works.’ In this sense, visionary companies mimic the
biological evolution of species. We found the concept in Charles
Darwin's Origin of Species to be more helpful for replicating the
success of certain visionary companies than any textbook on
corporate strategic planning.119
Adding more weight to “fast and loose” approach to strategy is some
compelling evidence that planning doesn’t make a lot of difference in the smaller,
entrepreneurial organizations that epitomize the nonprofit sector. Though the value
of strategic planning on small firms with 100 or less employees was confirmed in
one meta-analysis, “the effect sizes for most studies are small [and] it may be that
the small improvement in performance is not worth the effort involved.”120
Whether the organization is an entrepreneurial start-up also appears to
moderate the benefits. A 1990 National Federation of Independent Business study
of nearly 3,000 start-ups “showed that founders who spent a long time in study,
reflection, and planning were no more likely to survive their first three years than
people who sized opportunities without planning.”121 In another study of 100
founders of the fastest growing companies, only 28 percent had a full-blown plan
when they started out. Because of the dynamic environment that entrepreneurs
face, “an ability to roll with the punches is much more important than careful
planning.”122
Strengthening the argument that planning is a waste of time is Henry
Mintzberg’s recommendation that “conditions of stability, controllability, and
predictability [are] necessary for effective planning.”123 As such, he acknowledges
the significant impact that the environment can have on the organization. While
the research on planning is not conclusive, there is reasonable evidence to suggest
that planning is less appropriate for times of crisis:
An organization may find itself in a stable environment for years,
sometimes for decades with no need to reassess an appropriate
strategy. Then, suddenly, the environment can become so turbulent
that even the very best planning techniques are of no use of the
impossibility of predicting the kind of stability that will eventually
emerge.124
Juxtapose the need for stability against the helter-skelter realities of most
nonprofits and you come up with a resounding recommendation to just say no. As
the fictional HBO character, Tony Soprano would say, “Fuhgeddaboudit.”
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The idea here is that you shouldn’t try to control the world, but let the
world control the organization. Reacting as a strategy is not uncommon as John
Kay in his Why Firms Succeed explains:
The notion that successful strategies are often opportunistic and
adaptive, rather than calculated and planned, is a view as old as the
subject of business strategy itself. One of the best expressions of it
is Lindblom’s (1959) exposition of the “the science of muddling
through” . . . Lindblom’s perspective was most extensively
developed by Simon (1961) and Cyert and March (1963). They
deny that organizations can sensibly be viewed as entities with
personalities and goals like those of individual people. Rather,
firms are better seen as shifting coalitions, in which conflicting
demands and objectives and constantly but imperfectly reconciled,
and all change is necessarily incremental. In this framework,
rationalist strategy – in which senior management chooses and
imposes a pattern of behavior on the firm – denies the reality of
organizational dynamics.125
A reactive approach to thinking about the future has validity. Take the case
of the Child Care Clearinghouse, a fictional name for an actual nonprofit
organization. Two of its biggest strategic changes in recent years for the
Clearinghouse occurred serendipitously and were not anticipated as part of any
plan. The first was an appeal for assistance to the Clearinghouse’s executive
director from the board president of another, smaller agency with a similar mission
that happened while standing on a street corner waiting for the walk signal. Ten
months later, a new joint program between the two agencies was launched with an
annual price tag of $1 million. The program was executed by the smaller agency
and promoted by the Clearinghouse and it dramatically changed both
organizations for the better.
The second change for the Clearinghouse was even more surprising and
coincidental and involved another agency in the same business. On a beautiful
spring day, the executive committee of the Children’s Referral Service called to
express interest in a possible alliance with the Clearinghouse. That the Children’s
Referral Service delivered an outstanding service and was one of the treasures of
the community was not in question. That the Children’s Referral Service was
going through the most difficult period in its history and was teetering on the edge
of financial collapse was also not in question. After just one balanced budget in
seven seasons and a steady decline in activity, the board recognized its precarious
situation and entered into a management alliance with the Clearinghouse that very
summer.
Unfortunately, the alliance came too late to avoid a deficit of $250,000 for
the Children’s Referral Service, its biggest loss ever. Client placements hit a rock
bottom low at less than 2,600. Coming off a high at over 5,000 in the late 80s that
earned the company the status of the State’s best, the condition of the organization
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just 10 years later was a stunning reversal. Under these circumstances, the
company had no choice but to reduce its activities to exclude children above the
third grade.
Fortunately, the community of funders applauded the alliance. Through an
intensive effort, enough money was raised to pay off Children’s Referral Service’s
accumulated deficit, cover losses for a few years as it worked its way out to a
balanced budget, and create a cash reserve. At the same time, the new alliance
built capacity throughout the two organizations and improved strategic position.
Both of these changes for the Child Care Clearinghouse occurred as a result
of luck. No visioning process anticipated these opportunities. No strategic
planning process covered the possibility of such high-impact opportunities. In the
words of former First Lady Nancy Reagan, “Just say no.”
Just Say Yes
As suggested above, the value of strategic planning has been a matter of
considerable debate and research. Brian Boyd’s meta-analysis of 21 studies
representing nearly 2,500 for-profit companies at first seemed to suggest that
strategic planning had a very weak effect on performance, but when measurement
errors were taken into account, he found that the studies were guilty of “seriously
underestimating the benefits of planning [because] many firms do report
significant, quantifiable benefits.”126 More evidence from a later analysis led to the
striking conclusion that strategic planning “appears to double the longer term
likelihood of survival as a corporate entity” as compared to non-planners.127 A
different review of 35 studies found “strategic planning to positively affect firm
performance . . . equally in large and small and capital-intensive and laborintensive firms.” 128
When it comes to nonprofits, Melissa Stone, Barbara Bigelow, and William
Crittenden reviewed more than 65 studies representing over 2,000 organizations in
nonprofit organizations and did not find a conclusive relationship between
planning performance.129 Though some have seen this as evidence of a weak link
between strategic planning and performance,130 the lack of clarity is because so
few of the studies in the meta-analysis sought to examine the relationship between
formal planning and performance.131 Moreover, Robert Herman and David Renz
argue that the “evidence supports the view that strategic planning is related to
effectiveness.”132
One of the studies that did examine that relationship was Julie Siciliano’s
that looked at 240 YMCA organizations and found that “those organizations that
used a formal approach to strategic planning had higher levels of financial and
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social performance than those with less formal processes.”133 This particular study
is notable because the studies investigating the link between planning and
performance are few are far between.134
At the most basic level and according to Henry Mintzberg, there is only one
reason to engage in planning and that is to “translate intended strategies into
realized ones, by taking the first step that can to lead to effective
implementation.”135 Put another way, “the very Purpose of a plan or the action of
planning is to prepare for future activity.”136 Even though he says that “strategies
can appear at all kinds of odd times, in all kinds of odd ways, from all kinds of odd
places,”137 we usually engage in planning because we want to implement the
strategies that we already have in place or the new ones that we have discovered or
designed.
Remember the earlier advice from Jerry Porras and Jim Collins about
visionary companies? The one where they say these firms make “some of their
best moves by experimentation, trial and error, opportunism, and – quite literally –
accident.”138 The problem with this statement is in the word “some” in the first
sentence. If visionary companies only make some of their best moves by
experimentation, what do they do about the rest of their moves?
The issue here isn’t about where strategies come from; use peyote and a
sweat lodge if that’s what works for you. Do try a bunch of things and see which
one works. See what others are doing in your field, imitate, and improve. Don’t try
to control the world, let the world control the organization. But eventually you will
have to program those strategies into some workable protocol that allows you to
execute. As Larry Bossidy and Ran Charan warn, “Strategies most often fail
because they aren’t executed well. Things that are supposed to happen don’t
happen.”139
Scholars and practitioners have identified many benefits for undertaking a
planning process. Beyond the primary benefit of planning to program current or
new strategies, Henry Mintzberg adds communication media and devices for
control; the analysis, identification, and evaluation of potential strategies; and
helping others to think strategically.140 Leonard Goodstein, Timothy Nolan, and
William Pfeiffer say that planning is useful to give “a framework for action [to]
unleash the energy of the organization behind a shared vision [and] to constantly
adjust to current events and actions by competitors.”141 McKinsey gurus Eric
Beinhocker and Sarah Kaplan find just two benefits:
The first is to build “prepared minds”—that is, to make sure that
decision makers have a solid understanding of the business, its
strategy, and the assumptions behind that strategy, thereby making
it possible for executives to respond swiftly to challenges and
opportunities as they occur in real time. The second goal is to
increase the innovativeness of a company’s strategies. No strategy
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process can guarantee brilliant flashes of creative insight, but much
can be done to increase the odds that they will occur.142
Back to nonprofits, Michael Allison and Jude Kaye offer two reasons to
plan: It improves focus and it improves the way people work together.143 John
Bryson and Farnum Alston give seven reasons: Increased high performance,
increased efficiency, improved understanding and better learning, better decision
making, enhanced organizational capacities, improved communications and public
relations, and increased political support.144
John Bryson names four including “the promotion of strategic thought and
action . . . improved decision making . . . enhanced organizational responsiveness
and improved performance . . . directly benefit the organization’s people.”145
Bryan Barry has seven advantages including improved results, momentum and
focus, problem solving, teamwork-learning-commitment, communication and
marketing, greater influence over circumstances, and a natural way to do
business.146
Grouping these many ideas – for-profit and nonprofit – around common
themes gives order to the benefits and uses of planning as shown in Table 2.1.
Table 2.1 Benefits and Uses of Planning
IDEAS
BENEFITS
communication media, improved communications and public
relations, communication and marketing, prepared minds
Set Direction
Program
the promotion of strategic thought and action, a framework
for action, momentum, focus, program current or new strategies,
helping others to think strategically, directly benefit the
organization’s people,
Identify Strategies
Create
the analysis, identification, and evaluation of potential
strategies, to constantly adjust to current events and actions by
competitors, greater influence over circumstances, increase
innovativeness
©
Implement
Communication
Coordinate Action
improves the way people work together, unleash the energy
of the organization behind a shared vision, teamwork-learningcommitment, improved understanding and better learning, devices
for control
USES
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-
Operational Effectiveness
Enhanced Legitimacy
increased political support
Achieve Results
enhanced organizational responsiveness and improved performance,
increased effectiveness, increased efficiency, enhanced organizational capacities,
improved results, problem solving, a natural way to do business, improved decision
making, better decision making
In other words, a planning process like Results Now can create, program,
and implement strategy to achieve results. And if this is not enough to convince
you, think about the fundamental responsibility of the board as argued by William
Bowen, President of the Andrew W. Mellon Foundation:
Perhaps the overriding obligation of boards in both sectors is to
require that a sensible plan of some kind be in place and that it be
monitored carefully. It is surprising how frequently no real
planning occurs, especially on the part of the nonprofit world. And
it is even more surprising how frequently plans that were adopted
are not tracked in even the most rudimentary fashion.147
Why should Bowen be surprised that no real planning occurs or that
organizations do not track the plans adopted? At the end of the day and despite the
efforts that boards make, there will be members who miss meetings and who don’t
read advance materials. There will be disruptive members, those who are too
involved with the organization, and those who are disconnected. There will always
be inexperienced members and members who ignore the organization’s annual
fund appeal. There will be novice executive directors. That’s why well-designed
planning processes have value, ones that are quick and practical, not too much and
not too little.
The first point in W. Edwards Deming’s Management Method, widely
credited for turning around Japanese Industry and restoring American quality to
world leadership, is to create constancy of Purpose. This constancy of Purpose
does not originate in a reactive environment: “It is easy to stay bound up in the
tangled knots of the problems of today, become ever more and more efficient in
them.”148 And what is Dr. Deming’s recommendation? A plan for the future.
Show Me the Money
In Cameron Crowe’s film Jerry McGuire Cuba Gooding (who won a bestsupporting Oscar for his performance) plays Rod Tidwell, an aspiring tight end
who believes that he’s worth a lot of recognition both financially and otherwise.
Rod Tidwell’s mission is that a four-word sentence, “Show me the money.” In
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trying to convince Rod Tidwell that it takes confidence plus performance with a
touch of humility to win the game, Jerry McGuire’s four-word mission is quite
different: “Help me help you.” Forget all the other reasons for planning especially
when it comes to funding, if there’s one thing that helps funders help you and
shows you the money, it’s planning.
First, using the plan as a communications tool has tremendous value
because it tells the story of what the organization is trying to accomplish, the
direction it is heading. If what Howard Gardner observes is true, that “the artful
creation and articulation of stories constitutes a fundamental part of the leader’s
vocation,”149 then at some point the leader must create the script for that story. As
such, planning provides better communication media by generating necessary
information and data that is useful for things like the annual message, grant
writing, sponsorship proposals, and the like.
Instead of an off-the-cuff approach that cobbles things together, Results
Now provides real information, honestly constructed, to form messages that build
trust that can then form much of the content needed. Moreover, such a planning
process improves internal communications by providing a means to stimulate
meaningful conversation about what the organization is trying to accomplish. It
brings people together by providing a common language and vocabulary
concerning the organization’s efforts.
More specifically, an organization doing a comprehensive job of planning
that includes strategy, operations, and governance elements will be able to raise
money more effectively. After all, in order to be successful in fundraising, a strong
case statement always needs to be made. And that goes for both established and
emerging agencies:
When [established] nonprofits make a pitch for a donation, they
describe their longest running programs, show how well they
manage money, and tout their success stories. But when start-up
organizations look for seed money, they can’t point to their
achievements. To compensate, they must have a well-thought-out
plan, something in writing that they can show prospective
funders.150
As funds get tighter and funders become more concerned about
organizational capacity, the nonprofit with a comprehensive plan can prove that it
has all the elements in place to address any questions about strategy, operations,
and governance. The inclusion of a well-executed plan in a funder packet
engenders confidence. It is an impressive document, which shows the potential
funder that the organization takes its business seriously.
In a world in which general operating funds are increasingly difficult to
identify, much less to secure, being able to build strong project-oriented proposals
is necessary for garnering support. Unfortunately, a frequent claim from nonprofit
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executive directors is that their agencies are not project-oriented, especially in the
human service area. It is often a surprise when they find that there are indeed
programs and services that are fundable from a program standpoint.
Program support gives a sense of ownership to the donor and it starts with a
careful review of the organization’s lines of business, its key programs or services,
its major products. These by themselves may merit sponsorship support. By
breaking them into the various program components, most nonprofit organizations
can create a sizable inventory of attractive funding opportunities.
Any organization can do the homework to develop a roster of sponsorship
opportunities and the necessary case statements for general fundraising. The
difference between fundraising in an organization that plans and one that doesn’t
is that proposals, solicitations, and opportunities for giving are driven from a
carefully considered process that answers the question of where to go tomorrow, a
question that every donor wants explained.
Moreover, all people who raise money face the inevitable funder inquiry
about programs that received support: “When did it happen?” Especially in the
case of general operating support, funders often need an annual report outlining
the results of operations for the fiscal year. Sponsors demand detailed reports
about the funded project and government agencies require compliance summaries.
Whatever it is called, whether it’s compliance or assurance, accountability is the
underpinning. Rather than waiting until the last minute to produce the report of
accomplishments based on hastily assembled activity logs, data, and statistics, a
good plan has the needed information readily accessible.
Second, enhanced legitimacy comes with planning. Remember that
strategic planning is the top 2009 management tool for global business from a
satisfaction standpoint.151 Remember that strategic planning garnered the highest
marks for what worked by executives of high-performing nonprofits and that 91
percent of them had strategic plans in place at their own organizations.152 And
don’t forget that three out of five nonprofits do it and management services
organizations make it their top field of concentration. It is hard to ignore the
implications: If you want your nonprofit to grow into a high performing nonprofit
with a big budget (or get much needed funding), you need to have a plan.153
This viewpoint that planning is important is the elephant in the board room
of agencies that don’t plan. But plan they eventually will as nonprofits “adopt
formal planning when required to do so, suggesting that funders exert a form of
coercive pressure on nonprofits.”154 Unsettling as it may be for those who don’t
plan and uplifting for those who do is the news that nonprofits “appear to be
rewarded for doing so through an increase in resources.”155
Woody Allen once said that “Eighty percent of success is showing up.”156
And that’s what legitimacy is all about. In a study of 330 nonprofits, the
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researchers found few significant relationships between formal planning and
measures of performance, but they did find that “organizations in institutional
environments will adopt elements of administrative practice and structure for their
legitimating qualities, regardless of their effect on efficiency or performance.”157 In
a different study comparing churches that plan and those that didn’t, no significant
differences were found, but “a formal written plan appears important for
convincing funding sources that church administrators know what needs to be
done and how it should be done.”158 Put directly, planning quite literally shows
you the money.
Bottom Lines
Even though the two major changes to the Child Care Clearinghouse
occurred as a result of luck, the third change came about as a result of carefully
thinking about the future. Beginning with market research conducted that
concluded, “Families represent the greatest potential for future market growth,”
the Child Care Clearinghouse began planning to launch a new referral and shelter
service for families. The new service was initiated in a test fashion a year later
with full funding and rolled out in a full launch two years later again with full
funding guaranteed for the first three years. By planning for the dream, many of
the problems that occur with experimentation are eliminated or minimized
including funding and organizational capacity.
So, which way is best? Is it the “Just say no” reactive approach in which no
planning is good planning? Or is it the “Just say yes” proactive approach?
There are those who will throw up their hands in the face of organizational
complexity and the quickly changing world around them. They will complain
about the plan that gathers dust on the bookshelf and they will strenuously avoid
wasting time in any exercise that attempts to think about the future. Meanwhile,
back at the ranch, real people are doing real work. Whether consciously or not,
each and every one of those people is making assumptions about the future.
No matter what leaders may wish, actions today have impact on tomorrow
and when leaders deny this reality; it does little to help those people who must do
the work of the organization. You either make a choice about the organization’s
destiny or someone else will. As Stephen Covey says, “If you wait to be acted
upon, you will be acted upon.”159 That someone acting on the organization may not
be a board member, may not be an executive director, but no matter what,
someone, somewhere is going to give direction. Does the executive director or
board president really want the marketing director to set the “vision du jour?”
Give direction by default or do it by design, but one way or another, direction is
going to be given.
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The Child Care Clearinghouse alliance may have arisen by luck, but to
manage the opportunity, to make it successful, required a systematic way of
thinking. How could the Child Care Clearinghouse team handle the Children’s
Referral Service in such deep trouble? How could the board of the Children’s
Referral Service, which was known for micro-managing its operations, become
more helpful? All these questions would have been sorted out over time one way
or another, but Results Now allowed them to be answered in short order.
One way or another, we must have some idea of the direction that the
organization should move in. Either that direction is going to come in an orderly
fashion through some process or it will be made up as it goes. Actions always
indicate the plan behind them or the lack thereof. That plan is either articulated or
not, thought out or random. And when everything is said and done, people will
have taken action; the question is whether that action fits a clearly articulated
direction or is simply the whim of the individual.
Paul Light in his book Sustaining Innovation studied twenty-six nonprofit
organizations as he searched for common characteristics that would make the
sporadic act of innovating a regular occasion. He identified four broad
characteristics including critical management systems that must serve the mission
of the organization, not vice versa. About these management systems, he says:
Rigorous management systems cannot be taken as a given and are
essential for sound innovation. They also make the single act of
innovation less an act of courageous defiance and much more a
natural act central to achieving an organization’s mission.160
Having a framework, any framework at all, that deals with these important
questions instills a discipline into an organization that can provide a welcome
infrastructure that is hospitable to opportunity. The Yogi Berra leadership school
of “When you come to a fork in the road, take it”161 clearly applies here. If you
don’t know what business you’re in, how can you make effective decisions about
that business or new ones that you might enter?
Organizations are in some respects like long-distance runners that must up
build muscle and endurance for the challenge of the race. That training, the
mundane, day-to-day sweat and pain that prepares the athlete for the eventual race,
is part and parcel of what it takes to win. It’s not glamorous, but it is necessary for
success. An organization that uses a disciplined and comprehensive planning
approach builds the necessary organizational muscle to win. As such, “success
isn’t measured by the number of breakthrough ideas it produces [but] by how well
the review helps management forge a common understanding of its environment,
challenges, opportunities, and economics, thus laying the groundwork for better
real-time strategic decision making.”162 The discipline required of the method
assures the board and the staff that essential systems will be in place that can give
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the organization the foundation for achieving its chosen destiny, whatever it may
be.
There will always be people who believe that planning of any sort, long
range, strategic, short range, is a waste of time. “The world changes so rapidly, all
that can be done is react,” these people claim. Faced with the question of to act or
to react, do both. Invest in a process that will give the security of direction, but
don’t invest so much time and effort that changing course as conditions warrant it
becomes more difficult. Have a roof over your head that’s flexible, one that invites
addition, modification, or outright abandonment, but don’t have a palace that must
be worshipped and preserved because of its cost.
So, here we are at the end of a cursory review of the pros and cons of
planning that some will say has been covered succinctly, others ad nauseam, and
still others not enough. Here’s the bottom line about planning: Even if you don’t
think you’re ready to do it, don’t think you need to do it, don’t want to do it, don’t
care about it, don’t believe it matters, or know “whether planning leads to
effectiveness or whether effectiveness leads to planning”,163 your stakeholders in
general and funders in particular do believe it’s important, that it matters.
Engaging in a planning process simply because your stakeholders believe it is
important may appear to be the ultimate folly, but doing so is completely
consistent in a world where nonprofit effectiveness is judged “in terms of response
to the needs and expectations of their stakeholders”164
For those familiar with philosophy, this argument for planning is similar on
a small scale to Pascal’s Gambit where it is better to believe that God exists than
not believe because you have little so lose by believing and so much – both
infinite and eternal – to gain. Henry Mintzberg puts it this way, “Too much
planning may lead us to chaos, but so too would too little and more directly.”165
And Michael Porter asserts that “questions that good planning seeks to answer . . .
will never lose their relevance.”166
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Chapter 3 All Together
To build a successful team, you don't start out with
people – you start out with the job.
You ask: What are we trying to do?167
Peter Drucker
The four pillars of high performance – mission, strategy, operations, and
governance: delegation and accountability – together generate five essential
questions that every organization must answer:
Why?
Where to go tomorrow?
What gets done today?
Who does what?
When did it happen?
These five questions can be answered in many different ways from
informal to formal. Results Now falls is a moderate approach that strikes a balance
between these two extremes by creating a unified frame – a Master Plan – to guide
the work of the organization. After all and as noted expert Henry Mintzberg
advises, “All viable strategies have emergent and deliberate qualities.”168 The trick
is to find a process that offers enough structure to be Purposeful, but not so much
that the organization loses its adaptability. Results Now strikes just the right
balance by keeping things quick and practical – not too much, not too little.
Unlike traditional methods, Results Now is an ongoing way of doing things,
an essential part of day-to-day organizational life. First, the Results Now Master
Plan itself is often used as a centerpiece of board meetings and many organizations
include it as a standard part of board meeting advance Information. Second,
because the Results Now Master Plan is so uncomplicated, it can be refreshed as
needed and at least annually as a regular part of day-to-day operations.
Governance experts John and Miriam Carver argue that the job of
leadership is to ensure that “the organization produces what it should . . . while
avoiding situations and conduct that should not occur.”169 William Bowen,
President of the Mellon Foundation, says, “Perhaps the overriding obligation . . . is
to require that a sensible plan of some kind be in place and that it be monitored
carefully.”170 For the Carvers, accomplishing the mission is the end; for Bowman,
the plan is the means to that end. For organizations looking for a quick and
practical way to do both, the five questions are the right questions and the Results
Now offers a method for answering them.
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Master Plan
In the earliest iterations of Results Now, only three questions were
addressed:
Why?
Where to go tomorrow?
What gets done today?
This is pretty standard stuff, the one-two punch of strategic and operating
plans. Though Results Now proved itself effective, a deficiency began to show
itself. There was frequent confusion and conflict about duties especially at the
board and executive director levels. Complaints about micro-management by
boards were common among executive directors while boards often complained
about dull meetings and not having a great enough impact on the organization.
In addition, concerns arose about the need to have a disciplined approach to
monitor performance so that the plans wouldn’t end up on a shelf gathering dust.
Attempts to find a suitable solution to the governance question often leads to the
Policy Governance® model.171 Developed in the late 70s, the model contains four
policy elements: Ends are mission-related and serve as the board’s long-range
plan. Executive Limitations clarify boundaries for the staff. Board-Executive
Linkage policies are concerned with delegation between board and staff. Board
Process policies deal with how the board governs itself.
By using the Policy Governance® model, John Carver contends that boards
can compose and then control policies about many of the governance variables.
This turns out to be easier said than done.172 For example, the critical Ends policies
that answer the where to go tomorrow question and drive an organization forward
are difficult to construct and then monitor.173 And when compared to other solid
board development programs, Policy Governance seems to yield similar, but not
superior results.174
The real answer to the delegation and accountability questions turns out to
be a large dose of common sense: Decide who does what (delegation) and when it
happened (accountability). Thus, the final resolution to the question of governance
was the addition of the third and fourth question:
Who does what?
When did it happen?
The output of Results Now is a Master Plan, which is a practical tool that
will help make it possible for the organization to achieve its chosen destiny
whatever that may be. It is results driven and covers the five major questions as
illustrated in Figure 3.1.
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Figure 3.1 Results Now Master Plan
STRATEGIC PLAN
OPERATING PLAN
Where to go tomorrow? What gets done today?
Lines of Business
goals
success measures
Budget
vision
PURPOSE
Delegation
Who does what?
Duties
Guidelines
Why?
Accountability
When did it happen?
Agendas
Assessments
GOVERNANCE PLAN
Results Now has its own distinct vocabulary that in some ways is familiar.
It uses many words that are common to planning mission and vision, but these
words may have different meanings for different people. Strategy is mostly about
lines of business, which are the programs, services, or products that are the
organization’s major activities. Though the term is quite common to the for-profit
sector, if you are more comfortable using another word, simply take your pen and
write in the word you like better. Results Now isn’t about forcing a vocabulary on
anyone; it isn’t about demanding the "one true" answer. There are no right
answers, just the right questions.
Results Now is also not a magic bullet for achieving impossible dreams,
making conflict go away in agencies, raising piles of money, or whatever else ails
you. It won’t fix problems on its own; it won’t mend the unmendable. It is a tool—
nothing more, nothing less. There will still be board members that fail to live up to
their obligations or executive directors that deliver disappointing performance.
Be Quick
John, a veteran of a board that uses Results Now says that the process
“Bozo-proofs an organization and its board.” It creates a context, a way of doing
things, so that the difficult decision or difficult board and staff member, for that
matter, can be confronted effectively. Bozo-proofing an organization by giving it a
framework for consistently and capably managing itself is a sensible thing to do,
but it must be a framework that is practical, one that doesn’t take a two-day
orientation seminar to grasp.
Of course, many might say there are easier ways to do this and many
organizations search high and low for solutions. We want to believe that we
correct all the problems. It is a search for symptomatic relief, however. Take
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boards for example. Maybe they can be bettered if we have a smaller board or a
bigger board, maybe more time for meetings or perhaps a shorter time
requirement, more thorough advance materials or abbreviated information,
meetings after work or breakfast meetings, an annual retreat off site or no more
retreats at all.
Boards are not an end unto themselves; they are a means to an end. The
proof of a great agency is in its accomplishments, not in how effective it is with
recruitment and orientation of board members or the degree of satisfaction with
meetings. These are means to an end, not an end itself. Stephen Covey’s
immensely popular book The Seven Habits of Highly Effective People lists being
proactive as its first habit:
While the word proactivity is now fairly common in management
literature, it is a word you won’t find in most dictionaries. It means
more than merely taking initiative. It means that as human beings,
we are responsible for our own lives. Our behavior is a function of
our decisions, not our conditions. We can subordinate feeling to
values. We have the initiative and the responsibility to make things
happen.175
No one can deny the rationality of Covey’s argument, but it is not easy to
make the transition from being reactive to proactive. Making proactivity come
alive in an individual is difficult to cultivate; if it were not, Stephen Covey would
have listed it as a footnote, not as the first of seven habits. And as hard as it is to
make an individual to become proactive, there is the added difficulty for a
collective like a nonprofit organization. And what is the end of an agency
including its board? Its chosen destiny.
Of course, to achieve a chosen destiny, the chosen destiny must first be
chosen. In order to become truly strategic, the organization must be both reactive
and proactive. If not, it will be buffered by every trendy management fad or
reform movement that comes along. It must be focused on delivering results now,
not later.
This book will show you how to build a Results Now Master Plan. To do
this requires a process that must answer Peter Drucker’s question that began this
chapter: “To build a successful team, you don't start out with people – you start out
with the job. You ask: What are we trying to do?”176 To get to the answer, any
effective process has to meet satisfy three requirements.
First, the process used to build the plan must be quick since board members
and the staff members do not have much time to give to the task. To be sure,
building a Results Now Master Plan can be done at a more moderate pace. Most
organizations decide to be quick about things. The cost for speed is that the Master
Plan will have less refinement, but this can be balanced by making it an ongoing
endeavor to polish it. The Results Now Master Plan puts a roof over the
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organization’s head; polishing it over time makes it a home and becomes the
perpetual work of the board and staff.
Quicker installations can be better than drawn-out ones for another reason.
Because of the modest investment in time, the Results Now Master Plan is a home
that no one will feel sad about renovating or selling or rebuilding from scratch. It
isn’t a palace that people are scared to live in. Boil this down into the adapted
words of the great Prussian General Helmuth von Moltke and you get the point:
“No business plan ever survived its first encounter with the market.”177
John Wooden once said “Be quick, but don’t hurry”178 and this epitomizes
Result Now. Begin with what you’re doing now and not with what you’re doing
next. Deciding what’s next – formulating strategy – is both a science and an art; it
can take a lot of time or be a lucky break. As the eminent Henry Mintzberg notes,
“few if any, strategies are purely deliberate, just as few are purely emergent. One
means no learning, the other means no control. All real-world strategies need to
mix these in some way: to exercise control while fostering learning.”179 So, be
quick to understand what you’re doing now, but don’t be in a hurry to figure out
what you’re doing next.
Second, the Results Now Master Plan must be simple because the levels of
experience are going to vary from member to member and within the professional
staff. It must be user-friendly for a wide variety of users. In the words of Albert
Einstein, “Everything should be made as simple as possible, but not simpler.” 180
Gone should be the long-winded mission statements and impossibly
complicated documents that few can understand. The focus is on the critical few
rather than the trivial many; those issues that will deliver the greatest results are
the center of attention. Less is more; simple is better. This is all in keeping with
what Tom Peters and Robert Waterman observed in the early 80s:
The project showed, more clearly than could have been hoped for,
that the excellent companies were, above all, brilliant on the
basics. Tools didn’t substitute for thinking. Intellect didn’t
overpower wisdom. Analysis didn’t impede action. Rather, these
companies worked hard to keep things simple in a complex
world.181
Results Now gets much of its simplicity by using the 80/20 rule, which is
formally known as the Pareto Principle. Vilfredo Pareto was an economist who
declared that in any group of objects, 20 percent of the objects would account for
80 percent of the group’s entire value. For example, 20 percent of the donors
contribute 80 percent of the funds in an annual campaign. In the process of
building a Results Now Master Plan, it is important to focus on those issues that
will have the most significant impact, the 20 percent that will deliver the 80
percent.
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The third rule of Results Now is that everything in the Master Plan should
ultimately make a difference in the work that real people do in the here and now.
Nothing should be included unless it informs the work that gets done today. If it is
confusing or extraneous, it’s not in the Results Now Master Plan. For example,
instead of an operating plan that contains every goal and action including what are
essentially job duties (the 95 percent of jobs that we all do every day), Results
Now includes only material goals (the 5 percent of new or improved things that we
have a motivating shot at getting done).
How involved the board is in each of these components depends upon the
particular circumstances of that organization. Some boards will be very involved.
They will participate in setting the goals for staff departments. Other boards will
be concerned only about the work of the board itself. Some boards will delegate
the crafting of every element that builds a Results Now Master Plan to staff; other
boards will be involved in every detail.
The degree of involvement on the part of the board is fluid and depends
upon a host of variables including the experience of the executive, the amount and
depth of staff, and resources available. A grassroots organization with a budget of
less than $100,000 and no full-time professional staff will answer the five
questions differently than a $10 million foundation. A board with 50 members will
probably need an executive committee, a board of 12 might not, either of which is
certainly agreeable. The point here is to focus on the five questions and derive
answers that are appropriate at your particular place in time.
The important point – critically important – about involvement is this:
“those who carry out strategy must also make it.”182 What this means is that if the
staff will implement the strategy are missing from the room, you are doomed to
failure. So, should the marketing director be in the room, the development officer?
Absolutely, positively, yes; the more the merrier. Should you use a small, behindthe-scenes group of board members who will take the load off the larger group?
Absolutely, positively, not; there is nothing more fundamental and important to a
great board – and being a great board member – than being involved in strategy
setting.
Results Now is not just for organizations that are already strong. In fact, it
can be extremely valuable for those in dire circumstances. After all, once there is a
plan of action, climbing out of a hole can actually be easier than fighting your way
out without any idea of where to go next. For the new executive director, no
matter what shape the organization is in, the first thing that should be done is to
see if the answers to the five questions exist. If the answers aren’t there, get them
quickly.
Form follows function in Results Now. Instead of the old “We’ve always
done it this way,” you build the around the order of the five questions. As such,
Results Now is big-picture first, details next, and is inherently optimistic about the
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future. Since the success measures from the strategy plan are tied seamlessly to the
operations plan, where real people have bottom-line responsibility and authority
for implementation, a feedback loop exists that keeps excess optimism in check.
The Results Now Master Plan can be upbeat about where to go tomorrow
while at the same time absolutely down-to-earth realistic about what gets done
today. Furthermore, the success measures provide glue that holds the things
together from front-line staff to executive director to board member and thereby
diminishes the chance that the Master Plan will end up on a bookshelf or as a
doorstop. And isn’t using the plan in the here and now the ultimate test of an
effective planning process?
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Part II: Purpose
He who has a why to live for
can bear almost any how.
- Nietzsche
STRATEGIC PLAN
OPERATING PLAN
Where to go tomorrow? What gets done today?
Lines of Business
goals
success measures
Budget
vision
PURPOSE
Delegation
Who does what?
Duties
Guidelines
Why?
Accountability
When did it happen?
Agendas
Assessments
GOVERNANCE PLAN
In the opening credits of the Jerry Maguire, Tom Cruise’s character creates
a new mission that sets the stage for the rest of the film. As a cut-throat executive
in a sports management firm that handles the careers of top athletes, Jerry
experiences a crisis one night on the road at a NFL owners meeting in Palm
Desert. On this sleepless night, Jerry reflects back upon his life and a variety of
incidents including the star player who only signs his sponsor’s brand of baseball
cards, the young son of an injured football player who calls Jerry out for not
protecting his dad, and the high-profile player whose indiscretions Jerry blithely
spins away.
When Jerry totals up his life’s work, he comes up short, “In the quest for
the big dollars, a lot of the little things were going wrong . . . Who had I become,
just another shark in a suit?”183 The answer to his sleepless night of self-reflection
is a new mission for Sports Management International, a company made up of
“Thirty-three out of shape agents guiding the careers of 2,120 of the most finelytuned athletes alive.”184 The mission is straightforward: “Caring for them, caring
for ourselves, and the games too.”185
There are many top managers and managers in organizations who honestly
believe that the key motivator in the workplace is pay. You may know some of
these people. “I remember when a person got a dollar for a dollar's work,” they
say. “Their paycheck is enough motivation.” However, while money is a
consideration, it is not as important for many. Daniel Pink, for example, says that
it takes three things to motivate most people in the workplace: “(1) Autonomy –
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the desire to direct our own lives; (2) Mastery: the urge to get better and better at
something that matters; and (3) Purpose – the yearning to do what we do in
service of something larger than ourselves.”186
What can be missed in this is the obvious fact that purpose-driven people
need a purpose. They need to have it reinforced on a regular basis. When new
employees are recruited to the agency, they need to be given a clear understanding
of the purpose and how important they are to helping deliver on it. This section
contains two chapters. The first chapter is about the values that guide conduct. The
second chapter concerns the mission that addresses customers, the difference to be
made in their lives, and how the organization is different from its rivals.
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Chapter 4 Values
If you plant ‘Crab’ apples,
don’t count on harvesting ‘Golden Delicious.’
- Folk Saying
Pick up the newspaper any day or go to the web and there will be some sort
of revelation about values at work in society. Just in time for the winter holidays a
few years back, many newspapers picked up an Associated Press article about a
survey of 29,000 high school students in which 30 percent admitted stealing from
a store within the past year, eight in ten had lied to a parent about something
significant, and two in three had cheated on a test. Surprisingly, nearly all of the
participants were satisfied with their personal ethics and character and three in
four said that they were better than most when it comes to doing what is right.187
Though some might see these illustrations as a rather dour commentary on
the moral fabric of our society, others call it business as usual. In an interview
with Richard Dawkins, author of The Selfish Gene, Terry Gross, host of NPR’s
Fresh Air from WHYY, asked why we haven’t evolved more from a moral
standpoint. Dawkins responded, “The question is the other way around. If you
look at the selfish gene view of life, the question rather is why we are as moral as
we are?”188
Beginning an introduction to values with such gloom-and-doom is fairly
typical. Joanne Ciulla begins her 1995 book, Ethics, the Heart of Leadership, by
saying, “We live in a world where leaders are often morally disappointing.”189
Linda Treviño and Katherine Nelson open their 2007 Managing Business Ethics
similarly, “The popular business press is replete with feature stories describing
ethical meltdowns and how those corporate misdeeds have eroded the public
trust.”190
Bill George, former CEO of Medtronic, begins his 2003 Authentic
Leadership succinctly with “Thank you, Enron and Arthur Anderson.”191 Thomas
Jones’ 1991 top-ten-most-cited paper on ethical decision making opens with the
following:
Reasons for increased societal focus on ethics in organizations are
many. Insider trading on Wall Street, defense contractor scandals,
involving both private and public sectors, rental car repair
overcharges; and the resignation of over 100 Reagan
administration officials have helped keep ethical issues in the
public eye.192
Were it not for the reference to Reagan, this introduction would be as
relevant today as it was 16 years ago. Unfortunately, results from the 2007
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National Business Ethics Survey (NBES) compiled by the Ethics Resource Center
suggest that things have gotten worse:
Ethical misconduct in general is very high and back at pre-Enron
levels – during the past year, more than half of employees saw
ethical misconduct of some kind.
Many employees do not report what they observe – they are fearful
about retaliation and skeptical that their reporting will make a
difference. In fact, one in eight employees experiences some form
of retaliation for reporting misconduct.
The number of companies that are successful in incorporating a
strong enterprise-wide ethical culture into their business has
declined since 2005. Only nine percent of companies have strong
ethical cultures.193
Fortunately, the 2009 NBES shows a marked improvement in most
measures although it comes with a warning: “The lesson for organizations is that,
when more settled, prosperous times return, misconduct is likely to creep upward
again.”194
Getting Real
The common response to news like this is to extol the virtues of valuecentered leadership, which many executives say is “simply a matter of leaders
having good character. By having ‘the right values’ or being a person of ‘strong
character,’ the ethical leader can set the example for others and withstand any
temptations.”195 Joe Badaracco describes how this conventional approach works:
They stress the purity of leaders’ motives, their unfaltering
dedication to high aims and noble causes, and their willingness to
challenge the system. At best, these stories provide inspiration and
guidance. At worst, they offer greeting card sentimentality in place
of realism about why people do what they do. They also tell people
with mixed and complicated motives that they may be too selfish,
divided, or confused to be “real” leaders.196
Edward Freeman, ranked 39th on Ethisphere’s list of the 100 most
influential people in business ethics,197 responds to those who practice greetingcard ethics by saying the “reality of ethical leadership is far more complex and the
stakes are much higher.”198 Linda Treviño and Michael Brown agree and
especially so when it comes to decision making:
Ethical decisions are ambiguous, and the ethical decision-making
process involves multiple stages that are fraught with
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complications and contextual pressures. Individuals may not have
the cognitive sophistication to make the right decision. And most
people will be influenced by peers’ and leaders’ words and actions,
and by concerns about the consequences of their behavior in the
work environment.199
One of the key findings in the 2007 National Business Ethics Survey was
that “ethics risk diminishes when a company adopts an enterprise-wide cultural
approach to business ethics,”200 which has four key elements:
1. Ethical leadership: tone at the top and belief that leaders can be trusted
to do the right thing.
2. Supervisor reinforcement: individuals directly above the employee in
the company hierarchy set a good example and encourage ethical
behavior.
3. Peer commitment to ethics: ethical actions of peers support employees
who “do the right thing.”
4. Embedded ethical values: values promoted through informal
communications channels are complementary with a company’s official
values.201
Culture “refers to the taken-for-granted values, underlying assumptions,
expectations, collective memories, and definitions present in an organization. It
represents ‘how things are done around here.”202 For Edgar Schein, culture comes
in three levels.203 At the first level are artifacts, the things that outsiders can
observe about an organization like the pictures on the walls or the office space
itself. The second level is the espoused values, verbal and written expressions of
what is important in the organization, things such as teamwork, integrity, and
commitment to customer service. Level three – the deepest – is what happens
when espoused values become taken for granted, when they become basic
underlying assumptions.
Although all three levels are important, perhaps the second level – espoused
values – is the more so because unlike artifacts and basic underlying assumptions,
“when people publicly espouse a particular point of view, they become much more
likely to behave consistent with that point of view even if they did not previously
hold that point of view.”204 In other words, the talk before your walk.
There are various methods for ensuring that values become part of the
organizational culture. Gary Yukl sees two primary ways that leaders can shape
the ethical culture of an organization:
Promoting an ethical climate
 Set an example of ethical behavior in your own actions.
 Facilitate the development and dissemination of a code of ethical
conduct.
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 Initiate discussions with followers or colleagues about ethics and
integrity.
 Recognize and reward ethical behavior by others.
 Take personal risks to advocate moral solutions to problems.
 Help others find fair and ethical solutions to conflicts.
 Initiate support services (e.g., ethics hotline, online advisory group).
Opposing Unethical Practices




Refuse to share in the benefits provided by unethical activities.
Refuse to accept assignments that involve unethical activities.
Try to discourage unethical actions by others.
Speak out publicly against unethical or unfair policies in the
organization.
 Oppose unethical decisions and seek to get them reversed.
 Inform proper authorities about dangerous products or harmful
practices.
 Provide assistance to others who oppose unethical decisions or
practices.205
No statement of organizational values is of benefit to any company if it is
not kept alive through promoting the values that will certainly embrace ethical
matters and the opposing of practices that do not adhere to the values. In other
words, it is easy to clarify the values; the hard work is living them and responding
appropriately to exceptions.
Talk that Walks
Walking your talk – living your values – is akin to authenticity, which
means “owning one’s personal experiences, be they thoughts, emotions, needs,
wants, preferences, or beliefs [and acting] in accord with the true self, expressing
oneself in ways that are consistent with inner thoughts and feelings.”206 Other
descriptions of authentic include “genuine, reliable, trustworthy, real, and
veritable”207 and “to know, accept, and be true to one’s self . . . they know who
they are, what they believe and value, and they act upon those values and beliefs
while transparently interacting with others.”208
Fred Luthans and Bruce Avolio observe that authentic leaders “lead from
the front, going in advance of others when there is risk for doing so . . . Such
‘walking the talk’ has been shown to be much more effective in influencing others
than coercing or persuading.”209 Indeed, there is evidence that trust is significantly
related to performance210 and an important source of competitive advantage.211
James Kouzes and Barry Posner make use of the phrase model the way and say,
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“Exemplary leaders go first. They go first by setting the example through daily
actions that demonstrate they are deeply committed to their beliefs.”212
Your talk ultimately refers to your values, which are like your car in that no
matter where you are, what road you're on, where you're headed, or who’s in the
car with you, the car stays the same. Jim Collins and Jerry Porras defined values in
their best-selling Built to Last as the “organization’s essential and enduring tenets,
not to be compromised for financial gain or short-term expediency.”213
Why should we care about having a clear set of values anyway? First, how
can you test your actions against your values or those of your organization when
you don't know what they are in the first place? How can you “walk your talk” if
you don’t know what the talk should be? How can you “lead by example” if you
don’t know the example you are trying to set?
That not everyone shares the same values should be obvious and is
illustrated by lack of insight shown in a quote attributed to Alexander Wiley about
how to solve the Mideast problems, “The Jews and Arabs should settle their
dispute in the true spirit of Christian charity.”214 The fact is that in an increasingly
diverse workplace, people grow up in different environments with different values.
Obviously, people look at the world differently and there are frequently few
bridging devices such as religion to give a common vocabulary.
Whether we like it or not – and we often don’t like it – many of the
conflicts between people occur as a result of values clashes. These differences
occur not only with customers and clients, but also with employees and family
members. It is all about the assumptions we make. I assume that my seventeenyear-old son has the very same perspective I have when it comes to taking
responsibility. I assume that our marketing director shares my dedication to
serving school audiences when, in fact, she's dedicated to the customer who pays
$115 a seat to Wicked, not the kids who come for free.
In reality, most of us have “values defaults” just like the word processing
programs we use on our computers. I use margins set at one inch, time roman font
set at 12 point, footer set at 0.4 inch, tabs set every 0.3 inches, and page numbers
at the bottom right. Anyone that uses my computer will get this document format
because it is set as my default. Just like the default, I have particular values that
govern my behavior. These values are mine and mine alone, not yours, not my
organization. In the absence of direction from the organization, the people who
work for the organization, the volunteers, and the board members will default to
their particular values. Explicitly outlining values gives rise to the possibility that
these people will adapt to these values, especially if the values are modeled at the
top.
Expecting people to know your values without espousing them is values by
clairvoyance. This makes an assumption that you know what my values are, that
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you respect my values that you care about them. Leadership frequently falls into
this trap. Leaders seem to believe that others can read their minds when it comes
to values, that others should know that lending a hand without asking is important
and it should be done. It just doesn’t work this way. Employees are not mind
readers. If the leaders of the nonprofit organization want certain values embraced
in the workplace, they need to spell it out explicitly, promote it throughout the
organization, model the values, and take action if the values are not being
observed.
The challenge to values is that they are frequently given lip service as a fad
of the day. You’ll come into the office one day and find that a manager has put up
a framed picture of an eagle soaring in the mountains with a pithy saying about
teams. That’s not the same as clear and concretely articulated values that are lived
and enforced. Clarifying values at the organizational level is the first step.
Second, organizational values often contain a kernel of competitive
advantage, which is what makes you different from your rivals. The important
things to people in organizations often are matters of the heart and this often give
you the edge in an increasingly competitive environment for nonprofits. If making
your clients healthy is a hill you intend to die on as the saying goes, consider it a
value because it is an enduring tenet of how you do business and “not to be
compromised for financial gain or short-term expediency.”215
Third, because organizational values are so important to people, they offer
you an immediate tool to use in judging the appropriateness of everything you do.
An faith-based organization that believes in the sanctity of their house of worship
may want to reconsider teen-night films with R ratings in the church basement.
Table 4.1 lists four organizational values for an agency helping students
get ready for college that were generated in about 20 minutes using the BAM
process (brainstorming, affinity grouping, and multi-voting) shown in Appendix
A.
Table 4.1 College Preparation Agency Values
Ideas
Results
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makes sense, effective, real, achievement,
results driven, seamless, consistent, aligned
Purpose, high performance organization, rigor,
focus, sustainable, fundable, doable financially,
cost effective (47)
-
child centered, global, student input (19)
integrity, equitable, accountability,
transparent (15)
passionate, motivating, engaged, high
expectations (13)
Effective
Child Centered
Trustworthy
High Expectations
Collaborative
buy in, inclusive, shared responsibility,
collaborative, shared belief, synergy (9)
Most organizations go further and clarify the values more specifically.
Table 4.2 for example lists the organizational values for a management service
organization.
Table 4.2 Management Service Organization Values
Ideas
-
collaboration, team players
optimistic, excited, well intentioned,
positive, enthusiastic, energetic
-
cooperative
Results
1. Collaborative
a. Optimistic
b. Cooperative
c. Effective communicators
good communicators, open, effective
communication, shared information, shared goals,
share information, diverse, flexible
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innovative, cutting edge, ingenious,
progressive
proactive, change oriented, risk takers, risk
tolerant
experimental, experimenting, share it,
present new ideas
-
2. Innovative
a. Proactive
b. Experimental
c. Persistent
d. Continuous learners
persistent, comfortable being wrong
continuous learning, expand education
experience, think outside the box, open to new
ideas, open minded, creative, initiative, willing to
learn, flexible
customer centered, service oriented, user
friendly, community oriented, concern for
community, customer focused, asset to nonprofits
-
respectful, show you care, truthful
responsive to needs, attentive, listen to
customer, timely
3. Customer centered
a. Respectful
b. Responsive
c. Solution driven
above and beyond, solution driven, asking,
solve problems, value adding, provide quality,
provide added quality
professional, quality, competent,
excellence
results driven, execute effectively, have
standards, results oriented, provide value
thorough, dedicated, committed, hard
work, loyal to mission
4. Professional
a. Results driven
b. Dedicated
c. Knowledge and experience based
knowledge based & experienced,
resourceful, works with knowledge, committed to
evidence-based practice, knowledgeable, know
the business
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accountable for actions, integrity,
trustworthy
-
fair, consistent, objective
-
transparency, sharing information
positive, negative feedback, make
problems known, honest
5. Trustworthy
a. Fair
b. Transparent
c. Truthful
d. Promises keepers
keep confidences, straight forward, keep
commitments, above board, keep word
The five “buckets” of organizational values – collaborative, innovative,
customer centered, professional, and trustworthy – might be considered
organizational values, but they are of very little use until the guidelines are
clarified. These can easily be crafted into an over-arching statement of
organizational values:
 We are collaborative: optimistic, cooperative, effective
communicators.
 We are innovative: proactive, experimental, persistent continuous
learners.
 We are customer centered: respectful, responsive, and solution driven.
 We are professional: results driven, dedicated, and knowledge-andexperience based decision makers.
 We are trustworthy: fair, transparent, truthful promise keepers.
Now that’s talk that you can definitely walk!
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Chapter 5 Mission
Starting with the mission and its requirements is the
first lesson
business can learn from successful nonprofits.
- Peter Drucker216
That mission is considered a sine qua non of high-performing nonprofits is
not in debate; Peter Drucker, for example, says it is the first thing that for-profits
can learn from nonprofits and here’s why:
It focuses the organization on action. It defines the specific
strategies needed to attain the crucial goals. It creates a disciplined
organization. It alone can prevent the most common degenerative
disease of organizations, especially larges one: splintering their
always limited resources on things that are “interesting” or look
“profitable” rather than concentrating them on a very small number
of productive efforts. 217
Paul Light in his study of innovative nonprofit and government
organizations also found that this pragmatic nature of mission, “Without a strong
sense of mission, nonprofit and government organizations cannot long sustain
innovativeness. They will have no basis on which to say either yes or no.”218
Take malfunctioning teams for example. When things go wrong, people
often search for the root causes of the difficulties. Carl Larson and Frank LaFasto
can save you time with their analysis: “In every case, without exception, when an
effectively functioning team was identified, it was described by the respondent as
having a clear understanding of its objective . . . and the belief that the goal
embodies a worthwhile or important result.”219
Besides the benefit of giving focus, a well-constructed mission is the first
step of the strategy stairway that leads ultimately ends in boots-on-the-ground
programs.
Mission is also valuable as the “sex drive of organizations.”220 James Phills,
director of the Center for Social Innovation at Stanford explains: “The function of
a mission is to guide and inspire; to energize and give meaning; and to define a
nonprofit and what it stands for.”221 Kasturi Rangan writes, “Most nonprofits have
broad, inspiring mission statements – and they should . . . After all, the mission is
what inspires founders to create the organization, and it draws board members,
staff, donors, and volunteers to become involved.”222
A fourth benefit of a well-crafted mission is to “distinguish one
organization for other similar enterprises”223 that “reveals the image the company
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seeks to project, reflects the firm’s self-concept.”224 As such, it becomes a
repository of what the organization sees as its competitive advantage.
A fifth benefit is for communications: “In just a few sentences, a mission
statement should be able to communicate the essence of an organization to its
stakeholders and to the public: one guiding set of ideas that is articulated,
understood, and supported.”225
It’s not just nonprofits that make good use of mission statements. Jim
Collin and Jerry Porras assert that the mission, which they call a firm’s core
ideology, is an essential element of successful visionary companies.226 Lending
credence to view is the news that mission statements are the number three
management tool for two-thirds of global firms.227 Little wonder given the
evidence of the relationship between mission statements and financial
performance.228
In sum, the mission is the bedrock of a nonprofit organization. It is the
fundamental element in a nonprofit organization’s success. It is the reason for
being for the organization, the why of its existence. The mission drives all of the
other elements of the organization, its activities, and its governance and
management structure. The mission takes a global view of the organization. With a
properly crafted mission, the organization has driven a stake in the ground that can
provide an extraordinary amount of guidance in decision-making at many levels of
the organization. A mission focuses the organization and gives people the cause
they so fervently need.
A well-crafted mission addresses three questions:
1. Who are our customers?
2. What difference do we make?
3. How are we different from our rivals?
Notice that the verbs in these questions are present tense. As such the
mission statement is about what you are doing in the here and now; it is not about
where you’re going in the future. In other words, a mission is not strategy; a
mission is not the organization’s vision for the future. A mission is in the present
tense and describes the why of the organization; strategy is future oriented, the
where are we going. As James Phills puts it, “mission, no matter how clear,
compelling, or poetic, won’t ensure economic vitality. That is the job of
strategy.”229
This doesn’t mean that mission doesn’t have an impact on the future. Of
course it does; it defines the work of your organization. As you review your
mission with the three questions, you may decide that what you are actually doing
now isn’t exactly what you should be doing. This can have significant
ramifications; it can take real effort and time to achieve the present tense of a
mission. Remember the story about the eating an elephant, the one where the best
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way to do it is one bite at a time? No wonder that two of Fortune’s most powerful
women entrepreneurs, Susan Walvius and Michelle Marciniak, say that the best
advice they ever received was “Crawl, walk, and then run.”230
Jerry Maguire’s new mission for Sports Management International was
quite simple: caring for them, caring for ourselves, and the games. As a testament
to right time and wrong place, two weeks later he is sent packing for the greener
pastures of entrepreneurial start-ups. In the long run, Jerry’s startup succeeds well
beyond everyone’s expectations. He not only wins the game, but he also wins the
“You complete me . . . You had me at hello” girl (played by Renee Zellweger) and
her adorable son (played by Jonathan Lipnicki). What’s not to love about the
perfect blend of sports and romance? That’s the power and focus of a great
mission!
Who are our customers?
By beginning mission with the question of customers, you ensure that they
are its focus. Though this is a truly elemental foundation of successful businesses,
it is often neglected and deprives the organization of the very focus it needs to be
successful. No organization can ever do wrong by focusing first on customers. As
Harvey Mackay, the author of five business bestsellers, so aptly says:
Successful organizations have one common central focus:
customers. It doesn’t matter if it’s a business, a hospital, or a
government agency, success comes to those, and only those, who
are obsessed with looking after customers.
This wisdom isn’t a secret. Mission statements, annual reports,
posters on the wall, seminars, and even television programs all
proclaim the supremacy of customers. But in the words of
Shakespeare, this wisdom is “more honored in the breach than the
observance.” In fact, generally speaking, customer service, in a
word, stinks.
What success I’ve enjoyed in business, with my books, my public
speaking, and the many volunteer community organizations I’ve
worked for, has been due to looking after customers – seeing them
as individuals and trying to understand all their needs.231
Even with all the evidence, many worry that if a specific customer is
defined, it will be limiting to the scope of activity. Unfortunately, no organization
can be all things to all people and defining the customers to be served makes it
possible to concentrate effectively. The key issue is to answer the question with
authority and explicitness. Youth and children is a good start for a customer
description at Big Brothers – Big Sisters chapter, but 7 to 13-year-old children
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from at-risk, single parent households is much better because it gives more usable
information for the construction of lines of business in the near term and for
ensuring accountability later on.
In Peter Drucker’s five-question protocol for evaluating “what you are
doing, why you are doing it, and what you must do to improve”232 begins with
mission and is immediately followed by “Who is our customer?”233 He gets at the
answer by addressing the following two relevant topics: “Who is our primary
customer? Who are our supporting customers?”234 He defines the two types of
customers this way
The primary customer is the person who life is changed through
your work. Effectiveness requires focus, and that means one
response to the question . . . Supporting customers are volunteers,
members, partners, funders, referral sources, employees, and others
who must be satisfied.235
The most important aspect of the customer question for Peter Drucker who
warns that it is “very tempting to say there is more than one primary customer, but
effective organizations resist this temptation and keep to a focus – the primary
customer.”236
There are a great many ways to get at the answer to the many questions
posed by Results Now. The one used most frequently is the BAM process shown
in Appendix A. Whatever process you use, if you are going to work with a group
of people, the only “no-matter-what” recommendation is to avoid word-smithing.
Word smithing is best left for later to a capable person or crew and then reviewed
and revised. Using BAM with a group including 23 board and staff members from
a faith-based outdoor camping agency yielded the results shown in Table 5.1 in
about 25 minutes including discussion.
Table 5.1 Camping Agency Mission Primary Customer
Ideas
youth in our community, schools, other
youth groups, future business leaders (63)237
Results
Youth in our community
----- Ideas not chosen ----adult leaders, counselors, volunteers,
board (26)
donors, foundations, contributors (23)
-
parents, families (8)
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mankind, stakeholders, society values,
society, communities (4)
community organizations, community
ambiance, churches, community at large, penal
institutions (2)
-
character organizations (1)
-
national office
-
local businesses
Notice in the table the demarcation line between the first and second
grouping. Below that line are all of the groupings that were “left off the table”
after a discussion about which of the grouping truly represented the customers for
the agency.
What difference do we make?
The typical mission statement tells us all about the products and services
provided by the organization, its essence is about the agency and not the customer;
“Here are the products we sell” is the key message. What the mission should be
doing is saying what difference the agency is going to make in the lives of its
customers. What’s changed in that person as a result of the interaction? Whether it
is health restored for a cancer patient or well-adjusted families for a family-service
agency, the difference is what the customer will experience and should always
have a texture of a final destination. The difference for the customer frequently
describes why the organization exists, its reasons for being in business in the first
place.
The difference should always be crafted in the context of the customer, not
the organization. What is different for the customer is the question to be answered,
not what product will be delivered by the organization. At the mission level, the
difference is global and it is uncommon to see more than one. Later on in the
process, more detailed customer differences are articulated to form lines of
business, which are the agency’s products, services, programs.
Life at its fullest is an example of a customer difference for a person
affected with Multiple Sclerosis. A performing arts center could easily consider an
enriched life as a viable customer difference. After all, the customer isn’t going to
the theatre to just see a play or hear a symphony. The performance itself is actually
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a means to an end. The performing arts center might use standing-ovation
experiences as a statement of what difference the organization makes for its
customers.
A Multiple Sclerosis Society chapter will certainly produce programs to
help the newly diagnosed, update education to keep those afflicted current,
funding for research, direct disbursements for those without means, and support
groups to help people network with each other. Not one these programs and
services belong in a mission statement because they do not answer the question of
what difference. These are all about what the chapter does, what it makes, what it
sells, its lines of business. The Chapter’s “what difference do we make” is best
described as life at its fullest for people affected by Multiple Sclerosis. Once this is
defined, programs and services that make up the lines of business of the
organization become easier to formulate.
A Chamber of Commerce at first responded to the question of difference
with providing information and referral services to business, group purchasing
opportunities, business counseling and education services, and programming.
This does not answer the difference correctly because it is about the programs and
services that the Chamber provides, not about what difference is made for its
customers. It is better for the Chamber to first determine what difference it intends
to make for its customers before it moves to the strategies that will cause that
difference to happen. That’s why a difference of making business more profitable
was chosen.
Save the Children’s difference is to make lasting positive change in the
lives of disadvantaged children. While this is very broad and some might prefer
more definition, this clearly is a properly-crafted difference statement and one that
can give rise to significant strategies that can bring it about. A Big Brothers – Big
Sisters chapter difference is to build confident, competent, and caring young
adults.
Put directly, a mission statement should never include the programs of the
agency; it should include the difference it makes in the lives of its customers as the
results for the outdoor camping agency (shown in Table 5.2).
Table 5.2 Camping Agency Mission Difference
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Ideas
character, relationship with God, sense of
honesty, values, value system, integrity (40)
Results
Character-centered
Skills good for life
skill set for life, success in life, experience,
special skills, well rounded (30)
----- Ideas not chosen ----experience leadership at younger age,
career path, learn to take initiative, structure, (20)
self-confidence, self-reliance, pride in
yourself, confident in skills, higher self esteem (15)
fun, sense of adventure, drug avoidance,
travel (15)
personal accountability, take
responsibility, maturity (3)
support network, friendship, teamwork,
respect for others, get along with others, male role
model (1)
accomplishment, planning skills, goal
driven, recognition motivation
How are we better than our rivals?
The third question in crafting the mission is about the advantage that your
organization has over its rivals. What edge will the company have that other
organizations cannot match? The question is embodied in John Pierce II and Fred
David’s recommendation that the effective mission “defines the fundamental,
unique purpose that sets a business from other firms of its type.”238
A Girl Scout council might choose scouting for all girls as an answer,
thereby defining inclusiveness as a core theme. An agency with the difference of
putting the American dream of a home within reach for people with low to
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moderate incomes decided that being the go-to organization was its advantage. No
other agency in the community would be able to match its position for one-stop
shopping, for the breadth of its knowledge and services.
Every organization has a choice in what it becomes known for, its
reputation if you will. This choice is about the edge that the organization will have
over all others like it, the defining quality of its work. What do we want to be
known for, respected for? A Big Brothers – Big Sisters chapter chose
professionally supported one-to-one matches that deliver results. There are other
mentoring programs in the community, but none that can match the professional
support and the results that are delivered.
Ultimately, how you are better than your rivals is your competitive
advantage. Although improving the operations of your organization to be a best
practice is essential, it is not enough to become high-performing.239 Competitive
advantage is the “presence of visible, obvious, and measurable ways in which your
organization differs from and is better than its peers.”240 And you want that
advantage to be sustainable over time because your organization can “outperform
rivals only if it can establish a difference that it can preserve.”241
Why should you care about your advantage? Though you might believe
you’re special, your customers, stakeholders, and especially funders may
respectfully disagree. When they review your appeal, they may perceive you to be
a lot like your peers. And if there’s discernable difference, you may end up on the
short end of the stick. As painful as it be to learn and in the words of David La
Piana and Michaela Hayes, “Foundations tend to see more proposals each year
from nonprofits that, from their perspective, look alike . . . Unfortunately, if there
is one belief that all funders share, it is that all nonprofits are the same.”242
I ran a performing arts center for 15 years; I was its first full-time executive
director in all my wet-behind-the-ears glory. In the first few days at my new job, I
was overwhelmed by the sheer magnitude of problems surrounding the imminent
move into a newly restored theatre circa 1866. From the installation of seats to the
repair of the Mighty Wurlitzer Organ that had been left out in the rain, I hardly
had time to think about where the organization should be going in the future. My
answer to “What’s the plan?” was “What plan?”
Despite the intense activity, we (the board and top staff members) could not
dodge decisions that would have a long-term impact on the company. One way or
another, we had to have some idea of the direction that the organization should
move in. We had to decide what shows would be chosen for the season coming up
nine months later, technology systems and offices had be furnished with some idea
of what work would be done. For example, did we need two incoming phone lines
to the box office or 20? “What’s the plan?” became an immediate question that
had to be answered. That’s why the only order of business at my first board
meeting was answering the question of where to go tomorrow.
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Our efforts then were crude compared to what we later used, but I vividly
recall the long and hard debate about whether the organization was going to be “a”
regional performing arts center or “the” regional performing arts center. The
discussion about the choice of this single word in the mission statement was
dramatic because the differences required substantially different levels of risk and
effort.
One of the hottest shows at the time was Les Misérables. It was the
“World’s most popular musical” for good reason, but its price tag matched its
appeal. The choice of whether to do the show instead of something less risky
literally hinged on the decision between “a” and “the” in the mission statement.
You’d think that booking a show like Les Miz is a no-brainer, but the cost for
doing it in the coming season was equal to our entire budget for the one we were
currently doing. That’s called a white-knuckle ride, betting the ranch, burning your
boats.
The vote to go with “the” was not easy, but the board knew the risks and
was firmly unanimous in the roll call. At the time I didn’t have a clue about
competitive advantage, but what that one little word meant was that we were going
to be best and that meant shows like Les Miz were must-do. And because we all
admired LL Bean’s approach to customer service, we decided that standing
ovation experiences for our customers was how we were going to be different.
Now a competitive advantage wouldn’t be worth much if it only
distinguished you from others; it has make you better than your rivals, it has to
achieve synergy with your efforts to achieve operational excellence. A focus on
the customer certainly did both for our small nonprofit performing arts center,
which way back in 1990 had a budget of $500,000 give or take and just 2,250
Broadway subscribers. A year after Les Miz, we had 8,000, and for the last 10
years of my tenure, we ran at about 15,000, which was capacity for our theatre.
The total audience attending events in our buildings including a brand-new $130
million new performing arts center complex grew from 22,000 to over 900,000
while revenues under management were went up 21-fold to $21 million.
Do I seriously attribute our success to a competitive advantage of standing
ovation experiences? In fact, I do. Les Miz was a great beginning, but it wasn’t
enough; we had to execute effectively and we had to be different from our rivals
including other arts organizations, entertainment options like movies and
television, and the whole wide world of nonprofits that were at the funding table
next to us.
What happened was that we (board and staff together) decided on “the”
over “a,” which meant we wanted to be the best. That got us over the first big Les
Miz hurtle that in turn forced us to commit to a competitive advantage of standing
ovation experiences. That built loyalty with our customers of such depth that a bad
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show (or two) wouldn’t keep them from coming back. And come back they did,
over and over and over.
Were we especially brilliant for picking customer service as our advantage?
Honestly, it’s a pretty good idea for any business simply because “complete
customer satisfaction is the key to securing customer loyalty and generating
superior long-term financial performance.”243 Indeed some experts say that a
commitment to loyal customers is “the acid test of leadership [because] long-term
rewards of loyalty ultimately outstrip even the most spectacular short-term
profits.”244
How do you find your competitive advantage, the difference that you can
set you apart from others? Expert David La Piana recommends that you go about it
this way:
 Using a unique asset (such as a strength that no other similar
organization in your geographic area has), and/or
 Having outstanding execution (such as being faster or less expensive, or
having better service, than other similar organizations in your
geographic area)245
It’s a bit like being in your own restaurant and deciding from the menu
what dish will become your signature. Take an inventory of what you have or
what you can do, make a decision, and run with it. A more linear approach
undertakes an analysis of resources (tangible and intangible), capabilities, core
competencies (valuable, rare, costly to imitate, and nonsubstitutable) to identify
your competitive advantage.246
My experience with standing ovation experiences was much less formal;
we liked LL Bean and in a sense, we stole the idea from them. As the saying goes,
imitation is the sincerest form of flattery.
Yet another way to find your agency’s competitive advantage is to think of
the values that are most important to you, the ones that you would not forsake for
any reason. For me, it was making our customer the star; for you it might be
delivering real results, lowest costs, o highest quality.
Although some organizations have multiple advantages, I recommend
trying to have as a few as possible. It’s hard enough for folks in your agency to
remember the mission let alone how you’re going to win. If you have singled out
one advantage and pound away at it, you just might pull it off. Table 5.3 shows the
results from the outdoor camping organization.
Table 5.3 Camping Agency Mission Advantage
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Ideas
delivers skills for life, everyone succeeds,
strong rank advance program, long-term
relationships (34)
Results
Everyone succeeds
----- Ideas not chosen ----for any kid, at risk urban youth, urban
activities, buddies, geographic diversity, wide
range of ages, flexibility for kids, special needs (19)
values-driven programs, trust, history,
reputation (19)
programs – programs – programs, order of
the arrow, comprehensive, well-rounded(16)
strong leader training, real leadership
program only one, boy-run, active engaged adult
leaders (15)
fun, opportunity for travel, excitement,
summer camp experience, high adventure
program (14)
financial stability, do all kinds of things,
high annual giving (3)
well organized, recruiting methods,
effective marketing(7)
strengthen programs of churches and
sponsors (0)
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The Sweet Spot
In his popular book on motivation, David Pink uses the question “What’s
your sentence” to clarify the need for succinct yet powerful mission statements:
In 1962, Clare Boothe Luce, one of the first women to serve in the
U.S. Congress, offered some advice to President John F. Kennedy.
‘A great man,’ she told him, ‘is one sentence.’ Abraham Lincoln’s
sentence was: ‘He preserved the union and freed the slaves.’
Franklin Roosevelt’s was: ‘He lifted us out of a great depression
and helped us win a world war.’ Luce feared that Kennedy’s
attention was so splintered among different priorities that his
sentence risked becoming a muddled paragraph.247
When you’ve answered the three questions shown above, you can finally
put your mission statement together where it becomes the sweet spot of your
Result Now Master Plan, that one sentence that Dan Pink refers to.
As simple as it sounds, constructing that one sentence is a matter of putting
your answers to the three questions together in a way that makes works for you.
The mission for the outdoor camping organization is a place for youth in our
community where everyone succeeds with character-centered skills good for life.
Notice in this statement that there is nothing tentative about everyone succeeds; it
doesn’t say that the agency helps, assists, tries to be sure. John and Miriam Carver
say that words like this “can be fulfilled while having absolutely no effect upon
consumers. Be tough; allow yourselves and your CEO no points for supporting,
assisting, or advocating; rather, hold yourselves to the discipline of requiring
results for people.”248
People working on the mission statement sometimes struggle with letting
go of old mission statements. They like the feel of the words or the historical
context. There is no issue with using previously created mission statements
provided that the mission explicitly addresses the three questions with authority.
Take the comparison of before and after mission statement from a Big Brothers –
Big Sisters chapter that is shown in Table 5.4.
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Table 5.4 Old versus New Mission
Old mission
Children and youth
Mission Element
Who
New mission
7-13-year-old children from at-risk,
Committed to making a positive
difference, assist them in achieving
their highest potential, grow to
become confident, competent, and
caring individuals
primarily through a professionally
supported one-to-one relationship
What difference
single-parent households
builds confident, competent, and
caring young adults
How different
through professionally supported
one-to-one matches
that deliver results
Complete Statements
Old mission
New mission
Committed to making a positive difference
Building 7-13-year-old children
in the lives of children and youth,
from at-risk, single-parent households
primarily through a professionally supported
into confident, competent,
one-to-one relationship,
and caring young adults
and to assist them in
through professionally supported
achieving their highest potential
one-to-one matches
as they grow to become
that deliver results
confident, competent, and caring individuals.
Haiku
1-to-1 matches transform
at risk children
into strong young adults
Which of the two mission statements is better? The new mission has the
edge because it offers more specific information to inform decisions. Moreover,
less is more; definite is better than ambiguous.
Of course, most missions like the one for Big Brothers – Big Sisters are not
short enough to be easily recalled, which is why you need to work on the “T-shirt”
mission. The mission summary has great value to the organization especially for
people who will be doing the work. Even at 40 words, a mission statement is
difficult to remember. The mission summary takes the most important feature of
the mission and distills in down into just a few words. It can become a rallying
point for decision making; it can be a constant reminder to board members, staff,
and volunteers about the organization’s mission. It goes on the bottom of
stationary, on business cards, and on T-shirts. For the Big Brothers – Big Sisters
chapter, the mission summary is Building Young Adults.
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If an organization lives with the summary long enough, the odds are good
that everyone close to the organization including its customers will know the
mission summary and hold the organization accountable to it. At that point, the
organization will have become truly mission centered. Someone somewhere will
need to make a decision and they will recall that four or five-word statement
mission summary, it will give them guidance, and they will make the right
decision aligned with that statement. There is no way this will happen with a 40word statement, but it can and does happen with four or five word statements that
are repeated over and over and over.
People helping people in need today is the mission summary of a United
Way. Life at its fullest is the summary for the MS chapter. For the outdoor
camping agency, it’s Skills good for life. Share Our Strength’s is No Kid Hungry;
Outward Bound’s is Challenge yourself. Challenge your world.
The performing arts center I led that wanted to be the best with an
advantage of standing ovation experiences choose you are the star. It was in place
for many years, published on T-shirts, on jackets, stationary, and it was
prominently displayed in every place imaginable including tickets and label pins.
It was mentioned in curtain speeches and in radio commercials. So well-known
was this mission summary that customers reminded box office employee or ushers
of it if things weren’t up to standard. That’s what it can mean to get the message of
a mission out to the community: The customers know the mission and hold the
organization accountable to deliver it.
In the three examples below of well-constructed missions, most of the
elements have been addressed effectively, which provides the necessary
information that can bring these missions to life through appropriately developed
lines of business:
Bringing the community together with resources to help Summary
We bring the community together to provide resources How better
that help people in need or at risk Who
solve their problems. What difference
A home within reach Summary
We are the “go-to” organization How better
that puts the American dream of a home within reach What difference
for people with low to moderate incomes. Who
You are the star! Summary
We are the regional arts center
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enriching life What difference
for adults, families and school children Who
with standing ovation experiences. How better
The inescapable concern about these mission statements is whether they are
too simple. That the missions are straightforward and elegantly simple is exactly
the point. No one benefits from confusion about the mission of the organization.
Meaningful action must be driven by an explicitly clear mission. As a core driver
of decision-making, the complicated mission that no one can recall or understand
serves little value to the organization. The simpler the mission, the better, and the
more likely it will drive action on the front lines of work. Keep it short and simple,
hammer away it at every chance, and the likelihood is that it may actually come to
life.
If the above examples are not simple or graceful enough for you, you might
try crafting your mission statement in Haiku. As Chris Finney explains, “Your
organization’s mission statement deserves to be elegant, precise, and even poetic
because these words embody the reason your nonprofit exists.”249 Here are some
examples that address the three-question mandate in the 17-syllable format of
three lines with five, seven, and five syllables:
A difference made How better
Change-ready homeless women Who
Self-sufficiency What difference
National leader How better
At-risk kids and families Who
To be better now What difference
How do you know your mission is a good one? According to Peter Drucker,
a well-articulated mission:
Is short and sharply focused.
Is clear and easily understood.
Defines why we do what we do, why the organization exists.
Does not prescribe means.
Is sufficiently broad.
Provides direction for doing the right things.
Addresses our opportunities.
Matches our competence.
Inspires our commitment.
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Says what, in the end, we want to be remembered for.250
Hoop Dreams
The power of mission of cannot be overstated as the shortest NBA
basketball player of all time illustrates. Five-foot-three Muggsy Bogues grew up in
Baltimore's housing projects. He went to Dunbar High School where he was
frequently laughed at because of his size although he became the MVP in his
senior year. At Wake Forest, he led the league in assists and steals in his junior
year and made all-conference. He was one of five in Wake Forest history to have
his jersey number retired. And he is 5’-3” tall.
For Bogues, it was clear that his mission was to play basketball; that’s how
he defined himself. And his vision for bringing this mission to life – what Jerry
Porras and Jim Collins call a BHAG (big hairy audacious goal)251 – was to play in
the NBA. Never mind that this was a stretch quite literally compared to someone
like Yao Ming at 7’-6” tall.
Some would say just the opposite; that you should change your mission if
you obviously can’t succeed at it, but before you do that, consider what happened
to Muggsy. He figured out how to maximize his assets and create a competitive
advantage. Being short is a real plus if you going to be one of the best ball
handlers and stealers in the game. It’s no surprise that his advantage made him one
of the NBA’s all-time leaders in the assist (the number his passes that ended up in
his team’s hands) to turnover (the number of passes that end up in the opposing
team’s hands) ratio. And that’s not all. In fact, Muggsy
 In 1999-2000 had a 5.07 assist-to-turnover ratio, first in NBA
 Notched his 6,000th career point, 6,000th assist, 2,000th rebound and
1,200th steal during the 1997-98 season
 Ranks as the Hornets' all-time franchise leader in assists (5,557) and
steals (1,067) and ranks 3rd in points (5,531)
 Holds the Hornets' franchise records for most assists in a season (867 in
1989-90), in a game (19, accomplished three times) and in a half (13,
against the New York Knicks on 3/27/89)
 Holds the Hornets' franchise record for most steals in a season (170 in
1991-92) and shares the record for most steals in a game (7,
accomplished twice)252
History is filled with hundreds of wonderful, inspiring stories of people like
Muggsy who began with an idea of who they were and not with an appraisal of
what they could accomplish. When looking at nonprofits, people see companies
characterized by the same sort of courage. Nonprofits go where for-profits
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wouldn't dream of going. They drive against incredible odds. They bring society's
conscience to life with action. If nonprofits were basketball players, the majority
would be Muggsy Bogues, not Yao Ming. And that’s the power of mission.
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Part III: Strategic Plan
If you don’t know where you’re going,
you might wind up someplace else.
- Yogi Berra
STRATEGIC PLAN
OPERATING PLAN
Where to go tomorrow? What gets done today?
Lines of Business
goals
success measures
Budget
vision
PURPOSE
Delegation
Who does what?
Duties
Guidelines
Why?
Accountability
When did it happen?
Agendas
Assessments
GOVERNANCE PLAN
The Strategic Plan is where the high-impact decisions are made about how
to bring the Purpose to life. This begins with identifying the lines of business,
which include your programs, services, and products. This is followed by
constructing success measures for the organization and its lines of business. The
Strategic Plan concludes with the creation of a vision that depicts the aspirations
for major new undertakings like launching a new line of business,
professionalizing fundraising, initiating a company-wide intranet, or undertaking a
major capital campaign for a new facility.
The Strategic Plan is meant to advance the organization’s Purpose. This is
why the gurus of strategy like Michael Porter often talk about competitive
strategy.253 After all, why would any organization undertake a strategy if it didn’t
advance its interests whether to serve its clients better, garner greater resources to
serve those clients better, or to serve even more clients?
Competitive strategy in the for-profit sector is defined as “an integrated and
coordinated set of commitments and actions designed to exploit core competencies
and gain a competitive advantage.”254 Strategies are not the competitive advantage;
they’re what establish it. The nonprofit sector takes a softer viewpoint of
competitive strategy, which David La Piana and Michaela Hayes define as
“pattern of thoughtful action through which an organization’s leaders seek an
increased share of limited resources, with the goal of advancing their mission.” 255
A simpler definition is that strategy brings Purpose to life. Because the Purpose
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defines your customer, the life-changing difference they experience, and how the
agency is different from its rivals, Purpose is inherently competitive.
To be sure, talking about competitive strategy is putting the cart before the
horse. That’s because many nonprofit executive directors have an incomplete
picture of what’s on their organization’s strategy menu in the first place. Executive
directors and board members frequently don’t understand the organization’s lines
of business let alone how to go about measuring success. Once done, they are
usually quite surprised – sometimes pleasantly, sometimes not – to see how broad
the agency is in scope and depth.
It is common sense that you should know where you are before charting a
new course, but that is not the typical way that strategy making is done.
Remember that the key uses of planning are to create strategies, program and
implement them, and then achieve the results. Arranging these uses in the
conventional order begins with identifying strategies at one end and achieving
enhanced legitimacy at the other as shown in Figure III.1.
Figure III.1 The Conventional Order
Create
Identify Strategies
Program
Set Direction
Implement
Communicate the Plan
Coordinate Action
Achieve Results
Operational Effectiveness
Enhanced Legitimacy
Unfortunately, it is not a foregone conclusion that the identification of
strategies belongs at the beginning of protocol or in the process at all. In the words
of Henry Mintzberg, “strategy making is an immensely complex process, which
involves the most sophisticated, subtle, and at times, subconscious elements of
human thinking . . . all viable strategies have emergent and deliberate qualities.”256
A more fruitful way to look at the chronology is to start with programming
the strategies that you already have. This method is easier to do and faster, and is a
more efficient way to take advantage of the benefits of planning especially for the
very large number of smaller nonprofits (see Figure III.2).
Figure III.2 A Better Order
Program
Set Direction
Implement
Coordinate Action
Communicate the Plan
Achieve Results
Operational Effectiveness
Enhances Legitimacy
Create
Identify Strategies
When you look at it this way, you begin to see why so many processes are
long and laborious. It’s because these long-winded processes include both creating
and programming strategy. It is strategy identification where the largest amount of
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Results Now for Nonprofits EDITOR’S DRAFT page 72
time is consumed, but it’s not necessary or productive to do this. Strategy
formation for most nonprofits is a once-in-a-long-while proposition. Launching a
new line of business is hardly an annual affair as it often takes a year to find, vet,
and get ready the launch, another year to get it up and running, and then two to
three years to get it online completely. Supporting this view are the results of a
survey conducted by from Community Wealth Ventures that found the average
time from launch to profitability was 2.5 years.257
Strategy guru Michael Porter suggests that three questions be addressed in
the process of building competitive strategy: “What is the Business Doing now?
What is Happening in the Environment? What Should the Business be Doing?”258
In other words, let’s not worry about where we’re going tomorrow until we
understand where we are today. After all, who would plan a trip without knowing
the point of departure? That’s why the Results Now Strategic Plan begins with a
discussion of the lines of business in Chapter 6 followed by a review of the
success measures in Chapter 7 and concludes with the vision in Chapter 8.
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Results Now for Nonprofits EDITOR’S DRAFT page 73
Chapter 6 Lines of Business
The human tendency to regard little things as
important
has produced very many great things.
- G. C. Lichtenberg
Though it is true that the Purpose is the heart of the agency, it only begins
to beat in the Strategic Plan. More specifically and to broaden the definition,
strategy brings Purpose to life through the lines of business. And those lines of
business make their home in the Strategic Plan.
You can do a number of different things to maintain a competitive position
with your lines of business. Michael Porter, for example, argues that there are just
three strategic approaches.259 First, you can be the low cost leader that allows you
to have above average profits or to charge less than your rivals. For instance, you
might make the delivery process for services more efficient than your rivals,
which allows you to charge much less than they do.
Second, you can differentiate your product and somehow make it unique
compared to your rivals. Making the customer the star was a way to do this for the
Victoria Theatre. Third, you can choose which customers to focus on. You might
be the only agency to serve clients with Downs Syndrome in a certain community
or at a certain age.
Any of these approaches might be magical, but without lines of business
that exchange something of value between you and your customers, you have
nothing with which to make the magic visible. Your lines of business are what
generate the products or services of value for your customer. And in this brief
chapter that belies its importance, you’ll learn why lines of business are important,
why they are ends not means, and how to construct them.
What Are We Doing Now
Many people at first have difficulty thinking about lines of business. It
seems an acceptable idea for a manufacturer, but it’s a foreign concept when it
comes to a housing agency or mentoring organization. It doesn’t take long,
however, for people to get the hang of things when you ask the question in the
context of core programs, services, and activities. In fact, the typical nonprofit has
five or more lines of business compared to small for-profits that usually have just
one.260
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Results Now for Nonprofits EDITOR’S DRAFT page 74
Lines of business are different from other activities within the organization
because they are ends, not means. They must stand the customer-difference test.
First, there is a customer external to the organization. Second, there is a lifechanging difference for that customer.
Because people naturally think first about products or services that are
provided to the customers, they can lose sight of the life-changing difference they
are trying to achieve. Consequently, lines of business often stray far afield from
the Purpose. This drifting, which is sometimes referred to as mission creep, is
tacitly endorsed by funders who typically put new programs ahead of established
ones, project funding over general operating support. And because funding for
new programs is commonly done as a three-year commitment, getting out of the
program early is very hard to do. The customer-difference test helps you stay true
to the Purpose.
Some people involved with the organization may profess little interest in
seeing a list of lines of business. “We already know what we do,” they say. But
board members and staff alike are many times surprised to see that what they
thought was a relatively simple operation turns out to be much more dynamic. The
benefit for the seasoned board member is to see the wide array of lines of
business; the benefit for the new board member is to see them for the first time. In
the process, some organizations decide that the array of lines of business is simply
too broad to sustain; other organizations choose to expand.
The example from a local United Way identified shows 14 lines of
business:
Research
Encouraging self-sufficiency
Resource Development
Baby Steps
Nurturing children
Immunization Track
Strengthening families
Preschool-Jump-Start
Building communities
Links
Eliminating abuse
Labor Services
Heartland
Outcomers
Fourteen lines of business is common for an active organization such as a
United Way that is involved in providing direct services, but this list is too broad
to be memorable to most people, especially those pressed for time. After all,
experts say that the maximum number of “chunks” of information we can easily
retain in our short-term memory appears to lie between five and seven (plus-orminus two).261
By grouping the lines of business by theme, the United Way was able to
group its lines of business into four categories that not only made its work more
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March 6, 2016 Page 75
understandable to stakeholders, but it also helped focus the organization (see Table
6.1).
Table 6.2: A local United Way’s Lines of Business
Research
Problems
identified and
prioritized
for others in
need
Resource
Development
Amplifying the
impact of
giving for
donors who
want to help
others in need
Resource
Distribution
Funding for
high-impact
problemsolvers directly
help others in
need
Initiatives
Leading solutions for others in need
Management
Services
Incubating highimpact problem
solvers
Heartland
Fostering highimpact problem
solvers in nonurban areas
Nurturing children
Baby Steps Outcomers
Strengthening families
Immunization Track Teaching highBuilding communities
Pre-School-Jump-Start impact problem
Eliminating abuse and neglect Links
solvers how to be
Encouraging self-sufficiency
use outcomes
The web link to highmeasurement
impact solutions for
Labor and
others in need
Community
Services
High-impact
solutions in the
workplace
Means and Ends
Some staff and board members may wonder why administrative activities
aren’t shown as lines of business given their significance to the organization. No
one would deny for example that marketing is central to success in most
nonprofits, but it usually is executed in direct support of the lines of business; it is
a means to an end and simply does not pass the customer-difference test. Under no
circumstances is this meant to diminish its importance or that of other
administrative activities such as maintaining buildings or keeping accurate
financial records.
On the other hand, many people treat fundraising as a line of business
because of its importance to the organization. After all, most lines of business only
reach breakeven with the help of contributed income delivered through direct
support or from the annual fund..262 Especially with regard to general operating
support, fundraising is tied to all of the activities of an organization as opposed to
one specific lines of business. As such, it is quite possible to identify a credible
customer-difference statement. An example of how it might look is shown in
Table 6.2.
March 6, 2016 Page 76
Table 6.2 Fundraising as a Line of Business
Development
The joy of giving
to help others in need
for those with a
generous heart
in our diverse community
Individuals
Corporations
Foundations
Special Events
Planned Giving
Another example of an activity that is a means to end but that could be
considered a line of business is selling Girl Scouts cookies. Representing as much
as 60 percent of the revenue of some chapters, this is a major source of funds.
Some chapters will see it as a line of business; others won’t. One council that saw
cookie sales as a line of business felt strongly that this activity built confidence for
the girls; another council thought that the buyers of the cookies were the
customers and the difference was both in helping build confidence for the girls as
well as enjoying delicious cookies. In other words, Girl Scouts cookies feed the
soul and the sweet tooth.
Making Lines of Business
Drafting the list of current lines of business is straightforward and takes
very little time. You first generate a list of all the products, services, and programs
that are delivered to the customers or clients of the organization. You then develop
a customer-difference statement for each. It’s that simple.
The level of detailing within lines of business – including how many lines
you have – should stop when it becomes difficult to develop reasonable customerdifference statements. Table 6.3 and Table 6.4 shows the lines of business for two
different organizations.
March 6, 2016 Page 77
Table 6.3 Big Brothers – Big Sisters Chapter
Core Match
Building 7-13-year-old Littles
into confident – competent –
caring young adults
High School Mentoring
Building 15-17-year-old Bigs
into confident – competent –
caring young adults
Teen Mothers
Building pregnant and
parenting teens into
confident – competent –
caring parents
Table 6.4 MS Chapter Lines of Business
Newly Diagnosed
You’re not alone
for those newly diagnosed
Research
Ending the devastating effects
for those living with MS
Support Groups
Living the fullest life possible
for those living with MS
MS Peer Connection
Moving Forward
Knowledge Is Power
Update Education
Staying current
for those living with MS
Fall Education Conference
National Television Conference
Direct Disbursements
Solutions
for those without means
Equipment
Direct Counseling
Referral Counseling
As shown in the examples above, the preferred way to describe the lines of
business is with brief customer-difference statements of no more than six to eight
words in length. Sometimes the statement includes the customer and the
difference; sometimes organizations will use descriptions that are more about
products or services as demonstrated in the fair housing agency example in Table
6.5.
March 6, 2016 Page 78
Table 6.5 Fair Housing Agency Lines of Business
HOUSING DISCRIMINATION
Education & Outreach
General Public
Individuals are more aware and
assert their fair housing rights
Housing Providers/Professionals
Individuals and companies are better educated,
and greater compliance is achieved
Enforcement
Meritorious complaints are identified and
violations are challenged & proven
Research/Advocacy
Problems & barriers are
identified, prioritized, publicized
PREDATORY MORTGAGE LENDING
Education & Outreach
General Public
Individuals are aware and
avoid becoming victims
Housing Providers/Professionals
Individuals and companies are better
educated, and assist in protecting customers
Intervention for Victims
Residents’ rights are asserted and
remedies are achieved
Research/Advocacy
Problems are
identified, prioritized, publicized
It is usually the executive director’s task to outline the lines of business.
There is no one best way to go about doing this; some executive directors will
quickly list all the products, services, and programs that the organization is
delivering and group them in a logical fashion. Others will involve key
professional staff in a group setting and use brainstorming to develop the list of
current lines of business. Once done, you are ready to work on the success
measures.
March 6, 2016 Page 79
Chapter 7 Success Measures
What you measure is what you get.
- Robert Kaplan and David Kaplan263
As is the case with lines of business, success measures are used to answer
Michael Porter’s question of “What is the Business Doing now?”264 Unlike the
lines of business customer-difference statements that describe what you’re doing
now from a qualitative perspective, success measures look at this question from a
quantitative point of view. Along with the lines of business and their customerdifference statements, success measures provide a powerful way to ensure that the
Purpose comes to life. In this chapter, you’ll discover that you can indeed measure
the unmeasurable, why it’s important to do so, and how to do it.
Measuring Unmeasurable
If a shareholder wants to know how a for-profit company is doing, she
typically takes the measure at the bottom line. Whatever this bottom line is called,
be it shareholder wealth, net profit, share price, or return on investment, for-profits
depend on financial information as a fundamental measure of their success.
Nonprofits, on the other hand, are almost anti-financial when it comes to
measuring lines of business. As William Bowen, President Emeritus of The
Andrew W. Mellon Foundation puts it, “There is no single measure of success, or
even of progress, that is analogous to the proverbial bottom-line for a business.”265
Jim Collins of Good to Great fame takes a similar viewpoint, “For a
business, financial returns are a perfectly legitimate measure of performance. For a
social sector organization, performance must be measured relative to mission, not
financial returns.”266 He’s not alone in this opinion. Indeed, the idea that
nonprofits are unable or incapable of paying attention to the bottom line is widely
held. Michael Porter and Mark Kramer assert that nonprofits “operate without the
discipline of the bottom line in the delivery of services.”267 Regina Herzlinger says
that nonprofits lack the “self-interest that comes from ownership . . . they often
lack the competition that would force efficiency [along with] the ultimate
barometer of business success, the profit measure.”268
No discipline? Lacking in self-interest? These viewpoints fall far short of
the reality. Exemplary nonprofits depend upon measurable results to determine
effectiveness including financial results. Twenty years ago, Rosabeth Kanter and
David Summers recognized that “nonprofits are increasingly setting more
stringent financial goals, reporting ‘operating income’ as though it were
March 6, 2016 Page 80
‘profit.’”269 At about the same time, Peter Drucker asserted that “nonprofit
enterprises are more money-conscious than business enterprises are. They talk and
worry about money much of the time because it so hard to raise and because they
always have so much less of it than they need.”270 In other words, that nonprofits
don’t, shouldn’t, or can’t use financial returns to measure performance is as much
a myth as the idea that nonprofits can’t make a profit at all.271
To be fair, it’s not that nonprofits don’t have measures; it’s just that many
aren’t financial or written down. Furthermore, nonprofits often have measures
based in the quality of things, which is very challenging because it’s softer in
texture, “How much” is much easier to measure than “how good” or “what good.”
Peter Goldmark, former President of the Rockefeller Foundation, describes it this
way, “You don’t have a central financial metric that is really central . . . You are
dealing with more squishy intangible issues of social change or public attitudes
and behavior.”272
In other words, it is one thing to measure how many people quit smoking at
the weekly cessation class, but quite another to do it with “such subtle outputs as
tender loving care in a nursing home, appreciation of art and music, and education
in cultural values.”273 That said, this viewpoint is increasingly seen as a copout; it
is possible to measure such things and the best nonprofits do it regularly. Take
appreciation of art and music for example. A ballet company can easily count
standing ovations after a performance, the number of tickets sold, and the number
of intermission walk-outs; all are perfectly legitimate surrogates for customer
enjoyment.
Why Measure
The more that you know about how success is measured, the better. First,
having an explicit understanding about success measures provides a common
vocabulary for monitoring performance. Thus, people with widely differing
viewpoints can be on the same page when it comes to evaluating the work of the
organization. Gone is the muddle of trying to decide what to evaluate every time
the issue of performance comes up.
Second, the executive director and the board can understand exactly what it
means to achieve meaningful results. In addition to giving all participants a level
playing field when it comes to performance, success measures offer the board and
staff an agreed-upon platform for celebrating success, correcting deviations, or
even for incentive compensation provided that it is based on measurable results
that the employee has control over.274 Even better, this platform of success
measures is readily available and usually pre-approved by the board.
March 6, 2016 Page 81
Third, success measures provide meaningful information that can make
fundraising harder hitting in the case statement and provide required data for
compliance reporting. Are you looking for a list of things to highlight in the
newsletter, annual appeal, or annual report? It comes ready-made in the success
measures.
Fourth, success measures provide a valuable source of questions for the
board member to use in fulfilling a key responsibility. Sharon Percy Rockefeller,
President and CEO of Washington Area Television Authority, says that a board
member’s role is straightforward: “Ask why. Why do we have that priority? Why
are we doing that now? Why aren’t we doing that now”?275 Much of the
information needed to form these questions comes from the success measures,
which also helps the executive director, who has the obligation to answer those
tough questions, be prepared, and be knowledgeable.
Fifth, having an agreed-upon set of success measures in the Strategic Plan
that the board and executive director are vigilant about monitoring creates a much
greater likelihood of actually achieving the desired results. Later in the Operating
Plan, where the decisions are made about what gets done today, the success
measures provide valuable guidance on where to focus attention.
Sixth, by connecting the thinking about tomorrow with the work that gets
done today, the likelihood of action is higher and the chances of “bookshelfing”
are lower. Instead of constructing a plan and throwing it over the wall to
departments where it will gather dust on the bookshelf, the success measures force
a feedback loop that is useful to everyone and that keeps the Strategic Plan alive.
Seventh, having well-articulated success measures saves time and makes
people smarter. What with busy board and staff members, why keep explaining
what happened how-many years ago at the bottom line or with a particular
program when your success measures can put that information right at the
fingertips of those who need it? Want decision makers to be smarter? Then give
them the information that can make it so! Imagine a new board or staff member is
looking at this information for the first time. Though there may still be complaints
about the loss of organizational memory, at least aspects of it are maintained and
questions that arise about the past can be easily answered.
Eighth, it bears repeating Robert Herman and David Renz’s assertion that
comparison is at the core of effectiveness, “The comparison may be to the same
organization at earlier times, or to similar organizations at the same time, or to
some ideal model, but effectiveness assessments are always a matter of some kind
of comparison.”276 With well-crafted success measures, you can compare your
agency to itself at an earlier time and to other like agencies.
Finally, the benefit of deciding success measures often first comes from the
discussions and inevitable soul-searching that arises in deciding which ones to use.
March 6, 2016 Page 82
Vitally important questions of priorities become apparent; issues about precious
resources of money and time are verbalized. For many boards, the determination
of success measures often presents the first opportunity ever to think about what is
truly important and what is merely trivial. Says William Bowen, “Efforts to
develop key indicators can be the occasion for a nonprofit board to think seriously
(perhaps for the first time) about what really matters to the organization.”277
Table 7.1 shows selected lines of business success measures for a Girl
Scouts Council. The success measures criteria are in the left-hand column and the
history and targets for each measure are in the successive columns to the right.
Table 7.1 Girl Scouts Council Selected Lines of Business Success Measures
Girl Scout Troops:
Total
Retention
New
Diversity
Daisies:
Total
Retention
New
Diversity
Brownies:
Total
Retention
New
Diversity
Year
Before
Last
15,999
10,254
5,745
3,317
824
31
793
26
5,218
3,624
1,594
445
Last
Year
This
Year
Next
Year
17,499
11,322
6,177
4,800
550
37
513
34
5,268
3,550
1,718
465
18,244
11,817
6,427
4,976
980
0
980
75
5,450
3,720
1,730
482
18,429
11,902
6,527
4,976
1,006
6
1,000
101
5,476
3,726
1,750
533
Year
After
Next
19,000
12,000
7,000
5,000
1,100
35
1,050
120
5,450
3,500
1,800
500
Notice that the last two columns to the right do not describe what business
you’re in, Michael Porter’s first question of strategy building. Instead, the focus is
on the future, which is his third question of “What Should the Business be
Doing?” 278
In setting targets, the question arises about probabilities. What should the
probability of achievement be for next year, the year after that, and so on?
Expectancy theory suggests that the “degree of motivation and effort rises until the
expectancy of success reaches 50%, then begins to fall even though the
expectancy of success continues to increase.”279 Why not apply this approach to
the targets? This may be legitimate for targets set two years out, but it is not
advisable especially for the targets for next year. Because many organizations use
next year’s targets to provide important information for budgeting, the targets are
usually best set with a higher probability of 80 percent or better. That doesn’t
March 6, 2016 Page 83
mean stretch is not welcome; it does mean that stretch has to be legitimate in the
next fiscal year’s targets.
Table 7.2 is another example of selected lines of business success measures
from a performing arts organization.
Table 7.2 Performing Arts Agency Selected Lines of Business Success Measures
(in thousands)
Festival:
Attendance #
Paid Attendance #
Street Attendance #
Income $
Opera:
Attendance #
Subscriptions #
Paid Single Tickets #
Comp Single Tickets #
Income $
Renewal Rate %
Year 3
Year 2
Year 1
6.7
6.7
0
53
13.7
2.6
4
2
366
81
11
6
5
56
15.5
2.7
3.4
3.9
453
80
33.6
8.6
25
68
14.7
2.7
5.2
1.5
564
73
Last
Year
19.9
7.4
12.5
35
12.3
2.6
3.1
1.6
468
70
This
Year
23
8
15
39
21.4
2.9
9.4
1
1,070
75
Next
Year
20
5
15
42
19.5
3.3
5.6
1.5
957
75
The amount of history shown in success measures is flexible. Five years is
better than four years, and three is better than two. Anything less than two years
makes it difficult to see trends. The number of years out in the future is a different
matter altogether, with three being the maximum recommended length and one or
two years being more common. Some of this is due no doubt to uncertainty about
what will happen in the future.
The problem with showing measures for just one year in the future is that
the readers do not get a sense of direction, but the staff will argue that setting
targets more two years out is academic. Given that it can often take three years for
a new line of business to show its full impact, there are times when a longer
horizon is a good idea especially when it comes to financial measures. The board
and staff usually find compromise in give-and-take dialogue that replaces the old
show-and-tell reporting. Having said this, if you desire a three-year horizon, no
rule exists to deny it.
Making Success Measures
Effective success measures can contain a wide variety of components
including outcome indicators, financial measures, and measures of activity.
March 6, 2016 Page 84
Measures do not tell the reader whether the organization is doing a good job or is
in need of corrective action. Measures are measures, nothing more, nothing less.
Most success measures have a clear activity texture about them. Tickets
sold, classes attended, grades achieved, number of customers, number of
customers who return, number of customers that do not recidivate. This is not to
diminish the value of measuring outcomes as advocated in recent years especially
by United Ways. But let’s be realistic here: outcomes measurement is no walk in
the park. The United Way of America early on recognized the “tension between
the need for technically sound methodologies, which can be expensive and time
consuming, and the staffing, funding, and workload realities that constrain nearly
all service agencies.”280 Moreover, measuring activity is the first step in any
program to measure outcomes.
When choosing criteria for the success measures, an important condition is
that the measures be easy to use. A measure built around information that readily
available is often more preferable than building one from scratch. Furthermore, the
cost of using the measure needs to be considered as there is very little point in
having brilliantly designed success measures that require a quarter-time staff
member for tracking. A reasonably good success measure easily used without cost
is usually superior to a great success measure that is expensive.
In the process of building success measures, there is a natural tendency to
generate more ways to measure a line of business than can possibly be managed.
The number and permutation of success measures is surprisingly broad and you
can forget that measuring success takes time and effort, resources that are limited
in most nonprofits. When doing the first Results Now Master Plan for an
organization, you are best to stick with the “less is more” approach and see how
successful it is.
Mission Success Measures
Success measures should always include mission success measures. Like
the well-known blood pressure, pulse, and temperature at every visit to the doctor,
these mission success measures are usually composed of no more than three or
four success measures with a global texture. It is quite common to see success
measures related to financial condition and total number of clients served. These
success measures offer an effective way to quickly ascertain performance and
health of the organization. Table 7.3 shows the mission success measures from a
performing arts organization.
March 6, 2016 Page 85
Table 7.3 Performing Arts Agency Mission Success Measures
(in thousands)
Attendance #
Total Revenue $
Earned $
Contributed $
Net Income $
Year 3
Year 2
Year 1
24
1,220
450
770
(189)
18
1,240
521
718
(47)
41
1,460
797
664
65
Last
Year
31
1,640
970
671
(42)
This Next Year
Year
42
42
1,950
1,900
1,230
1,190
726
713
(45)
(86)
These success measures tell a story. Attendance had a big jump a few years
ago along with income. The earned-to contributed ratio seems to be improving, but
shows dramatic change from year to year and net income has been consistently
negative. Looking forward, the organization seems to anticipate continuing
difficulties.
Like all success measures, the story told is always open to interpretation;
the success measures are intrinsically neutral. Perhaps the organization is engaged
in an effort to build its clients that brings with it planned deficit spending. Perhaps
the organization is slowly sinking or maybe the organization’s growth is making it
hard to concentrate on its core lines of business.
Mission success measures commonly have a bias for financial information
and can be quite thorough complete with graphs as shown in Table 7.4 from a
economic development agency culled from six years of IRS Form 990s.
Table 7.4 Economic Development Agency Organizational Financial Success
Measures
($ in thousands)
Profit & Loss: Contributed Revenue $
Earned Revenue $
Total Revenue $
Total Expenses $
Excess/(Deficit) $
Balance Sheet:
Assets $
Liabilities $
Net Assets $
Capital Structure:
Total Margin1
Current ratio2
Year 6
2,330
177
2,507
2,072
435
986
554
432
0.17
5.6
Year 5
3,552
74
3,626
1,998
1,628
3,583
1,519
2,064
0.45
10.6
Year 4
3,305
121
3,426
2,868
558
3,968
1,344
2,624
0.16
11.4
Year 3
2,431
140
2,571
2,962
(390)
3,589
1,349
2,239
(0.15)
10.9
Year 2
3,477
295
3,772
4,065
(293)
2,949
999
1,950
(0.08)
3.9
1
Total Margin: Positive is better; (Total Revenue minus Total Expenses) divided by Total Revenue
2
Current Ratio: >2 is preferred; Current Assets divided by Current liabilities
Year 1
3,412
131
3,542
3,877
(335)
2,463
864
1,599
(0.09)
2.1
March 6, 2016 Page 86
As you review these success measures, questions will arise. Balance Sheet
Assets peaked in Year 4 and expenses have risen in recent years along with a
persistent deficit. This combination often happens when new facilities are brought
on line. As Clara Miller warns, “Even in the best of circumstances, acquiring a
facility that doesn’t push an organization’s fixed costs to an uncomfortable level is
devilishly difficult.”281
Notice that the current ratio, which "matches the short-term assets of an
organization with liabilities that it expects to face,"282 has also fallen dramatically.
Granted, the gold standard for the current ratio is two or better, but something is
happening here that likely demands the attention of the board and executive
director.
Is it reasonable to use IRS Form 990s in success measures? From a
reliability standpoint, they provide a good deal of information and are “a reliable
source of information for basic income statement and balance sheet entries.”283
Moreover, the 990s offer you a reasonable way to compare your agency to others,
which is very useful.
Some may argue that there is too much financial information provided, but
like all success measures, you want enough information to tell the story. For the
economic development organization above, including seven years was necessary
because something quite worrisome is happening that shows clearly in the three
most recent years. Had these success measures been in place, perhaps the board
and executive director would have seen the challenge at much earlier when the
deficit was more manageable.
Lines of Business Success Measures
While the mission success measures offer a snapshot of the organization,
they do not offer the full picture that comes from adding in the lines of business
success measures. Table 7.5 illustrates selected success measures from a regional
theatre. These particular success measures are ready for presentation to the board
of directors at a meeting that will focus on developing a new Strategic Plan for the
March 6, 2016 Page 87
coming fiscal year. In this example, there are two primary categories for a theatre
series. The first are the activities success measures that are mostly about counting;
the second are the satisfaction success measures.
Table 7.5 Regional Theatre Lines of Business Success Measures
Year 3
Year 2
Year 1
25.3
2.4
13.4
691
(143)
70
48
7
87
16.7
2.4
3.2
414
(155)
73
26
16
78
14.5
1.9
5.5
352
(177)
56
56
8
86
(in thousands)
Activity:
Attendance #
Subscriptions #
Single Tickets #
Income $
Net Income $
Satisfaction: Renewal %
Standing Ovations %
Intermission Walkouts %
Buy-to-attend Ratio %
This Year
Plan Forecas
t
11.3
10.8
2.7
2.6
3.4
3.0
257
268
(74)
(75)
74
80
63
65
6
6
88
90
Next
Year
10.5
2.6
2.1
263
(75)
74
56
9
85
The success measures are neutral and offer the chance for interpretation and
discussion. For example, what has caused the 46 percent drop in total attendance
for the resident series from 25,300 in Year 3 to 11,300? How does this drop
correlate to the improvement for series losses and improvement in renewal rate?
Notice in the second grouping of success measures that the criteria are
about customer satisfaction. Renewal rate is the percentage of subscribers who
renew from one season to the next. The steep drop from Year 2 to Year 1 could be
related to the way customers felt about the shows in Year 2 because standing
ovations were down, intermission walkouts were much higher, and the buy-toattend rate – a measure of word of mouth – was down. These are all indicators of
satisfaction. The repertory was adjusted in Year 1 to a more pleasing mix, which
shows in the results.
Though quantitative survey research might get at customer satisfaction in a
way that is more generalizable and a qualitative interview study could yield more
nuanced information, these are expensive and time consuming approaches. In the
success measures, the organization is taking advantage of readily available
information; ushers can easily count standing ovations and intermission walkouts.
The computerized ticket system can easily do the other two. In many respects,
these success measures are actually measuring the outcome of a satisfied attender.
As you can see in this example, the current year is broken into two
columns: one for the budgeted amount that was passed in advance of the fiscal
year and one for the forecast for year end. This can be very helpful in terms of
assessing progress, which itself is a fundamental tool for ensuring accountability.
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For those interested in having a fundraising line of business, Table 7.6 lists
the success measures used at an arts agency.
Table 7.6 Arts Agency Fundraising Line of Business Success Measures
(in thousands)
Year 4
Year 3
Year 2
Year 1
Total Raised
Annual Giving: Annual Fund
Government
Leadership Giving: Legacies
Sponsorship
1,560
280
258
18
1,020
1,680
332
279
20
1,070
1,740
360
391
22
986
1,670
390
385
22
892
This Year
Plan Foreca
st
1,710
1,730
370
440
363
290
26
30
981
1,000
Next
Year
1,930
425
345
26
1,160
Remember that there is an inclination to have too many success measures.
Don’t forget the Results Now rule of thumb from Albert Einstein, “Everything
should be made as simple as possible, but not simpler.”284
By developing lines of business and success measures, you can answer
Michael Porter’s first question of “What is the Business Doing now?” and if you
set targets for the future, you can also answer the question of “What Should the
Business be Doing?”285
For many organizations, this may be as far as you need to go. Targets from
the success measures can be taken into the Operating Plan to form goals and you
can deal with the vision next time around if that makes sense. Alternatively, you
might work on the vision to be sure you’ve answered the question about what the
business should be doing. Maybe some lines of business should be phased out;
maybe you should launch new ones or work on operational effectiveness instead.
March 6, 2016 Page 89
Chapter 8 Vision Statement
Chance favors the prepared mind.
- Louis Pasteur
Jerry Maguire’s vision statement was a very simple one that epitomizes the
inspirational quality of many such statements, “we must simply be the best
versions of ourselves.”286 His eventual success shows what many writers in the
popular literature have long argued, that vision is the absolutely essential to
effective leadership.287 Scholars give an equally strong vote of confidence its
importance.288 As such it is now generally accepted that the “single defining
quality of leaders is the capacity to create and realize a vision.”289 In other words,
“leadership behavior that is not infused with vision is not truly leadership.”290
Does vision deserve all this glowing press? Is vision truly “a force in
people’s hearts, a force of impressive power”?291 Is it really the “essential
leadership act”?292 This chapter will answer this question by showing how
visions vary depending upon the context and how to go about making a vision
statement including preparing your mind and then setting the statement itself.
Vision Types
The news that vision is a hallmark of effective leadership would be cause
for celebration if there were agreement on what it actually is. Gary Yukl says that
vision is “a term used with many different meanings, and there is widespread
confusion about it.”293 One study of vision content showed that visions are not
necessarily homogeneous and range from the imprecise to the specific;294 another
study of innovative leaders found that all of them had a vision, but the visions
varied widely from vague to concrete.295
For example, some like John Kotter define vision quite broadly as “a
picture of the future.”296 Others like Henry Mintzberg take the view that it’s
strategy writ large:
Vision sets the broad outlines of a strategy, while leaving the
specific details to be worked out. In other words, the broad
perspective may be deliberate but the specific positions can
emerge. So when the unexpected happens, assuming the vision is
sufficiently robust, the organization can adapt.297
Making sense of the differences are Jill Strange and Michael Mumford who
reviewed a host of definitions and found the commonality that “vision may be
conceived of a set of beliefs about how people should act, and interact, to attain
March 6, 2016 Page 90
some idealized future.”298 As Burt Nanus so eloquently puts it, “vision always
deals with the future. Indeed, vision is where tomorrow.”299 Thus, your Purpose is
in the present tense and the Vision is in the future tense.
One thing is for sure when it comes to vision – it matters. From an
academic perspective Raed Awamleh and William Gardner showed that an
“idealized vision can help leaders to enhance their image.”300 A longitudinal study
of entrepreneurial firms found that “vision significantly effects organizationallevel performance, and vision affects performance directly as well as indirectly
through vision communication.”301 John Kotter places underestimation of the
power of vision in his top three reasons for why transformation efforts fail302 For
Henry Mintzberg, “vision – expressed even in imagery, or metaphorically – may
prove a greater incentive to action than a plan that is formally detailed, simply
because it may be more attractive and less constraining.”303
Leaders of organizations are paying attention. In 1989, 1,500 leaders from
20 different counties including 860 CEOs agreed that vision was crucial to
success.304 Popular writers picked up and amplified the importance of vision and
by the mid-1990s, all top executives had visions of one sort or another.305
The position that vision is essential has not abated in the new millennium.306
In 2003, vision was a top-three management tool used by 84 percent of the
respondents from a survey of 708 companies on five continents and this position
had not faded at the end of first decade.307
Lest we get too carried away, not everyone is convinced of the power of
vision. The venerable Bass & Stogdill’s Handbook of Leadership barely makes
note of vision in its 1,182 pages.308 A study of 1,400 Australian public sector
employees indicated that “articulating a vision does not always have a positive
influence on followers.”309 Another study in the Israeli Defense Forces showed that
a leader’s vision was “not positively related to subordinate identification and trust,
self-efficacy, and motivation and willingness to sacrifice.”310
For some highly regarded practitioners, vision is specific enough to have a
direct impact on the day-to-day efforts in the workplace:
“A vision gives you a focal point . . . It tells people what’s
expected of them.”
Frederick Smith, Chairman, President and CEO, FedEx
Corporation
“A vision provides a framework through which you view
everything that goes on in the company and in the external
environment.”
Raymond Gilmartin, President and CEO, Merck & Co311
The vision referred to by these deans of corporate America is “valuable
because an organization needs to know where it wants to be in order to act in a
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reasonably efficient manner to get there.”312 It is defined by its drive to yield
specific results.313 This includes Ronald Heifetz’s adaptive work where “a vision
must rack the contours of reality; it is has to have accuracy, and not simply
imagination and appeal.”314
These kinds of vision have an operational texture somewhat similar to
formal planning, which “seems better suited to the tranquilities of peacetime than
the disruptiveness of war, especially unforeseen war.”315 The visions that yield
practical results are the type that Paul Valery refers to when he said, “The best
way to make your dreams come true is to wake up.”316 In this respect, vision as a
term is synonymous with strategies that help you achieve major results.
Another kind of vision is the type that elevates and takes the organization to
someplace new.317 It is “a new story, one not known to most individuals before.”318
Defined by idealism, these visions are “transcendent in the sense that they are
ideological rather than pragmatic, and are laden with moral overtones.”319 These
are the kind of visions that Walt Disney refers to in his often-repeated quote, “If
you can dream it, you can do it.”320 In this respect, vision as a term is synonymous
with what an overarching picture of what success will look like in the future.
That there are differences in the definitions of vision is hardly news.321
Though vision has been the subject of much discussion, “there has been little
definition of content. No one has described how to develop vision that has broadbased commitment. Equally important, there has been little written on how to
communicate vision, how to renew it, and how to sustain it over long periods of
time.”322 In all of this confusion, however, patterns begin to emerge. What follows
is a list of desirable vision characteristics culled by Gary Yukl from a who’s who
of experts:
simple and idealistic; a picture of a desirable future; not a complex
plan with quantitative objectives and detailed action steps; appeals
to values, hopes, and ideals; emphasizes distant ideological
objectives; challenging, but realistic; not wishful fantasy; an
attainable future grounded in the present reality; addresses basic
assumptions about what is important for the organization; focused
enough to guide decisions and actions; general enough to allow
initiative and creativity; simple enough to be communicated clearly
in five minutes or less323
There are contradictions within this list that cannot be easily resolved. For
example, how can a vision emphasize distant ideological objectives while also
being focused enough to guide decisions? Grouping these desirable characteristics
around common themes resolves many of the inconsistencies and it becomes clear
that there are not one, but two major types of vision as shown in Table 8.1
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Table 8.1 Vision Types
Characteristics
simple and idealistic; simple enough to be communicated clearly in
five minutes or less; a picture of a desirable future; not a complex plan with
quantitative objectives and detailed action steps; appeals to values, hopes,
and ideals; emphasizes distant ideological objectives
challenging, but realistic; not wishful fantasy; an attainable future
grounded in the present reality, addresses basic assumptions about what is
important for the organization; focused enough to guide decisions and
actions; general enough to allow initiative and creativity
Types
Idealistic
Pragmatic
The idea that there might be two primary types of vision is hardly groundbreaking news among practioners. Alan Guskin, former Chancellor of Antioch
University, takes this point of view:
I believe that one must be both idealistic and pragmatic. For, to be
idealistic without being pragmatic leads to frustrated aspirations
and unfulfilled promise; to be pragmatic without being idealistic
leads one to be a hack and a bureaucrat. Being both idealistic and
pragmatic leads to hope and optimism along with being realistic
and focused.324
Nor is this paradoxical blend unusual in the literature. For example, Glenn
Rowe argues that strategic leaders show a “synergistic combination of managerial
[pragmatic] and visionary leadership [idealistic].”325 This is consistent with Jim
Collins and Jerry Porras’ view that vision “consists of two parts: a 10-to-30
audacious goal plus vivid descriptions of what it will be like to achieve the
goal.”326
My study of 16 exemplary nonprofit leaders in Dayton, Ohio found that the
concept of vision resonated strongly and that most supported vision was to always
accomplish the mission. This was followed with a tie for second place between be
more financially sound and be the best at what you do.327 In other words, always
accomplishing the mission was idealistic in texture; financial strength and being
the best were pragmatic.
Results Now splits the vision into two elements: The clear picture of the
future is the idealistic vision statement; the strategies that bring it to life are the
pragmatic vision strategies.
Making Statements
Many characterize vision making as an almost mystical process with
spiritual undertones. Says Po Bronson, “Most of us don't get epiphanies. We only
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get a whisper – a faint urge. That's it. That's the call.”328 Charlie Knight, a Ute
medicine man, describes how he found his vision, “Everyone has a song. God
gives us each a song. That’s how we know who we are. Our song tells us who we
are.”329 Jay Conger observes that that “vision when articulated is surprisingly
simple; yet when we examine the evolution of a specific leader’s vision it appears
to be a much more complex process. Events stretching as far back as childhood
may influence its origins.”330
Most people don’t want to wait for whispers, songs from God, or go
through Freudian therapy to get at their childhood vision inputs. They want a
rational process where the “vision starts with understanding the enterprise – or in
other words, what you see depends on where you stand – you must be quite clear
about the fundamentals of the business you are in.”331 This is how General Electric
approaches vision making, which “only comes after hard thought about the
capabilities of the organization and the needs of the market.”332 The classic model
of this systematic process is summarized as follows:
The firm’s first step in the process is to analyze its external
environment and internal organization to determine its resources,
capabilities, and core competencies – the sources of its “strategic
inputs.” With this information, the firm develops its vision and
mission and formulates one or more strategies.333
The brevity of this summary belies the effort required. For example, John
Bryson’s approach for nonprofits is a 10-step process:
1.
2.
3.
4.
Initiate and agree upon a strategic planning process.
Identify organizational mandates.
Clarify organizational mission and values.
Assess the organization’s external and internal environments to identify
strengths, weaknesses, opportunities, and threats.
5. Identify the strategic issues facing the organization.
6. Formulate strategies to manage these issues.
7. Review and adopt the strategic plan or plans.
8. Establish an effective organizational vision.
9. Develop an effective implementation process.
10. Reassess strategies and the strategic planning process.334
What identifies this as the basic planning model is the reliance on the
SWOT model (strengths, weaknesses, opportunities, and threats). The SWOT
model makes the promise that by knowing your agency’s strengths, weakness,
opportunities, and threats, you can finally have “a wonderful future” as Paul
Tulenko puts it.335
Here’s how SWOT analysis works: 1) You assess your internal strengths
and weaknesses; 2) You move to the external environment where you identify
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opportunities and the threats; 3) You put this information into the mix and your
strategies are born.
Reliable SWOT analyses are unfortunately the rarity. As Henry Mintzberg
puts it, the strengths and weaknesses portion of the process “may be unreliable, all
bound up with aspirations, biases, and hopes . . . Who can tell without actually
trying, if the strength will carry the organization through or the weakness will
undermine its efforts?”336
What about competitor analysis which is often done as part of looking for
your threats? Surely knowing what your competitors are up to will help you be
more successful. Gary Hamel and C. K. Prahalad tell us that this too is fraught
with difficulty because “traditional competitor analysis is like a snapshot of a
moving car. By itself, the photograph yields little information about the car’s
speed or direction . . . assessing the current tactical advantages of known
competitors will not help you understand the resolution, stamina, and
inventiveness of potential competitors.”337 Indeed, nonprofit planning expert John
Bryson notes that SWOT analysis “does not offer specific advice on how to
develop strategies, except to note that effective strategies will build on strengths,
take advantage of opportunities, and overcome or minimize weaknesses and
threats.”338
Ultimately, making vision requires that you “see and to feel . . . it requires a
mental capacity for synthesis.”339 This is certainly true of Amar Bhide’s study that
found “many successful entrepreneurs spend little time researching and
analyzing.”340 Four percent found ideas through systematic research for
opportunities like SWOT, 20 percent were discovered serendipitously, 71 percent
came from an idea encountered at an earlier job, and the final five percent came
from going with the flow of their industry.341
Starting out with SWOT means that that you’ll inevitably focus on your
weaknesses, which is self-defeating as nonprofit expert Thomas McLaughlin
observes:
Few strategic concepts have taken hold quite so thoroughly as the
SWOT model of strategic planning. It offers an appealing balanced
approach – identify your strengths and weaknesses, and be aware
of your threats and opportunities. But in practice it doesn’t deliver.
In fact, it tends to divert attention to unproductive areas . . . like a
kindly, well-meaning family doctor who inadvertently gets you
thinking about disease when you should be thinking about
health.342
This view not only shows up in planning literature, it also appears in advice
on career building.343 Don’t take the “path of most resistance”344 says Tom Rath of
Clifton StregthsFinder fame, but instead understand that “the key to human
development is building on who you already are.”345 You want to prepare your
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mind for visioning; you want stay positive where insights are more probable.346
Even though we assume that “the best way to solve a difficult problem is to focus,
minimize distractions, and pay attention only to the relevant details, the clenched
state of mind may inhibit the sort of creative connections that lead to sudden
breakthroughs.”347
Think back to Muggsy Bogues. If he had used SWOT, he would never have
played basketball let alone been a NBA first-round draft pick. But the game was
his mission; it was who he was. That’s what counted for Muggsy Bogues and kept
him going. And because he wanted to be the best he could be, he had to shoot for
the NBA. Thank goodness he grew up poor in the Baltimore projects where
management consultants weren’t out in force with SWOT as their solution to his
problems. Do what you love; love what you do is not the typical outcome of the
SWOT model. That’s why you should “Swat the SWOT,” says Tom
McLaughlin.348
Still, some will worry about missing something important by not doing a
SWOT analysis, but don’t fret too much. You’ll have plenty of time to do it on the
back end. SWOT appears to be better as criteria for examining the quality of your
strategies once formed; the backside of the process in, not the beginning.
Ready Your Mind
Eric Beinhocker and Sarah Kaplan’s study of the strategic-planning process
at 80 large for-profit companies found that one of the primary purposes of formal
planning was “to build ‘prepared minds’ – that is, to make sure that decision
makers have a solid understanding of the business, its strategy, and the
assumptions behind that strategy, thereby making it possible for executives to
respond swiftly.”349 This is consistent with Michael Porters three-step approach to
strategy making that begins with “What is the Business Doing now?”350
The notion that you should prepare your minds for vision making showed
up convincingly in my study of 16 high-performing executive directors. I asked
about the origins of their visions and then had the participants prioritize the
answers to yield the first three steps for readying your mind and I add a fourth
item drawn from the earned income literature: 351
1.
2.
3.
4.
Reaffirm your purpose
Listen to your customers
Know the best of best in your field
Understand your risks
Though the objective of readying your mind is to gain a deeper
understanding of what your business is doing now, you will definitely generate
many ideas for vision strategies in the process. It is therefore very important for
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you to keep careful track of these ideas as you go along because they will be very
useful later.
Reaffirm Your Purpose
Reaffirming the Purpose begins with the review of values that are part of
the Purpose. Do these values restrict you in any ways that are related to your
vision? Do they provide insight on the boundaries for selecting strategies? Take
the example from earlier of the five values:
 We are collaborative: optimistic, cooperative, effective
communicators.
 We are innovative: proactive, experimental, persistent continuous
learners.
 We are customer centered: respectful, responsive, and solution driven.
 We are professional: results driven, dedicated, and knowledge-andexperience based decision makers.
 We are trustworthy: fair, transparent, truthful promise keepers.
These values form criteria that might be used to stimulate thinking about
possibilities and to help consider whether current activities are congruent with
these values. Certainly these values suggest that riskier, out-of-the-box ideas will
be welcome and encouraged; ideas not centered on customers may be eschewed.
Being knowledge-and-experience based decision makers suggests an analytical
approach to prioritizing the ideas that arise.
The mission can be equally stimulating. You know the customers you want
to serve, you know the difference that you want to make in their lives, and you
understand what you’re going to do to be better than your rivals. But as Peter
Brinckerhoff cautions
You will find (as I always do) that, while your staff and board may
well know the words of the mission, they are not unanimous in
their interpretation of the outcomes . . . If, for example, your board
feel that your focus should be on improving quality of service
(doing the best possible service) while the staff feels that it should
be on expansion (doing the most possible), there will be a
conflict.352
Take for example an agency that serves homeless women ready for change.
Its primary lines of business are housing, real-life tools, and a support network.
But can these women be married? Can their husbands join them? Can they have
children in tow? How old can the children be, the women? Talking through the
issues, taking the temperature of your board, staff, and other stakeholders, can be
very helpful in terms of generating ideas and maybe revising your mission.
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What issues should you discuss specifically? Peter Drucker’s
straightforward five question protocol for evaluating “what you are doing, why
you are doing it, and what you must do to improve”353 begins with the question of
mission. To get at the answer, he suggests four questions: “What is the current
mission? What are our challenges? What are our opportunities? Does the mission
need to be revisited?”354 Of these, the first – what is the current mission – is the
most salient for preparing for vision making. And probing this requires a
discussion around the following: “What meaning does the mission have for you?
In what ways has the organization furthered the mission?”355
At the Victoria Theatre Association, the board was quite bullish on growth
within the confines of our mission boundaries, but I know many other agencies are
that are very risk averse. The only way to know is to ask. For instance, a group in
another Ohio city invited us to manage its Broadway series. It looked great on
paper, but our mission statement was quite clear that we were the regional – not
statewide – center. As such, the board needed to be involved in the discussion and
together we all decided that taking on a new market was less valuable than
developing new offerings for our community.
Listen to your Customers
Consistent with the use of success measures, four in five nonprofits use
some sort of program output measures when it comes to performance
measurement.356 Success measures are certainly a legitimate and obvious useful
method for tracking performance of existing activities, but what about new
strategies that don’t yet have a track record? When it comes to gauging the success
of recent nonprofit innovations, client feedback takes the lead position.357 If going
to the clients after the fact is the key way to evaluate success on a new strategy,
why not begin with them? This is the key premise of customer voice.
Looking at what’s going on with those you serve doesn’t mean looking at
your customers from a helicopter; it means seeing them eye to eye. Eye-to-eye
understanding typically requires research whether qualitative up-front-andpersonal interviewing or quantitative broad-and-deep surveying.
Peter Drucker gets at the customer question by addressing the following
three topics: “Who is our primary customer? Who are our supporting customers?
How will our customers change?”358 He defines the two types of customers this
way
The primary customer is the person who life is change through
your work. Effectiveness requires focus, and that means one
response to the question . . . Supporting customers are volunteers,
members, partners, funders, referral sources, employees, and others
who must be satisfied.359
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If you didn’t address these questions when you worked on the mission, you
have a second opportunity to do so now. More important to preparing your mind
for vision making is the third topic of how your customers will change. Here Peter
Drucker is not referring to the life-changing difference that you make in their
lives, but literally to how they will change:
Customers are never static. There will be greater or lesser numbers
in the groups you already serve. They will become more diverse.
Their needs, wants, and aspirations will evolve. There may be
entirely new customers you must satisfy to achieve results –
individuals who really need the service, want the service, but not in
the way in which it is available today. And there are customers you
should stop serving because the organization has filled a need,
because people can be better served elsewhere, or because you are
not producing results.360
But even this doesn’t quite get at customer voice. The most important
advice Peter Drucker gives about customers is about staying close to them, which
is what customer voice is all about, “Often the customer is one step ahead of you.
So you must know your customer – or quickly get to know them. Time and again
you will have to ask, ‘Who is our customer?’ because customers constantly
change.”361
Kristin Majeska, former executive director of Common Good: Investments
in Nonprofit Solutions, calls this customer focus, which begins with identifying
your customers and ends with researching what they value:
Identify your customers. Separate your customers into distinct
groups that you can picture, reach, and, above all, understand.
Figure out what type of customers you serve most effectively, ask
yourself why, and use that knowledge to serve your ”best”
customers exceptionally well and to improve your service for
others . . .
Research – don’t assume you know what customers value. Dig into
information sources. Observe. Most important, ask your
customers! Listen attentively to their answers and get to know the
people who make up your market . . . and who will determine your
success.362
One of the best ways to get close to your customers is to do exactly that.
Yes, you can commission rich and rewarding research, but one of the most
effective ways to understand your customers is to talk with them. I ran a
performing arts center for 15 years and though I wasn’t needed at the theatre every
night, that’s where you’d generally find me and not standing in the wings, but in
the lobby. I knew what our customers liked about our organization and what they
didn’t like because I asked them; it was that simple. No wonder that the Victoria
Theatre Association’s customer base was the envy of much larger communities
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and that our renewal rate for subscriptions was regularly 20 basis points higher
than most other practices. Our customers really were the stars.
What questions should you ask? I like to keep it simple. After introducing
myself, explaining what I’m doing, and getting to know the customer a bit, I begin
by asking what he or she likes about the product, program, or service they are
using. This is a good ice breaker and the answers can inform your marketing
strategies.
Then I ask the customer what he or she doesn’t like. Don’t ask what he or
she should do to improve this or that aspect of your services, products, or
programs because this is hard for to conceptualize. Though people have a tough
time knowing how to improve things, they definitely know what they don’t like.
Your customer’s first response may be deferential as most people are as
uncomfortable giving honest feedback as they are receiving it. But if you
encourage the feedback honestly and persistently, you will prevail.
If you are not getting thoughtful answers, something is likely flawed in the
way you’re asking the questions. I like to use open-ended questions, those that
don’t require a simple yes or no, when I’m trying to get at the customer
experience. Be sure to probe answers to get more information. Restate what you
have heard to be sure you understand what the customer said and meant.
I always ask a third question around what I should have asked, but didn’t,
which almost always yields a rich response. The three questions together generate
a surprising amount of information if you are patient and listen carefully. A typical
interview with a customer should take 20 minutes or so, maybe more if the
customer is talkative, maybe less if they’re not.
The identification and research of your customers is the first and most
important thing you must do to prepare yourself for vision making. What Tom
Peters and Robert Waterman say is as true for nonprofits as it is with for-profits,
that the “excellent companies really are close to their customers.”363
Know the Best of Best in Your Field
The rationale for knowing the best of best in your field is elemental
according to Marcus Buckingham: “Conventional wisdom tells us that we learn
from our mistakes [but] all we learn from mistakes are the characteristics of
mistakes. If we want to learn about our successes, we must study successes.”364
The applicability at the organizational level is evidenced by the fact that the most
used for-profit management tool in a 2009 study of international executives was
benchmarking.365
In terms of definitions, benchmarking is “a systematic, continuous process
of measuring and comparing an organization’s business processes against leaders
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in any industry to gain insights that will help the organization take action to
improve its performance.”366 The idea here is that benchmarking any best process
at any leading firm, nonprofit or for-profit, leads to specific practices that you can
imitate.
Knowing the best of best is more focused than benchmarking because you
are looking at the best of the best in your field only. It is akin to survivor
technique, which “draws upon the notion of survival of the fittest in a competitive
environment.”367 You seek out those firms your field that have survived over the
long haul and investigate the sources of their longevity. Then you drill down to
find the reasons for their success including processes, structure, governance,
everything, and anything that might be the source for their best-of-best-ness. You
are trying to get at the key success factors, which Sharon Oster defines as “those
characteristics that are essential to successful performance in that industry.”368
What do you do with all this wonderful information? Why initiate it of
course. Don’t forget that seven out of 10 ideas in the Amar Bhide’s study of
entrepreneur founders came from an earlier job.369 This goes for nonprofits as well.
A recent study on nonprofit innovation from Lester Salamon, Stephanie Geller,
and Kasey Mengel surveyed 417 nonprofit organizations and found the most
common way to learn about innovations was from peer organizations.370
By studying the very best in your industry, you’re trying to replicate the
experience of working at those agencies and come away with opportunities that
might work for you. Some may characterize this as mopping your own floor with
someone else’s dirty water as the saying goes. Yes, you are using someone else’s
water, but no, it’s not dirty water; it’s very clean, the best water you can find.
I worked with an agency that was all about finding the next killer
application, that new venture that would take them to the next level. Money was a
big issue and discussion turned to how best to amplify earned income. It turned
out that the executive director had never looked at the best practices in his field. In
his first telephone call, he learned that he was charging 25 percent lower than this
best practice in his field for an identical service. How can you even begin to think
about killer applications without first achieving operational effectiveness?
Most of the strategies that you’ll come up with will not be killer
applications at least if the literature on for-profit business launches is any
indication. W. Chan Kim and Renée Mauborgne for example who found that
nearly all (86 percent) of new for-profit ventures were “line extensions –
incremental improvements to existing industry offerings – and a mere 14% were
aimed at creating new markets or industries.”371
Even if you learn nothing in your investigation of best practices, you may at
least temper the natural inclination to be overly optimistic. This happens because
we tend to overstate our talents, misunderstand the real cause of events, inflate the
March 6, 2016 Page 101
degree of control we think we have over things, and discount the role luck plays,
and we thus fall prey to what Dan Lovallo and Daniel Kahneman call delusions of
success.372 In other words, when “pessimistic opinions are suppressed, while
optimistic ones are rewarded, an organization’s ability to think critically is
undermined.”373
Understand Your Risks
Peter Brinckerhoff explains why understanding your risk orientation has
value:
All of us have different genetics when it comes to risk. Some of us
thrive on it, some avoid it so adamantly that our behavior becomes
risky in itself. Since our organizations are really just groups of
people making decisions, this wide variety of risk-taking
thresholds extends to our not-for-profits. As a result, some
organizations are cavalier in their approach to risk, and some avoid
any risk at all costs (even to the expense of the mission). . . too
many not-for-profits let real service opportunities pass because
they are not ready to react promptly. Remember that there may be
more risk in doing nothing.374
The first thing to do and perhaps the most reliable is to sit down and talk
with knowledgeable people. Be sure to include a mix of staff members, board
members, funders, and other stakeholders. I like to ask people who are influential
enough to champion or obstruct ideas.
Discussing what your mission says about your strategies is also a quick test
of your risk orientation. Although nonprofits are typically quite risk averse, 375 it
could be that your board and staff are more comfortable with expansion as
opposed to improving operational effectiveness.
Another approach is to test your agency against Lilya Wagner and Mark
Hager’s ten symptoms of a dysfunctional organization:
1. Lack of a strategic plan
2. A narrow fundraising base
3. Productivity slowdown
4. Staff-board breakdown
5. Fear of change
6. Poor communication
7. Declining morale
8. Financial instability
9. Unhappy customers
10. Loss of key people376
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Depending upon how you stack up, you may be willing to take more or less
risk, focus on operational effectiveness or on new lines of business. Ironically,
sometimes the more dysfunctional an agency, the more willing it is to take risk
with new ventures.
You could also consider Peter Brinkerhoff’s Social Entrepreneurship
Readiness Checklist categories:
 Mission – Has the idea been reviewed for fit to organization culture and
mission?
 Risk – How much can you tolerate including capital and stress?
 Systems – Do you have the organizational infrastructure including
people and systems?
 Skills – Does the team have the competencies to succeed?
 Space – Do you have the physical space?
 Finance – Do have the means to reach the ends?377
Because financial position tends to have an enormous impact on risk
orientation, it is often used as a catalyst for discussions. For example, the
following seven questions fall under Peter Brinckerhoff’s finance category from
the checklist:







Have you been profitable the past 3 years?
Do you have 90 days cash on hand?
Do you a good relationship with a banker?
Do you have a line of credit?
Do you have a current ratio of 1 or higher?
Do you have a debt to net worth of 0.3 or less?
Will any funders penalize you for any net income?378
Alternatively, you might consider Howard Tuckman and Cyril Chang’s
four operational criteria of financial vulnerability:
 Inadequate Equity . . . A nonprofit’s ability to temporarily replace
revenues is affected by its equity or net worth. Equity is the difference
between a nonprofit’s total assets and total liabilities . . . The
assumption is that a nonprofit with a large net worth relative to revenues
has a great ability to replace revenue than one with a smaller net worth.
 Revenue Concentration . . . Revenue diversification is assumed to make
a nonprofit less vulnerable . . . This is because access to multiple
funding sources enhances an organization’s chances of being able to
balance a gain in one revenue source against a loss in another.
 Administrative Costs . . . When a financial shock occurs, a third
recourse available to nonprofits is to cut their administrative costs . . .
This is because organizations that have low administrative costs are
already operating at a point where additional cutbacks are likely to
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affect the administration of their program. A consequence is that
program output will suffer.
 Reduced Operating Margins . . . A nonprofit’s net operating margin
(defined as it revenues less its expenditures divided by its revenues)
shows the percentage that its profits represent of its revenues. The larger
this percentage, the larger the net surpluses a nonprofit can draw down
in the event of a financial shock.379
A briefer approach is to test your organization against John Trussel’s
assumption that “a charity is financially vulnerable if it has more than a 20 percent
reduction in its fund balance during a three-year period.”380 In his study of 94,002
charitable organizations, 17,112 were financially vulnerable (about one in five).
He found that financially vulnerable agencies:
 Have more debt (44.52 percent) than those that are not financially
vulnerable (31.58 percent)
 Have a higher concentration of revenues (0.7935) than those that are not
financially vulnerable (0.7421)
 Have a lower surplus margin (3.46 percent) than charities that are not
financially vulnerable (8.52 percent)
 Are smaller ($268,740 average total assets) than those that are not
financially vulnerable ($477,443 average total assets)381
At the risk of stating the obvious, don’t forget to review your lines of
business for the possibility that you have too many or too few on your menu. And
looking at your success measures in general and the financial ones in the mission
measures in particular may give you a good sense of how much risk you can
tolerate. Don’t worry about going into too much detail at this point, however.
These issues will be reviewed in detail when you begin working on your vision
strategies.
Make Your Statement
Now that you have a ready mind, you are prepared to set the vision
statement. Remember that Results Now splits the vision into two elements: The
clear picture of the future is the vision statement that is typically idealistic in
texture; the vision strategies that bring the picture to life are typically pragmatic.
The vision statement is a “guidepost showing the way.”382 It doesn’t have to be
lengthy or particularly descriptive; it is a guidepost, not a roadmap. The vision
statement tells you what direction you’re heading in; the visions strategies provide
the specific directions.
When it comes to making the vision statement, it’s all about the questions
you ask. Michael Allison and Jude Kaye propose answering ten questions as part
of a visioning exercise:
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 How would the world be improved or changed if we were success in
achieving our Purpose?
 What are the most important services that we should continue to
provide, change or begin to offer in the next three years?
 What staffing and benefits changes do we need to implement to better
achieve our Purpose?
 What board of directors changes do we need to implement to better
achieve our Purpose?
 What resource development (fund-raising) changes do we need to
implement to better achieve our Purpose?
 What facilities and technology changes do we need to implement to
better achieve our Purpose?
 What infrastructure, systems or communication changes do we need to
implement to better achieve our Purpose?
 How could we more effectively or efficient provide our services? If you
could only make three changes which would significantly impact our
ability to provide quality services to our clients/customers, what would
those changes be?
 What makes us unique (distinguishes us from our competition)?
 What do our clients/customers consider most important in our provision
of services? What do our customers need from us?383
John Bryson uses a five-question process of which the first two are
relevant:
1. What are the practical alternatives, dreams, or visions we might pursue
to address this strategic issue, achieve this goal, or realize this scenario?
2. What are the barriers to the realization of these alternatives, dreams, or
visions?384
Peter Drucker also uses a two-part method when he says that “genuinely
entrepreneurial businesses have two ‘first pages’ – a problem page and an
opportunity page – and managers spend equal time on both.”385 Put simply, what
holds you back and what takes you forward? These two questions also implicitly
address Michael Porter’s assertion that “Operational effectiveness and strategy are
both essential.”386
This two-question approach offers a quick, practical, and productive way to
begin especially when working with board and staff members in a group setting.
Few would argue that a vision statement is an important element of the
Strategic Plan and that the board should be involved in its development. Yet, how
can we expect that average board member who spends just 12 hours a year around
the board table to engage constructively in a task that could have long-term
consequences?387
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Finding a solution that invites the board’s thoughtful input is important
because one of the key ways that the board adds value is to “encourage
experimentation, trying out new approaches and alternative ways of dealing with
issues.”388 In other words, for the nonprofit organization thirsting for
encouragement in its thinking about vision, there may be no better source than the
board.
The easiest and most effective way to generate opportunities for the vision
statement is by gathering your board and key staff members together and asking
the following question: What are the major opportunities that will take us forward
in the next three to five years? Using the BAM process shown in Appendix A
generated the results shown in Table 8.2 for a fair housing agency.
Table 8.2 Fair Housing Agency Statement
Ideas
fair housing education before
enforcement, proactively address fair housing
issues in the community, most comprehensive
help solutions to fair housing issues in region,
impact discrimination in community on
systemic level
best of, premier provider of housing
discrimination assistance nationally, regional
leader in fair housing, leader in impacting
predatory lending in the region, premiere
housing opportunities specialists in the region,
leading authority and service provider in
reducing housing discrimination in the Miami
Valley, positive impact on discrimination,
strong advocacy/enforcer for fair housing in
region, funding base to allow business line
growth, the expert on housing issues, experts
on systemic enforcement, “go to” place for
victims, known as leading agency for
foreclosure prevention, nationally recognized
organization for dealing with housing
discrimination and education, best known
expert on housing discrimination
Results
Comprehensive solutions
Best practice nationally
Notice that the question of what takes us forward delivered results about
lines of business (comprehensive solutions) and also delivered results about
operational effectiveness (best practice nationally). Paradoxically, the question of
what takes us forward also frequently answers the question of what holds us back.
This sort of double-hitter is common because people think differently about the
future. Some are solely focused on pragmatic ideas it comes to the organization;
others think about idealistic possibilities.
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Asking the second question of what holds us back is still a good idea
because you may want the information later on when you decide whether to more
the strategy forward. The central idea is to understand the capacities of the
organization that will stand in the way of a successful future. Therefore, there
must be a sincere willingness on the part of the participants to look at those
obstacles holding the organization back. Table 8.3 shows the obstacles identified
by a United Way agency.
Table 8.3 United Way Obstacles
Ideas
lack of education about United Way,
perception, lack of understanding of need,
times are good, apathy towards giving,
confusion of terminology, communication, lack
of clarity, marketing and communications
message
left behind by technology, stagnation of
United Way
Results
Lack of clarity in the community about United
Way
inefficiency of not giving directly,
community foundation, watch market share,
competition for funds, give directly,
unpredictability of donor choice
number of volunteers, quality of
leadership, less volunteer time
Competition for funds
county perspective versus regional
perspective, changing employee base, lack of
county involvement, limited service delivery
changing companies, lack of corporate
pledge increases, employer ratio, economic
realities of community, lack of leadership
giving expertise
agency versus United Way attitudes
County perspective versus regional needs
Stagnation
Availability of volunteers
Economic environment
Agency relations
Here are idealistic vision statements that came from four different agencies
using the BAM process:




Be the best practice nationally that delivers comprehensive solutions
To the next level of excellence through creativity and leadership
The Best of All
Iconographic
How do you know your vision is on target? Jim Collins and Jerry Porras
offer the following checklist of questions to answer:
 Does it stimulate forward progress?
 Does it create momentum?
 Does it get people going?
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 Does it get people’s juices flowing?
 Do they find it stimulating, exciting, adventurous?
 Are they willing to throw their creative talents and human energies into
it?389
Though the four vision statements certainly meet the test, they are too
broad to be particularly actionable. But some organizations stop here. You have an
inspiring vision statement, the lines of business, and success measures with targets
to help set goals for the Operating Plan. You can make vision strategies something
to be explored when there’s more time to next year or even later. There is no
problem whatsoever with this. But if you want to start bringing that vision
statement to life now, you’re ready for John Bryson’s question: “What major
actions (with existing staff and within existing job descriptions) must be taken
within the next year (or two) to implement the major proposals?”390
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Chapter 9 Vision Strategies
Vision is the art of seeing the invisible.
- Jonathan Swift391
Who can forget Jerry Maguire’s two primary strategies to operationalize
his vision statement of to be the best versions of ourselves, the elegance and
simplicity, the four words of sheer audacity: Fewer clients, less money? As soon
as you see the words flash across the screen, you can almost feel the winds of
change blowing. It’s no surprise then when Bob Sugar (played unctuously by Jay
Mohr) fires Jerry at a busy restaurant where there’s less chance of a scene. Bob
lets Jerry know exactly who’s to blame: “You did this to yourself. You said ‘fewer
clients.’ You put it all on paper . . . You did this to yourself . . . although I do gotta
hand it to you. For about five minutes you had everyone applauding smaller
revenues.”392 Not that Bob Sugar was right as Jerry eventually proves.
Jerry Maguire instinctively understood that vision statements are valuable
for being a guidepost pointing to the future, but without clarity about how to get
there, you won’t have much of a chance. That’s why in this chapter, you’ll learn
how to make your strategies.
Making Strategies
Vision strategies typically revolve around what takes your forward in the
form of lines of business and what holds you back in the form of operational
effectiveness undertakings. Your efforts to launch a new line of business or
increase the number of clients, satisfaction, or price of the services for an existing
line of business are strategies. Your recruitment of board members who can open
more doors to funding is a strategy; so too is a major remodeling that expanding
your back-office infrastructure.
Just who should be tasked with doing the work of identifying possible
strategies? Most organizations will use the BAM approach with everyone around
the table because it so easy to do and primes the pump, but then delegate
enrichment and refinement to the staff.
Enriching ideas – including refining and adding to the ideas with new ones
– is often necessary because the ideas from the larger group are often quite broad
in texture. Thus, typically the work of enriching these ideas for further discussion
and the subsequent feasibility studies is delegated to staff and then brought back to
the board for further discussion in an iterative fashion.
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There are two steps to making your strategies. First, you generate ideas and
second, you choose which ones to move forward to more study or implementation.
Generate Your Ideas
Although hardly inclusive, there are three useful ways of putting together a
pool of viable ideas for strategies. First is to mine the information gained from
when you were making the vision statement including readying your mind and the
statement itself. Second, is to use the BAM process. Third, you can use a variety
of questions generated from the earned income literature.
No matter what method you use to generate ideas, always keep in mind that
strategies sometime appear in very mysterious ways including lucky breaks and
ah-ha revelations. Other times strategies become clear as a result of the backbreaking work of analysis. Sometimes you know what needs to be done in your
gut; sometimes you have to take a very thoughtful approach. Sometime an idea
comes to you when you’re walking in the neighborhood where your customers
live; other times when you’re enjoying a good bottle of wine.
Vision Statement
By now you should already have a growing list of ideas that you discovered
when you were working on the vision statement in general and readying your
mind in particular. Did your reaffirmation of the Purpose provide insights on what
you should be doing? What about listening to your customers? What about doing
more of what they liked? What about addressing the things that they didn’t like?
Did you talk to any customers who had given up on your agency?
Knowing the best of the best in your field should have given you some
potent ideas. Did you go to visit any of them in person? Were there things they
were doing that you could adopt? Any things you were doing that they weren’t
that you should stop? Don’t forget that the most used source for learning about
innovation at nonprofits is from your peers.393 What are your best of best peers
doing that you should be imitating?
When you took time to understand your risk, did any ideas occur to you
that you should be addressing? What about the financial vulnerability tests and
your lines of business and success measures?
In addition to the ideas that might arise from readying your mind, you may
have already generated some potent strategies when you did the vision statement
itself if you used the BAM process. Take the example of the housing agency that
identified four possible ideas as shown in Table 9.1.
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Table 9.1 Ideas from Vision Statement BAM Process
Ideas
fair housing education before
enforcement, proactively address fair housing
issues in the community, most comprehensive
help solutions to fair housing issues in region,
impact discrimination in community on
systemic level
best of, premier provider of housing
discrimination assistance nationally, regional
leader in fair housing, leader in impacting
predatory lending in the region, premiere
housing opportunities specialists in the region,
leading authority and service provider in
reducing housing discrimination in the Miami
Valley, positive impact on discrimination,
strong advocacy/enforcer for fair housing in
region, funding base to allow business line
growth, the expert on housing issues, experts
on systemic enforcement, “go to” place for
victims, known as leading agency for
foreclosure prevention, nationally recognized
organization for dealing with housing
discrimination and education, best known
expert on housing discrimination
Results
Comprehensive solutions
Launch fair housing education program
Best practice nationally
Strengthen advocacy
Strengthen fundraising capacity
Strengthen marketing capacity
BAM
By far the most popular and efficient approach is using the full group of the
board and key staff to generate ideas. And it’s easy to do by using the BAM
process beginning with a question as simple as “How will we achieve our vision
statement?” Table 9.2 lists the strategies from a museum that did just that.
Table 9.2 Vision Strategies for a Museum
Ideas
leading museum worldwide,
redevelopment to an organization recognized
for design, architecture, programming, and
organizational excellence, international
recognition, recognized for our programs,
iconographic, unparalleled reputation
worldwide
Results
Statement
Iconographic
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financial security, in place to celebrate
the centennial, standard for excellence and
financial stability of all sites in the world,
financially self-sufficient, financially secure,
achieves financial independence, financially
stable, wildly financially excellent
single best attended museum, cultural
center for learning, entertainment, and
meeting ground, international draw
unique design leader, innovative
design ideas
education bent, education partnerships
especially with universities, catalyst for
heightened education pride regionally, leader
in learning, driver four community image with
regard to schools
Strategies
Financially Secure
Best Attended
Innovative Design Ideas
Leader in Learning
Notice that the first two strategies – financially secure and best attended –
are related to operational effectiveness and the last two – innovative design ideas
and leader in learning – are related to lines of business. These ideas were
delegated to staff for enrichment that led to the following:
 Iconographic
 Financially Secure
 Boost annual retail sales one third to $100,000
 Advance annual contributed income 50 percent to
$300,000
 Best Attended
 Advance post-opening membership base 20 percent
per year to 2,246
 Boost attendance for tours 35 percent to 9,500
 Innovative Design Ideas
 Open the Design Innovation Campus 2012
 Leader in Learning
 Boost attendance for programs/events to 10,000 by
2011
Good Questions
Questions from the literature on earned income can be particularly
stimulating for generating ideas. Working from larger lists to smaller begins with
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the great Joseph Schumpeter’s five categories394 plus two more from J. Gregory
Dees:
1.
2.
3.
4.
5.
6.
Creating a new or improved product, service, or program
Introducing a new or improved strategy or method of operating
Reaching a new market, serving an unmet need
Tapping into a new source of supply or labor
Establishing a new industrial or organizational structure
Framing new terms of engagement [e.g., customer satisfaction
guarantees]
7. Developing new funding structures [e.g., franchising]395
J. Gregory Dees goes on to offer seven other questions that can stimulate
the process of finding opportunities:
1. How well are you serving your clients, customers, etc.?
2. Are you reaching all of the people you would like to reach?
3. Have the demographics (e.g., age, ethnicity, preferred language,
educational levels, incomes, wealth) changed in the community your
serve or want to serve?
4. Have social values, moods, perceptions, or politics changed in a way
that hampers your effectiveness or creates new opportunities?
5. Are your staff unhappy or frustrated in their work?
6. What kinds of innovations are working in other fields?
7. Do we have any new scientific knowledge or new technology could
improve the way you operate?396
Richard Brewster takes a five-question approach to help your organization
identify the “best match between what it does very well . . . and available financial
resources and other forms of support:”397
1.
2.
3.
4.
5.
to modify the nature of a program, particularly to improve quality;
to add a new program;
to withdraw from programs;
to increase the number of people to whom programs are delivered; and
to secure more resources.398
A four-question approach is contained in the widely-used Ansoff Matrix
based upon its namesake who makes the following assertion: “There are four basic
growth alternatives open to a business. It can grow through increased market
penetration, through market development, through product development, or
through diversification.”399 Table 9.3 shows what the Ansoff Matrix looks like.
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Table 9.3 Ansoff Matrix
Current products
New products
Current
Markets
Market Penetration:
current products to more
customers like current
customers
Product Development:
new products
to current customers
New
Markets
Market Development:
current products to
new kinds of customers
Diversification:
new products
to new kinds of customers
Although there are no hard and fast rules about which quadrant is better,
diversification is the most difficult to pull off because you are doing something
you have never done before. Market penetration is the least difficult because you
are doing more of what you’re already doing. In general, market development and
product development, which are adjacent to market penetration, are preferable
over diversification.400 As Tom Peters and Robert Waterman observed nearly three
decades ago, “Organizations that do branch out (whether by acquisition or internal
diversification) but stick very close to their knitting outperform the others.”401
Table 9.4 illustrates a different matrix suggested by Scott Helm’s work
around current thinking about earned income strategies:402
Table 9.4 Earned Income Matrix
Sustaining Strategy
Disrupting Strategy
Earned
Income
Commercial
Non-Entrepreneurial
Commercial
Entrepreneurial
Unearned
Income
Noncommercial
Non-Entrepreneurial
Noncommercial
Entrepreneurial
Disrupting strategy is sometimes described as nonprofit entrepreneurship,
which Scott Helm defines as the “catalytic behavior of nonprofit organizations that
engenders value and change in the sector, community, or industry through the
combination of innovation, risk taking, and proactiveness.”403
As shown in the matrix in Table 9.3, disrupting strategy need not be
profitable and sustaining innovation need not be unprofitable. The earlier case of
the outdoor camping agency that raised its camping fees is a perfect example.
When I work with agencies on strategy, I often ask that opportunities be generated
for each of the quadrants. Because sustaining innovations are typically strongly
related to operational effectiveness and disrupting innovations are tied to lines of
business, this matrix helps to address what takes us forward and what holds us
back.
Please remember that the vast majority of the strategies you will identify
will not be killer applications. There is nothing wrong with this; most of your low
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hanging fruit is of the sustaining variety.404 Though it is true that you become more
risk tolerant as you get more desperate (and the more likely you are to try to
launch a killer application), your better bet is to stick to your knitting and enhance
operational effectiveness.
Make Your Strategies
Once you have enough ideas identified – at least eight legitimate ones –
you need to cull the list to a manageable number that you can then consider more
carefully. You’re trying to get the number of strategies that need to be studied
down to two or three. Just how do you choose?
It is important to note that half of all decisions in organizations fail
primarily because people “impose solutions, limit the search for alternatives, and
use power to implement their plans.”405 Thus Paul Nutt suggests that leader should
“make the need for action clear at the outset, set objectives, carry out an
unrestricted search for solutions, and get key people to participate.”406
The way in which vision statements and strategies are finalized and readied
for feasibility studies can range from simple to complex, from “Take it to Vegas”
multi-voting style in the BAM process to more nuanced ranking matrixes, from
feasibility studies to full-blown business plans. Interestingly, the exemplars in my
study of high-performing executives were quite informal about this matter. Just
one way stood out for the participants: “You kick around a final draft of the vision
with others including staff and board; it’s a way of floating trial balloons and
building ownership.”407
Intuitive and Analytic
Many decisions we make are characterized by a “ready, fire, aim” variety
so popular especially with entrepreneurs.408 And why not? In his best-selling book,
Blink, Malcolm Gladwell argues that our snap judgments can be every bit as good
as those decisions we carefully deliberate. Much of this is due to thin slicing,
which is the ability to size up a situation quickly with very little information.409
It turns out that snap judgments based on thin slices aren’t all that
astonishing. When studying chess masters who simultaneously play many
opponents, make split-second moves, and beat all comers, Herbert Simon found
that the experience and learning from a lifetime of playing makes this possible;
intuition is simply another word for vast experience, for “analyses frozen into
habit.”410
All things being equal, we human beings prefer the intuitive to the analytic.
An analytic approach greatly improves accuracy, but “the gain in precision which
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accompanies an analytic approach to decision-making strategy may be offset by
the danger of extreme error.”411 In other words, when we use an analytic approach,
we are either perfectly right most of the time or we are utterly wrong. Intuitive
decision makers, on the other hand, are approximately correct all of the time
without the extreme errors, which is perhaps why the only time we use analytic
techniques is when we cannot use our intuition.
The idea that we’re one or the other, analytic or intuitive, is often referred
to a left brain versus right brain or as Dorothy Leonard and Susaan Straus
describe, “An analytical, logical, and sequential approach to problem framing and
solving (left-brained thinking) clearly differs from an intuitive, values-based, and
nonlinear one (right brained thinking).”412 Whatever you call it, left brained or
right, intuitive or analytic, all decision making – and research for that matter – are
subject to misinterpretation and misperception:
We are predisposed to see order, pattern, and meaning in the
world, and we find randomness, chaos, and meaninglessness
unsatisfying. Human nature abhors a lack of predictability and the
absence of meaning. As a consequence, we tend to “see” order
where there is none, and we spot meaningful patterns where only
the vagaries of chance are operating.413
Though simple matters are best decided through conscious thinking, we
should “delegate thinking about complex matters to the unconscious.”414 In other
words, let the decision simmer:
Use your conscious mind to acquire all the information for making
a decision – but don’t try to analyze the information. Instead, go on
a holiday while your unconscious mind digests it for a day or two.
Whatever your intuition then tells you is almost certainly going to
be the best choice.415
Like so many things in life, the resolution to the question of analytical
versus intuitive is paradoxical. It is both/and as opposed to either/or. Analysis and
intuition go hand in hand. As Dorothy Leonard and Susaan Straus put it, “Rightly
harnessed, the energy released by the intersection of different thought processes
will propel innovation.”416 And as Herbert Simon argues, the effective manager
must be capable in both decision making approaches – the analytic and intuitive.417
In other words, use your head and your gut, but don’t trust either exclusively.
Directive and Participative
Individuals do not make decisions in a vacuum when it comes to
organizational life. As such, issue isn’t so much how to make the decision –
analytic or intuitive, fast or slow – but who should be involved. John Kotter and
Leonard Schlesinger also use time as the key variable when offering their
continuum that goes from “a very rapid implementation, a clear plan of action, and
March 6, 2016 Page 116
little involvement of others [to] a much slower change process, a less clear plan,
and involvement on the part of many people other than the change initiators.”418 If
you need lots of acceptance, go slower; if you don’t need it, go as fast as you want.
Other decision models use the need for acceptance and quality of decision
as one of the key situational variables in deciding who should be involved. Gary
Yukl’s modification of Victor Vroom and Phillip Yetton’s model419 has two
variables – the decision quality and subordinate acceptance – and three decision
making styles – directive, consultative, and group. Generally simplified, if
subordinates’ acceptance is not important or everyone will agree with whatever
you decide, you make the decision. If you need acceptance, delegate the decision
to the group if the decision quality isn’t important. If you need acceptance and the
decision quality is important, consult the group, but make the decision yourself.420
When it comes to directive versus participative, some people argue that the
latter is the only way to go. Indeed, many leaders in the nonprofit sector avoid
directive (also called autocratic) decision making on principal.421 Wilfred Drath for
example condemns the John Wayne directive style, but he recognizes the
difficulties of participative approaches including the limitations of too many chefs
in the kitchen and diffused accountability.422 The Chinese proverb is really true, “A
courtyard common to all will be swept by no one.”
Thinking that participative approaches are the only way to go is not
necessarily supported in all situations. Gary Yukl, for example, warns that the lack
of “consistent results about the effectiveness of participative leadership probably
means that various forms of participation are effective in some situations but not
in others.”423 Recognizing this explicitly is Henry Mintzberg who says that in
times of crisis, people not only expect directive leadership, they demand it.
Because the organization “must respond quickly and in an integrated fashion, it
turns to its leader for direction.”424
But planning is not typically done during crisis so this suggests a more
participative approach that will likely be at least somewhat analytical and thus take
longer.
Start, Stop, and Continue
Although it may seem obvious that you should put everything on the table
when working on your vision strategies, do not forget that stopping things you are
currently doing is a very potent strategy itself and that includes lines of business.
A strategy analysis I conducted recently for a very small agency identified 20
strategies including six current ones, eight in various stages of exploration, and ten
new ideas.
All of these strategies were evaluated by the board and staff and the
decision was made to reduce the volume to 10 strategies total including scrapping
March 6, 2016 Page 117
four current lines of business. The process of reaching this decision included
qualitative interviews with the key decision makers and quantitative rankings in
person and through the web.
The specific lesson of this example is that every strategy you are currently
doing, those you’re investigating, and those slated for the future should be under
consideration when deciding what goes forward. Why is this so, so important?
In the last two years, 68 percent of the nonprofits in a study on innovation
were unable to move their ideas forward. The four most salient obstacles were
related to funding including lack of funding, growth capital availability,
narrowness of government funding streams, and foundations that encourage
innovation but don’t sustain it.425
When we want a ready source of funding, our eyes commonly look outside
of the agency and toward our funders for support. Sometimes we’ll also cut costs
through things like negotiating for lower rent or cutting overhead. There’s nothing
wrong with this, but we often overlook a readily available source of funding and a
quick boost to operational effectiveness, which is to eliminate underperforming or
inconsequential lines of business.
Beware the sunk cost fallacy, also known as escalation of commitment,
which causes people to actually increase their investment to a course of action
because of what they’ve put into it and despite knowing it is a lost cause.426 Be
open to the idea of shutting strategies down including complete lines of business.
You cannot be all things to all people.
It is certainly true that competitive advantage is all about how you are better
than your rivals. Having more lines of business than any other agency may
accomplish this, but it’s not likely to viable for the long term. The essence of
strategy may indeed be “choosing to perform activities differently or to perform
different activities than rivals,” but this doesn’t mean doing everything for
everyone. What then is the essence of strategy? Remember the words of Michael
Porter, “The essence of strategy is choosing what not to do.”427
Before you make your decision about which – if any – of the strategies
including those you are currently doing and those you might want to do, take time
for portfolio analysis. These tools include simple ones like ubiquitous GrowthShare Matrix from the Boston Consulting Group shown in Table 9.5.428
March 6, 2016 Page 118
Table 9.5 Growth-Share Matrix
Business
Growth
Rate
Relative Competitive Position (Market Share)
High
Low
High
“Stars”
“Question Marks”
Low
“Cash Cows”
“Dogs”
There are many variants to this simple four quadrant matrix. One of the
most useful is the Portfolio Analysis Matrix from Robert Gruber and Mary Mohr429
that some people call the Double bottom line Matrix shown in Table 9.6.
Financial
Returns
Table 9.6 Double Bottom Line Matrix
Positive
Sustaining
(Necessary evil?)
Beneficial
(Best of all possible worlds)
Negative
Detrimental
(No redeeming qualities)
Worthwhile
(Satisfying, good for society)
Low
High
Benefits (Social Value)
A more nuanced and prescriptive three-step portfolio analysis tool is the
MacMillan Product Matrix shown in Table 9.7.430
Table 9.7 MacMillan Product Matrix
Step 3
Determine
Competitive
Position
Strong
Weak
Step 1
Determine Program Attractiveness
High
Low
Step 2
Determine Alternative Coverage
High
Low
High
Low
Build Up the
Aggressive
Aggressive
Soul of the
Best
Competition
Growth
Agency
Competitor
Aggressive
Divestment
Build Strength
or Sell Out
Orderly
Divestment
Foreign Aid or
Joint Venture
In step one, you determine program attractiveness on the basis of internal
fit (mission congruence, competencies, overhead sharing) and external fit (support
group appeal, fundability and funding stability, size and concentration of client
base, growth rate, volunteer appeal, measurability, prevention versus cure, exit
barriers, client resistance, self-sufficiency orientation of client base).
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Step two is to determine alternative coverage, which simply means the
number of agencies with similar programs. In step three, you determine
competitive position, which requires “some clear basis for declaring superiority
over all competitors.”431 By following these steps, you are to locate your program
within the corresponding cell and take the recommended action.
Fast and Slow
It takes time for things to percolate, which is why time is one of the key
situational variables when it comes to decision making style. Herbert Simon offers
two decision making approaches that are temporal in texture: Logical decision
making is where “goals and alternatives are made explicit [while] judgmental
decision making [is where] the response to the need for a decision is usually rapid,
too rapid to allow for an orderly sequential analysis of the situation.”432
Among the fast methods for deciding are the weighted multi-voting “Take
it to Vegas” multi-voting approach discussed in Appendix A, but it’s not the only
one. Another quick tool is the Payoff Matrix popularized at General Electric and
shown in Table 9.7433
Table 9.7 Payoff Matrix
Easy to Implement
Tough to Implement
Small
Pay-Off
Quick Wins!
(QW)
Time Wasters
(TW)
Big
Pay-Off
Bonus Opportunities
(BO)
Special Efforts
(SE)
The key complaint about these types of approaches is that they are too
simple, but they do offer a quick way to winnow out the ideas not worth pursuing.
A slower and perhaps more nuanced method to rank strategies is one suggested by
Burt Nanus.434 Step one is to decide what decision criteria you’ll use. Next you can
weigh the importance of each criterion. Third, you vote and tally. Table 9.9 is the
output from a ranking of lines of business against weighted selection criteria
chosen in a BAM process at a human service organization.
Table 9.9 Weighted Decision Matrix
Decision Criteria
Plays to Strengths
Growth Potential
Profitable
Responds to Threats
Consistent with Values
WT
10
9
10
10
10
Strategies
A
B
41
63
90
90
60
80
22
52
77
75
C
69
90
50
50
77
D
75
63
40
28
85
E
70
90
90
33
77
F
65
63
20
23
85
G
57
54
40
25
81
H
46
63
40
24
88
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Minimizes Obstacles
Achievable
Something Extraordinary
Drives and Motivates
Mission Fit
TOTAL
10
5
10
10
10
25
25
40
60
56
496
36
10
90
70
40
606
36
20
90
80
48
610
30
10
80
60
80
551
38
35
80
100
64
677
10
20
100
60
72
518
27
45
30
90
72
521
27
40
60
50
64
502
You can use a matrix like this and include your values, your mission
including customers, difference, and advantage; you can use the results from the
question what holds you back. The nice thing about this method is that you are
forced to think about the criteria that matter, which may help prevent our
altogether too human tendency to fit data to the decision we were going to make in
the first place.
The trick is not to make your final decisions at this stage, but to reduce the
volume to a more manageable amount. Whatever method you choose to decide,
the question is not so much about which idea is the best as much as it is about
which ideas are weakest. After all, “The essence of strategy is choosing what not
to do.”435
How many potential strategies get taken forward for deeper investigation
depends upon your tolerance for work. Still, it is uncommon to have to study more
than one or two. You can’t do everything and meritorious ideas can always be
revisited in the future. Remember that an organization with just a few vision
strategies will do better at achieving them than one with many. Focus is
everything.
What Next
Now that you’ve winnowed down the field of strategies, you are ready to
investigate the ones that are still on the table. Your goal in the words of Peter
Brinkerhoff is to answer the following question, “Can we provide this service (or
make this product) in this market, at this price, with the resources we can muster,
and meet both our mission and financial goals.” 436 The task of getting an answer is
typically delegated to staff members and then brought back to the board for further
discussion and eventual finalization.
There are two stages to this task. First Cut is where you take a relatively
shallow dive to see whether it makes sense to proceed to the Final Answers where
you go for a deeper dive. The First Cut is a vetting process to reduce the volume of
strategies to a smaller number, perhaps moving down to one or two. Following
these studies, vision strategies are sometimes packaged into formal business plans
for board approval and pitches to funders and stakeholders. Sometimes the
business plan step is skipped and the vision strategies are integrated into the
Results Now Master Plan that the board then votes on.
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It is very important to note that these two stages – conducting the First Cut
and Final Answers analyses – often become Operating Plan goals themselves for
the coming fiscal year. Because most organizations take this path, you’ll find more
detail in Appendixes B and C. Furthermore, not everything suggested in these two
stages will apply to all types of strategies because much of the content comes from
the earned income literature. There is enough information, however to be valuable
without regard to whether your strategy is about what takes your forward or what
holds you back. Use what works for you; discard what doesn’t.
Now that you have your Vision Statement, and your Three Vision Strategies, you’re ready for John
Bryson’s question: “What major actions (with existing staff and within existing job descriptions) must be
taken within the next year (or two) to implement the major proposals?”437
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Part IV: Operating Plan:
If you cry ‘forward,’
you must without fail make plain in what direction to
go.
- Anton Chekhov
STRATEGIC PLAN
OPERATING PLAN
Where to go tomorrow? What gets done today?
Lines of Business
goals
success measures
Budget
vision
PURPOSE
Delegation
Who does what?
Duties
Guidelines
Why?
Accountability
When did it happen?
Agendas
Assessments
GOVERNANCE PLAN
When Jerry Maguire is fired by Bob Sugar, they both scramble to get back
to the office; Jerry to keep his clients and Sugar to take them away. Jerry is up
against a formidable challenge. He’s striking out on his own without the muscle of
Sports Management International behind him. As the afternoon wears on, Jerry’s
loses all of his clients except for Rod Tidwell, a wide receiver for the Arizona
Cardinals.
In addition to Tidwell, Jerry has a chance at Frank Cushman, the college
star quarterback who is expected to be the number one choice in the NFL draft, but
he loses him to in a back-stabbing move by Cushman’s father and Sugar. The
biggest mistake Jerry makes in the Cushman debacle is to try to get a quarterback
on his roster at all. If you want payback for the money, stick with the linebackers,
“You want to use a first-round draft pick on a player who will have an immediate
impact on your team? Go with a linebacker. You want to use a first-round draft
pick on a player who will promptly establish himself as a difference-maker? Go
with a linebacker.”438
The linebackers are big, tough, down in the dirt; they’re not as flashy or as
well compensated as the backfield where the quarterback and crew take the glory.
Maybe that explains why the number one first-round NFL 2009 draft pick was a
quarterback, but the number two was an offensive tackle. So what does this have
this got to do with Results Now? Simple: If the strategic plan is the quarterback of
Results Now, the Operating Plan is the linebacker.
March 6, 2016 Page 123
At its core, the Results Now Operating Plan is about goals, which are “the
future outcomes (results) that individuals, groups, and organization desire and
strive to achieve.”439 Goals can take a wide variety of forms; they can be “implicit
or explicit, vague or clearly defined, and self-imposed or externally imposed.
Whatever their form, they serve to structure employee time and effort”440
The Operating Plan answers what gets done today through goals to be
accomplished in the next 12 months, which is entirely different from the Strategic
Plan that addresses where to go tomorrow. This is not an earth-shattering concept
according to Leonard Goodstein, Timothy Nolan, and William Pfeiffer, “Strategic
planning, in and of itself, is an academic pursuit, of little direct use to any
organization. The payoff of strategic planning is in its application, in the execution
and implementation.”441
Call it what you will, be it tactical plan, implementation plan, or Operating
Plan, but execution matters a lot. “No worthwhile strategy can be planned without
taking into account the organization’s ability to execute it,”442 say Larry Bossidy
and Ram Charan. That said, you won’t find a lot of ink spent on operating plans in
most books on planning. For example, in Michael Worth’s quite thorough text on
nonprofit management, the operating plan merits just one lonely paragraph in a
nearly 400-page book that largely focuses on the role of the executive director:
This will include indentifying specific tasks to be completed,
establishing a timeline for their completion, assigning
responsibility for each task, identifying the resources that will be
needed – human and financial, determining the right organizational
structure, identifying what information systems will be required,
defining measures by which the competition or success will be
determined, and other operational details.443
This is pretty much the same content as you would find in the for-profit
sector. Here’s how Larry Bossidy and Ram Charan describe the role of the chief
executive:
In the operating plan, the leader is primarily responsible for
overseeing the seamless transition from strategy to operations. She
has to set the goals, link the details of the operations process to the
people and the strategy processes, and lead the operating reviews
that bring people together around the operating plan. She has to
make timely, incisive judgments and trade-offs in the face of
myriad possibilities and uncertainties. She has to conduct robust
dialogue that surfaces truth. And she must, all the while, be
teaching her people how to do these things as well . . . It’s not just
the leader alone who has to be present and involved. All of the
people accountable for executing the plan need to help construct
it.444
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One of the reasons that less attention is paid to the Operating Plan is that it
is a logical extension of the Strategic Plan where you’ve invested lots of
intellectual capital. “It’s all over except for the shooting” as the old saying goes.
You’ve decided where to go tomorrow, now it’s a relatively simple matter of
laying out the various things that need to be done (goals) and price it out (the
financials).
The Operating Plan certainly is the linebacker of Results Now and
accomplishes many of the same Purposes, but it only goes to the line of
scrimmage for major plays. You remember that Results Now gets much of its
quickness and flexibility by paying attention to the Pareto Principle, the 80/20 rule
where 80 percent of your results are delivered by 20 percent of your efforts. What
this means is that when it comes to Operating Plan goals, only the major ones that
will deliver high payback are included. None of the job duties, the “continue to do
this and that” stuff, the job description-like goals that typically are part and parcel
of most Operating Plans are included.
Now, take a deep breath here, step away, and remember that nearly 30
percent of all nonprofit agencies have one full-time employee or none at all. Half
of all nonprofits have five or fewer.445 So forget about the 80/20 rule when it
comes to available time and substitute the 95/5 rule where staff members have
already committed 95 percent of their time to on-going activities and have only 5
percent of disposable time . . . if that. Only the major, high-impact goals are in the
Operating Plan and if this means that there are only one or two goals or none at all
for a particular department, so be it.
The Operating Plan is generally the work of the staff with the exception of
goals that pertain to the board. As opposed to the highly creative process that
characterizes the Strategic Plan, the Operating Plan is developed in a more
mechanical, step-by-step approach to render the two sections of goals and Budget.
March 6, 2016 Page 125
Chapter 10 Goals
We can’t cross a bridge until we come to it;
but I always like to lay down a pontoon ahead of
time.
- Barnard Baruch
Call it an objective, tactic, or target; an Operating Plan goals should do just
one thing: achieve a meaningful result. In the case of the Operating Plan, that
result is typically an improvement or innovation for the organization at the
department level. Again, goals in the Operating Plan do not describe the on-going
day-to-day activities of the organization or the job duties of individuals. Put
another, way, goals are not a policies and procedures manual; they are not job
descriptions. Simply choosing a clear and difficult goal is not enough; it must also
achieve a significant result for the organization in general and the department
specifically.
What does significant mean? Obviously this will depend from organization
to organization and upon the specific circumstances. In the recent economic
turbulence for instance, many nonprofits found a decline of 10 percent in
fundraising results a significant accomplishment.
Though goals in the Operating Plan are not about continuing operations,
they must respect the reality of the regular work that people do each and every
day. Almost all of your time is consumed by regular job duties or the inevitable
and unexpected things that come up. You must find the time you need to
implement a goal in the same workweek that you use to get your job done. That’s
why it is unusual for any department to have more than two or three meaningful
goals in any given year.
This means that a department with seven meaningful and challenging goals
may fail with five due to lack of time and organizational capacity. In fact, it is
common for some departments to have no goals at all for a particular year. This
situation might arise for a variety of reasons such as new staff, because day-to-day
activities in a particular department are currently too time-consuming, or because
the department has just concluded a major improvement project.
The degree of involvement from the board in developing goals is usually
very limited. In some nonprofits, the board never sees the goals; in others, the
board receives this information as a matter of practice, but doesn’t participate. I
personally like to show the goals in all their glory as it can implicitly reassure the
board that the staff is on their game. In smaller organizations with limited staff, the
board may be very involved in setting goals. Whatever fits for the organization at
its particular time and place is agreeable, but there needs to be careful
March 6, 2016 Page 126
consideration of the fine line between advice and instruction and the covenant to
respect the chain of command between the board, the executive director, and the
professional staff.
There are many ways to develop Operating Plan goals. Just keep the
following in mind, “Clear and challenging goals lead to higher performance than
do vague or general goals . . . goals that are difficult, but not impossible lead to
higher performance than do easy goals.”446
Department Map
Step one in the process of developing goals is to understand the
departments in your organization. Rather than building plans around job titles and
specific people as is usually the case with traditional approaches, Results Now asks
that you build the Operating Plan goals around departments that must exist for the
organization to be successful, even if these departments do not have staff members
or volunteers assigned to them.
Consequently, job titles and department boundaries have less meaning
because people have job duties that often cross departments. Since most nonprofit
organizations are lean in terms of hierarchy, it is common for people to do many
different jobs. The finance person does the budgets and answers the phones; the
executive director handles governance, fundraising, programming, and takes out
the trash.
In many nonprofits, it is unlikely that there will be a fulltime development
director on staff, but someone somewhere must still do fundraising whether the
board member, board committee, the executive director, or an independent
contractor does it. By making sure that there is a development department, it is
much more likely that important matters related to fundraising will be
remembered. Whether the people who work in the department area are staff, board
members, or volunteers, having the department identified makes it more likely that
goals will be developed that can move the area ahead. Figure 9.1 is a simple
department map for a Big Brothers – Big Sisters.
Figure 9.1 Big Brothers – Big Sisters Department Map
Board
Executive Director
Administration
Marketing
Development
Programs
March 6, 2016 Page 127
High School
Mentoring
Core Match
Recruiting
Figure 9.2 is a department map from a county children services agency with
a budget in excess of $50 million.
Figure 9.2 Children Services Department Map
Board of Directors
Planning & Programs Committee
Resources Committee
Executive Director
Fiscal Services
Public
Relations &
Training
Human
Resources &
Administration
Legal & Risk
Management
Organization
Research &
Evaluation
Social Services
The noticeable question here is whether these examples are too simple.
Remember that the department map is a tool for determining the necessary
departments of the organization that will guide the setting of goals. You can
discard it after use or hold onto it and put in information packets for the board.
Either way, it should be kept as simple as possible, but not simpler.
Making Goals
When it comes to building goals, John Bryson’s final two questions of his
five-question strategy-development process apply:
1. What major actions (with existing staff and within existing job
descriptions) must be taken within the next year (or two) to implement
the major proposals?
2. What specific steps must be taken within the next six months to
implement the major proposals, and who is responsible?447
These two questions represent goals and action steps respectively. Not all
goals have action steps, but many do and most should.
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Generate Your Ideas
There are a variety of ways to generate goals for a department. The first and
best place to look for Operating Plan goals is the Strategic Plan in general and the
success measures and vision strategies in particular. Indeed, if you’ve done it
right, much of the work of setting goals is already done. That’s because success
measures already come with goals built in. Remember that each Success Measure
not only includes the past and the present, but also includes the future of at least
one year. Take for example this example shown in Table 9.1 from a performing
arts center development department.
Table 9.1 Performing Arts Center Development Success Measures
(in thosands)
Year 4
Year 3
Year 2
Year 1
This Year
Budgeted
Forecast
Next
Year
Total Raised
1,560
1,680
1,740
1,670
1,710
1,730
1,930
Annual: Annual Fund
280
332
360
390
370
440
425
Government
258
279
391
385
363
290
345
Leadership: Legacies
18
20
22
22
26
30
26
Sponsorship
1,020
1,070
986
892
981
1,000
1,160
The obvious choices for focus would be sponsorship that is set to rise 16
percent and the annual fund at 19 percent. These two targets are of the clearly
significant category if the demarcation point is 10 percent as Michael Tushman,
William Newman, and David Nadler suggest in their statement that “almost any
organization can tolerate a 10 percent change,”448 But only the people close to the
ground in that agency can determine what is significant and what isn’t. For
example, sponsorships for next year might already be in place and there is no goal
necessary.
Table 9.2 is a different example from a Big Brothers – Big Sisters.
Table 9.2 Big Brothers – Big Sisters Success Measures
Year 3
Year 2
Year 1
This Year
Next Year
March 6, 2016 Page 129
Bigs – Inquiries
352
319
610
400
400
Applications Completed
120
176
229
200
200
Little Sisters: Inquiries
54
33
50
75
100
Applications Completed
33
42
42
60
85
Clearly the 33 percent boost from 75 to 100 for Little Sisters Inquiries
could be a significant goal. Perhaps the effort expended to make that happen will
be intense or maybe it will happen naturally due to a board member’s connections.
As noted earlier sometimes just to stay even or a decline in a measure can
represent a significant goal. The point is that the success measures often contain
important goals if you just look for them. Even so, not all departments will find
goals in the success measures. It is unlikely, for example, that the human resources
department will have any relevant success measures, for example.
The other place to look for readily available goals is in the vision strategies.
Take a vision strategy from a housing agency to stabilize contributed income at
$150,000 per year by 2013. In year one, you may need to enhance the
infrastructure in the development department or make your first hire of an
administrative assistant. In year two, the development department might need to
secure some percentage of funding and the finance department may need to
determine how to invest those funds.
Another place to seek out goals is in obstacles, which especially useful for
departments that have difficulty finding possibilities in the success measures and
vision strategies. You may have already generated a list when you were working
on the vision. As you may recall, obstacles are anything that impedes success or
that stands in the way of getting things done. Obstacles are everywhere and every
organization has its fair share of them. Look at identifying obstacles as
opportunities to finally remove them.
The department in search of obstacles should list as many of them as
possible. Completing the following sentence is a good way to being: “If there was
just one thing I could fix that would make things work a lot better, it would be.”
Once done, grouping the answers into around common themes will help eliminate
duplication. Once you have identified the obstacles, prioritize them by choosing
the most actionable.
Not everyone is comfortable with the search for problems as it has a
decidedly negative texture. In other words, some people become justifiably
defensive. Instead, you can change the terminology to a review of best wishes.
Instead of asking, “What is wrong with our department that we’d like to fix?”
March 6, 2016 Page 130
change it around a bit and ask, “If I had just three wishes for this department, what
would they be?”
Make Your Goals
Making your goals begins with deciding which of the ideas generated are
worthy of pursuit. Return to Chapter 9 Vision Strategies for the tool kit on
decision-making methods. Once you’ve decided what you’re going to do, you
need to put the goals into proper form.
One popular (and perfectly usable) approach is the SMART method, which
originally stood for specific, measurable, assignable, realistic, and time-related.449
These days the permutations are almost limitless including simple or stretching;
motivational, or meaningful; agreed upon, attainable or ambitious; relevant or
rewarding; and trackable or tangible. So complicated and often confusing is the
SMART method that some use the DUMB approach, which is short for doable,
understandable, manageable, and beneficial. Others say it means dreamy,
unrealistic, motivating, and bold.450
A simpler approach to goal setting advocated by Don Hellriegel and John
Slocum is to focus on challenging goals that have three elements. First,
challenging goals have clarity, which means that the goal taker will “know what is
expected and not have to guess.”451 Difficulty means that the goal “should be
challenging, but not impossible to achieve.”452 The implications of clarity and
difficulty are clear:
Employees with unclear goals or no goals are more prone to work
slowly, perform poorly, exhibit a lack of interest, and accomplish
less than employees whose goals are clear and challenging. In
addition, employees with clearly defined goals appear to be more
energetic and productive. They get things done on time and then
move on to other activities (and goals).453
Self-efficacy, the third required element, refers to a person’s “estimate of
his or her own ability to perform a specific task in a specific situation.”454 This is
not about ability, but is about your belief in yourself. Though self-efficacy begins
with the self, it is heavily influenced by the person you report to. Or as J. Sterling
Livingston, the author of a classic on the subject of expectation effect puts it, “A
manager’s expectations are key to a subordinate’s performance and
development.”455
Of course, setting clear and challenging goals that people believe they can
achieve is just the beginning. The goal taker must be motivated to achieve the
goal, which depends upon whether he or she “believes that the behavior will lead
to outcomes . . . that these outcomes have positive value for him or her [and] he or
March 6, 2016 Page 131
she is able to perform at the desired level.456 In other words, what’s in it for me, do
I care about it, can I get it if I try? Obviously, no amount of motivation is of any
value if the goal taker doesn’t have the abilities required to achieve the goal. In
other words, attitude is no replacement for skill set.
Most certainly those who are tasked with achieving the goal must accept
the challenge One of the easiest ways to pull everything together for a success is to
involve the goal taker in the process because “positive goal acceptance is more
likely if employees participate in setting goals.”457 Provided that the goals we set
are “within our grasp, but outside our reach,” and there is the presence of positive
incentives along with genuine acceptance developed through a participatory
process, better performance will likely result.
Naturally, goal setting can be dicey when the environment is unsteady and
time is at a premium. In such conditions, people actually care less about
participation and more about being told what to do. That said, by and large, when
there is time to set goals with those who will be accountable for achieving them,
take the time. Setting goals is always better than not setting them without regard to
degree of participation: “Even when it is necessary to assign goals without the
participation of the employees who must implement them, research suggests that
more focused efforts and better performance will result than if no goals were
set.”458
My approach to a properly formatted goal is to be sure it contains a verb,
noun, measurable results, the person(s) responsible, and the completion date. One
way to address this is to simply build the measurable results right into the goal:
Increase annual giving $15,000 (ML 5/1). An even better approach: increase
annual giving 20 percent to $15,000 (ML 5/1).
Some people want more definition about implementing goals than the goal
itself. It’s one thing to say that you want to make the department more efficient by
going paperless in six months; it’s quite different to know what action steps to
take. Here is a useful template for action steps related to improvement oriented
goals:
1. Determine problems that need to be fixed including the root causes.
2. Develop possible alternatives including best practices from other
organizations
3. Decide best alternatives including determining what could go wrong
4. Draft an implementation plan including specific completion dates and
people responsible
To find the action steps for starting something new like a line of business or
an endowment or capital campaign, you simply start with step 2. Take the goal
about going paperless for example. It is clearly about improving something so go
with the longer template:
March 6, 2016 Page 132
Go paperless (ML 6/30)
1. Determine problems for going paperless including the root causes (ML
1/15)
2. Develop possible alternatives including best practices from other
organizations (JG 2/1).
3. Decide best alternatives including determining what could go wrong
(CC 3/1)
4. Draft an implementation plan including completion dates and people
responsible (4/15)
Here are the goals and action steps for the development department of a
performing arts center:
1. Develop and implement a major gift strategy to raise at least $15,000
from at least 10 new members at the President’s Circle level (WM/WB
6/30).
a. Identify and solicit President’s Circle prospects using Target
Solutions data when applied to Raiser’s Edge (WM 9/15).
b. Write a specialized appeal letter for board members to encourage
an increase in giving (WM 10/15).
c. Hold at least two cultivation events for donors (WB/WM 6/30).
2. Develop Corporate Partner campaign to increase giving by $27,500
(WM 6/30).
a. Send corporate partner mailing by 12/1 to current and lapsed
donors (WM 12/1).
b. Identify prospects from outside lists and Target Solutions data
(WM/WB 12/1).
c. Ensure prospects are solicited and closed (WM 6/30)
3. Research and cultivate companies of new vendors and/or board
members to raise at least $10,000 in new sponsorships (CP 6/30).
a. Send letter to each company (CP 9/15).
b. Schedule cultivation visits (CP 9/30).
c. Meet, cultivate, and close prospects (CP/ML/WB 6/30).
4. Launch a planned giving program so that at least six individuals include
the organization in their plans or make an outright gift with a similar
intent (WB 6/30).
a. Develop possible alternatives including best practices from other
organizations (WB 8/30)
b. Decide best alternatives including determining what could go
wrong (WB 9/30).
c. Draft an implementation plan including specific completion dates
March 6, 2016 Page 133
and people responsible (WB 10/30).
d. Close six gifts (WB/ML 6/30).
March 6, 2016 Page 134
Chapter 11 Budget
You spend as little as you can,
you earn as much as you can.459
Colin Blumenau
There is great variety in the formats used for the budget and there is no
right or wrong one to use except for one: a budget summary should not be longer
than one or two pages, three at the most. Frequently, the current budget format is a
holdover from an executive director long since departed and needs revision to
reflect the needs of the current readers. Be forewarned, however, that asking too
many people for their opinions could create a format that is too complicated; what
should have been a simple three- or four-column presentation turns into something
impossibly confusing. As a minimum rule of thumb, any Budget Summary
presented to the board should give enough information to answer these questions:
1.
2.
3.
4.
What has been spent so far this fiscal year?
What is the approved budget for the current fiscal year?
What is the projection for how the current fiscal year will end?
What is the difference between budget and projection?
By having these four perspectives, the reader can understand the basic
financial position. Of particular importance is the often neglected forecast. The
late General Dillman Rash, a wizened community volunteer and sought-after
board member in Louisville, Kentucky, used to call the surplus or deficit the
“southeast corner of the budget,” referring to the lower-right corner of the
financial statement where he said, “The sun goes up or down on the executive
director.” It was, he said, “About the only number that any board member worth
his or her salt should care about.
Regrettably, the most common format revolves around year-to-date
comparisons complete with percentages and extensive detail. This approach has
arisen primarily because publicly held corporations use quarter-to-quarter
comparisons and for-profit oriented board members are comfortable with this. It
could also be that the software in use defaults to this format. In a nonprofit,
however, such information can be largely distracting. Table 10.1 is an example.
Table 10.1 Common Budget Format
Last Year
Yr To Date
$ Difference
Column 1 less
Yr To Date
Column 2
Budget
This Year % Difference
Yr To Date
Column 4 ÷
March 6, 2016 Page 135
5/31
5/31
5/31
Column 2
Total Income
224,531
285,787
60,746
284,082
(0.6)
Total Expense
200,490
248,909
48,419
316,510
127
Net Income
24,041
36,878
12,327
-32,428
(88)
We know very little about what is going on in the above organization
beyond year-to-date comparisons. More important, the reader cannot get a clear
picture of the anticipated surplus or deficit that will occur at the end of the fiscal
year. Table 10.2 shows the earned income section of a typical nonprofit that shows
the four-column format in action.
Table 10.2 Better Budget Format
Actual
Yr To Date
6/30
Budget
For Yr
Ending
12/30
REVENUE
696
805
1,501
1,891
1,113
3,005
2,420
947
3,367
529
(166)
362
1,462
200
217
1,879
1,126
1,265
141
514
1,920
1,447
(197)
(59)
EXPENSES
EXCESS OR (DEFICIT)
1,221
160
224
1,605
(104)
(in Thousands)
Forecast Difference
For Yr
Column 3
Ending less Column
6/30
2
PROFIT AND LOSS
REVENUE
Contributed
Earned
EXPENSES
Program Services
Management and General
Fundraising
41
321
If the budget being presented includes a proposed budget for the coming
fiscal year, you simply add an extra column to the right of the forecast column.
Generally, the more information that is added and provides value to the
reader, the better, but there is always a limit. Where that limit occurs is going to be
different for every organization, but there is a limit. There is peril in providing too
much information because people may not be able to wade through the details.
The best place to begin a discussion of the right format is at the absolute
minimum, not the maximum. The four-column approach (year to date, budget,
forecast, and variance) is generally all that is required.
Some organizations like to add a balance sheet to the financial presentation
and there is no objection to doing so. Indeed, this can be very helpful. Even so, it
is good to remember that balance sheets have become increasingly complex and
difficult to understand. Keeping things simple is always a good idea and reducing
March 6, 2016 Page 136
the balance sheet down to its basic elements accomplishes this. Typically, the
abbreviated balance sheet is shown at the bottom of budget summary.
It is also good to remember that producing balance sheets regularly
throughout the fiscal year can be a time-consuming activity that may deliver
limited benefit especially for smaller organizations. Most people who ask for a
balance sheet are actually looking for answers about cash flow or solvency
questions. You approximate this quite simply using the suggested format with
some modifications as shown in the example in Table 10.3.
Table 10.3 Budget Format with Cash Reconciliation
Actual
(in thousands)
Budget
Forecast
Difference
Yr To Date For Yr Ending For Yr Ending Column 3 less
Column 2
5/31
6/30
6/30
Total Revenue
186,449
300,000
320,000
20,000
Total Expenses
200,490
250,000
290,000
40,000
Net Income
(14,041)
50,000
30,000
(20,000)
Add Back Depreciation
16,000
32,000
31,000
(1,000)
Approximate Cash Position
1,959
82,000
61,000
(21,000)
Granted, for many nonprofits and especially those that don’t own real
estate, depreciation is a negligible expense. As such, their net income is often
essentially the same as their cash position. The challenge that this example
presents is that the organization has a surplus on a cash basis and a deficit on an
accrual basis in the actual year to date column. Such is the stuff of discussion
about the value of depreciation and the like, which can occasionally enliven a
discussion or present an opportunity for education to those unfamiliar with such
financial matters.
As implied earlier in the success measures section, one of the easiest ways
to build a budget is to use the categories from the IRS Form 990. It allows you to
compare your organization to your peers easily and serves as a credible platform
for communicating your financial position. Take for example an economic
development agency shown in Table 10.4.
March 6, 2016 Page 137
TABLE 10.4 Abbreviated 990-Based Budget Format
Actual
Yr To Date
6/30
Budget
For Yr
Ending
12/30
REVENUE
696
805
1,501
1,891
1,113
3,005
2,420
947
3,367
529
(166)
362
1,462
200
217
1,879
1,126
1,265
141
514
1,920
1,447
(197)
(59)
EXPENSES
EXCESS OR (DEFICIT)
1,221
160
224
1,605
(104)
ASSETS
373
3,413
3,786
1,210
3,974
5,184
1,264
5,586
6,850
54
1,612
1,666
LIABILITIES
220
5
225
202
19
221
316
35
351
114
16
130
3,396
165
3,698
1,265
3,560
3,786
4,963
5,184
3,748
2,624
128
6,499
6,850
50
1,359
128
1,536
1,666
(in Thousands)
Forecast Difference
For Yr
Column 3
Ending less Column
6/30
2
PROFIT AND LOSS
REVENUE
Contributed
Earned
EXPENSES
Program Services
Management and General
Fundraising
41
321
BALANCE SHEET
ASSETS
Current
Long-term
LIABILITIES
Current
Long-term
NET ASSETS
Unrestricted
Temporarily restricted
Permanently restricted
NET ASSETS
LIABILITIES & NET ASSETS
At less than one page, it is perfectly adequate for use at the full board level
and generates a comprehensive view including the balance sheet. Because
agencies that are required to file the form 990 will have a methodology already in
place for dealing with this, the budget format already exists. In short, it is
convenient and readily available for most.
Do not let the brevity of this chapter understate the importance of the
financials in general and the budget in particular. It bears repeating that about twothirds of the nonprofits in a study on innovation were unable to move their ideas
forward because of lack of funding, growth capital availability, narrowness of
government funding streams, and foundations that encourage innovation but don’t
sustain it.460 Neglect the financials at your peril.
March 6, 2016 Page 138
Part V: Governance Plan
When it comes to governance, everyone is an
expert.
- John C. Whitehead461
STRATEGIC PLAN
OPERATING PLAN
Where to go tomorrow? What gets done today?
Lines of Business
goals
success measures
Budget
vision
PURPOSE
Delegation
Who does what?
Duties
Guidelines
Why?
Accountability
When did it happen?
Agendas
Assessments
GOVERNANCE PLAN
Somewhere there are effective governing boards. With more than a million
and a half tax-exempt organizations in operation today, the odds have to be
favorable. Unfortunately, as many board members and executive directors know,
good governance is tough to achieve. It’s a bit like newborns that sleep through
the night: You’ve heard about them, but it certainly didn’t happen with your kids.
A study on executive director tenure and experience, for example, ranked
board relations as one of the top three reasons for why executive directors would
leave their jobs behind burnout and career opportunity.462 That governance can
cause heartburn is hardly breaking news. In the mid-1990s, noted governance
experts Barbara Taylor, Richard Chait, and Thomas Holland wrote, “Effective
governance by a board of trustees is a relative rare and unnatural act.”463 They
hadn’t changed their minds nearly a decade later when they stated, “There is no
question that the nonprofit sector has a board problem. Frustration with boards is
so chronic and widespread that the board and troubled board have become almost
interchangeable.”464
John Carver, another governance authority, said much the same in 1997,
“With good evidence, many people believe that boards will always stumble from
rubber-stamping to meddling and back again. They believe the realities of group
decision making forever destine boards to be incompetent groups of competent
people.”465 And when his new edition was released a few years ago, not a word of
this statement had changed.466
It is not always true that a poorly functioning board can severely damage an
institution or that an effective board equals an effective organization; there are
March 6, 2016 Page 139
exceptions to every rule. However, despite the lack of definitive research on the
causal relationship between boards and effective organizations, common sense
says that a better board can help the organization reach its full potential; a
dysfunctional board can hold it back.
There are other reasons to care about the quality of governance. Some
board members point with good reason to the advantage of teams over individuals
in decision making. William Bowen, President Emeritus of The Andrew W.
Mellon Foundation, argues that the “exercise of collective responsibility through a
board can slow down some kinds of decision making, but it can also dampen the
enthusiasm of the aspiring autocrat. It provides checks and balances by adding
layers of judgment and protections.”467
Even if the full board is disinterested in attending to its responsibilities, the
individual board member’s self-interest about personal liability should offer ample
motivation. But because directorships are bestowed upon the generous patron as a
thank-you for unselfish giving, this fact is often overlooked. Trusteeship should
not be considered a gift, but rather should be conveyed as a serious obligation that
carries significant responsibility and accountability. And what is the best way to
avoid difficulties? Say experts Jacqueline Covey Leifer and Michael Glomb,
“Clearly, the best way for board members to avoid personal liability is by fulfilling
all of the obligations of the office.”468 Of course, this can be somewhat problematic
if the board members don’t know what those obligations are in the first place.
Just how well are board members and the boards they serve fulfilling the
obligations of the office? A finding from the most recent Governance Index
published by BoardSource is discouraging, “According to chief executives and
board members themselves, nonprofit board performance is mediocre at best.”469
How do we end up with this sobering news from an organization that has been
building effective boards since 1988 and from a survey of more than 2,150 chief
executives and board members who were selected from its own membership?
Understanding what’s wrong with board begins with the common
complaints. The late Peter Drucker says that there are just two: “Nonprofit CEO’s
complain that their board ‘meddles.’ The directors, in turn, complain that
management ‘usurps’ the board’s function.”470 Barbara Taylor, Richard Chait, and
Thomas Holland list four key complaints:
1. “There’s no red meat on the table.” The issues before the board and its
committees are little more than a mishmash of miscellany; trivial
matters disconnected from one another and from corporate strategy.
2. “Board meetings are boring.” Events are tightly scripted, outcomes are
largely predetermined, and opportunities to substantially influence
significant decisions are severely limited.
March 6, 2016 Page 140
3. “We have plenty of information, but we have no idea what it all means.”
Board packets bulge with raw, uninterpreted data, and trustees suffer
from a deluge, not a dearth, of information.
4. “The parts on this board sum to less than the whole.” The trustees’
individual talents are not harnessed to a collective effort. The board
functions more like foursomes on the same golf course than like players
on the same team. Each committee or clique engages in a self-contained
event on a common terrain, largely oblivious to the activities of
others.471
After reading this, how can anyone be surprised that many board members
“find serving on boards to be an exercise in irrelevance”?472 But so what? Should
leaders at nonprofits care that meetings are boring or that there is no red meat on
the table? It comes with the job after all. That’s certainly the opinion of William
Bowen: “Directors are like airline pilots, in that their lives consist of hours of
boredom punctuated by moments of terror.”473 So long as we arrive safely, do we
really care what the pilot does at 30,000 feet with the auto pilot engaged? Never
mind that pilots sometimes overshoot the airport; it’s the take-offs and landings
where we want the pilot frosty.
Unfortunately the viewpoint that board members are like pilots is a bit off
the mark. In the conventional thinking about governance, the board decides what
and staff decides how. So, the board would decide what destination and the
executive director figure out how to get there. As such, it’s usually the executive
director who’s in the pilot seat although some board chairs usurp that position.
If the board isn’t the pilot, then what is it? Part air-traffic controller, airline
owner, and passenger is the schizophrenic truth; part “Ascend to 10,000 feet” and
part “Dear Lord, don’t let me crash.” Don’t think for a moment that the executive
gets off easy. We all know that a flight can get into real trouble when the pilot
leaves the flight deck, but boards ask for this all the time. The board wants the
executive director to be the pilot and flight attendant at the same time.
Some executive directors like this state of affairs because it gets them off
the hook. After all, says the late Kenneth Dayton, former CEO of Dayton Hudson,
“A weak CEO can often protect his or her hide by delegating management’s
responsibilities to the board.”474 Upward delegating so muddies accountability that
no one is quite sure who is responsible for what. And that’s especially true when it
comes to fundraising. What executive director hasn’t complained about
ineffectiveness on the part of the board in fundraising without taking any
responsibility for the failure? “That’s the board’s job,” says the executive director,
“Not mine.” Little wonder that executives and their board members give
fundraising their lowest grades on the board performance report card.475
Many of these complaints about governance are simply unavoidable.
Reviewing financial audits, for example, is not the most interesting task for board
March 6, 2016 Page 141
members, but it is a crucial one. If the organization is performing as it should,
perhaps some boredom is tolerable and may be a welcome sign of an effective
board. No one could reasonably suggest that the executive director of a successful
agency manufacture a “crisis du jour” for the board simply to keep the members
entertained and stimulated. And yet many a committee has been created for
reasons just like these.
Attending to these complaints has merit, however. Being awash in
meaningless information is a waste of time and resources. And if every meeting is
a sleeper, what is the point of meeting at all?
Boards can certainly make a difference in the life of the organization. That
difference can be positive. For example, we know that boards “have an impact on
executive tenure and satisfaction and on agency success. Longer-tenured executive
directors and those leading larger agencies perceive their boards to be more
supportive and helpful than executives projecting shorter tenures for themselves or
heading smaller agencies.”476 And that difference can be negative in that a “series
of successive, short-tenure executives can do lingering harm to an agency’s culture
and performance.”477
Though we know that “nonprofit organizational effectiveness is strongly
related to board effectiveness,”478 we also know that “many boards do not fully
meet their governance and management responsibilities.”479 Indeed, as William
Bowen observes, “Boards can also matter greatly as negative forces when they act
imprudently.”480
The simple truth is that most people want nonprofit boards to be effective,
to be responsible, and accountable, but we have always struggled with knowing
how best to pull this off. All board members want meetings to be “give and take”
and accomplish important work, but most are “show and tell” events awash in
reports or “shake ‘n’ bakes” where any subject is game and the board forages
about for things to do. It is not that nonprofit boards don’t want to govern well;
they just don’t necessarily know how to go about it. The Governance Plan starts
the journey to governing well.
Seven Realities
That boards want to be great, but cannot make it happen is largely due to
the seven realities of nonprofit governance. First is that part-time board members
have limited time to give. With the average number of meetings each year at 6.9
and length at roughly 3.3 hours, the average nonprofit board will spend about 16.5
hours a year around the table.481 The average board member, however, will not
March 6, 2016 Page 142
make all of the meetings as evidenced by the average attendance rate of 71
percent. 482 Do the math and the average board member spends about 11.5 hours a
year at board meetings. And you thought you’d move mountains how?
This scarcity of time leads to the second reality of imperfect knowledge,
which in turn affects the quality of decision-making. That a board made up of parttime novices should have the final responsibility for the organization managed by
a seasoned professional who likely works 2,500 to 3,000 hours a year creates a
paradox of nonprofit governance. Melissa Middleton describes this paradox as
“strange loops and tangled hierarchies”483 and this portrayal is as fresh today as
when it was written nearly 25 years ago. Here’s how it works:
 The board hires, fires, and supervises the executive; thus the executive
is a subordinate of the board.
 The board is responsible for making final policy decisions and should
not become “a captive of the palace guards.”
However:
 The executive often has the important information and thus serves as an
educator of the board.
 As implementers of policy, executives may in fact be the functional
authority.484
Third, in the world of nonprofit governance, size does matter. At an average
size of 16,485 the board is larger than the task of governance requires. It’s no
wonder that board members don’t necessarily feel that they count because they
often don’t. After all, it’s common sense that a larger group will have difficulty
working together than a smaller group. Larger boards have more difficulties
working tougher and accomplishing objectives than small ones. This is especially
true if you subscribe to the size-of-ten rule from Jon Katzenbach and Douglas
Smith, “Ten people are far more likely than fifty to successfully work through
their individual, functional, and hierarchical difference toward a common plan and
hold themselves accountable for the results.”486
Fourth, the composition of the board is haphazard at best and generally has
little to do with the task of governance. Sure, people will say the board’s primary
recruiting tool is the “Three Ts” (time, talent, and treasure) or the “Three Ws”
(wealth, wisdom, and work). But it’s really affluence or influence that is best
known as the rule of “Three G’s” (give, get, or get off). While perhaps good for
fundraising, it does not necessarily support effective governance and certainly
works against building the board team. Rich corporate executives serve along side
of the volunteer influencers who don’t have two dimes to rub together. Board
members that understand the intricacies of financial audits at billion-dollar firms
sit across the table from the people that can’t balance their home checkbook.
If you want evidence for the affluence or influence approach, just look at
the 71 percent attendance rate. There is great emphasis on what you bring to the
March 6, 2016 Page 143
table, but very few consequences for actually being at that table.487 So what if a
meeting is missed? Federal and state laws have arisen that make it extremely
unlikely that a board member will ever be held accountable for not showing up.
Are there any employees could produce meaningful results if they were absent
almost three days out of 10 days as are board members?
Not only are there few consequences for poorly performing board members,
but the same holds true for poorly performing boards. Whose picture ends up on
the front page of the morning paper after organizational meltdown? Usually not
the board chair. Many people still remember William Aramony who did seven
years in prison for his role in a scandal at the United Way of America in the early
1990s, but who remembers the board chair at the time? (It was the late Edward A.
Brennan then the chairman of Sears.) Most board members not only thankfully
miss out on the public floggings of nonprofits that sometimes occur, but they
usually miss out on the accolades as well.
Is it bad that board members are chosen for reasons other than their skill at
governing? Of course not. “Board members,” says one board chair, “are onequarter governance, three-quarters influence.” A board member with the ability to
raise significant funds or influence a particular outcome is worth his or her weight
in gold. Ask most United Ways if they’d trade their 45 member campaign-driven
boards for smaller, more effective governing boards and most would say, “No,”
especially those that have done just that and seen their campaign results sink.
The fifth reality is fund ability. Fundraising is problemo numero uno for
boards and executive directors and, guess what, there’s good reason.488 According
to a BoardSource survey, when it comes to raising money, 73 percent of board
members are comfortable with writing or signing letters, 63 percent with providing
contacts, 54 percent with meeting prospects in-person, 43 percent with making
phone calls, and 40 percent making the ask straight on.489 And despite the common
understanding that funders frown upon anything less than 100 percent board
giving, less than half of executive directors report meeting this standard.
Many executive directors will jaw drop at the idea that 40 percent of board
members are comfortable with making “the ask” because their personal experience
suggests it’s much, much lower. Laura Fredricks opens her book on fundraising,
The Ask, by saying “Some people would rather stand in the longest supermarket
line than ask for money,”490 but maybe she should change that “some” to “most”
based upon the BoardSource survey.
Sixth, pulling the board together so that there is continuity from meeting to
meeting is tough since the average attendance of board members guarantees a
different board at every meeting.491 It’s “déjà vu all over again” as precious time at
meetings is taken up answering the question “When did we do that”?
March 6, 2016 Page 144
With time and talent in short supply, the board lucky enough to attract a
top-quality director will likely share that person with other boards. Because most
boards have term limits that most commonly restrict service to six consecutive
years, new members arrive just as seasoned ones rotate off.492 A board with two
consecutive three-year terms for board members will lose 15 percent of its
seasoned members every year and welcome the same number of newbies to the
board.
Put another way, term limits ensure the number of newcomers to seasoned
veterans is one-to-one with almost half of all board members in their first, second,
or third year of board service.493 Making matters worse is that the average tenure
of the officers is less than two years.494
If we asked a championship sports team to win by retiring nearly 15 percent
of the best players at the end of every season, we’d be barred from the stadium.
Yet this is exactly the way that it’s done on the nonprofit board. Adding to the
constant flux are board chairs that spend two years or less at the helm. Imagine
that same championship team losing its coach every other year? Is it any wonder
that the board’s voice is inconsistent from meeting to meeting?
Here’s what can go wrong: Simple majority carries the vote for most
nonprofits and quorum is also generally set at simple majority. Considering seven
out of 10 board members on average are absent means that just four people can
change the direction of the organization. You get the point. And considering that
only two in ten board members has a 90 percent or better attendance record,495 you
can pretty much bet that most of those decision makers aren’t completely up-tospeed on the work of the organization.
The seventh reality is executive director inexperience. The one constant in
the governance equation – the executive director - is a first timer in the job with
five or less years of experience.496 These are "once is enough" leaders; five out six
take an immediate vacation after leaving and only one out of three ever goes on to
take another top job with a nonprofit.497 It’s the blind leading the blind in many
nonprofits.
Helping to explain this “get me out of here” situation is that about 82
percent of nonprofits have budgets of less than $1 million,498 nearly 30 percent
have one or no full-time employees, half have five or fewer, and almost 90 percent
have 50 or fewer.499 This means that almost all nonprofits are small businesses
where money is generally tight, executive salaries low, and tensions high in an
increasingly competitive job market at the top that Thomas Tierney calls the
leadership deficit.500 What does this add up to? Put simply, “many nonprofit
leaders are ‘learning by doing.”501 Small organizations are magnets for novice
executives who inherit the problems of the previous novice executives; novices
beget novices.
March 6, 2016 Page 145
The downside to getting top level jobs early in a career is that you don’t get
those “learning by watching first” opportunities that those in the for-profit sector
receive. One day you wake up to find yourself in an executive director's job
having never been to a board meeting or done a marketing plan or led anyone
anywhere. In the for-profit sector, the care and feeding of executive talent is taken
quite seriously. A young leader would never be given an assignment without
having the skills to get it done. Attitude is important, of course, but so too is
having the ability to get the job done: “Many nonprofits reflect the interests of
individuals who are idealistic, committed to a set of nonmonetary goals and
generally less experienced in some kinds of practical work than are those who live
principally in the business world.”502
To be sure, there’s a big upside to working in nonprofits. First, “in any
economy, the best jobs provide emotional as well as financial rewards.”503 This
statement reflects what workers in the nonprofit sector already know: almost all
who work in the sector experience a high level of enjoyment in their work.504
Second, you can land a top job young. It might not be a big nonprofit, but
it’s a company none the less. Three years after graduating with my MBA and
before I was 30, I had the job. My friends who graduated with me were still buried
in the depths of their for-profit companies at the same point in their careers. The
bountiful number of opportunities for young leaders is perhaps explained best by
the fact that so many of the agencies are small; 45 percent operate on expense
budgets of less than $100,000.505 It’s a wonderful learn-by-doing opportunity to
get a top job so early in a career. The downside for the organization is that it’s a
learn-by-doing opportunity.
In sum, part-time board members have limited time to share at the board
table, which leads to imperfect knowledge of the organization. The size of the
board is a drag on team effectiveness, but this is largely irrelevant because the
composition of the crew is based upon each member’s affluence or influence.
Hoping that this will somehow lead to a fund raising powerhouse board is
misplaced as fund ability is in short supply even though it’s priority one for the
executive director. Difficulties with maintaining continuity from meeting to
meeting and year to year guarantees an ever-changing board. Executive director
inexperience only makes matters worse.
Not all nonprofits experience the seven realities at the same time, but it is a
rare one that doesn’t encounter a handful simultaneously. Frustrating as these
seven realities may be, understanding and accepting them is a better approach than
expending precious energy and time trying to change them. Effective leadership
understands these realities and works with them; ineffective leadership is either
oblivious to them, fights them to the point of distraction, or spends its time finding
fault for its performance. For such agencies, being irrelevant would be a step
forward.
March 6, 2016 Page 146
These realities of nonprofit governance have a causal impact on many other
aspects of governance and organizational life. Cohesion, the team spirit of the
board, is affected by size, composition, and continuity. Fundraising results are
highly sensitive to size and composition.
The seven realities of nonprofit governance would at first seem fixable.
Upon examination, however, many of them are simply unaffected by any attempt
to impact them. For example, time is fixed; no amount of effort can make more of
it. It can be used more effectively, but it can’t be increased simply through wishing
for more. It is possible to make a larger board smaller, but not without the
tradeoffs including the loss of influential “door opening” board members.
The problem with denying these realities, with not responding to them, is
that the board will forever be reactive in texture, always dependent upon outside
stimuli in the form of rushed, stopgap measures or trendy fixes. This year it’s
strategic restructuring; next year it’s outcomes management; last year it was the
Better Business Bureau’s process to credential organizations; this year it’s the
standards of excellence. Maybe we can make it all better if we have a smaller
board or a bigger board, maybe more time for meetings or perhaps a shorter time
requirement, more thorough advance materials or abbreviated information,
meetings after work or breakfast meetings, an annual retreat off site or no more
retreats at all.
Here’s a good example of this problem fixing approach to governance. In
just one short readable article, United We Stand, How to Make Your Board Work
Like a Championship Team, we are advised first to turn meetings into team events
by using consent agendas, making board development a part of every meeting,
going into executive session, and scheduling themed meetings. Inclusion should be
the rule in board structure, which can be achieved by working towards a smaller,
simpler board and downplaying the role of the executive committee. Selfassessment should be an ongoing part of the board’s work. Recruitment,
orientation, and mentoring are keys to better governance. In the final few
paragraphs, we are advised that “building a high-performing board team means
building a team that is ready, willing, and able to focus on the main thing.”506
No board should be without this sort of helpful advice provided, of course,
that everyone knows what the organization is supposed to do be doing in the first
place, that everyone knows the “main thing.” That’s often where boards and
organizations get into a lot of trouble. They forget that the fundamental Purpose of
governance is to achieve the chosen destiny for the organization; the board is a
means to an end and not an end unto itself. If the board fails to deliver on the
promise of achieving its mission, it doesn’t matter if board meetings are
stimulating or directors happy.
The effective board knows that it cannot escape its accountability and
authority; it uses its precious time and knowledge in ways that count. No board
March 6, 2016 Page 147
has the time or knowledge to watch over the shoulder of the professional staff
every minute; the effective board decides what is important to monitor,
communicates it precisely, stands aside to let the work get done, and follows up to
see that it happened. This way the professional full-time staff knows what is
expected. Whereas, the ordinary board forages about for things to watch over and
often dummies down to micromanaging line items in the budget, the effective
board, board member, and chief executive make time count.
Boards often overlook the obvious: The board of directors is a team. When
it comes to teams, the biggest source of difficulty isn’t with how long or short a
meeting is or how big or small the size of the collective is. It lies with the
fundamental Purpose. Carl Larson and Frank LaFasto explain:
In the descriptions of ineffectively functioning teams the factor
that occurred far more frequently than any other was very simple:
The team had raised – or had allowed to become raised – some
other issue or focus about the team's performance objective.
Something was being attended to that had assumed, at least at that
time, a higher priority than the team's goal...Whenever we
encounter a team that is functioning poorly we always ask first:
What is it that this team is elevating above its performance
objective? 507
But what if there is no performance objective? The answer comes from
Parmenides, a fifth-century Greek philosopher, who proposed the answer, which is
that nature abhors a vacuum. This means that there is no such thing as empty space
because nature always fills it with something. These days the concept has been
broadened to include the human psyche or as Psychology Today’s Leon Seltzer
puts it, “Human nature abhors a vacuum.”508
In other words, if there are no performance objectives, we’ll make them up.
And that includes clear duties and guidelines. Ever wonder why boards go
foraging in the pastures of micromanagement, why executive directors usurp and
boards meddle? Now you know. Human nature abhors a vacuum. Enter the
Governance Plan!
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Chapter 12 Delegation
Same bed, different dreams.
Chinese Proverb
There’s a wonderful scene in Jerry Maguire where he tries to convince Rod
Tidwell – his one and only client – to get with the program. What Rod has wanted
from day one is for Jerry to “Show me the money” that Rod so self-righteously
says he deserves, the “Love, respect, community, and the dollars too, the entire
package, the Kwan.” Talented as he may be, Rod has gained a well-deserved
reputation as a high-maintenance diva. In order to get the Kwan, Rod needs to up
his game, which Jerry does his best to describe, “Here’s what I am saying. This is
a renegotiation. We want more from them so let’s give them more. Let’s show
them the pure joy of the game. Let’s bury the Attitude a little bit, let’s show
them.”509
The response from Rod is explosive, “Do your job, man. Don’t you tell me
to dance. I am an athlete, not an entertainer. These are the ABCs of me. I don’t
dance. And I don’t start pre-season without a contract.”510 Jerry’s response is a
plea for help, “You don’t know what it’s like to be me out here for you. It is an upat-dawn pride-swallowing siege that I will never fully tell you about! Okay?! Help
me, help me help you, help me help you.”511
This scene, as entertaining as it is, illustrates the confusion that occurs each
and every day between executive directors and their boards. Whose job is it to
deliver the Kwan? Is it the executive director’s, the board’s, the board member’s,
all of them, some of them? Which one of these characters – Jerry or Rod –
represents the executive director? Is Jerry the executive director who begs for the
board to “Help me help you” or is he the high-handed “Do your job” character of
Rod?
Most people take the normative view that the board plays the role of Rod
“Do you job” Tidwell and the executive director plays Jerry “Help me help you”
Maguire. In other words, the board is the boss; the executive director is the
worker. But at the best-run organizations, the answer is quite the opposite.512 The
best executive directors understand that it is their central responsibility to help the
board help them, not the other way around.
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Low Hanging Fruit
Many boards and professional staff operate under the long-held assumption
that boards decide, staff implement. The idea that boards make policy and staff
members implement it is as old as the sector itself. Boards decide what and staff
decides how. Boards set policy and staff execute it. Cyril Houle observes this
pattern in his Governing Boards:
Many authorities on boards have enunciated a single, fundamental
rule by which to define the function of the board as contrasted to
the function of the executive. Most frequently they say, often with
an air of profundity, that the board should determine policy and the
executive should carry it out. Brian O’Connell [co-founder of
Independent Sector] has responded succinctly “This is just not so”
and has called that distinction “the worst illusion ever perpetrated
in the nonprofit field.”513
At the same time that he rails against this single fundamental rule, Cyril
Houle offers his own replacement: “Whenever the board can, it should stay at the
level of generality and not specificity . . . The executive, on the other hand, must
recognize that hers is the immediate responsibility.”514 Thus, the board is big
picture; the executive director is here and now. This causes an inevitable puzzle:
How can the board stay at the level of generality that respects the chain of
command so essential to accountability, but still accomplish its fiduciary
requirements?
Puzzles
Board members in all fairness have a difficult job to do. They are expected
to be members of a collective, individual board members, and volunteers, each
with different expectations. Robert Andringa and Ted Engstrom highlight this
puzzle using the metaphor of hats to describe their roles:
1. Governance hat: Worn only when the full board meets, proper notice
has been given, and a quorum is present . . . An individual board
member has no authority in governance. Governance is group action.
2. Implementation hat: Worn only when the board gives one or more board
members authority to implement a board policy . . . Such authority is
not automatic just because a person is a board member. It depends on
the board’s having given its authority, acting by resolution in an official
meeting.
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3. Volunteer hat: Worn at all other times, when board members are
involved with organizational activities as volunteers . . . As a volunteer,
a board member has no individual authority simply by virtue of his or
her position. When wearing a volunteer hat, the board member is
accountable to another person.515
The authors go on to note that “Problems arise when board members and/or
staff confuse these hats or when board members assume that individual and
collective board responsibilities are interchangeable.”516 Little wonder given that
the fourth hat – the board member hat – is missing from the list. Yes, the board
member is sometimes granted authority to do a specific job, but in the meantime
he or she is hardly a volunteer. This would be akin to saying that a duly-elected
public official becomes a common citizen when he or she leaves work at the end
of the day. Can your boss really your best friend when he or she has the power to
terminate your employment?
The problem with being a board member in chambers, but a volunteer at all
other times usually begins to appear in complaints about parking-lot chatter or
disrespect of confidentiality. Once elected and until the term of service is
complete, the board member is never a volunteer. Wearing the volunteer hat may
be a nice way to say that you have to roll up your sleeves and pitch in, but the
board member must never forget that he or she is never a volunteer, but is always
a board member, always.
One of the fundamental reasons that governance is often so confusing is
because of the frequent mashing together of board and board member
responsibilities. The job of the board member is very different than that of the
board, but you might not know that when reading some of the literature. For
example, the report card for board performance from BoardSource’s 2007
Governance Index lists the following 13 items:
1. Understanding organization’s mission
2. Financial oversight
3. Legal and ethical oversight
4. Knowledge of organization’s programs
5. Providing guidance and support to CEO
6. Level of commitment and involvement
7. Evaluating the CEO
8. Strategic planning
9. Monitoring organizational performance
10. Understanding board’s roles and responsibilities
11. Recruiting and orienting new board members
12. Community relations and outreach
13. Fundraising517
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Most of these are the province of the board, but some pertain solely to
board members. Boards don’t have knowledge of the organization’s programs,
board members do; boards don’t have a level of commitment and involvement,
board members do. Board jobs are flat-out different than board member jobs.
Perhaps the biggest problem that occurs with combining board and board
member duties – and calling board members volunteers when they’re out of the
board room – is the “who’s the boss” dilemma. As described by Alexis de
Tocqueville so eloquently some 150 years ago, “When the government speaks it is
difficult to ascertain the difference between a suggestion and a command.”518
A prominent board member, influential in the community and generous to
the organization pulls the executive director aside to ask a question about what
insurance broker the company uses and why. The executive director should
certainly be able to answer these questions, but if the questioning were to
continue, the executive director might begin to wonder whether the board member
is giving direction. Perhaps the organization is not using the best broker; perhaps
the board member wants a more thorough process. Advice becomes instruction.
“But I was wearing the volunteer hat at the time” is hardly palliative to the
executive director whose feet are being held to the fire for the consequences of
switching to an inferior insurance provider.
Board members very rarely have a problem with confusing advice with
instruction; it is the staff members who have the difficulty. “I work for the board,
this is a board member, therefore I work for this board member” is the faulty logic,
but it doesn’t go away simply because it is flawed. This can be an especially
difficult problem when it’s the chair of board. Board members have to be
extremely guarded about how they interface with the staff as Robert Andringa and
Ted Engstrom warn:
The most misunderstood and abused principle of governance is the
requirement for group action. The chief executive and staff cannot
serve two (or 22) masters. The full board sets policy, not individual
board members who feel strongly about something and voice their
opinions to the chief executive. Board members must be taught this
principle, and staff must be reminded of it. Otherwise, confusion
and conflict reign and board effectiveness is diminished.519
Regularly reminding board members of this principle is one way to deal
with the problem. A better way is to explicitly clarify the duties of the board and
the duties of the board members. And have different guidelines of conduct as well.
And make sure that board committees only help the board with its duties and stay
away from helping the staff with theirs unless asked by the staff.
Despite these misgivings, the board has an interest in the operations of the
organization. No board wants to get into the business of managing the
organization, but no board wants to create a vacuum between itself and the day-to-
March 6, 2016 Page 152
day operations. Take for example an organization that announces the departure of
two senior staff members in six weeks, one a nine-year veteran, the other a fouryear veteran. Shouldn’t the board have interest in this? An organization with short
staff tenures is going to have difficulty accomplishing its goals and thus merits the
questions from the board including how large is the senior staff team? What were
the circumstances? Is this a continuing pattern? What sort of tenures do the other
senior staff members have?
The board has an obligation to ask tough questions about the organization
and the executive director has an obligation to answer them with the “truth, the
whole truth, and nothing but the truth.” If the board must strike the right balance
between asking and telling then the executive has the same obligation. The process
of asking tough questions should allow sensitive issues to be put on the table in a
meaningful, respectful, and reasonable process as opposed to the random, kneejerk manner that so often characterizes the process.
Levers
It is no wonder that a good board is often a key criterion of nonprofit
organizational high performance; it lands in the top two ways to improve the
performance of leadership in Paul Light’s survey of opinion leaders and executive
directors of high performing nonprofits.520 No doubt, some of this is due in part to
all the difficulties associated with governance; if you have a good board, it has to
be a sign of high performance. But what are the key levers that improve
governance, the low-hanging fruit as it were?
There is a great body of literature on teams that provides helpful advice. In
many respects, the board is a team just like many other teams. It may have its own
idiosyncrasies, true, but much about teams is applicable to the nonprofit board.
Carl Larson and Frank LaFasto studied high-performing teams and found eight
fundamental characteristics:
1.
2.
3.
4.
5.
6.
7.
8.
A clear, elevating goal
Results-driven structure
Competent team members
Unified commitment
Collaborative climate
Standards of excellence
External support and recognition
Principled leadership521
Using an instrument constructed around these eight characteristics, I set out
to identify the key opportunities for improving governance. I surveyed nine
nonprofit governing boards with a total of 169 members including executive
directors. In addition, I surveyed a total of 323 attendees at nonprofit capacity-
March 6, 2016 Page 153
building conferences. Keep in mind that the boards and attendees surveyed were
interested in better governance, which likely makes them better than average. The
results on a scale of 1 to 4, with 4 being best, are shown in Table 12.1.
Table 12.1 Board Performance Questionnaire Results
Boards Attendees
A Clear, Elevating Goal
1. We have a clear understanding of the mission and goals.
2.8
3.0
2. We view our mission and goals as important or worthwhile.
3.3
3.4
3.4
3.2
3. We have clear roles and accountabilities.
2.4
2.3
4. We have an effective communication system where credible
information is easily accessible to all team members.
2.5
2.7
5. We have an effective communication system where opportunities exist
for team members to raise issues not on the formal agenda.
2.6
2.8
6. We have an effective communication system to document issues raised
and decisions made.
2.7
2.6
7. We monitor Individual performance and provide feedback.
1.9
2.1
8. We make decisions based on sound facts and interpreted without the
harness of predisposition.
2.7
2.5
2.8
2.5
9. We possess the relevant skills, abilities, and knowledge.
2.9
2.9
10. We possess a strong desire to make a meaningful difference to the
cause.
3.3
3.2
11. We are capable of working well with each other.
3.1
3.1
3.4
3.1
A Results Driven Structure
Competent Team Members
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Boards Attendees
Unified Commitment
12. We make serious individual investments of time and energy.
2.6
2.6
13. We do not pursue individual objectives at the expense of the cause.
3.1
3.1
3.3
2.9
14. We have a climate of honesty – integrity, no lies, and no exaggerations.
3.3
3.2
15. We are open – a willingness to share, a receptivity to information,
perceptions, ideas.
3.0
3.1
16. We are consistent – predictable behavior and responses.
2.8
2.9
17. We are respectful – treating people with dignity and fairness.
3.3
3.3
3.2
3.1
18. Our standards of performance are clearly and concretely articulated.
2.3
2.4
19. Individual members require one another to conform to the established
standards.
2.2
2.4
20. We exert pressure to make changes that constantly improve our
standards.
2.3
2.4
2.7
2.4
2.9
2.8
22. Our officers keep the vision of the future alive and in mind.
2.7
2.9
23. Our officers inspire us to make changes when needed.
2.6
2.7
24. Our officers unleash the energy and talents of the members.
2.3
2.4
A Collaborative Climate
Standards of Excellence
External Support and Recognition
21. We celebrate our successes.
Principled Leadership
March 6, 2016 Page 155
Boards Attendees
25. Our officers suppress their individual egos on behalf of all of the
members.
3.0
2.9
3.0
2.7
Average
67.9
69.7
Median
67.0
70.0
68% of the scores fall in this range
57-79
57-83
By rank ordering the eight topics, you can see where boards are best and
most in need of attention as shown in Table 12.2.
Table 12.2 Board Performance Questionnaire Rankings
Boards
Attendees
A Clear, Elevating Goal
3.4
3.2
A Clear, Elevating Goal
Competent Team Members
3.4
3.1
Competent Team Members
Unified Commitment
3.3
3.1
A Collaborative Climate
A Collaborative Climate
3.2
2.9
Unified Commitment
Principled Leadership
3.0
2.8
External Support and Recognition
External Support and Recognition
2.9
2.7
Principled Leadership
A Results Driven Structure
2.8
2.5
A Results Driven Structure
Standards of Excellence
2.7
2.4
Standards of Excellence
To summarize, boards have the necessary clear, elevating goals and the
competent team members, but the results-driven structure and the standards of
excellence are lacking. Means testing showed statistical significance between the
group of two at the top and the group of two at the bottom. Thus the key
opportunities – the low-hanging fruit to immediately address – are results driven
structure and standards of excellence.
March 6, 2016 Page 156
Adding weight is a study conducted a few years ago with two groups of
people attending a major national conference where governance was the central
topic. The 72 attendees were from a wide variety of organizations, some were
board members, some executive directors, and all were interested in the topic of
the board team.
The participants used the same questionnaire as above and ended up with
an average score was 66. Following the quiz, each participant wrote down the
three key obstacles to effective board performance. The participants then worked
in small groups to prioritize the top three. These obstacles were then presented to
the whole room and affinity grouped to reduce the volume of ideas. Finally, each
participant voted on top choices on a one to three scale, with three being the top
choice:
Unclear roles (114)
Lack of accountability (84)
Inconsistent levels of individual commitment (55)
Poor use of time, lack of time (40)
Strategic direction (38)
Poor communication (38)
Personal agendas, ego (32)
Ineffective leadership (16)
Insufficient knowledge and training (11)
Inactive or absentee board members (9)
Poor interpersonal skills (8)
Poor board member recruitment (2)
Again, the two top obstacles – unclear roles and lack of accountability –
correspond with the survey categories of results driven structure and standards of
excellence.
According to Carl Larson and Frank LaFasto, the critical first element of a
results driven structure is clear roles and accountabilities: “In short, each member
of any successful team must understand at the outset what he or she will be held
accountable for and measured against in terms of performance . . . Without clear
roles and accountabilities, all efforts become random and haphazard.”522 In the
delegation section of the Governance Plan, clear roles and accountabilities are
addressed by the duties.
The critical first element of standards of excellence is clear and concrete
standards, which are important because “the extent to which standards are clearly
and concretely articulated determines the eventual likelihood of the standards
being met.”523 In the delegation section, standards are addressed by the guidelines.
March 6, 2016 Page 157
The job of a board member is tough enough to do even when duties and
guidelines are clear, and even more difficult when operating within the seven
realities of nonprofit boards. Under these circumstances, no wonder Karl
Mathiasen complains that there is “a perplexing lack of clarity about what boards
‘ought to do.”524 Boards are made up of people who surely will perform better,
wear their different hats well, and be more satisfied in their service if they know
what is expected of them including not only duties, but guidelines of conduct as
well. As Sharon Percy Rockefeller says:
Boards have to know their role. They have to care a lot, and they
have to be committed to the organization. For both the board and
staff, the dynamics of that caring can be time-consuming, but
worth it in the long run.525
Duties
In the five essential questions, duties and guidelines answer the fourth
question:
Why?
Where to go tomorrow?
What gets done today?
Who does what?
When did it happen?
Duties are jobs, nothing more, nothing less. If left vague, many board
members will likely confuse the duties of the board with those of the individual
board member and the executive director may have mistaken impressions of his or
her authority. The duties in the delegation section solve this problem by providing
detailed job descriptions for the full board, committees, officers, individual board
members, and the executive director. Duties will vary from agency to agency, but
are assigned only if they carry both full responsibility and authority. Thus, only
those duties that the board intends to hold itself accountable should belong to the
board.
Like other Results Now elements, the answers will depend upon the
particular needs and circumstances of the organization at its time and place. There
is no right or wrong answer. While answers are indeed unique to each
organization, common themes have arisen especially with regard to the duties of
the board including the full board itself, committees, and officers, and the
executive director.
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Board Duties
When is a board a board? In a general sense, it is when the board members
are convened around the table with a quorum present. Some might argue for a
more specific definition that it is when the question is called on a motion. Others
might say it is when the board is engaged in its duties. The board of the
organization includes three elements: the board itself, the committees, and the
officers.
Board
Most boards will generate at least four major of duties as did an agency
supporting families of hospitalized children as shown in Table 12.3.
Table 12.3 Board Duties
Ideas
-
evaluate/change mission
ask good questions, direction, serve the
community, establish policies, growth, ascertain
community needs and how to meet them, resolve
growth questions, test assumptions, future
planning, detective work
Results
1. Decide why
2. Decide where to go tomorrow
3. Delegate who does what
hire/fire CEO, delegate, oversee the
executive director, governance, time contribution,
obtain information/knowledge/learn, education,
hold each other accountable, job of the board,
serve each other, recruit, by-laws update
oversee money, operations, financial
responsibilities, budget, avoid mission creep, stay
on mission
a. Board (board, committees, officers)
b. Board members
c. Executive Director
4. Determine if it happened
There are boards that will add other duties to the list including fundraising
or advocacy. Provided that the board holds itself accountable for the results and
uses its authority to get the job done, this presents no problem. Accountability and
March 6, 2016 Page 159
authority should be inseparable, which can be helpful in deciding to whom the
duties should be delegated. For example, if the board intends to hold itself
accountable for the duty of fundraising, it should exclude it from the executive
director’s roster of duties. But if at the same the board intends to hold the
executive director accountable for the bottom line including fundraising results,
the authority for fundraising is the executive director’s.
Testing the four board duties against the responsibilities of nonprofit
governance provided by BoardSource lends support to their validity as shown in
Table 12.4. 526
Table 12.4 BoardSource and Results Now
BoardSource
Results Now
1. Determine the Organization’s mission and
Purpose
1. Decide why
11. Determine the Organization’s Programs and
Services
2. Decide where to go tomorrow
2. Select the Chief Executive
3. Delegate who does what
8. Recruit and Orient New Board Members
10. Enhance the Organization’s Public Standing
13. Strengthen the Organization’s Programs and
Services
14. Support the Chief Executive
3. Provide Proper Financial Oversight
4. Ensure Adequate Resources
5. Ensure Legal and Ethical Integrity
6. Maintain Accountability
7. Ensure Effective Organizational Planning
9. Assess Board Performance
12. Monitor the Organization’s Programs and
Services
4.
Determine if happened
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15. Assess the Chief Executive
The bottom line is all boards want to make a difference for their
organizations. They want to avoid wasting time and talent. The common
complaint of not doing important work is often a result of simply not taking time
to describe exactly what that important work should be.
Committees
Many a one-liner has been written about committees including Anthony
Sampson’s “Muddle is the extra unknown personality in any committee.”527 No
wonder John Carver gives the following advice: “Have no more committees than
is absolutely needed . . . Committees can serve a useful function, but the propitious
path is to start with no committees and add them only when clearly needed.”528 In
other words, when starting the discussion, the only good committee is no
committee at all.
Is it possible to be an effective board with no committees? The better
question for many board members is whether it is possible to be effective with any
committees. I worked with a new nonprofit on the east coast some years ago with
a mission of preparing public school students to be ready for college. The 20 board
members were so disappointed with their committee experiences on other boards
that they decided to have just one committee – a committee of the whole board.
Beyond that, they decided to use ad hoc committees and task forces whenever
there was a clear need, but only if there were definitive expiration dates.
To be fair, there are some boards solidly committed to old-school
governance. In this model, the full board does very little other than to rubber
stamp the recommendations of a great number of committees including the
executive committee that serves as the real board. This is an especially popular
approach with very large boards where membership is bestowed upon individuals
for their contributions to the cause. As such, a board position often conveys
significant status to its members who often must contribute substantial gifts to gain
access.
If committees are so frustrating, why on earth do they exist in the first
place? First, many committees are in place because they’ve always been in place.
It’s like the old joke about why the auditors crossed the road, which is because
they did it that way last year. Committees are seen as something almost holy that
has been passed down through the ages. Second, committees are often chartered in
the by-laws, which are also considered a sacred text by many boards. Third,
imitation is the sincerest form of flattery; if the local United Way has this or that
committee, you need it too. Fourth, some committees are born out of a need to
give work to the board. If you have 28 members, you need more than a few
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committees if you’re going to spread the work around effectively and give
everyone something to do.
What kind of damage do poorly designed committees do beyond the
obvious waste of resources including time and opportunity cost of that time? First,
because the duties of the board are frequently ill-defined and confusing,
committees are typically designed to mirror of staff functions. Personnel, facilities,
marketing, and programming committees are good examples. This rarely leads to
satisfactory results for either the committee or the staff. Rather than helping the
board do its work, board committees formed in this manner often push the staff in
directions that are ill considered and counterproductive. Like the well-meaning
board member, the committee’s advice is often taken for instruction. Powerless to
refuse the “boss of the boss,” staff members are pulled in two or three or even
more directions.
Take organizations that employ a marketing director for example. The
marketing director is almost always accountable to the executive director – and
never directly to the board – when it comes to performance. It is the executive
director who is responsible to the board, but three out of 10 boards have marketing
committees.529 So is the marketing director accountable to the board committee or
the executive director? If you want a better example, consider the development
committee that is present in 60 percent of all boards.530 Just who does the
development director report to? Is it the board committee or the executive
director?
Second, committees almost always bring single recommendations forward
to the board for approval, which the board is then loath to deny. The committee
worked hard on the major recommendation; do you really want to be the one to
say no? This sort of rubber stamping is certainly understandable, but it is held in
contempt nonetheless. No wonder John Carver points out that rubber stamping
“enjoys defacto popularity while enduring rhetorical derision.”531
The better way to establish committees is to have form follow function with
committees structured to help the board accomplish its duties, not to help the staff
do theirs. Thus, an agency might have a board-level governance committee to
recruit, orient, and assess board performance, but not have a board-level marketing
committee, which would generally be considered a staff responsibility.
If staff members need a committee made up of board members to help out
with advice, free labor, whatever, then they can certainly ask for that committee.
Let the staff member chair that committee, let the staff member call the meetings,
and have accountability for its membership and results. It is a staff-level
committee, not a board-level committee. This way, there’s no chance that the
board will be emasculated later on when the staff member says that he or she was
only doing what the board’s marketing committee told her to do. After all,
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marketing isn’t a duty of the board; this is a staff level duty and that’s true even if
the organization is made up of all volunteers.
To be fair, sometimes there is a need for committees of board members that
assist the staff. Such committees are especially prevalent in smaller organizations
where the resources are too limited to fully staff these functions. The people on
these staff-level committees help the staff get their jobs done and thus should
report to the staff member in charge of the particular committee.
There are two ways to go about deciding if you need committees. One way
is to list all of your current committees, tally up the number of meetings and the
amount of time used by each and every person involved including preparation and
follow-up, and then multiply the number of hours by a reasonable hourly rate; I
like to use $100, triple the average hourly income for a full-time employee in
America.532
Separate the board-level committees that help the board do its job from the
staff-level committees that help the staff do their jobs. Have a frank conversation
about whether the expenditure of resources including the opportunity costs for
each committee is worth it. Be sure to include the staff in the discussions.
Eliminate any committees that don’t pass muster. Don’t study it ad nauseam; just
do it.
I once worked with a board that did this in less than an hour. The board and
staff were all present, we had the by-laws with us, and we found that in the course
of a year, there were 88 committee meetings that generated nearly 1,250 hours of
effort on behalf of the participants at an opportunity cost of $125,000. Staff
members were asked about the value of the committees that were supposed to be
helping them do their jobs; committees that were supposed to help the board with
its work were tested against the duties. In short order, the volume was cut down to
just three board-level committees and no staff-level committees.
The second way is start with a clean slate and an open mind. Review the
board duties and ask whether any of them require committee support. Take for
example a board with the four duties outlined above. The duties to decide why and
decide where to go tomorrow could foster a committee to develop the Results Now
Master Plan. But this is not a good idea. Though in especially large boards, this
could be tempting to do, the danger is that recommendations will be brought to the
board for approval instead of discussion. Nothing on the board’s agenda is more
important that deciding the mission and strategy. Nothing is a more stimulating
antidote to the complaints of boring meetings and no red meat on the table. Do you
really want to delegate it to a committee? Fortunately, most boards don’t delegate
this activity; the planning or strategy committee doesn’t make the list of the seven
most common committees.533
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The duty to determine when it happened could lead to a finance committee
or performance assurance committee, finance committee, an audit committee, or
program evaluation committee. Typically the board treasurer would chair
committees like these simply because finances are a major focus. Although the
finance committee is the second most popular,534 evaluation committees – like
planning or strategy committees – may rob board members of the opportunity to
become more knowledgeable. Same goes for a program evaluation committee.
The duty to delegate who does what to the board might lead to a
governance committee to recruit and orient new board members and assess board,
committees, officers, and board member performance. This is the third-most
popular committee535 and it is often chaired by board member next in line to
become the chair.
The duty to delegate who does what to the executive director might lead to
an executive committee, which is the most popular of all committees at four out of
five boards.536 Unfortunately, most executive committees are commonly chartered
with much broader responsibilities, making it one of the most disliked by those
who aren’t members. On one hand, the committee can be quite valuable according
to Warren McFarlan:
Legally, the entire board is responsible for the health and
governance of a nonprofit organization. But the executive
committee provides the small-group atmosphere that helps
members talk about problems on a more intimate basis. Members
can discuss sensitive topics with less danger of damaging leaks and
with greater likelihood of reaching a quick consensus on
operational issues.537
But as many boards have found out the hard way, there can be a significant
downside:
But there’s a big risk that an executive committee will turn into an
“upstairs” board, whose members are in the know. Committee
members get great emotional satisfaction out of this but it alienates
the “downstairs” board members who aren’t on the committee.538
Whether or not a board has an executive committee depends on many
variables and cannot be decided by fiat. A large board will have a greater
likelihood of needing an executive committee than a small board. Some executive
directors prefer having a carefully chartered executive committee that can be an
intimate sounding board whether or not there is a large board in place or a small
one. Still, there are three primary dangers to be aware of when it comes to working
with or serving on an executive committee:
Rubber-stamping board: The full board has lost its independence.
It is too submissive to authoritarian rule and is no longer asking
pertinent question before voting.
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Overstepping committee authority: The executive committee has
extended beyond its stated authority without consulting the full
board or gaining board approval.
Creating an elite subset of the board: The executive committee
alienates other board members due to its special authority,
resulting in the creation of a class system of the board.539
The executive committee does its greatest disservice when it keeps the rest
of the board uninformed. To learn that the executive committee has made a major
decision without taking the counsel of the rest of the members can be very offputting and worrisome. The frequent excuse for creating this committee is that it is
needed in case of an emergency, but this simply doesn’t wash. If it’s an
emergency, shouldn’t the whole board should be notified and involved? In this day
and age of smart phones and voice-over-internet-protocol, is there really any
excuse for a situation in which the “‘downstairs’ board directors are so out of the
loop so much of the time, they never hear anything but the official line”? 540
Whether it’s the “downstairs” board member who finds out after the fact
about excessive executive director compensation in the morning newspaper or
who hears about the forced resignation of the executive director days after it
happened, “upstairs” executive committees have a reputation for not informing the
“downstairs” board of the goings on until after the fact. This denies the board
members the very information that they need to accomplish their legal
responsibilities.
The board must be very careful in the delegation section and its bylaws
about what powers it delegates to the executive committee. The deciding factor in
whether or not an executive committee is effective has much to do with the limits
of its authority. An executive committee that has full authority to act for the board
in the periods between full board meetings will likely end up creating an “upstairs
– downstairs” board; an executive committee with a more focused charter may
avoid that pitfall.
Not all boards elect to follow the common three-committee structure of an
executive, finance, and governance committee, however. Some boards have fewer
committees; others have more including the development committee. There are
some who take the position that having a development committee is vitally
important to the success of the fundraising effort and this often includes the
development director. Others take the view that this lets the rest of the board
members off the hook by creating a “special” committee to do the work. And even
worse, it can send a very confusing message to the executive director that implies
this is a board-level job that requires his or her support, but not accountability.
If it is the board’s intention to make it clear that fundraising is the
responsibility of the professional staff beginning with the executive director,
empowering a board-level committee is hardly helpful in that cause. And if the
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development director wants the committee, by all means she or he can certainly
power up a staff-level committee made up of board members. That is, provided
that it is absolutely clear that the development director is the chair of this
committee. The only time a board-level development might be appropriate is when
its focus is on activities like special events or fund raising from board members
and only when the board intends to hold itself accountable for the results.
Even though the literature on committee duties is well articulated and
readily available especially at BoardSource, having a discussion with the full
board about the executive committee is useful primarily to establish the limits of
its authority. Table 12.5 shows the results from such a discussion at a fair housing
agency.
Table 12.5 Executive Committee Duties
Ideas
Results
okay lawsuits, handle some emergencies,
handle the minutia
1. Act for the board in between meetings with
regard to non-material issues or in the event
of an emergency when the board cannot be
reasonably convened.
-
review CEO
2. Coordinate the full board’s review of the
compensation and performance for the staff in
general and the chief executive in particular.
-
more current source
3. Serve as a sounding board for the chief
executive
-
agenda for board, ensure planning
4. Focus the board’s work
-
leadership, inform board
5. Coordinate the work of the full board541
Beyond the executive committee, an extended discussion of committee
duties is usually unproductive simply because there is so much literature on the
topic including useful templates from BoardSource. Following for example are
duties for the finance and governance committees, which are the second and third
most popular committees:542
Finance Committee
 Coordinate the board's oversight responsibilities including finance,
legal, and ethics
 Recommend policies to the board, interpret them for the staff, and
monitor their implementation
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 Monitor the organization's financial records, review and oversee the
creating of accurate, timely, and meaningful financial statements to be
presented to the board
 Review the annual budget including operating and capital, recommend
it to the full board for approval, and monitor its implementation
 Monitor compliance with federal, state, and other reporting
requirements including oversight of the organization's financial audit
Governance Committee




Assure board effectiveness, maximum participation and performance
Recommend new trustees in a timely fashion
Ensure board policies are being observed
Implement board development and growth opportunities throughout the
year
 Ensure all board members receive orientation
 Annually recommend a slate of officers to the board of trustees for
approval
Officers
Expecting the board to manage itself, as some people believe, is unrealistic
for Richard Hackman, one of the greats when it comes to research on groups:
Managers who hold this view often wind up providing teams with
less structure than they actually need . . . The unstated assumption
is that there is some magic in group interaction process and that by
working together members will evolve any structures that the team
actually needs . . . It is a false hope; there is no such magic.543
The importance of selecting the right people to lead the board cannot be
overstated. The officers of the nonprofit have a challenging job and the board chair
in particular must be very skilled. Turning to team literature can be instructive
about the responsibilities of the officers. Jon Katzenbach and Douglas Smith in
The Wisdom of Teams say lay out six major responsibilities:
1.
2.
3.
4.
5.
6.
Keep the Purpose, goals and approach relevant and meaningful.
Build commitment and confidence.
Strengthen the mix and level of skills.
Manage relationships with outsiders, including removing obstacles.
Create opportunities for others.
Do real work.544
The best place to begin the discussion about officer duties is in the bylaws
of the organization; just remember that bylaws are not cast in stone and can
usually be amended without much difficulty. You will typically find four board
officers at a minimum: Chair, Vice Chair, Treasurer, and Secretary. Some boards
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will have more officers; others will combine the secretary and treasurer positions
to have fewer. You can then turn to the literature available at BoardSource to
compare or change the job descriptions. For example, The Nonprofit Policy
Sampler offers seven different variations for the board chair and offers the
following introduction to this office:
The job of the board chair is one of the most challenging roles in
the nonprofit world. A successful chair inspires a shared vision for
the organization and its work, builds and nurtures future board
leadership, and manages the work of the board. This position
demands exceptional commitment to the organization, first-rate
leadership qualities, and personal integrity. For many boards,
success may rest heavily on the individual chosen to lead it.545
The average term of service for a board chair is 1.8 years and the number of
consecutive terms is about two.546 And that’s if you’re lucky. In my 22 years as an
executive director, I had 14 chairs and never longer than two years. But by having
the vice chair become the chair and by keeping the retired chair on the board until
he or she was replaced, transitions were relatively stable. So instead of a single
board chair, I would have a troika of high-quality leaders. And this also served as
an antidote to having a problem chair as occasionally occurs. To improve your
chances of success, there are just a few characteristics to keep in mind:
Most team leaders must develop skills after they take the job.
Those who succeed have an attitude that they do not need to make
all key decisions nor assign all key jobs. Effective team leaders
realize that they neither know all the answers, nor can they succeed
without the other members of the team. The wisdom of teams lies
in recognizing that any person, whether previously an autocrat or a
democrat, who genuinely believes in the Purpose of the team and
the team itself can lead the team toward higher performance.547
The right chair can bring out the best in board and can help the board
become give and take in its exchanges. He or she can keep the board on task,
allow time for thoughtful reflection, and bring the question to a satisfying
conclusion. Part time keeper, part counselor, the board chair is often the deciding
factor between a good board and an extraordinary one. As BoardSource’s Robert
Gale puts it, “There is no way around it: Effective organizations are led by
effective boards and effective boards led by effective chairs.”548
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Board Member Duties
When asked about duties of the board member, Sharon Percy Rockefeller,
CEO of WETA in Washington, recounted the following experience:
When I joined the board of Stanford University, I asked an older,
more experienced board member what I was supposed to do. He
said to me, “Your main job is to ask why.” I'll never forget that. A
board member’s role is simple. Ask why. Why do we have that
priority? Why are we doing that now? Why aren’t we doing that
now? Board members ask these questions out of duty, but also
because they care.549
The path to a great board follows that of the outstanding team. The
prescription is uncomplicated according to Frank Larson and Carl LaFasto:
To create an effective team . . . First, make sure that the goal is
clear, the performance goal crystallized . . . Then, select good
people, members who possess the essential skills and abilities to
accomplish the team's objectives . . . Finally, foster high standards
of excellence.550
The Strategic Plan gives a clear goal, and the guidelines to be discussed
later address the standards of excellence, but what about good people, what about
board members? In his best-selling book, Good to Great, Jim Collins’ found that
the for-profit leaders who took their companies from good to great didn’t first
decide “where to drive the bus and then get people to take it there. No they first
got the right people on the bus (and the wrong people off the bus) and then figured
out where to drive it.” In the nonprofit sector, however, Jim Collins sees
something different:
In the social sectors, where getting the wrong people off the bus
can be more difficult than in a business, early assessment
mechanisms turn out to be more important than hiring
mechanisms. There is no perfect interview technique, no idea
hiring method; even the best executives make hiring mistakes . . . it
makes selection all the more vital.551
So, instead of getting people off the bus, nonprofits shouldn’t put them on
in the first place. The problem here is that “‘Give, get, or get’ off is at the heart of
nonprofit boards.”552 So how can we honor Jim Collins’ recommendation to first
get the right people on the bus? We can try, but it’s very difficult. The good news
is the others have dismissed concerns about finding just the right members. In Jon
Katzenbach and Douglas Smith’s research, they “did not meet a single team that
March 6, 2016 Page 169
had all the needed skills at the outset . . . as long as the skill potential exists; the
dynamics of a team cause that skill to develop.”553
Fortunately, the delegation section makes the recruiting process much more
effective and efficient. By knowing the duties and guidelines for the board
member, potential candidates can be found who at least understand the
expectations up front and can answer the call in an informed manner. Like all
duties, the construction process is uncomplicated. Table 12.6 lists the duties for
board members at an agency that serves the families of children who are
hospitalized.
Table 12.6 Board Member Duties
Ideas
Results
1. Exercise the duty of care554
familiarize yourself with by-laws, know the
mission, do your homework, be prepared
-
attend 75% of full board meetings
-
offer solutions, participate
-
ask hard questions, have courage
-
don’t be afraid to vote
a. Prepare
b. Attend
c. Participate actively
d. Ask hard questions
e. Vote conscientiously
be a willing participant, serve on
committees, participate in projects
2. Do the work of the board including serving on
committees and attending events
be an ambassador, protect the brand,
involve outside organizations, promote
3. Champion the organization to and from the
community
4. Contribute generously
-
financial support
a. Make a generous personal contribution
-
go on calls
b. Actively participate in fundraising
-
offer your expertise, give wise counsel
c. Share your expertise
trust each other, motivate each other, get
to know each other
5. Support each other
-
6. Hold each other accountable
hold each other accountable
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Executive Director Duties
The four major duties of the board are to decide why, decide where to go
tomorrow, delegate who does what, and determine when it happened. These match
up with four of the five essential questions, but what about question of what gets
done today? This duty – deliver what gets done today – belongs to the executive
director.
To be sure, neither the board or executive director operates in a vacuum; it
takes a partnership to address many of the details implied in these duties. Yet, how
involved should the board be in determining the answer to this question of what
gets today? As is the case with many of the issues that come up in Results Now,
the answer is “It depends.” Some boards with an early-career executive director
might indeed have great input into setting goals for staff departments, but this is
rare for organizations with seasoned staff. Some boards want to see staff goals,
other boards don’t. With this said, the common response is that the executive
director is accountable to deliver what gets done today along with just one other
duty as shown in Table 12.7 that lists the results from a management services
agency:
Table 12.7 Executive Director Duties
Ideas
implement objectives, right staff, hire/fire,
say “no” when necessary, secure funding, research
other programs, guide operations, manage staff,
presence in the community, provide leadership,
spokesperson, fiduciary, scan environment,
evaluate staff
Results
1. Deliver what gets done today
2. Enable the board
inform the board, challenge board, don’t
let the board micromanage
What does it mean to enable the board? The official dictionary definition of
this verb applies, “1. to make able; give power, means, competence, or ability to;
authorize . . . 2. to make possible or easy . . . 3. to make ready; equip.”555 Some
observers say that it is the job of the board to help itself.556 Others say that seven
realities of the board make this implausible. Robert Herman and Dick Heimovics
are definitive about this matter, which they characterize as executive centrality
wherein “chief executives can seldom expect boards to do their best unless chief
executives, recognizing their centrality, accept the responsibility to develop,
promote, and enable their boards’ effective function.”557 Put simply and in the
March 6, 2016 Page 171
words of the late Kenneth Dayton, “if the board is to do its job, the CEO must
enable it to do so.”558
The argument of executive centrality runs counter to how we typically
think organizations function hierarchically. As discussed earlier, the normative
model of nonprofits would strongly suggest that Jerry “Help me help you”
Maguire is the executive director and Rod “Show me the money” Tidwell best
represents the board. After all, that a subordinate would be held accountable for
the performance of his or her bosses is simply unthinkable. But this is the reality in
a world where the most effective executive directors understand the centrality of
their role and act on it.559
I vividly recall my own eye-opener about this concept. I had prepared my
annual performance appraisal for the executive committee to review, which was
part of that committee’s charter. The appraisal covered my individual performance
plan written a year earlier including the goals we agreed upon and how things had
turned out. In addition, I supplied a list of salaries from a group of peers in our
industry. Time passed and having heard nothing about the report, I called the chair
of the board. He indicated that he had read the report, but needed additional
information about compensation including the list of peer salaries.
After a long pause, I indicated this information was part of the report that
he had just read. Again another long pause. And then he said that I only had
myself to blame if I was disappointed that hadn’t read it thoroughly. He then
proceeded to recount the many events leading up to his selection as a chair of the
board including his original recruitment. At each and every step, he told me that I
had been very involved. And he was right. If there was anyone to blame, it was
me. I could have done better either by helping him do his best or by having seen
earlier that he was not up to the task.
This is not to say that the board is completely absolved of its
responsibilities in the executive-centrality approach:
Boards are still expected to do much, but they are not expected to
do things on their own. Chief executives are expected to provide
board-centered leadership. Chief executives do not usurp the
board’s roles and responsibilities, however. Rather, effective chief
executives know that helping their boards to meet their
responsibilities is the best way to maximize effectiveness.560
A Results Now board is most certainly not a rubber stamp board, but it does
have high expectations for the executive director. After all, “since chief executives
are going to be held responsible and since they accept responsibility for mission
accomplishment and public stewardship, they should work to see that boards fulfill
their legal, organizational, and public roles.”561
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Guidelines
Guidelines differ from agency to agency depending upon many factors. As
Jim Collins and Jerry Porras observe in their best-selling Built to Last and in
referring to values, “The crucial variable is not the content of a company’s
ideology, but how deeply it believes its ideology and how consistently it lives,
breathes, and expresses it in all that it does.”562 Guidelines are a member of the
values family, but more specific in texture, more behavioral, and are meant to
guide you in a particular course of action. Guidelines are designed to be “seeable”
in the actions of people. Guidelines “define those relevant and very intricate
expectations that eventually determine the level of performance a team deems
acceptable.”563 Thus, unlike values that are like the car that you drive, guidelines
are akin to how you drive the car.
Board Guidelines
Because the committees and officers serve to help the board do its job,
many boards will use a common set of guidelines for the board, committees, and
officers and as illustrated in Table 12.8 by this set from a suicide prevention
center.
Table 12.8 Board Guidelines
Ideas
Results
do important work, support mission, be
productive, on subject, stay focused, use time
effectively, start/end on time, don’t waste time,
not boring
1. Focus talent and time on important work
a proactive and “give-and-take” board, be
active, evaluate committee reports, board
participation, interactive, review status, respect
each other, positive, be happy, no personal
agendas, not constant confrontation, professional,
feel valued, cooperate, respectful of each other,
open, honest
2. Be a give-and-take board that respects the
diversity and strength of all its members
not meddle, remember board’s role, board
job versus staff job, respect chain of command,
not involved in operations, value CEO’s opinions,
motivate Executive Director, love, nurture, follow
3. Govern the organization – not manage it
March 6, 2016 Page 173
up, hear what staff says, respect, staff experience,
be consistent, be fair, set clear expectations
Table 12.9 is a different and larger group of guidelines from an agency that
helps the families of sick children:
Table 12.9 More Nuanced Board Guidelines
Ideas
-
fun, know board members, celebrate!
Results
1. Enjoyable and sociable
effective time, less reports, if you can
2. Focused and efficient
write it/no need to speak it, info ahead of time and
no repeats, start on time, right info in advance,
structure, agenda
respect each other, open/honest,
motivating, resolve the cliques, participation, brain
storming
3. Give-and-take, not show-and-tell
issue focused, mission focused, call the
question, action oriented, hard questions,
accomplish something, willing to ask hard
questions, about the house – not the personality,
what can I do to help, important issues
4. Important work
-
5. Information counts
-
too much detail
informative, review important information,
hearing more about the families, educational,
summary of committee meetings, grant
involvement, what’s staff doing, review
mission
6. Informative and educational
Board Member Guidelines
Like the duties that were different for the board as a collective and the
board member, guidelines are also distinct and will generally include answers
similar to those from the agency serving families of hospitalized children shown in
Table 12.10.
March 6, 2016 Page 174
Table 12.10 Board Member Guidelines
Ideas
Results
1. Exercise the duty of loyalty564
conflict of interest, integrity, ethical
behavior
support the voice of the board, no parking
lot chatter, support decisions
-
put house first, meet/exceed loyalty
-
keep confidences
a. Disclose any potential conflicts of interest
b. Speak with one voice including majority
decisions not personally supported
2. Exercise the duty of obedience565
a. Stay true to the mission
listen, concise, don’t dominate others,
inclusive, think critically, be willing to learn,
respect opposing viewpoints, open, honest, pull
out ideas from each other, mentor members
b. Keep confidences
set an example, friendly, professional
attitude, do it, deliver, do what you say you’ll do,
accountable
d. Follow through
c. Respect each other
Such explicitly crafted guidelines can be very helpful in the recruiting
process for new board members as they tell the board member exactly what will be
expected of him or her. Rather than finding out the ins and outs of expectations
after the fact, the prospective board member has the needed information to make
the commitment to serve. Furthermore, the guidelines offer the board the
opportunity to size the potential candidate up against the expectations.
To be sure, there are people that shouldn’t be recruited for the board under
any circumstances, no matter how much potential they might have; no matter how
much everyone can learn needed skills, no matter how great the ability to “Give or
get.”
First is the individual who is unwilling or unable to let go of his or her
personal agenda when it conflicts with what the team needs. As Carl Larson and
Frank LaFasto note:
Especially intense among teams that are struggling, but more likely
than anything else to be noted as a problem across all teams . . . is
that the team allows individuals to place self-interest above team-
March 6, 2016 Page 175
interest. Tolerating members who are more self-oriented than
team-oriented is the most common complaint.566
Independent thinking is not the killer of a board when it's aligned with the
needs of the organization and the board. It's not alright when that personal agenda
gets in the way of the team. Said the great basketball coach Red Auerbach, “The
team is more important than any individual. If some guy couldn't live with that,
my philosophy was to let him go and ruin the chemistry of some other team.” 567
People who let their personal agendas get in the way or who simply can't
get along with others may be difficult to identify until after they've spent some
time on the board. As a consequence, there may be no way to avoid having these
people on the board, but it is absolutely vital to deal with them when they are
identified.
Second, there's the person who simply can't get along with others no matter
how much training or coaching they've been given. Why is this so important?
James Brian Quinn, Philip Anderson, and Sydney Finkelstein provide one answer:
Information sharing is critical because intellectual assets, unlike
physical assets, increase in value with use. Properly stimulated,
knowledge and intellect grow exponentially when shared. All
learning and experience curves have this characteristic. A basic
tenet of communication theory states that a network’s potential
benefits grow exponentially as the nodes it can successfully
interconnect expand numerically. It is not difficult to see how this
growth occurs. If two people exchange knowledge with each other,
both gain information and experience linear growth. But if both
then share their new knowledge with others – each of whom feeds
back questions, amplifications, and modifications – the benefits
become exponential.568
What experienced board members sometimes forget is that every time
someone new joins the board, the board team in essence has been re-formed.
Allowing time and consideration for building the new board team is an important
matter that gives significant import to orientation processes. Starting out with a
retreat or social event that brings the new members into the fold can pay handsome
dividends. Pairing the new member with a seasoned member in a mentoring
relationship can also be quite useful.
Executive Director Guidelines
Because the greatest responsibility for implementation of the Results Now
Master Plan is typically delegated to the executive director, the bulk of the
guidelines are related to that individual. These guidelines often include treatment
of customers, treatment of staff, financial planning and budgeting, financial
March 6, 2016 Page 176
condition and activities, asset protection, compensation and benefits and
communication and support to the board.
By spelling out guidelines in advance, the board relieves itself of worry that
the executive director might be conducting business in a manner at odds with its
wishes. No one – board member, executive director, supervisor, or even parent –
can possibly monitor or approve every decision. Instead, you set guidelines that
establish clear boundaries of acceptable behavior. Indeed, one of the easiest ways
to stimulate additional ideas for guidelines is to ask participants what they don’t
want to have happen. This is consistent with John Carver’s executive limitations
where the “board should remain silent except to state clearly what it will not put
up with.”569
In a board meeting not too long ago when the executive director’s
guidelines were constructed, a participant insisted that the budget should not vary
at all from the final results. Once set, the budget was not to be breached under any
circumstances. It didn’t take but a moment for other board members to confront
the impossibility of this demand. “The second the budget is printed, it is obsolete,”
one board member commented, “It’s senseless to expect perfect tracking, things
change too rapidly.” It would be more sensible to establish a broader guideline like
an allowable percentage or amount that requires the executive director to inform
the board treasurer if it will be missed.
Like the budget, the organization cannot be held in check waiting for
approvals from the board. An approval-oriented board leads to management
gridlock as the staff waits for board permission or, even worse, insubordination as
the staff takes necessary action without approval. Because the guidelines preapprove most activity, it allows the board to concentrate on more important work,
work related to the Strategic Plan or helping the executive staff raise funds.
Executive director guidelines could simply begin and end with a statement
similar to the following:
The executive director will conduct himself or herself with the
highest business and professional guidelines at all times, never
causing or allowing any practice that is illegal or unethical.
It is a reality that the board cannot speak about every detail; the executive
director must make decisions about matters that are not detailed in the guidelines
or are not detailed at a specific enough level. That is why the controlling statement
mentioned earlier is used as a safety net and the executive director guidelines
should contain a section on reasonable interpretation similar to the following:
With regard to interpretation of these guidelines, the executive
director will use reasonable interpretation, the same interpretation
as an ordinarily prudent person would exercise in a like position
and under similar circumstances.
March 6, 2016 Page 177
Most boards will not stop with these two statements, however and will add
sections including finance, personnel, communication to the board, risk
assessment, planning, and fundraising among others as Table 12.11 illustrates:
Table 12.11 Executive Director Guidelines
Ideas
Results
internet bad stuff, unethical behavior,
1. The executive director will conduct himself or
don’t run off with the money, be legal, don’t lose
herself with the highest business and
sight of strategic plan, duty of loyalty, report status
professional guidelines at all times, never
versus goals, don’t talk with other agencies for
causing or allowing any practice that is illegal
merger without talking to board first
or unethical.
2. With regard to interpretation of these
guidelines, the executive director will use
reasonable interpretation, the same as an
ordinarily prudent person would exercise in a
like position and under similar circumstances.
development, AFP, compliance with
national and United Way
3. With regard to development, the executive
director will follow the standards set by the
Association of Fundraising Professions.
-
4. With regard to endowment funds under
management, the executive director will:
mismanage endowment funds
a. Invest in funds with annual three-year and
five-year performance of at least the top
quartile.
b. Invest in funds with manager tenure of at
least five years.
c. Invest only in funds that follow the
investment standards established by the
local community foundation.
protect the organization, have proper
insurance
5. With regard to risk assessment and
management, the executive director will
protect the company’s assets and earning
power by using proper risk management
techniques.
March 6, 2016 Page 178
don’t disrespect staff, personnel
handbook, turn-over, poor morale, poor pay, poor
management, complacency, burn out
6. With regard to personnel matters, the
executive director will:
a. Treat the staff and volunteers fairly and
respectfully.
b. Establish, communicate, and implement
effective personnel policies that are
reviewed by independent counsel
annually.
c. Establish, communicate, and implement
clear accountabilities for staff and monitor
performance accordingly.
d. Pay compensation at a level required to
attract and retain the qualified staff
needed.
e. Advise the board before making a hire-orfire change in personnel at the senior
level.
March 6, 2016 Page 179
no surprises, staff changes, serious
allegations about clients, keep board up to date,
don’t manipulate board, don’t let board waste
executive director’s time
7. With regard to communication to the board,
the executive director will:
a. Provide information to the board,
committees, officers, or board members in
a timely manner that could have a
significant impact on the company or in
any way cause embarrassment.
b. Send information in advance of board
meetings by at least one week.
c. Help the board in its implementation of
the Master Plan.
d. Not burden the board with insignificant
issues that divert focus.
e. Inform the board if it is burdening the staff
with insignificant issues that divert focus.
f.
Foster a relationship with the board based
upon trust and respect.
March 6, 2016 Page 180
Positive margin from operations without
investment income, live within budget, financially
prudent, clean audit, deal with management
letter, stay on top of budget, lend money, don’t
invade endowment
8. With regard to financial matters, the executive
director will:
a. Make no capital acquisition of greater than
$10,000.
b. Draw no more than five-percent income
annually from endowment investments.
c. Have and follow an audit-proof procedure
for handling income and disbursements.
d. Receive a clean audit and comply with any
recommendations outlined in the
accompanying management letter
e. Not take on any debt including lines of
credit.
f.
Achieve a positive budget surplus annually
of income over expenses.
g. Present budgets with a probability of
occurrence of at least 80 percent.
h. Not borrow or lend funds.
If at any time, the board – or the executive director for that matter – wants
more or less detail, it takes a simple vote to make it so. This brings up an
important question: How the board and executive director ensure that all of the
necessary guidelines are included? One of the best ways to do this is to make use
of standards promulgated by others as shown in the following topic headings from
the Ohio Association of Nonprofit Organizations (OANO) Standards of
Excellence and from the Better Business Bureau’s (BBB) Wise Giving Alliance
Standards for Charity Accountability:








OANO – 23 standards in eight categories570
Mission and Program
Governing Body
Conflict of Interest
Human Resources
Financial and Legal
Public Accountability
Fundraising
March 6, 2016 Page 181






Public Affairs and Public Policy
BBB – 20 standards in four categories571
Governance and Oversight
Measuring Effectiveness
Finances
Fund Raising and Informational Materials
Guidelines are ultimately triggers that cause the executive director to bring
matters to the board for discussion and perhaps exemption. It is not always
possible for the surplus to be met, for example, as circumstances with budgets
change unexpectedly. The guidelines implicitly require that the executive director
inform the board of variances in a timely fashion; by doing so, confidence and
trust are built and the partnership between the board and the executive director is
strengthened.
March 6, 2016 Page 182
Chapter 13 Accountability
What gets measured gets done.
-Maison Haire
It was a March Sunday afternoon in downtown Dayton when the new
Schuster Center for the Performing Arts opened. The $130 million project
included the 2,300 seat nonprofit performing arts center; a private equity mixeduse condominium tower for private residences, office condominiums, and rental
spaces; parking garages, restaurant, and catering operations; and a huge
wintergarden.
The head of programming had planned an ambitious early afternoon ribbon
cutting ceremony including a vertical ballet of dancers rappelling up and down the
face of the 13-story tower. After this, the public would proceed into the beautiful
three-story wintergarden with its live palm trees and three-story glass walls and
then into the theatre for a 30-minute show, which would be repeated by different
performers for a new group of people on the hour throughout that day.
Though we had prayed for lamb-of-spring weather, the day turned out to be
a howling lion-of-winter. The publicity director had done a masterful job of
hyping the opening and especially the vertical ballet, which focused the day.
Instead of the 5,000 to 10,000 people who could have been accommodated at the
start of the afternoon, the number of people actually freezing to death in line was
later reported at 70,000 by the Dayton Daily News.
To make matters much worse, when the city fire department saw the huge
crowd, they justifiably insisted that everyone wait outside because the
wintergarden was the primary exit for the people inside of the theatre. What if
there were a fire and people had to get out fast? Now imagine if you can the huge
and unexpected crowd with looks of claustrophobic fear in their eyes and bodies
pressed against the thin glass walls of the empty – and deliciously warm –
wintergarden.
Memory is frail and I’m sure I exaggerate my recollections, but I swear to
this day that as the firemen, volunteer ushers, staff members, and everyone else
slowly backed away from the three-story high glass walls, I was the only one left
standing as the walls began to bow inward from the pressure of all those people. I
was a deer in the headlights; hell had truly frozen over.
When the press converged in mass that night just in time for the late news,
it wasn’t the head of programming or the board chair that addressed the cameras
and apologized for the near disaster; it was me. And what was my excuse? I had
no excuse, none, nada; I had failed in my responsibilities. The headline in the
March 6, 2016 Page 183
Dayton Daily News was a succinct 565 words including the headline “Schuster
Flubbed Open House.” What follows is just a taste:
Who says you can't get people to come to downtown Dayton?
Some 70,000 braved the cold for the community open house at the
Schuster Center on Sunday. But what started out as a feel-good
event now has the makings of a full-scale public-relations disaster.
“My pledge is to make the customer the star, and I did not fulfill
that promise on Sunday,” Mark Light acknowledged Tuesday . . .
“I hope the community will forgive me for the difficulties they
experienced on Sunday, and come down and enjoy this
blessing.”572
By the time the doors closed that night, thousands and thousands of people
had been disappointed by the incredibly long waits, the biting cold, and the
obvious lack of foresight on our part; one performer had danced her way off the
stage into the orchestra pit and then to the hospital. It was one of the worst days of
my career.
It goes with the job of leadership that the buck stops at your desk. As the
late great Coach Paul “Bear” Bryant once said, “If anything goes bad, I did it. If
anything goes semi-good, we did it. If anything goes really good, then you did
it.”573 But I really was responsible from more than a symbolic standpoint. What
had gone wrong?
On the upside, I had been spot on with delegation, clearly articulating
duties and guidelines to the programming director; she was clearly in charge, had
full authority to do the job. Moreover, she was a brilliant and very experienced
executive and she had the benefit of seasoned outside counsel who had opened
other arts centers. On the downside, I was an utter failure at ensuring
accountability.
Though I had sat in on a few of the discussions about the opening
festivities, these were at least six months earlier. I had so much faith in the team
assembled that I simply abdicated responsibility. Accountability wasn’t just about
me; it was about those who were accountable to me. Had I carefully reviewed the
plans as they were developed, I could have asked hard questions that might have
uncovered the flaws that led to hell freezing over. And this is why board members
should never be uncomfortable asking the hard questions of the executive director.
You never know when a hard (or stupid-sounding) question will unlock an insight
that saves the day.
It is one thing to walk your talk and quite another to be held accountable for
that talk. The willingness to shoulder accountability is akin to what Jim Collins
describes when he says that his 11 good-to-great leaders looked “in the mirror, not
out the window, to apportion responsibility for poor results, never blaming other
March 6, 2016 Page 184
people, external factors or bad luck.”574 Put simply, accountability “essentially
means being required to answer, to take responsibility, for one’s actions.”575
In my study of high-performing leaders, walking one’s talk and taking
responsibility for that talk – authenticity and accountability – were clearly evident.
One panelist said, “I don’t care much if people like me, love me, or admire me, but
I want people to say, ‘You know, she pretty much does what she says she’s going
to do and is straight up with you.’” Relative to being accountable, another said
quite simply, “Leaders who cannot admit they made a mistake are doomed for
failure.” A third described it this way, “When something is happening, some crisis,
you can’t go ‘Oh gosh,” or ‘This is awful. I can’t do this job.’ Yes, this is going to
go wrong and next week something else will be the issue. You have to have
fortitude.” Another said quite simply, “The buck stops here.”576
Accountability is where the other Results Now elements are put to the test
of when did it happen. Instead of the reactive approach that often seeks
accountability after the fact, Results Now is proactive about accountability.
Accountability begins with agendas – when are we going require an answer – and
ends with assessments – what tools we use to get the answer.
Agendas
There are only two agendas needed in Results Now. First is the annual
agenda for the board’s work in the coming year. Second is the board meeting
agenda.
Annual Agenda
The annual agenda is ultimately about doing important work and this
includes whether the desired results are on track. From executive director
performance to the cycle for making a new Results Now Master Plan for the
coming fiscal year, the annual agenda is more than just a monitoring schedule. It
can also become “meeting central” by being the common platform for planning
meetings and basic agendas for an entire year.
Evaluation of performance is very important in ensuring that the Results
Now Master Plan is effectively implemented. Frequently, however, boards and
staff often cannot decide what should be monitored, when it should be monitored,
and by whom. The annual agenda is a reporting schedule that addresses these
issues quickly and practically. Table 13.1 is an agenda from a group helping the
families of sick children:
March 6, 2016 Page 185
Table 13.1 Basic Annual Agenda
Who-When-Where
What
Full Board – January 24th
3:30-7:00 Main Hall
Last year’s Results Now Master Plan review
Full Board – March 28th
3:30-5:00 Main Hall
TBA
Full Board – April 26th
Quarterly Financials / This year’s Results Now Master Plan review /
4:30-7:30 Community College Volunteer Recognition Dinner
Full Board – May 18th
3:00 – 7:00
Grant Site Visit / Fish Fry
Full Board – July 25th
3:30 – 5:00 Main Hall
Quarterly Financials / This year’s Results Now Master Plan review
Full Board – August – 17th or Donor Recognition and Future Fund Event
24th TBD
Full board – September 26th
3:30 – 6:00 Main Hall
Next year’s Results Now Master Plan discussion
Full board – November
3:30 – 6:00 Main Hall
Annual Meeting – Officer Elections / Year End Projections / Budget
Presentation / Results Now Master Plan Presentation and approval
The timing of the process to develop the next Results Now Master Plan
plays a role in the annual agenda. While monitoring of performance is vital on its
own, this information can be extraordinarily helpful in developing the next Plan.
The agency above has eight meetings, of which seven have a central
meeting content, a Purpose for convening. If a credible reason to convene cannot
be clarified for the March 28 meeting, a strong argument should be made to cancel
it.
Purely a form follows function approach; the annual agenda builds the
board’s work around the Plan. Some boards will stop at this point of completion.
Other boards will use the annual agenda as ‘Agenda Central” to communicate
other meetings including committees and the like. Table 13.2 is an example of an
organization with six full board meetings in a year that used its annual agenda as
meeting central.
March 6, 2016 Page 186
Table 13.2 Comprehensive Annual Agenda
Who-When-Where
What
Executive Committee Executive Director’s individual plan
Full Board – February
Last-year Strategic Plan results
8:30 AM-11 AM
Current-year Strategic Plan review
Board Room
Full Board – May
Field trip to study service delivery through hands-on shadowing
8:30 AM-11 AM
Board Room
Executive Committee Delegation section – Executive Director’s duties
Executive Director’s individual plan
Executive Director’s compensation
Governance Committee Delegation section – Board duties and guidelines
New-year directors and officer slate
Assurance Committee Delegation section – Executive Director’s guidelines
Last-year Leadership section – audit review
Full Board – July
Current-year Strategic Plan review
8:30 AM-11 AM
Strategic Plan first draft
Board Room
Executive Committee Executive Director’s individual plan
New-year Executive Committee goals
Governance Committee Delegation section – Board duties and guidelines
New-year directors and officer slate
New-year Governance Committee goals
March 6, 2016 Page 187
Assurance Committee Delegation section – Executive Director’s guidelines
Last-year Leadership section – audit review
New-year Assurance Committee goals
Full Board – September
Current-year Strategic Plan review
10:30 AM-1 PM
Operating Plan and Governance Plan first draft
Board Room
Full board – November
Results Now Master Plan first draft
8:30 AM-11 AM
Board Room
Executive Committee Executive Director’s individual plan
Full board – December
Results Now Master Plan final draft
4:30 PM-9 PM
Annual meeting
Board Room
Celebration Dinner
Notice in this layout that the six full board meetings are staggered by the
needs of the organization with just two full board meetings in the first half of the
year when organization is working its plan and it is arguably too early to be
thinking about the new year. Things ramp up in the second half where there are
four meetings. When it comes to good governance and armed with an annual
agenda, board members can schedule meetings that matter. And there is no rule
that the meetings can’t be as long as necessary and scheduled at convenient times
when people are at their best.
How many meetings a board holds depends upon many things. A board
with 60 members will likely have a smaller executive committee and quarterly
meetings for the full board. You cannot help but wonder if quarterly meetings are
a useful schedule even for a large board. If a board member cannot attend just one
meeting, he or she will be absent for half a year. Perhaps this explains why the
average number of meetings is about seven and the length is roughly 3.3 hours.577
March 6, 2016 Page 188
Board Meeting Agenda
One of the best ways to ensure accountability is to build it right into the
board’s agenda. The following example of a board meeting agenda effectively
demonstrates the relative importance of agenda items; the central meeting content
and accountability sections take up two thirds of the time available. Furthermore,
notice that the time for all items is specifically allotted making it possible for the
board chair to do his or her job more effectively as shown in Table 13.3.
Table 13.3 Board Meeting Agenda
Topic
Convener
1. Call to Order
Chair
Minutes
5
a. Minutes of Last Meeting
b. Consent Agenda
2. Accountability
a. Financials
Treasurer
10
b. Executive Summary
Executive Director
10
c. Board Assessment
TBA
10
3. Central Meeting Content
TBA
60
4. No surprises
Executive Director
5
5. Chair’s Comments
Chair
5
6. Open discussion
Chair
10
7. Board Meeting Assessment
Chair
5
8. Adjournment
Chair
120
The two agendas shown in Tables 13.2 and 13.3 are neither complex nor
difficult to construct. In most organizations, it takes very little time to put them
March 6, 2016 Page 189
together. What makes them so remarkable is that most organizations don’t do
them. Yes, boards will almost always set meetings a year in advance and some
will set committee meetings that far out as well. Few boards, however, set the
agendas in advance and instead default to a show-and-tell reporting style that uses
the same agenda for each meeting. The executive director calls the chair about two
weeks before the meeting and asks what’s on the agenda or, even more likely, the
last meeting’s agenda is simply used. The better way is to take the bull by the
horns and decide what work needs to be done in advance, well in advance.
Assessments
It is all well and good to set up a schedule for monitoring, but what
assessments should be used? As with all the elements of the Governance Plan, less
is more, simple is better. Though there are a wide variety of assessments done
within an organization including individual performance, Results Now is interested
in just three: the full board, the board members, and the executive director.
Board
Because the full board is only constituted at meetings, a simple assessment
built around the duties and guidelines specific to the agency is a practical
alternative as Table 13.4 shows.
Table 13.4 Board Assessment
Board Duties: Circle how the full board did today to accomplish its duties (4=best)
Decide why and where to go tomorrow
1
2
3
4
Determine when it happened
1
2
3
4
Delegate who does what (duties and guidelines)
1
2
3
4
Board Guidelines: Circle how the full board did today to respect its guidelines (4=best)
The board focused its talent and time on important work
1
2
3
4
The board was a give-and-take board that respected the diversity
and strength of all its members
1
2
3
4
The board governed the organization – not managed it
1
2
3
4
Comments:
March 6, 2016 Page 190
What should we discuss at
upcoming meetings?
What did you like about the
meeting?
What did you not like about this
meeting?
Managing this assessment is fairly simple. At the conclusion of the board
meeting, give it to the members, ask them to fill it out anonymously, turn it in,
tabulate results, and attach them to the minutes.
If doing the full assessment requires more effort than you want to expend,
think about doing it less frequently, say twice a year instead of at every meeting.
Or you can cut the duties, but always leave the guidelines and the comments. Both
are very useful for improving the meetings. Moreover, the questions in the
comments section can be changed as the need arises. Once you affinity group the
comments, you can gain a solid picture of what’s working and not working. Tables
13.5 and 12.5 are two very different sets of comments.
Table 13.5 Board Comments from a Retreat
What should we discuss at
upcoming meetings?
What did you like about this
meeting?
What did you not like about this
meeting?
Strategy
Give-and-take atmosphere
- Concern about saying things
that funders on board might
not like to hear
- Where our focus should be as - Open discussion
we move forward to beef up or
- Hearing voice I did not know
expand services
- Strategy and direction
- Hearing all voices
- Funding diversification
- Everyone’s participation (for
those who attended)
- Open and candid discussions
Governance
Building community
- Attendance standards
- It gave us an opportunity to
bond as a board
- Brief discussion on results of
where we are
- Continue the open dialogue
Clarifications
- Resolved issue that I had
- Clarified roles and
responsibilities
March 6, 2016 Page 191
The comments in Table 13.5 followed a board retreat that was particularly
stimulating; those in Table 13.6 followed a regular board meeting:
Table 13.6 Board Comments from a Regular Meeting
What should we discuss at
upcoming meetings?
What did you like about this
meeting?
What did you not like about this
meeting?
Strategy
Give and take
- Leadership
- Ongoing changes in vision and
mission with emphasis on
specific direction
- Active discussion on bylaw
revisions
- President not there, it was a
crucial meeting, crucial votes
Transparency issues
- 2008, future
- Differences of opinion and
points of view
- Strategies for the future
- Good dialogue
- Personal agendas
- This was the annual meeting.
- How do we compare to other - Sharing, openness, genuine
Important changes were being
caring, differing opinions
proposed by the governance
nonprofits
committee. There was no prior
surfaced
Operations
discussion on any of the
- Honest discussion
proposed changes, yet
- How we are impacting those
committee met all summer.
we serve (mission Moment)
- Good discussion
Conflict of interest was present
- How others (the public) might Focus
on governance committee.
view that our organization is so
Outcome remained
How
our
executive
director
was
sound when we are asking for
contentious.
so on top of everything. I think
funding.
she gave the lengthy meeting
- Always finances
energy.
March 6, 2016 Page 192
What should we discuss at
upcoming meetings?
What did you like about this
meeting?
What did you not like about this
meeting?
Delegation
Information counts
Use of time
- Role of the officers and role of - mission Moment
each committee – with
- Informative
membership designation for
each committee
- Lots of info
- Length
Governance
- I understand why the meeting
was lengthy, but I like the fact
our regular meetings are 1.5
hours.
- Recap the last meeting, as not
all were in attendance . . . it
was an important meeting
- The meeting when went
overtime (too much agenda or
spent too much time on bylaws)
- Brief report / update from each
committee – where they are,
what they have done, where
they are going
- Less reports – we can read
these
- Issues heatedly discussed in
December
- Political influence on
discussions (i.e. politicking on a
specific issue prior to meeting)
Board Member
Putting together the assessment for board members is done in the same
fashion as the full board. You take the duties and guidelines constructed by the
board and put them into an assessment format as shown in Table 13.7.
Table 13.7 Board Member Assessment
Board Member Duties: Circle how you have done recently to accomplish your duties (4=best)
I prepared.
1
2
3
4
I attended.
1
2
3
4
March 6, 2016 Page 193
I participated actively.
1
2
3
4
I asked hard questions.
1
2
3
4
I voted conscientiously.
1
2
3
4
I did the work of the board including serving on committees and
attending events.
1
2
3
4
I championed the organization to and from the community.
1
2
3
4
I made a generous personal contribution.
1
2
3
4
I actively participated in fundraising.
1
2
3
4
I shared my expertise.
1
2
3
4
I supported my fellow board members.
1
2
3
4
I held my fellow board members accountable.
1
2
3
4
Board Member Guidelines: Circle how you have done recently to respect your guidelines (4=best)
I disclosed any potential conflicts of interest
1
2
3
4
I spoke with one voice including majority decisions not personally
supported
1
2
3
4
I stayed true to the mission
1
2
3
4
I kept confidences
1
2
3
4
I respected my fellow board members
1
2
3
4
I followed through on my commitments
1
2
3
4
Comments:
What can be done to help you do What do you like about being a
your best as a board member?
board member?
What don’t you like about being a
board member?
What is the point of a board member completing a self-assessment on the
duties and guidelines? Won’t the board member see things in the most positive
light as is often the case with self-assessment? To be sure, this is a good point, but
the reason for asking the board member to self-assess is to keep the duties and
guidelines fresh in their minds.
March 6, 2016 Page 194
Because attendance is one of the – if not the most critical – measures of
board member performance, an attendance assessment should be also used. Table
13.8 is one from an agency focused on the developmentally disabled.
Table 13.8 Board Member Attendance
Board Member Feb
Apr Jun
Aug Oct
1
√
√
X
√
√
2
X
√
√
√
X
√
X
X
X
3
4
√
√
X
√
√
5
√
√
√
√
√
X
X
√
√
√
6
7
8
√
X
X
√
√
9
√
√
√
X
√
10
√
√
√
√
X
11
X
√
X
X
X
√
√
12
13
√
X
X
X
X
14
X
X
X
X
X
15
√
X
X
√
√
% Present
73
73
31
60
60
√ = Present, X = Absent
As the saying goes, a picture is worth a thousand words. What has
happened to board members 11, 14 and 15, all whom are functional no-shows?
What about board member 3 who has only made one meeting in the last four?
March 6, 2016 Page 195
Though many organizations have three-strikes-and-you’re-out regulations in the
bylaws to deal with no-show board members, most don’t take this nuclear option.
Having an attendance summary that accompanies the minutes calls the question.
I recall a board chair that was troubled about publishing the attendance
assessment. She was worried that the board members would see this as a
throwback to grade school and that they would be insulted to have their attendance
recorded. So, the question was taken to the board members for comment. It was
eye-opening. The board members wanted the attendance log as a way for their
service to be recognized. It was disconcerting to many that board members with
poor attendance habits were never called out or any explanation given for the
absences. The attendance assessment was extremely valuable to them.
Executive Director
Executive director assessment is a bit tricky. The executive director’s two
duties – Deliver what gets done today and Enable the board – are not particularly
nuanced, but the guidelines are specific enough to require more than a cursory
look. The solution is to include the duties and only those guidelines related to
related to governance as was done in Table 13.9.
TABLE 13.9 Executive Director Assessment
Executive Director Duties: Circle how the ED has done recently to accomplish the duties (4=best)
Deliver what gets done today
1
2
3
4
Enable the board
1
2
3
4
Executive Director Guidelines: Circle how the ED has done recently to respect the guidelines (4=best)
Provide information to the board, committees, officers, or board
members in a timely manner that could have a significant impact
on the company or in any way cause embarrassment.
1
2
3
4
Send information in advance of board meetings by at least one
week.
1
2
3
4
Help the board in its implementation of the Results Now Master
Plan.
1
2
3
4
Not burden the board with insignificant issues that divert focus.
1
2
3
4
Inform the board if it is burdening the staff with insignificant
1
2
3
4
March 6, 2016 Page 196
issues that divert focus.
Foster a relationship with the board based upon trust and
respect.
1
2
3
4
Comments:
What should our executive
What do you like about the way
director discuss at the next board our executive director works with
the board and/or board
meeting?
members?
What one thing would you change
about the way our executive
director works with the board
and/or board members?
Following are the comments from an organization that asked just the third
question about what one thing the executive director should change:
Accountability
 To be more focused on the financial state of the organization
 Better accounting of $ and fund raisers
Climate
 There seems to be a group “friendly” to the executive director and a
group that isn’t so sure about his leadership. I’d hope that both groups
could remain informed and participate in decisions
Governance
 Agenda should be set by executive committee and carried out by board
Openness









More open and truthful – no surprises
Closer communication with committees
Communication
Improved communication and HONESTY
More reporting on what he is doing to alleviate current crisis
Keep everyone informed of problems
Make information more readily available
More honest; don’t sugar coat, be forthright
Tell us the truth
Leadership
 More organization
 He is frequently not prepared for board meetings, often distributing data
for discussion without sharing with the presenter in advance of the
meeting.
March 6, 2016 Page 197
 Take stronger verbal ownership of the agency in board meetings –
bigger position
 He needs to exert more leadership in the direction of the organization.
He needs to own the “process” and handle more of the details. The
board is there to help with policy and strategy.
 I feel he is effective given the challenges. He answers questions or will
get the answer.
 Board is still somewhat inbred, but he is slowly changing this.
 Need more board members with scouting background that truly care
 To challenge the board more about unrealistic expectations the board
might have and suggest alternative approaches based on his training
Socializing
 More opportunities for board members to network
Clearly this executive director has some issues to address especially around
openness and leadership. It might make some executive directors uncomfortable to
ask an open-ended question like what he or she can do better, but isn’t it better to
have the information in advance as opposed to hearing about at the annual
performance review or even worse at an exit interview? It is always up to the
recipient of feedback to decide what to do with it, but not having the feedback
denies the recipient the opportunity to change. This goes in both directions.
Because it is the duty of the executive director to enable the board, he or she must
also be forthright in feedback.
March 6, 2016 Page 198
Chapter 14 Smart Board
I always wanted to be somebody,
but I should have been more specific.
- Lily Tomlin
Many boards suffer from the LYBATD syndrome, which is characterized
by “board members’ singular or collective inability to apply their education,
training, professional skill set, and/or the requisite intellectual rigor to nonprofit
board deliberations, decision making, and governance.”578 Put simply, leave your
brains at the door (LYBATD) when you join a board.
Of course, board members don’t really leave their brains at the door, but
they appear this way to executive directors who are oblivious to the seven realities.
The executive director is very knowledgeable about the agency and thus assumes
the board members are too. With passion for the cause, many executive directors
cannot imagine any excuse for LYBATD syndrome other than that the board
members don’t care.
Although there are many tonics for the LYBATD syndrome including
Peggy Jackson’s likeable mix of better recruitment, orientation, and evaluation,579
the better place to begin is making it easier for board members to be smart.
Governance pundits often describe the board as a herd of cats where everyone has
their own point of view. But this animal metaphor is off the mark completely.
Because time is the key variable, board members are more like tortoises than cats.
Time moves very slowly for the average member; 12 hours a year or so around the
table, every other month or so.
Compounding confusion is that most board members aren’t monogamous
about their volunteering; the good ones often serve on multiple boards and
epitomize the 1970s rock anthem from Crosby, Stills, Nash, and Young anthem,
“Love the one you’re with.” I remember interviewing a board member a few years
ago who was the publisher of a regional newspaper. She was much sought after
not only for her position of influence, but because of her connection to a national
foundation. When she said she was on nine different boards, I asked her which
ones and she was only able to recall five off the top of her head.
Do we honestly think that every board member remembers what the
agency’s mission is? Or what its lines of business are? Or has read the board
meeting advance information? Or remembers the name of the other board member
sitting across from them? Surely we know this somewhere in the back of our
minds, but many executive directors persist in their Rod “Show me the money”
Tidwell behavior. Executive directors need to accept the seven realities and not
March 6, 2016 Page 199
fight them, but work with them. Don’t assume that board members know what the
executive director knows; assume that they don’t know. And this begins by seeing
each of them as Jerry “Help me help you” Maguire and not as Rod Tidwell.
Help Me Help You
Imagine a board member that serves on multiple boards and who is
passionate about her commitment to the agency. Yet she must balance her time
carefully including her day job and her family including her aging parents and
teenage children. The executive director of the agency sends a big manila
envelope to her about a week in advance of the upcoming board meeting. It is
chockablock with important information including the minutes, financial reports,
and the like. Some of the reports are on regular sized paper, others are legal size;
some are printed on both sides, some not; some stapled, others loose-leaf, some
reasonable font size, some bifocal small. And so it goes. Her duty is to carefully
prepare for the meeting, but first she must somehow put all that information into
some order that makes sense. And this is if she’s lucky. Unlucky is the board
member who has been sent the information by email and doesn’t have toner or
paper for the printer or didn’t check email in the first place.
Most board members are expected to make sense of all of the information
by using their trusty three-ring binders. At the orientation session that most board
members attend, they are presented with a binder usually complete with
information about the organization, the bylaws, contract information, agendas, and
the like. The idea is that board members will study the information carefully
before each meeting including any documents sent in advance, file the new
information in the proper place in the binder, and bring their three-inch binders to
the board meetings.
What really happens is that most board members don’t bring their binders
to the meeting and instead scramble for the extra copies, which then requires
someone make a trip to the copier for more. Those that did bring their binders
often click them open and shut throughout the meeting as they do their filing. As
Susan Powter said in her fitness-guru days back in the nineties, “Stop the
insanity.” But how?
Start by assuming that board members generally have to refresh their
memories about the agency before each and every meeting. And that they don’t
have the luxury of time on their side. And that they don’t know the agency as well
as the executive director. And that rule one is keep it short and sweet. How do you
accomplish this?
March 6, 2016 Page 200
Make the Results Now Master Plan the centerpiece of your board meeting
advance information packet. Add a table of contents, meeting agenda, executive
director summary to the front end. Add an appendix to the back that includes
minutes, motions, miscellaneous, and contact information. Why contact
information? Because it changes all the time and by updating it regularly, board
members get smarter. On the very last pages of your packet, put the blank
assessments that board members will fill out at the meeting. If you’ve followed the
keep-it-short-and-sweet rule, you might have 20 to 30 pages give or take.
Of particular value is the executive director summary. Like so many Results
Now elements, less is more especially for the busy board member. Thus, the best
summaries condense the major points of interest into a very readable summary,
usually no more than two-three pages. Executive director summaries contain not
only negative information; good news is just as welcome. The executive director
summary is essentially an annual report outlining notable ups and downs. The
executive director typically writes it and it can be an opportunity to celebrate
success and acknowledge failure or concerns.
The executive director summary gives the reader with limited time a first
look at the core of the Strategic Plan. The executive director summary stimulates
thinking by identifying those major topics about which the reader should be most
concerned. The chief concern about providing an executive director summary is
that it may be the only part of the advance information that the board member
reads. If that is the case, the executive director summary will have proved its
worth by alerting the reader to matters of greatest importance.
There are just two sections in the executive director summary. First is the
overview, which gives a quick glimpse of three or four paragraphs in length often
focused on the mission. Here, for example, are the first two paragraphs from the
Overview section of a chapter of Big Brothers – Big Sisters:
Big Brothers – Big Sisters finds itself at a crossroads. On one hand,
the organization is enjoying a period of outstanding financial
results and dramatic growth within some lines of business that
together have achieved an operating margin of nearly 7 percent, up
over 80 percent from last year. On the other hand, Average Total
Matches has declined 13 percent during the same period to 234.
The focus for the next two years is on tackling goals that will
achieve the result of increasing core matches. At the same time, the
organization is working to improve various business processes in
order to secure more core matches.
The second section is about the lines of business and discusses notable
issues. Some organizations will also add important information related to the
general operations or departments. Remember that one of the chief complaints of
March 6, 2016 Page 201
board members is too much information, so be careful to include only important
things. Here is an abbreviated executive summary from a performing arts group:
Overview
The theme for the Results Now Master Plan the two years ago was
“get set.” The theme for last year was “get ready” and this year’s
focus was “go.” For next year, the theme is “grow strong.” The
organization has combined revenues under management of $19.7
million this year and we are all working diligently to improve
infrastructure and reduce costs.
Of particular interest is that the audit just completed shows a
modest surplus of $9,000 for the fiscal year just ended – an
extraordinary accomplishment given doubling of the scale of
operations, war, soft economy, and a new building to run.
For the current year, the organization is projecting revenues under
management of $21.3 million with a deficit of $80,000, which is
solid improvement against the planned deficit of $145,000. Series
revenues have exceeded expectations and had it not been for
unforeseen management fee reductions of $180,000 net by the
community foundation, the financial position of the organization
would be solidly in the black. Next year is on track to achieve a
balanced budget.
Lines of Business
In Facilities Department, the Events Services line of business is
enjoying continuing success. Sales for this year will reach over $2
million with net revenues of $35,000. Catering events for the last
45 days of this calendar year will yield total sales of over
$350.000.
The strong pace of growth of the Call Center line of business has
continued and fee revenue will make goal at $380,000. Of note,
on-line sales have been very successful, and moved 34 percent of
the inventory. Unfortunately, we experienced real difficulties in
answering calls in a timely manner early in the fiscal year, but
things have improved in recent months.
In the Parking Services line of business, the garage is now open for
monthly, transit, and event parking. Monthly parking reached
capacity on September 1 and gross sales for this calendar year will
achieve $971,000 and grow to $1.65 million next year.
In the development lines of business, fundraising will achieve its
$1.87 million against a goal of $1.73 million in spite of a partial
loss of government funding. Next year is expected to see
significant improvement.
March 6, 2016 Page 202
The programming lines of business in general will slightly exceed
its goals for attendance and gross sales. Some lines of business are
struggling; however, increases in singles projections have left
overall activity and income either improved or relatively
unchanged.
For the coming year, subscriptions are projected to reach 13,300,
down from 14,700 this year. This is a substantial reduction, but
combined with another year of strong single ticket sales we expect
total income to be down by about 3 percent. We must keep a
watchful eye on this area as it is the engine that drives our revenue.
When you wrap everything together, you have board meeting advance
information that is standalone in texture. There is no need for a three-ring binder,
no need to collate and file. Simply toss the packet into a briefcase and you’re good
to go. Appendix D contains a complete template for how this can be arranged.
Adding Value
The corporate solicitation had come to a close, the memento of thanks
presented, and the proposal for the coming year had been discussed. The president
of the corporation obviously enjoyed his affiliation as a funder and a board
member of Child Care Clearinghouse. His busy schedule of travel had not stood in
his way as an active board member and he had missed just one of the last five
board meetings. “Bob,” he said to the executive director, “I want to do more. I
want to be more active on this board, really make a difference, and really add
value.”
Bob couldn’t believe his luck: a generous corporate leader and board
member willing to do more! “We could certainly use leadership on the
performance assurance committee to figure out how to invest our growing
endowment,” Bob replied, “And someone like you could make a magnificent
contribution as a leader of our planned giving initiatives to build that endowment.”
The corporate president thought for a moment and answered, “Finances have
never been of much interest to me and I don’t like asking other people for money.
Isn’t there something else that I could do?”
That board members want to make a difference and add value to an
organization goes without challenge. Most board members sincerely want to help,
to make a difference in the organizations that they serve. None-the-less, boards are
not meant to provide entertainment for their members. The board is a means to an
end, in this case the achievement of a chosen destiny, the accomplishment of the
mission. If there is a job that the board member can do that adds value, by all
March 6, 2016 Page 203
means it should be done. Yet making work for the Purpose of keeping the board
member interested wastes precious resources.
As elementary as it may seem, eighty percent of what it means to be a good
board comes from not being a bad board. The lion’s share of being positive is not
being negative. Doing no harm seems somehow too simple, too basic to be of
value, but it is tremendously significant. Instead of asking itself how it can do
better, good boards often ask what they could do to stop being unproductive.
Boards
How do boards add the most value to the organization? Aside from
accomplishing the duties and respecting the guidelines, boards are at their best on
the big ticket items. The mother of all of these is executive director selection. Next
would be the work done on the Strategic Plan especially with regard to the
selection of new strategies.
Much has been written about how boards add value. Thomas Holland and
Myra Backmon identify four ways:
Support the Chief Executive [by] helping the chief executive
determine what matters most . . . Not every matter is equally
important and not all issues can be addressed, so relative priorities
must be set.
Serve as a Sounding Board [to] create opportunities for the chief
executive to think aloud about questions and concerns well before
it is necessary to come to conclusions or make recommendations . .
. a board must encourage candid discussion of embryonic ideas,
ambiguous issues, and unclear challenges in the road ahead.
Encourage and Reward Experimentation . . . encourage
experimentation, trying out new approaches and alternative ways
of dealing with issues . . . Raising critical questions and
challenging assumptions stimulate new ideas and creative
alternatives for the future of the organization.
Model Effective Behavior . . . Boards that call for accountability of
staff have far greater credibility if they show by example how that
is to be done.580
With all this said, governance is not an end unto itself; it is a means to an
end. The proof of a great board is in the accomplishments of the organization it
governs, not in how effective it is with recruitment and orientation of board
members, the degree of satisfaction with meetings, or how pleased the executive
director is with the board relationship. These are means to an end, not an end
itself. Taken to its logical conclusion for a nonprofit organization and as Cyril
Houle asserts, “A board must ultimately be judged not by how it follows
March 6, 2016 Page 204
procedural rules, but by how effectively it achieves the mission of its
institution.”581
Board Members
Woody Allen once said, “Eighty percent of success is showing up.”582 And
that is most certainly true when it comes to how board members add value. Simply
following through on commitments made delivers great benefit to the
overextended executive director.
Unfortunately in looking for home runs, board members frequently miss the
chance to hit the single that wins the game. The value of a promptly paid pledge
pays big dividends to the fundraising staff, an unsolicited invitation to lunch for
the executive director “Just to see how you’re doing” can deliver remarkable
results in terms of building self-confidence. If boards are best on the big ticket
things, board members are at their best on one-to-one. Sometimes a few words that
may seem small to a veteran corporate leader are career building to the
inexperienced executive director.
Ask executive directors for a specific moment of extraordinary value from a
board member and it will often have a very personal texture to it. The executive
director recalls the 30 yellow roses delivered one a day over a month to his
terminally ill wife. Another executive director remembers the celebration of her
twentieth anniversary complete with commendations from the Governor.
Most executives would answer the question of how board members add the
most value in very specific terms: “Raise more money.” Being ready and willing
to assist the executive director with the on-going activities to raise the necessary
funds for operations is a critical need. Other executive directors remember those
board members who asked tough questions are the some of the best at adding
value. A single board who participates actively in decision-making can have an
immense difference an organization. Take Child Care Clearinghouse for example.
Julie had always expressed concern to the executive director that she talked
too much at board meetings. She had come on the board during a substantial
period of growth and she asked regularly what the company was doing to be a
good community citizen. Her vision was that the organization could do more to
lend a hand to those nonprofits less fortunate. Time and time again Bob, the
executive director, reassured Julie that her voice was important and that he wished
he had ten other board members that provided the stimulation in board meeting
that she did. Over the years as a board member, Julie continued her tough
questioning and slowly other board members began to echo her. Could the
company do more to be a community leader?
March 6, 2016 Page 205
In strategic planning, Bob and the board did not directly identify any
opportunities to be a better a community citizen. But because Julie had kept the
issue in front of the board in a positive way, Bob was more open to the
possibilities and the matter finally became a strategy to explore. The rest is
history: The first opportunity for helping came to Bob when the board president of
another, smaller agency with a similar mission asked for help. Ten months later, a
new joint program between the two agencies was launched with an annual price
tag of $1 million. This ushered in a new period of dynamic activity for the
Clearinghouse that was a direct result of one board member asking tough
questions over a period of years.
A single board member can make a difference. Bob recalls having a twentyminute conversation with the president of a large corporation and who was a board
member wherein he was advised to keep his altitude at 40,000 feet when
beginning the discussions for the joint program. “The details are less important
now than the vision,” the president remarked. This one moment of guidance
delivered incredible value to the organization. While the board member would not
see this as making a major difference, Bob will most respectfully disagree.
If mentoring the executive director or providing encouragement delivers
such great value, why isn’t it a duty of the board member? In some boards, it is,
but in general boards try to stay away from mandating this as a duty because of the
potential for abuse on the part of the board member. If the executive director asks
for advice from the board member, there is no issue with giving it. Unsolicited
advice, however, can pass for instruction.
Being responsive to the executive director who asks for advice is common
courtesy and should not breach the chain of command. Because the line is so thin
between advice and instruction, however, many boards are loath to prescribe that
the board member actively gives unsolicited advice. It is often difficult to fulfill
the duty of asking tough questions if the board member is also enjoined to be a
cheerleader of the executive director. Many times the two are mutually exclusive.
Although a strong case has been made for the importance of the executive
director fulfilling his or her duty to enable to board, the board member must take a
fair share of accountability for his or her duty to follow through on commitments
including honoring the duties and guidelines. Board members gain a lot from
being on the board as Alice Korngold observes, “Nonprofit board service is the
ultimate experience in ethics, accountability, leadership, group dynamics, and
crisis management and communications.”583 They should return the favor by being
diligent in their efforts provided that the executive director does his or her job to
enable their success.
Finally, one of the best ways for a board member to add value is to know
when he or she is not a fit to the agency. There are two primary considerations
according says Alice Korngold,
March 6, 2016 Page 206
First, find an organization that resonates with you. The second
factor is critical but usually ignored: It is paramount to join a board
where you can add value to advance the nonprofit.584
In other words, if the mission does resonate and you can’t add value, don’t
join that board. If you’re a turnaround artist, don’t go on a board that is operating
effectively. Thinking that you’ll be the one to “First break all the rules”585 as
Marcus Buckingham and Curt Coffman like to say, carefully consider whether it
would be better for you to break them somewhere else. And if you have a thirst to
be an executive coach to the executive director, perhaps it would be best to quench
it elsewhere. The point is to join a board where you care about the cause and
definitely can add value. In other words, find the nonprofit that fits you, not a
nonprofit that you can make fit.
Executive Director
Executive directors are significant participants in the process of adding
value. Very early in my career, I was pulled aside by a well-respected (and quite
seasoned) executive and offered a practical approach to governance. “Treat your
board like mushrooms,” the wizened veteran advised. “Keep them in the dark,
cover them with plenty of dirt, and chop off their heads as soon as they pop up.”
That approach may work well for some period of time until a critical decision has
to be ratified and those ill-informed board members make the wrong call. I found
this out first hand some years later when the board I was working for very nearly
doomed a project that later grew into one of the most important activities of the
company. That I treated the board this way had very nearly led to disastrous
results and cost me my job.
Many executive directors, call them presidents, chief professional officers,
or CEOs, live in the world of the traditional model of governance where the board
decides what, the staff decide how. This is not how the world works. The
executive director has a profound role to play in making the board effective. As
Robert Herman and Dick Heimovics observe:
Our research shows that board members and staff expect executive
directors to take responsibility for success and failure and they do
take such responsibility. Thus, we argue, the board’s performance
becomes the executive’s responsibility. We can no longer expect
boards, in most cases, to improve their performance
independently.586
What actions do executive directors take in the practice of board-centered
leadership? There are just six:
1.
2.
Facilitating interaction in board relationships.
Showing consideration and respect toward board members.
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3.
Envisioning change and innovation for the organization with
the board.
4.
Providing useful and helpful information to the board.
5.
Initiating and maintaining structure for the board.
6.
Promoting board accomplishments and productivity.587
To be sure, not everyone believes that the executive director is at the center
for board effectiveness. Some see a clear line between the work of the board and
that of the staff and never shall the two cross. For example, John Carver says that
the board itself must take responsibility for its “development, its own job design,
its own discipline, and its own performance . . . No matter how well the CEO tells
the board what to do and when to do it, governance cannot be excellent under
these conditions.”588
Other see a clear risk in the having the executive director at the center of
leadership. Richard Chait, William Ryan, and Barbara Taylor call this leadership
as governance where the executive director displaces the board and where the
“occasion to govern the organization thus becomes merely a chance to counsel
management. In the process, the entity granted ultimate power exercises precious
little influence.”589 They also see the opposite – governance by fiat where the
trustees displace executives – as equally destructive: “Boards would impose their
views on executives, an arrangement few executives and trustees would
tolerate.”590 Their solution is the better-by-far alternative of what they call is Type
III governance where “trustees and executives collaborate.”591
Ultimately, the question of who is responsible for effective governance is
conundrum. On the one hand, if the executive director does not provide support,
the likelihood is that all but a few boards will be able to rise to the occasion. On
the other hand, if the executive director supplies too much support, there a chance
that he or she will turn the board in the “proverbial rubber stamp or a combination
rubber stamp and cash cow.”592 You’re damned if you do, damned if you don’t.
Robert Herman and Dick Heimovicks recognize this dilemma, but argue that
“since chief executives are going to be held responsible and since they accept
responsibility . . . they should work to see that boards fulfill their legal,
organizational, and public roles.”
To be sure, there are some executive directors who don’t want their boards
to be effective. As the late Kenneth Dayton puts it,
They say, “I don’t want anyone looking over my shoulder. I don’t
want anyone second-guessing me. I don’t want anyone reviewing
my performance.” But if they really want to be good, if they really
want to grow, if the really want to build that institution into a
dynamic factor in society, then they will soon discover that they
can it so much more effectively if they have a dynamic , effective
board.593
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To stand aside and expect the board to be effective without the help of the
executive director is utter folly. That’s why for the executive director who asks
“What good is the board” comes the reply that he or she is largely responsible for
the answer. In other words, if you don’t like your board, look in the mirror for the
reason why.594
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Appendixes
Appendix A—BAM
A brainstorming, affinity grouping, and multi-voting rating process (BAM)
begins with brainstorming, which is a technique used to generate as many ideas as
possible. There are five official steps to structured brainstorming:
1. The central brainstorming question is stated, agreed on, and written
down for everyone to see.
2. Each team member, in turn gives an idea. No idea is criticized. Ever!
3. As ideas are generated, write each one in large, visible letters on a
flipchart or other writing surface [like Post-it® notes]
4. Ideas are generated in turn until each person passes, indicating that the
ideas (or members) are exhausted.
5. Review the written list of ideas for clarity and to discard any
duplicates.595
The wonderful thing about BAM is that it allows everyone to have a voice
in the process, but no one can dominate it. The quiet members who never speak up
finally have a chance to offer input because they are directly asked to do so; the
overbearing members finally get a chance to listen albeit this is not necessarily of
their choosing. To be sure, facilitating a brainstorming session takes practice, but
most executive directors can become quite good at leading brainstorming sessions
rather quickly. That said, bringing in a facilitator, or training someone in house to
handle the process, can be a good idea so that the executive director and senior
staff can participate actively.
Here for example is a short list of 20 ideas from a question about board
member duties answered by seven people:
advocate, ask questions, attend, attend events, be active, be
ambassadors, be educated, contacts and resources, dedicated, do
the work of the board, get money, give money, good
representatives, make good decisions, participate, prepare,
promote, provide tech expertise, recruit others, sit on
subcommittees
When I do brainstorming, I like to go around the table at least twice and
stop when the ideas get saturated, which occurs when you start hearing lots of
synonyms for things already up on the board, literal repeats, and passes. That is,
when the members are exhausted. Keep in mind that for a group of 15 people, you
might end up with 40-50 ideas, a full board of ideas.
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With this many ideas, you need some way to manage them. A technique
called affinity grouping is used to arrange the answers into common themes that
become the final board member duties. Here are the steps:
1.
2.
3.
4.
Phrase the issue under discussion in a full sentence
Brainstorm at least 20 ideas or issues
Without talking: sort ideas simultaneously into 5-10 related groupings
For each grouping, create summary or header cards using consensus.596
When using this technique, invite the participants to help sort the ideas, but
the facilitator should retain control. That’s because this is a game of horse shoes
where getting close is good enough, but being too far away is bad. In other words,
you don’t want to end up having just one or two groupings when 10 are actually
present. Building an affinity diagram can be done quickly, but you want to
practice this one before going before a group; you have to be able to see the trees
for the forest and that takes some practice.
Looking at the small group of ideas from above, start with one that seems
like a root idea, take advocate for example. There are three other ideas that belong:
be ambassadors, promote, good representatives. Table A.1 shows the results.
Table A.1 Affinity Grouping Ideas
Ideas
contacts and resources, get money
advocate, be ambassadors, promote,
good representatives
recruit others, sit on sub committees,
do the work of the board
prepare, be educated, dedicated, ask
questions, make good decisions, attend,
provide tech expertise, be active, participate,
give money, attend events
Results
Raise money
Champion the organization
Do the board’s work
Make good decisions
The final step in the BAM process is multi-voting to prioritize or rate the
final ideas. The easiest tool is weighted multi-voting that I like to call “Take it to
Vegas,” where a blue dot equals $3, a red dot equals $2, and a green dot equals $1.
Each person gets one dot of each color to distribute on any grouping of ideas.
They can put all their dots on one grouping or spread the dots around. Adding up
the money yields a strong sense of priority as shown in Table A.2.
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Table A.2 Multi-voting Ideas
Ideas
prepare, be educated, dedicated, ask
questions, make good decisions, attend,
provide tech expertise, be active, participate,
give money, attend events
contacts and resources, get money
be ambassadors, promote, good
representatives, advocate
recruit others, sit on sub committees,
do the work of the board
Results
Make good decisions (21)
Raise money (13)
Champion the organization (8)
Do the board’s work (0)
In the case of the last grouping that earned no points, you’d have a choice
of whether to keep it in the mix. Remember that prioritization does not necessarily
require discarding groupings; it’s simply a method for establishing importance.
Indeed, perhaps less important than what is at the top of the list is what ends up at
the bottom. Multi-voting is a good way to winnow out the things that you’re not
going to pursue further.
A word of caution: not every BAM process requires the multi-voting step.
Sometimes the consensus of the group is so strong, it is not necessary. This is also
true when time is at a premium or when prioritization is not necessary.
The supplies you’ll need for a BAM process include four of lightweight
aluminum telescoping display easels, four packages (three boards per package) of
30” x 40” foam boards, magic markers, a role of clear packing tape, and 10
packages of 5” x 8” Post-it® notes. You should also get black magic markers and
sticky dots in blue, red, and green colors.
Assemble the foam boards into six bigger 60” x 80” boards by taping the
adjoining seams on both sides. Leave two boards blank and load the four other
boards with Post-it® notes in vertical columns, seven notes to a column with seven
columns to a board. Put the two blank boards abutting each other spanned across
the four easels. Place the four loaded boards one behind the other in the middle of
the two blank boards, which leaves one-half of each blank board on each end.
Arrange the participants around a table set up in an open U shape with an
equal number of comfortable chairs on the three outside sides. Put the easels at the
head of the open U. You’re now ready to go!
Appendix B — First Cut
First Cut is where you take a relatively shallow dive to see whether it
makes sense to move a potential strategy to Final Answers where you go for a
deeper dive. The First Cut is a vetting process to reduce the volume of strategies to
a smaller number, perhaps moving down to one or two.
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Strategies
The First Cut begins with a detailed description of the strategy you are
investigating. Your description begins with the people you intend to serve, the
product to be delivered, the place of delivery, and the price. This alliteration
around the letter P is meant to evoke, but not duplicate exactly, the marketing mix
introduced by Neil Borden in a 1964597 and later grouped into four categories of
product, price, place, and promotion by Jerome McCarthy, which are commonly
known today as the 4 P's of marketing.598
People
The First Cut begins with a detailed description of the strategy you are
investigating. You start by describing the people who will benefit from the
strategy once implemented. Many experts like Kristin Majeska call this customer
segmentation, which she defines as “the identification of groups of customers with
common needs, behaviors, and demographic characteristics that can help you
target specific groups and tailor your offerings to them.”599
So if your idea is to improve client outcomes by 20 percent, you would first
describe the client as explicitly as possible. Let’s say your clients are juvenile girls
at risk for pregnancy:
Juvenile girls at risk of pregnancy and living in the urban core
As such, you are describing your target market, the segment of the
population you intend to affect by executing this strategy. Remember how Peter
Drucker describes the customers:
The primary customer is the person who life is changed through
your work. Effectiveness requires focus, and that means one
response to the question . . . Supporting customers are volunteers,
members, partners, funders, referral sources, employees, and others
who must be satisfied.600
The primary customer of any strategy ultimately must be the person whose
life is changed. It is perfectly acceptable to have a host of supporting customers,
but they are never primary. If your strategy does not have a defensible link to the
primary customer, ask yourself why it’s under consideration. Put differently, if
you cannot identify a clear link to the primary customer, perhaps you shouldn’t
undertake the strategy.
In addition to describing the beneficiary of the strategy, describe their
characteristics as much as you can. How old are they, where to do they live, what
is their income level, how many are there, how many do you serve. Use ready-
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made resources like census.gov and sba.gov to help you do this. In essence, you
are describing your market, which David La Piana defines as market awareness
that includes four useful questions:
 What the organization’s market is, whether that market is stable,
shrinking, or growing, and who else is in the market
 Where the organization stands relative to other players in the market
 How the organization got to its current status relative to others
 Where the organization wants to go next within the market601
What about operational effectiveness strategies that do not appear to have
primary customers that are the beneficiary of your life-changing Purpose? Take
the strategy of installing your first agency-wide intranet to facilitate enhanced
communications. But enhanced communication to what end? If the staff members
will be better able to serve the primary customers, you likely have a defensible
strategy.
Do not waste your time if you cannot draw a defensible link to the primary
customer. You don’t build new buildings or boost fundraising simply to make
your staff more comfortable and well compensated unless it has a direct benefit for
your primary customers. Does this mean that you don’t implement these kinds of
strategies? Not at all; comfortable and well compensated staff can make a huge
difference in serving the primary customer.
When our new performing arts center was built, I had the chance to move
our offices from very cramped and inefficient offices on three different floors that
we had occupied for a decade. It was a very tempting proposition. I had abandoned
my corner office years before so that three finance staff members could take it
over and I had relocated to a very small space. In the new building, there would be
room to spare, staff would be happier, and I’d get my office back with a wonderful
view to boot.
Unfortunately, the build out of the new space priced out at nearly $750,000
and we would be taking over an office condominium that could be sold for much
more and consequently benefit our all-too-small endowment. Over all, the direct
link to our primary customers just wasn’t strong enough to justify the expense. I
didn’t get my wonderful new space, but I did continue to get the view that
mattered most: that of a full house of people in the theatre.
Product
Product begins with what difference the strategy will make to the primary
customers. For the juvenile girls at risk of pregnancy, the life-changing difference
might simply be getting though their juvenile years without becoming pregnant.
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Just how you intend to do this is your next step in describing the product
itself. Is it sex education? Distribution of contraceptives? What about peer
mentoring or family counseling? In other words, what product or service will the
people you are serving be receiving? In this example, the product is peer-to-peer
mentoring:
Preventing pregnancy for juvenile girls at risk and living in the
urban core through peer-to-peer mentoring.
Place
Place typically refers to how the customer gains access to the product be in
person or on-line. This is sometimes called the distribution channel.
Preventing pregnancy for juvenile girls at risk and living in the
urban core through peer-to-peer mentoring based at our learning
center.
Price
Not all strategies need address the question of pricing. No one will be
charged for using the intranet for better communications for example. Pricing
questions usually arise in conjunction with lines of business where there is a direct
relationship with the client or through an intermediary.
Thinking about price early on and in the description of the strategy is very
important, but some relegate this matter to much later. That said, pricing is no
trivial issue and it should be on the table at the earliest point possible and most
certainly before you go back out to talk with customers when you can get an early
indication of their willingness to pay. As Patricia Caesar and Thomas Baker warn:
Never show people the product or describe the service without the
price, because that is not the way it is generally going be marketed
in the real world. You may be reluctant to do this at an early phase
of implementation; nevertheless, pick a number, put it down, and
get a reaction. Price is an integral part of how any product or
service is position in the marketplace, and yours, no matter what it
is, cannot be evaluated without one.602
There are many different ways to think about pricing. The most common is
the cost plus method followed closely by breakeven pricing, but these methods are
about what the provider must receive in order to achieve some objective like
breaking even. Instead you should first know what others in your field charge for
the same products. If your peer agency charges $225 per camping week in the
northern part of the state and regularly reaches 90 percent of capacity, perhaps
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your price of $435 is too high and explains why your capacity percentage is 55
percent and declining.
Regrettably, the typical mistake nonprofits make is not charging too much,
but too little or not at all. Nonprofits regularly make the failed assumption that
“free of charge” has great meaning. Whenever I see this message trumpeted as an
attribute of a program, I wince. As counterintuitive as it may seem, charging
nothing for something often conveys a value of nothing at all. After all, most
customers are willing to pay something for what you’re offering. How can you
justify not charging ones who have the means to pay? How can you pass up the
chance to serve more people as a result?
It has long been known that paying something for a service is good for both
the customer and the provider. At its most basic, charging for services puts skin in
the game for both the provider and the customer. The recipient of services is now a
bona fide customer purchasing something of value and expecting a certain level of
quality. The provider is now subject to the accountability that comes from having
paying customers instead of take-it-or-leave-it charity cases.
As such, it could be a viable strategy to start charging for something that
you have been giving away. You won’t be the first. Many nonprofits are beginning
to charge for services that no one would have thought possible even a few years
ago. Take the strategy of charging homeless people for space in shelters. What
could be more unthinkable; homeless people are penniless, right? Yet just this
spring the City of New York rolled out “an innovative welfare-reform policy that
advocates for the homeless are worried will just make matters worse: charging for
space in a shelter.”603 This was hardly innovative, however. A homeless shelter in
a Midwest rust-belt community has been charging $5 per night for some time now;
those that don’t have cash sign IOUs.
To be sure, there may be people who cannot pay a thing for what you are
providing. I ran a performing arts center that delivered a school-day educational
program for 60,000 kids each year. About a third of the children attended free on
scholarships that teachers could request. Instead of saying that everyone could
attend free of charge, we said that no one would be turned away. This type of
pricing allows you to set a fixed price for everyone, but use discounts or giveaways for those who need help.
If you are worried about whether this sort of price maximizing will hurt,
consider the results from Panera Bread’s nonprofit eateries:
Its cashiers tell customers their orders’ “suggested” price based on
the menu. About 60 to 70 percent pay in full . . . About 15 percent
leave a little more and another 15 percent pay less, or nothing at
all. A handful have left big donations, like $20 for a cup of
coffee.604
Here’s what you have so far:
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Preventing pregnancy for juvenile girls at risk and living in the
urban core through peer-to-peer mentoring based at our learning
center for a fee of $2 per session.
Market
Once you have the description of the strategy, you dig deeper into the
market by addressing the probabilities for success and the value proposition.
Probabilities
Researching the probabilities for success does not require an MBA or a
high-priced marketing consultant. You can get at this information in a variety of
ways, but the easiest is to ask your customers directly. In getting ready for making
the vision, you connected with some of your customers to understand what they
liked and didn’t like about their experience with your organization’s services,
programs, or products. You have now defined your strategy more specifically. It’s
now time to go back to your customers and understand the probabilities that your
strategy will succeed. What this requires according to Peter Brinckerhoff is “to
start the process of delineating the difference between what you think people want
and what you know they want. The only way to know is to ask.”605 But ask what?
Start with why you think your customers would buy or use your product or
service. You should have a pretty good idea by now. You know, for instance, what
life changing difference you’re supposed to be making for your clients. Maybe
how you’re different from your rivals is also part of the rationale. Make a list of all
of the reasons you think are important. Prioritize the top three or four. Now ask
your customer whether they would use or buy your service or product at the price
you have tentatively establish and test out your propositions with a half dozen
customers.
You can also go to sources of information already available at your
fingertips on the web and at your local chamber of commerce and other such
sources including census.gov and sba.gov. And you can talk to those best of best
agencies in your field to find out what they know. You can observe things. Take
opening a restaurant for instance.
You don’t launch a restaurant just anywhere. You look for the volume of
people who ordinarily will walk by your location especially at the times of day
when you plan to be open. You look at the other business nearby and visit with the
proprietors about how well they are doing. You are especially interested in
whether there are any other restaurants nearby, what they charge, their menus,
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quality of the food. And if there are no other restaurants nearby, find out why
because this may mean something about your probabilities for success.
The point here is that you have to get close enough to your customers to
gauge your chances of succeed. You don’t have to go overboard and spend tons of
money to do this. Conversations with a half dozen customers may do it.
Proposition
The value proposition is the at the core of marketing and is defined as “the
value of what you get relative to what give in exchange for it.”606 Put directly, why
would your customer write the check? Maybe the answer is that the customer
wouldn’t, would at the right price, or with a different product. The value
proposition is not about how you will sell this or that service or product, but why
the customer would buy it.
I talked to a man once who used existing information, talked to customers,
and practiced the art of observation to construct his value proposition. He told me
how he chose the location for his art gallery, why his pricing was so reasonable,
and the art so accessible. He had spent many, many hours walking the
neighborhoods where he could have located his gallery. He talked to people who
would eventually be his customers, visited proprietors in restaurants and shops,
and counted things like the number of people at certain times of the day and
evening. He talked to his artist/proprietor friends. He decided where to locate his
gallery because of this eye-to-eye research and his pricing reflected the brands of
automobiles that he observed. He didn’t have a Ford Focus gallery for sure, but he
wasn’t a Rolls Royce either; he called it a Honda Accord “kinda arts-and-crafty
place that sells good art at a fair price.”
Armed with the information you gained from your research, you are now
ready to write the value proposition for your strategy. Like your mission
statement, it will be short and to the point:
Preventing pregnancy for juvenile girls at risk and living in the
urban core through peer-to-peer mentoring based at our learning
center for a fee of $2 per session that delivers convenience,
confidentiality, companionship, and commitment to their success.
The value proposition – why the juvenile girls would write the check – is
for the convenience, confidentiality, companionship, and commitment to their
success.
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Muscle
Muscle is about the organization’s ability to execute the strategy under
consideration. This consists of three factors. Context is the environment in which
the agency operates, capacity has to do with its operational effectiveness, and
comparison does a reality check of the agency against the best of the best in its
field.
Context
Although environmental analysis is often used to predict what might
happen and is a systematic hunt for opportunities and threats (the last two letters of
the SWOT analysis), Results Now takes the position that it should be used to
understand whether the opportunities under consideration are doable within the
context that exists for the organization and in keeping with the Old Testament
verse that there is a “time for everything, and a season for every activity under
Heaven.”607
The classic approach to understanding context is environmental analysis
with its three central elements as described by strategic management experts
Michael Hitt, Duane Ireland, and Robert Hoskisson:
Analysis of the general environment is focused on environmental
trends while an analysis of the industry environment is focused on
the factors and conditions influencing an industry’s profitability
potential and an analysis of competitors is focused on predicting
competitors’ actions, responses, and intentions.”608
In this classic approach, you examine the general environment consisting of
“seven environmental segments: demographic, economic, political/legal,
sociocultural, technological, global, and physical.”609 Some people advocate a
different set called the PEST approach, which covers political, economic, social,
and technological segments.
After examining the general environment, you move forward to examine
the industry environment that is often built around Michael Porter’s five forces
model of threat of entry, power of suppliers, power of buyers, threat of substitutes,
and rivalry among existing competitors.610 Sharon Oster, for example, includes six
forces in her nonprofit approach that begins with defining your market, describing
the industry participants, and then analyzing five factors: relations among existing
organizations, entry conditions, competition from substitute products, the demand
side of users and donor power, and supply.611
Finally, you analyze your competitors using the following four questions:
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 What drives the competitor, as shown by its future objectives.
 What the competitor is doing and can do, as revealed by its current
strategy.
 What the competitor believes about the industry as evidenced by its
assumptions.
 What the competitor’s capabilities are, as shown by its strengths and
weaknesses.612
How do you use this information – general, industry, and competitor
analyses – once you have it? Though the common objective of external
environmental analysis is to identify threats and opportunities,613 you make a
qualitative case for how well each of your strategies fit with the external
environment as shown in Table B.1.
Table B.1 External Analysis Matrix
General
Fit to the External Environment
Industry
Competitor
Strategy 1
Strategy 2
Strategy 3
Capacity
When you get right down to it, “organizational capacity is the ability of an
organization to operate its business,” says the Nonprofit Finance Funds’ Clara
Miller. 614 If context is about what is happening outside the agency, capacity is
about the inside. There are three useful ways to think about capacity including
internal analysis, the iron triangle, and comparison with the best of best in your
field.
Internal Analysis
The classic method for understanding capacity has four elements that you
examine in sequential order as described by Michael Hitt, Duane Ireland, and
Robert Hoskisson, “Resources are bundled to create organization capabilities. In
turn capabilities are the source of a firm’s core competencies, which are the basis
of competitive advantages.”615 Once compete, you have an appreciation for what
you’re good at and what you’re not. Typically, you want to play to your strengths
and minimize your weaknesses.
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You begin by inventorying your resources including tangible financial,
organizational, physical, and technological resources and intangible human,
innovation, and reputational resources. You move forward to identify capabilities
that often occur in the functional areas of an organization like distribution, human
resources, management information systems, marketing, management,
manufacturing, and research and development.
Once done, you are ready to identify core competencies, which are “the
activities that the company performs especially well compared with competitors
and through which the firm adds unique value to its goods or services over a long
period of time.”616 Core competencies are tested against four criteria:
 Valuable capabilities allow the firm to exploit opportunities or
neutralize threat in the external environment.
 Rare capabilities are capabilities that few, if any competitors possess.
 Costly to imitate capabilities are capabilities that other firms cannot
easily develop.
 Nonsubstitutable capabilities are capabilities that do not have strategic
equivalents.617
Core competencies that pass the tests are often the sources of sustainable
competitive advantages. If you happen to have core competencies that pass these
tests, count yourself lucky and do all you can to align your strategies to them.
Once you have identified your core competencies, you make a qualitative case for
how well each of your strategies fit with core competencies as shown in Table B.2.
Table B.2 Core Competencies Matrix
Competency 1
Fit to Core Competencies
Competency 2
Competency 3
Strategy 1
Strategy 2
Strategy 3
The danger with the classic approach is that the competencies you have
now may not be the ones that you need in the future. If that is the case, you have a
possible new strategy to develop those needed competencies. Be forewarned, a
strategy to build a core competency is no walk in the park and can be of a scale
equal to other major endeavors simply because it often involves changing the
culture of the agency. The Victoria Theatre Association’s core competency of
making the customer the star took years of discipline. But once established, it
made an enormous difference in the organization’s success.
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The Iron Triangle
The iron triangle is a phrase coined by Clara Miller at the Nonprofit
Finance Fund and can be used to assess organizational capacity. The iron triangle
describes “a fixed relationship between those three elements (programs, capital
structure, and organizational capacity), with any change in one inevitably having
an impact, planned or unplanned, on the others.”618
Mission and Programs
According to Clara Miller, an “organization’s mission is usually
comparable with a significantly larger range of programs than it has the resources
to pursue.”619 As such, an excellent way to gauge the health of mission and
programs is to examine the degree of diversification in your lines of business.
On the low side of the diversification spectrum is the single line of business
that delivers 95 percent of revenues.620 The single business nonprofit might be an
agency that serves hot meals to the homeless in a single facility or a ballet
company that only does classic ballets in the local performing arts center. Single
lines of business organizations are typically highly mission-centered.
In the middle of the diversification spectrum are related constrained lines of
business where less than 70 percent of revenue comes from one source and all of
the businesses are tightly linked. A ballet company presents classic ballets like
Swan Lake, operates a ballet school, and tours regionally to high schools; the
agency for the homeless serves hot meals, provides space for recreation during the
day, and makes referrals to overnight shelter. Because of the common link,
organizations in the middle of the diversification continuum are also missioncentered.
At the far end of the continuum is unrelated diversification where less than
70 percent of revenue comes from a single business, but there are no common
links. An example of this is the ballet company that presents classic ballets, rents
its studios out for weddings, and sells bookkeeping services to neighborhood small
businesses. All of these lines of business make use of excess capacity, but they are
not related to each other except by the common bond of providing revenue.
Obviously, unrelated diversification is not seen as especially mission centered.
The healthiest place to be on the continuum is in the middle. In other
words, you’re in a riskier position by having a single line of business or multiple
unrelated lines of business. Although an argument can be made that as long as all
of the lines of business are tightly linked, the number of businesses doesn’t
particularly matter. That is true provided the organizational capacity is in place to
handle the load, but at some point, too many businesses is truly just that.
The bottom line when it comes to degree of diversification is that you
should be more risk tolerant if you’re running a single line of business agency and
March 6, 2016 Page 222
less risk tolerant if you have a lot of unrelated diversification. Moving toward the
mission-center diversification is suggested by either situation. That said, the ability
to succeed with new strategies when you have many unrelated businesses is much
more likely to result in problems than if you have a single business. In the end, the
question is not whether you have too few or too many business; the question is
always whether your intended strategy is mission-centered or not.
Degree of diversification is affected by a variety of things. Funders
typically support new programs as opposed to on-going ones or general operating
support, which stimulates the demand for diversification. Many board members
from the for-profit sector celebrate diversification because it is a popular tactic for
growth. Indeed, it is the rare nonprofit executive who has not heard the ubiquitous
axiom of grow or die.
Grow or die is synonymous with scaling up or going to scale, which
“means creating new service sites in other geographic locations that operate under
a common name, use common approaches, and are either branches of the same
parent organization or very closely tied affiliates.”621 That going to scale is a hot
topic these days is not in dispute and the implications are clear: go to scale and
become high impact.622
But don’t be seduced by the allure of going to scale, of grow or die. Keep
Michael Porter’s warning in mind that among “all other influences, the desire to
grow has perhaps the most perverse effect on strategy . . . Too often, efforts to
grow blur uniqueness, create compromises, reduce fit, and ultimately undermine
competitive advantage.”623
Organizational Capacity
Organizational capacity according to Clara Miller is “the short-hand term
used for the sum of the resources an organization has at its disposal and the way in
which they are organized – development skills, marketing skills, financial
management skills, program delivery mechanisms, staff, etc.”624 In essence, can
you deliver on the promises you’ve made?
There are a variety of methods to analyze organizational capacity including
reviewing topics you’ve already considered like risk orientation and degree of
diversification. You could also consider readily available tools like Venture
Philanthropy Partners Capacity Assessment Grid developed by McKinsey and
Company that examines the capacity categories shown in Table B.3.
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Table B.3 Capacity Assessment Grid Categories
Aspirations
Mission
Vision – clarity
Vision – boldness
Overarching goals
Organizational skills
Performance management
Planning
Fund-raising and revenue generation
External relationship building and
management
Other organizational skills
Systems and infrastructure
Systems
Infrastructure
Organizational structure
Board governance
Organizational design
Interfunctional coordination
Individual job design
Culture
Performance as shared value
Other shared beliefs and values
Shared references and practices
Strategy
Overall strategy
Goals/performance targets
Program relevance, and integration
Program growth and replication
New program development
Funding model
Human resources
Staffing levels
Board – composition and commitment
Board – involvement and support
CEO/executive director and/or senior
management team
Management team and staff –
dependence on CEO/executive
director
Senior management team (if not
previously covered)
Staff
Volunteers625
Capital Structure
Capital structure in the for-profit sector is “how a firm finances its overall
operations and growth by using different sources of funds.”626 The concept is quite
similar for nonprofits as Clara Miller explains:
Capital structure . . . is the distribution, nature and magnitude of an
organization’s assets, liabilities and net assets. Every nonprofit –
no matter how small or young – has a capital structure. There are
many kinds of capital structure, and there is no such thing as one
“correct” kind. It can be simple, with small amounts of cash
supplemented by “sweat equity” and enthusiasm, or highly
complex, with multiple reserves, investments and assets.627
Put simply, capital structure is figuratively “what’s in your wallet”
including your credit cards, cash and checking accounts, net value of your home
and car, your loans and other obligations; it’s about how you pay for your life
including whether you can go out to dinner and a movie tonight and how you
would pay for it.
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When you add capital structure to organizational success measures, the
reader gains a much deeper understanding of the overall health of the agency.
Along with a graph, Table B.4 shows an agency in crisis. After three years of
significant deficits, operating reserves are now negative and although working
capital is still positive, it has fallen dramatically. In other words, the agency is
running out of cash.
Table B.4 Comprehensive Organizational Financial Success Measures
($ in thousands)
Profit & Loss: Contributed Revenue $
Earned Revenue $
Total Revenue $
Total Expenses $
Excess/(Deficit) $
Balance Sheet:
Assets $
Liabilities $
Net Assets $
Capital Structure:
Total Margin3
Current ratio4
Operating Reserves5 $
Operating Reserves ratio6 months
Working Capital7 $
Working Capital Ratio8 years
Year 6
2,330
177
2,507
2,072
435
986
554
432
0.17
5.6
150
0.88
784
0.38
Year 5
3,552
74
3,626
1,998
1,628
3,583
1,519
2,064
0.45
10.6
860
5.20
1,477
0.74
Year 4
3,305
121
3,426
2,868
558
3,968
1,344
2,624
0.16
11.4
1,015
4.40
1,681
0.59
Year 3
2,431
140
2,571
2,962
(390)
3,589
1,349
2,239
(0.15)
10.9
1,109
4.67
1,403
0.47
Year 2
3,477
295
3,772
4,065
(293)
2,949
999
1,950
(0.08)
3.9
637
1.93
789
0.19
3
Total Margin: Positive is better; (Total Revenue minus Total Expenses) divided by Total Revenue
4
Current Ratio: >2 is preferred; Current Assets divided by Current liabilities
Year 1
3,412
131
3,542
3,877
(335)
2,463
864
1,599
(0.09)
2.1
148
0.47
382
0.10
Operating Reserves: Unrestricted Net Assets minus [(Land, Buildings, and Equipment) minus
(Mortgages and Other Notes Payable)]
5
Operating Reserves Ratio: >3 months is minimum; Operating Reserves divided by [(Total Functional
Expenses minus Depreciation) divided by 12] (A. Blackwood and T. Pollak, 2009, p. 9)
6
Working Capital: (Cash, Savings, Accounts Receivable, Pledges Receivable, Grants Receivable,
Investments, and perceivable liquid Other Investments) minus (Accounts Payable, Grants Payable, and
Other Liabilities) (L. Giles, September 11, 2009)
7
8
Working Capital Ratio:>1 year is best; Working Capital divided by Total Expenses
March 6, 2016 Page 225
The working capital and ratio is part of Charity Navigator’s Organizational
Capacity troika of “average annual growth of primary revenue, average annual
growth of program expenses, and working capital ratio.”628 Even though your
agency may not be listed in Charity Navigator’s database, there’s a good chance
that an agency you admire is listed, which allows for comparison. Though quite
similar to working capital, operating reserves and the accompanying ratio are
equally valuable because these come from a recent study of more than 2,600
organizations in the Washington, DC area.629 For more formulas to help calculate
risk tolerance and financial condition, Thomas McLaughlin is the go-to source.630
Comparisons
Remember from earlier in this book that that high performance is always an
issue of comparison. Sometimes you compare yourself to others as Michael Porter
recommends in his definition of operational effectiveness as “performing similar
activities better than rivals perform them.”631
It is likely that you already gave thought to this when you learned about the
best of best in your field, but in case you didn’t compare your agency then, do it
now. One of the best ways to begin thinking about comparisons is to match up
your financials with the best of the best in your field. Table B.5 shows an
example.
Table B.5 Best of Best Comparisons
Agency
Years of 990 data reviewed
Profit and Loss
Contributed Revenue $
Program Services $
Membership dues $
Other Earned Revenue $
Total Revenue $
Expenses $
Net Revenue $
Best A
5
Best B
6
Best C
6
631,945
649,495
87,497
145,739
1,514,675
1,508,223
6,452
48,333
233,808
253,975
166,980
703,095
640,819
62,276
146,720
207,096
452,606
320,266
1,126,688
1,067,278
59,409
A, B, C Our Agency
Average
6
275,666
363,466
264,693
210,995
1,114,819
1,072,107
42,712
129,721
0
14,262
1,102
145,085
118,497
26,586
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Agency
Years of 990 data reviewed
Balance Sheet
Net Assets
Ratios
Contributed/Total Revenue %
Dues/Total Revenue %
Net Revenue/Revenue %
Best A
5
Best B
6
Best C
6
A, B, C Our Agency
Average
6
5,046,631
$
625,390
5,232,404
3,634,808
330,248
42
6
0
7
36
9
13
40
5
21
27
5
68
31
18
What can you learn from such a simple layout? First, the ratio of
contributed to total revenue for Our Agency is more than triple the average of the
best practices. Granted, Our Agency is smaller, but this certainly suggests that one
of the opportunities is to ramp up earned income. Second, the per-client revenue of
the best practices is two-and-a-half times higher, which suggests either a pricing
problem or an issue with the perceived value of services.
However you do it, don’t forget David Renz and Robert Herman’s advice,
“The comparison may be to the same organization at earlier times, or to similar
organizations at the same time, or to some ideal model, but effectiveness
assessments are always a matter of some kind of comparison.”632
Match
In order to decide what goes forward, return to Chapter 8 and the section on
fast and slow for suggestions on how to make the decision.
A final word of caution about the launch of any strategy built upon the
hope of generating profits for your agency: “a large share fail.”633 A survey from
Community Wealth Ventures found only 42 percent of ventures achieved
profitability and just five percent (four agencies) of all the 72 studied earned more
than $50,000 in profit.634 A different study of 41 agencies by William Foster and
Jeffrey Bradach found 71 percent of ventures were money losers, 25 percent were
in the black, and 5 percent made it to breakeven.”635 A much larger sample of 217
agencies operating for-profit businesses found that about 35 percent were
profitable, 19 percent were at breakeven, and 35 percent were being subsidized.636
Put differently, about 55 percent made it to breakeven or better and about 55
percent made to breakeven or worse.
To be fair, money isn’t everything. Eighty percent report that new ventures
boosted reputation, three out of four get better delivery or a more focused mission,
and two in three build a more entrepreneurial agency.637 Indeed, most – two out of
three – don’t do it for the money, but for the social impact.638
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Is it bad that most earned income ventures do not make it to profitability?
Of course not. One can easily argue that every dollar of income you earn is one
more you can allocate to mission. There will always be people want nonprofits to
be self-sustaining without contributed income, but such a viewpoint is unrealistic.
And it denies the simple fact that many people want to help and receive great
personal benefit from giving. Who are you to deny them the chance to get to
Heaven through their good deeds?
Depending upon which study you consider, from 47 percent to 58 percent
of all monies flowing into nonprofits are of the earned income variety. 639 Although
earned income, social enterprise, social entrepreneurship, fourth-sector activity, or
whatever you want to call it, is the newest, hottest topic, it has been around a long,
long time.640
Earned income is every bit as important as contributed income; one is not
necessarily better than the other. Indeed, a number of experts have found that one
without the other is a riskier proposition. For example, Clara Miller of the
Nonprofit Finance Fund found in a study of 1,005 agencies with budgets of more
than $1 million that “a second source of revenue, usually fundraising, is required
just to achieve break-even.”641 Wolfgang Bielefeld’s study of mortality patterns
found “nonprofits that ceased to operate were younger and smaller, used fewer
strategies to attract funders, and had less diversified income streams than
survivors.”642
Whether it is charging more for the sodas in the basement machine, upping
the price of continuing services, or launching a new line of business meant to be
profitable, earned income strategies can make a big difference.643
Appendix C: Final Answer
Final Answers goes for a deeper dive around the strategies that made it
through the First Cut. There are four primary sections: strategy, marketing, money,
and management. Compared to the First Cut where there was more detail, a more
cursory approach is taken in Final Answers because it is much more dependent on
the strategy itself. Final Answers contains five distinct elements: strategy,
marketing, money, management, and your final answer.
Strategy
Like First Cut, Final Answers begins with a description of the strategy. You
build upon the information you have collected in the First Cut and expand upon it.
Peter Brinkerhoff uses a three-question approach:
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 What precisely will the business idea do?
 How will it benefit the organization?
 What are the characteristics of businesses of this type?644
Because you are beginning to think about how to pitch the strategy to
people outside of the organization, I like to use the five questions from Bernard
Ross and Claire Segal for building a case statement:





What is the need?
What evidence is there that this is a pressing need?
How are you uniquely qualified to tackle this need?
What will be the benefits of your action?
What are the negative consequences if you fail?645
Marketing
You will likely want to do more thorough research and move from direct
conservation with your customers to focus groups, test marketing, and/or survey
research. A focus group typically works this way:
A focus group consists of eight to ten members of your target
market (try to include both current customers and potential
customers who don’t know you at all) who are guided by a
facilitator to answer open-ended questions about a specific topic.
Focus groups are a low-cost means of conducting face-to-face
interviews, with the additional benefit of interactions that occur
within the group. 646
Survey research is most often quantitative – although qualitative
interviewing is gaining in popularity – and can range from a simple web-based
protocol like SurveyMonkey to telephone surveys or direct mail. Research can be
fast and cheap or slow and costly. The difference is usually in validity, reliability,
and generalizability to the customer population. Though quantitative research
yields useful data that can be analyzed quickly and is usually generalizable,
qualitative interviewing generates more nuanced and granular information that is
not generalizable.
Of particular importance is test marketing as explained by Kristen Majeska,
“Test marketing is essentially performing an experiment. Rather than asking your
customers what they think they’d do, you give them the opportunity, record the
results, and if you’re entrepreneurial, you figure out why they did what they
did.”647
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You’ll also need to think about how you intend to promote your strategy to
your intended market including sales, branding, and the like. Peter Brinckerhoff
has a list of questions you can consider:
How are you going to find out what your markets want and then
give it to them? How are you going to let them know that you
exist? How are you going to assure that they are happy and bring
others back with them? Who are your target markets and who are
your secondary markets?648
This all adds up to a marketing plan that according to Christopher Lovelock
should include situation analysis, marketing program goals, marketing strategies,
marketing budget, marketing action plan and schedule, and monitoring system. In
particular, marketing strategies address the following:
 Positioning
 Target segments
 Competitive differentiation
 Value proposition: distinctive benefits
 Marketing mix
 Core product, supplementary services, and delivery systems
 Price and trade terms (if selling through intermediaries)
 Marketing communication: advertising, personal selling,
promotion, and so on649
Because of the importance of marketing to the success of many strategies
related to lines of business, it is a good idea to consider employing the services of
marketing consultants. It is unlikely that most nonprofit will have the expertise
onboard to get to heart of marketing strategies. Fortunately, many marketing firms
offer a mix of pro bono and paid services.
Money
Money is about knowing how much you have, how much you need, when
you need it, and where you will get it. To answer the first three questions and at a
minimum, you will need a balance sheet, a profit and loss statement, and a cashflow projection:
 Balance sheet (“Statement of Financial Position”). This is the window
into the nonprofit’s financial health. It lays out lots of good, cumulative
information about the assets and liabilities of the organization and is the
source for many of the components of the financial ratios.
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 Profit and loss statement (Statement of Activities). On an agency basis,
this statement should show the extent of the organization’s profitability.
Individual program statement of profit and loss do the same thing and
should go to every manager whose program produces receivables.
 Cash-flow projection. It’s much easier to plan for a cash-flow disaster
than to be surprised by one. Someone familiar with your nonprofit’s
operation should be putting together a cash-flow project stretching out
one year in advance, or at the very least every quarter.650
All three reports need to take into account the start-up costs and operating
costs of the strategy under consideration. Start-up costs are what it takes to get the
strategy going and include capital costs like equipment purchases or facility rent
and non-capital costs like licenses and consulting fees. These three reports are
generally called pro forma financials and address the following questions from
Peter Brinkerhoff:




What are your break-even projections per month and per year?
How long will it take to reach your break-even numbers?
Can you afford to lose money for that long a period of time?
Do you have a projection of income and expense for three years, and a
cash flow projection for three years?651
These aren’t the only reports you might consider and the ratios earlier
discussed are not the complete universe. But as noted, these are the basic ones you
need and you can always add more.
When it comes to where you’ll get the money, you are talking about
sources both earned, unearned, and borrowed. The easiest place to find the money
may be the operating reserves you’ve built up over the years through modest
surpluses. Another place is those underperforming or inconsequential lines of
business that can be carefully jettisoned. Of course, your strategy may be fundable
through a variety of sources including donors or through debt financing. No matter
where you get the money, get it you must. Undertaking a strategy without having
your sources identified up front is inviting disaster. This is because once the
strategy has been launched, the case for funding is dramatically reduced in stature.
The performing arts center complex that was a capstone of my career – the
$130 million hybrid project of nonprofit arts center, for-profit garages and
food/event services, and private equity condominium tower that opened its doors
on a cold March weekend – was undercapitalized from the get-go relative to
endowment to cover operating costs. Though $13 million was in the original
capital campaign and was achieved, it was never enough to do the job as at least
$7 million more was needed. Once we realized this, the building was coming out
of the ground and the capital campaign was winding down. We did our best to
reboot the campaign, but the groundswell of support that had been there just
March 6, 2016 Page 231
months earlier had evaporated. We achieved significantly less in this after-glow
campaign.
Thinking that you can launch a strategy and the money will follow is
wishful thinking at best. Your leverage is before the launch, not once it’s up and
running. Know how much you have, how much you need, when you need it, and
where you will get it.
One of the places that board members and funders will often suggest is
collaborating with other agencies. Alliances of one sort or another have been
extremely durable strategies not only for saving money, but reducing duplication
of services, launching new programs, and doing things that you can’t do on your
own. This is not necessarily a bad idea even if the most for-profit mergers fail.652
Although there are far fewer nonprofit mergers,653 the success rate appears to be
much higher; expert David La Piana pegs his own success rate at about 70
percent.654
The central question here is not whether mergers work, but whether they
save money that can be reallocated to your strategies. Unfortunately, the news here
isn’t particularly promising. Linda Lampkin, former director of the National
Center for Charitable Statistics, says that “bigger isn’t always better or more
efficient;”655 Jan Masaoka, formerly of CompassPoint concludes that “nonprofit
mergers don’t result in reducing administrative costs;”656 and Robert Harrington,
with La Piana Associates agrees, “Organizations probably should not enter into a
merger with the primary goal of saving money.”657
There are two things to keep in mind about alliances. First, you need a
better reason for doing them than saving money. Second, keep David La Piana’s
thoughts in mind, “Collaboration often offers real advantages ‘on the ground,’
where services are coordinated, but at a stiff price. Many times, the results of
collaboration do not justify the effort; resources are dispersed and the need for
collaborative coordination grows.”658
Management
Management includes a potpourri of issues including corporate structuring
(e.g. for-profit, non-profit), tax issues (e.g. unrelated business income tax,
organizational structure), and organizational matters (e.g. delegation and
accountability).
Many agencies I work with bring up these topics early on, but I always
discourage going into too much detail especially about the first two issues. First
when it comes to corporate structuring, it is “overused, overrated, and
misunderstood.”659 Second, when it comes to the tax issues, words of wisdom
March 6, 2016 Page 232
come from Peter Brinckerhoff, “If your organization makes a profit from activities
not included in your mission statement, your organization, like any other, should
pay a tax on those profits. That’s it. Pretty simple and straightforward.”660 And
based upon the research, if you find yourself having to pay those taxes, count
yourself lucky as profitability is elusive.
It’s not that these corporate structure or tax issues aren’t important; it is just
that when you need to address these, you won’t to do it on your own. The best
advice about these is to get capable counsel and let them guide you. Moreover,
these are questions that among the final ones you will address and often when
you’re well into implementation.
The other question of organizational matters is worth thinking about now.
The delegation question of who does what needs to be answered as does the
accountability question of when did it happen. Many a strategy has been brought
to its knees in implementation because no one thought about these questions.
You will also want to consider the matter of where the strategy will live
relative to the reporting relationships. In the performing arts center I helmed, we
decided to implement a new line of business to celebrate the diversity of our
community. A capable person was hired to head up the effort that was imbedded
in the programming group where all the programming activity lived including the
massively important Broadway Series. The programming group also contained the
marketing function.
Because the new diversity program was tiny compared to the Broadway
Series, the diversity director couldn’t catch a break for resources. She could
program the events, but getting the marketing department to pay attention was
next to impossible. And who could blame them? A little gospel quartet can’t
compete for attention against a big Broadway show like Phantom of the Opera.
The diversity program never quite got off the ground, never achieved its promise.
A better approach would have been to set up a diversity group with its own team
including marketing in a different set of offices away from the programming group
and reporting directly to my office.
The questions you want to ask when it comes to management of the
strategy are big and little. Ones like corporate structure and issues are best
addressed with capable outside counsel and later on. Organizational matters like
reporting relationships, space, resources, can be handled internally, but should be
dealt with well before implementation.
March 6, 2016 Page 233
Final Answer
Making the final decision about whether to go forward with your strategy
requires a look at contingencies for what could go wrong, considering whether to
do a business plan, and coming to your final answer about the strategy you are
considering.
Contingencies
Before you close out Final Answers, it is very important to do some work
around contingencies for when something goes wrong. And something will go
wrong, “You may as well accept it right up front, before you take another step
toward implementation: reality will not follow your plan.”661 There is not a
strategy on earth that didn’t somehow stumble in implementation. Don’t forget the
words of Scott Anthony borrowed from the great Prussian General Helmuth von
Moltke: “No business plan ever survived its first encounter with the market.”662
That’s why you need to think about contingencies up front. The reason is
eloquently summarized by Donald Rumsfeld:
There are known knowns. These are things we know that we know.
There are known unknowns. That is to say, there are things that we
know we don't know. But there are also unknown unknowns.
There are things we don't know we don't know.663
What can go wrong with your strategy? Plenty. Here are the reasons for
why business plans fail from Patricia Caesar and Thomas Baker:
In some cases it is simply because the plan was based on a bad
strategy in the first place – a product or service for which there is
no market, a new venture that doesn’t fit with the organization’s
brand or capabilities. Far more often, however, the idea and the
strategy are good enough, but the organization fails to follow
through on and execute the plan. . . These details of execution are
not details at all – in many cases they make the difference between
a plan’s success or failure.664
The checklist for anticipating these problems includes the following
questions:






Have you validated your idea in the marketplace?
Are your pricing and revenue assumptions correct?
Have you put the right performance metrics in place?
Do you have the right team?
Are expectations in your organization set at the right level?
What if reality does not follow the plan?665
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Here are Rosabeth Moss Kanter’s four classic traps for why innovations
fail:
1) Strategy Mistakes: Hurdles Too High, Scope Too Narrow . . . in seeking
the killer app, managers may reject opportunities that at first appear too
small, and people who aren’t involved in the big projects may feel
marginalized.
2) Process Mistakes: Controls Too Tight . . . the impulse to strangle
innovation with tight controls – the same planning, budgeting, and
reviews applied to existing businesses.
3) Structure Mistakes: Connections Too Loose, Separations Too Sharp . . .
companies must be careful how they structure . . . to avoid a clash of
cultures or conflicting agendas. The most dramatic approach is to create
a unit apart from the mainstream, which must still serve its embedded
base.
4) Skills Mistakes: Leadership Too Weak, Communication Too Poor . . .
Undervaluing and underinvesting in the human side of innovation666
A different way to think about what can go wrong comes from
BoardSource’s most recent governance index. Responses from 2,152 board and
staff members put their most pressing organizational challenges in order of
priority. Number one was financial sustainability closely followed fundraising,
and then strategy.667 In other words, what holds you back will be a lack of financial
sustainability and fundraising; what takes you forward will be strategy. But it is
not a mutually exclusive choice of one over the other. Nor should it be. It is the
combination of operational effectiveness and competitive strategy that is essential
to success.668 That is, you must keep these two approaches in balance.
Operational effectiveness and competitive strategy go hand in hand. Or as
Andy Grove of Intel fame puts it, “I don’t think we should forget that there is
more to running an enterprise, small or large, than strategy . . . Figuring out what
to do is important . . . Doing [it] well is equally important.”669 Do not be seduced
by the allure of the former at the expense of the latter. As Larry Bossidy and Ram
Charan warn:
When companies fail to deliver on their promises, the most
frequent explanation is that the CEO’s strategy was wrong. But the
strategy itself is not often the cause. Strategies most often fail
because they aren’t executed well. Things that are supposed to
happen don’t happen. Either the organizations aren’t capable of
making them happen, or the leaders of the business misjudge the
challenges their companies face in the business environment, or
both.670
The workaround to dealing with the known and unknown is to craft a fourpoint compass of indicators that are vitally important to the success of your
March 6, 2016 Page 235
strategy. You can use whatever grouping you like that are relevant to the strategy,
but consider the following ones to begin with:
 Marketing – What must your customer do for your strategy to succeed?
 Muscle – What must happen with organizational capacity?
 Money – How much money you have, how much you need, where will
you get it, and when?
 Measures – What are the few early-warning measures that must be
tracked religiously?
Once you have clarified these for your strategy, you will have four groups
of key indicators – a compass of sorts – to let you know when things are off
course. You then construct brief scenarios about what you will do, your
contingency plan, for each of the four elements. These contingency plans should
not be overly complicated, but have enough structure to guide first responders to
whom you have delegated accountability for tracking each of the indicators.
Business Plan
Business plans are one way to pull all the pieces together for a final answer
about whether to go forward or not. Although about half of all nonprofits
launching ventures skip this step and move right to implementation, a little over
half find do a business plan.671 In the for-profit sector, the number is lower; Amar
Bhide learned that only three in 10 founders of entrepreneurial companies wrote
up full-blown business plans and two out of five had no plan at all.672
For some, a business plan is quite similar to the Results Now Master Plan.
Says Jeanne Rooney, “A business plan is not just one forecast about one program,
one function, or one resource. Instead it is a blend of the expectations about
multiple factors into one plan framing the future.”673 Others see the business plan
as a communication device used primarily to represent a specific strategy to
stakeholders in general and funders in particular.674 On the whole, the business
plan is both pitch and plan.
For William Sahlman, the most effective business plans focus on four
factors: people, opportunity, context, and risk and reward.675 For Peter Brinkerhoff,
the business plan should have the following contents:
A title page identifying the business plan as the property of your
organization.
A table of contents.
A summary of the plan.
A description of your organization and its business.
A description of the market for your product or service.
March 6, 2016 Page 236
A marketing plan.
A financial plan.
Business plan goals and objectives with a time line.
An appendix (if needed).676
The Small Business Administration’s template for a business plan contains
the following table of contents:
I. The Business
A.
B.
C.
D.
E.
F.
Description of business
Marketing
Competition
Operating procedures
Personnel
Business insurance
II. Financial Data
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
Loan applications
Capital equipment and supply list
Balance sheet
Breakeven analysis
Pro-forma income projections (profit & loss statements)
Three-year summary
Detail by month, first year
Detail by quarters, second and third years
Assumptions upon which projections were based
Pro-forma cash flow
III. Supporting Documents
A. Tax returns of principals for last three years Personal
financial statement (all banks have these forms)
B. For franchised businesses, a copy of franchise contract and
all supporting documents provided by the franchisor
C. Copy of proposed lease or purchase agreement for building space
D. Copy of licenses and other legal documents
E. Copy of resumes of all principals
F. Copies of letters of intent from suppliers, etc.677
You might also consider the many excellent software providers that provide
comprehensive tools for business planning. Among the most popular is Business
Plan Pro from Palo Alto Software, which offers the user three different templates –
simple, standard, and financials only – along with a plentiful database of sample
for-profit and nonprofit business plans.
March 6, 2016 Page 237
Because many of the necessary issues have been explored in the First Cut
and Final Answers, putting a business plan together is easier to do. But keep in
mind William Sahlman’s warning:
Most waste too much ink on numbers and devote too little the
information that really matters to intelligent investors. As every
seasoned investor knows, financial projections for a new company
– especially detailed, month-by-month projections that stretch out
for more than a year – are an act of imagination.678
Final Answer
How to pull all of the diverse pieces together to come up with the Final
Answer is not an easy task. But by summarizing the case for and against each
strategy and availing yourself of the information from the decision making results
in Good Ideas and First Cut, you can put together a strong discussion document
and reach a final answer about what to do next. The question here is a simple
albeit critically important one: Is your strategy feasible based upon what you know
now and in line with your Purpose?
Before coming to the final answer, keep in mind that the launch of a major
strategy often requires a commensurate change effort within the organization.
Unfortunately, most change efforts fail. Says Peter Senge, “Clearly, businesses do
not have a very good track record in sustaining significant change. There is little to
suggest that schools, healthcare institutions, governmental, and nonprofit
institutions fare any better.”679 After a decade of observation, change expert John
Kotter comes to the same conclusion, “A few of these corporate change efforts
have been very successful. A few have been utter failures. Most fall somewhere in
between with a distinct toward the lower end of the scale.”680
One of the fundamental reasons for the dismal track record is because
people resist change.681 Indeed, people in organizations “often resist change even
when their environments threaten them with extinction.”682 James O’Toole puts it
as direct as it comes, “In all instances of modern society, then, change is
exceptional. When it comes about, it does so primarily as a response to outside
forces.”683
It’s convenient to blame change failures on the people who resist change,
but many times, resistance is the right thing to do. When an organization looks
major change in the eye, say Clayton Christensen and Michael Overdorf, “the
worst possible approach may be to make drastic adjustments to the existing
organization. In trying to transform an enterprise, managers can destroy the very
capabilities that sustain it.”684
Before closing, you have one last chance to reconsider your decision to go
forward by using a list of questions from Jeffrey Pfeffer and Robert Sutton:
March 6, 2016 Page 238
1.
2.
3.
4.
5.
6.
7.
8.
Is the practice better than what you are doing right now?
Is the change really worth the time, money, and disruption?
Is it best to make only symbolic changes instead of core changes?
Is doing the change good for you, but bad for the company?
Do you have enough power to make the change happen?
Are people already overwhelmed by too many changes?
Will people be able to learn and update as the change unfolds?
Will you be able to pull the plug? 685
If you arrive at thumbs up, consider whether you have the four essential
elements required for leading change:
1. People are dissatisfied with the status quo
2. The direction they need to go is clear (at least much of the time) and
they stay focused on that direction
3. There is confidence conveyed to others – more accurately
overconfidence – that it will succeed (so long as it is punctuated by
reflective self-doubt and updating as new information rolls in)
4. They accept that change is a messy process marked by episodes of
confusion and anxiety that people must endure. 686
Of all these steps, the first is most salient, “Dissatisfaction proves people to
question old ways of doing things and fuels motivation to find and install better
new ways – especially when leaders can find ways to dampen fear and increase
trust and psychological safety.” 687
Just remember, “Even presumably good changes carry substantial risks
because of the disruption and uncertainly that occur while the transformation is
taking place. That’s why the aphorism ‘change or die’ is empirically more likely to
be ‘change and die.’”688 And don’t forget the words of Michael Porter, “The
essence of strategy is choosing what not to do.”689 Or as late David Packard once
warned, “More businesses die from indigestion than starvation.”690
March 6, 2016 Page 239
Appendix D: Board Meeting
Advance Information Template
Table of Contents
Topic
1. Call to Order
a. Minutes of Last Meeting
b. Consent Agenda
2. Accountability
a. Financials
b. Executive Director Summary
c. Governance
3. Central Meeting Content
4. No surprises discussion
5. Chair’s Comments
6. Open discussion
7. assessments
8. Adjournment
BOARD MEETING AGENDA
Convener
Chair
Treasurer
Executive Director
Vice Chair
TBA
Executive Director
Chair
Chair
Chair
Chair
Minutes See Page #
5
10
10
10
60
5
5
10
5
120
EXECUTIVE SUMMARY
Overview
Lines of Business
RESULTS NOW MASTER PLAN
STRATEGIC PLAN
OPERATING PLAN
Where to go tomorrow? What gets done today?
Lines of Business
goals
success measures
Budget
vision
PURPOSE
Delegation
Who does what?
Duties
Guidelines
Why?
Accountability
When did it happen?
Agendas
Assessments
GOVERNANCE PLAN
Purpose – Why
Mission
Values
March 6, 2016 Page 240
Strategic Plan – Where to Go Tomorrow
Lines of Business
Success Measures
Year 5
Year 4
Year 3 Last Year
This Year
Plan
Forecast
Next
Year
Mission
Lines of Business
Vision
Statement
Strategies
Operating Plan – What Gets Done Today
Goals
Department Map
Board of Directors
Board Chair
Committee
Committee
Committee
Committee
Executive Director
Administration
Board goals
Officers
Committees
Staff goals
Administration
Development
Marketing
Programming
Development
Marketing
Programs
March 6, 2016 Page 241
Budget
ACTUAL
BUDGET
For Yr Ending For Yr Ending
X/XX/XX
X/XX/XX
PROFIT AND LOSS
REVENUE
Earned Revenue
Contributed Revenue
Total Revenue
EXPENSES
Program Services
Management and General
Fundraising
Total Expenses
Net Revenue
Add Back Accrual Expenses
Cash Net Revenue
BALANCE SHEET
Assets
Total Assets
Liabilities
Net Assets
Total Liabilities & Net Assets
FORECAST
For Yr Ending
X/XX/XX
DIFFERENCE
Column 3 less
Column 2
March 6, 2016 Page 242
Governance – Delegation: Who does what
Duties and Guidelines
Board
Board Duties
Committee Duties
Officer Duties
Board, Committee, and Officer Guidelines
Board Member
Duties
Guidelines
Executive Director
Duties
Guidelines
Governance – Accountability: When Did It Happen
Annual Agenda
Who-When-Where
Full Board – February
Full Board – May
Full Board – July
Full board – September
Full board – November
Full board – December
What
Results Now Master Plan first draft
Results Now Master Plan final draft
Assessments
Board Assessment Summary
Board Duties: (4=best)
Feb May
Jul
Sep Oct Dec
Board Guidelines: (4=best)
Comments: (most recent)
What should we discuss at
upcoming meetings?
What did you like about the
meeting?
Board Member Assessment Summary
Board Member Duties: (4=best)
What did you not like about this
meeting?
Feb May
Jul
Sep Oct Dec
Board Member Guidelines: (4=best)
Comments: (most recent)
What can be done to help you do
your best as a board member?
What do you like about being a
board member?
What don’t you like about being a
board member?
March 6, 2016 Page 243
Executive Director Assessment Summary
Executive Director Duties: (4=best)
Feb May
Jul
Sep Oct Dec
Executive Director Guidelines: (4=best)
Comments: (most recent)
What should our executive
director discuss at the next board
meeting?
What do you like about the way
What one thing would you change
our executive director works with about the way our executive
the board and/or board members? director works with the board
and/or board members?
Board Member Attendance
Feb May
Jul
Sep Oct Dec
%
APPENDIXES
Minutes
Motions
Contact Information
Miscellaneous
Board Meeting Assessment Form
Board Duties: Circle how well the full board did today to accomplish its duties (4=best)
1
2
3
4
1
2
3
4
1
2
3
4
Board Guidelines: Circle how the full board did today to respect its guidelines (4=best)
1
2
3
4
1
2
3
4
1
2
3
4
Comments:
What did you not like about this
What should we discuss at
What did you like about the
upcoming meetings?
meeting?
meeting?
March 6, 2016 Page 244
Board Member Assessment Form
Board Member Duties: Circle how you have done recently to accomplish your duties (4=best)
1
2
3
4
1
2
3
4
1
2
3
4
Board Member Guidelines: Circle how you have done recently to respect your guidelines (4=best)
1
2
3
4
1
2
3
4
1
2
3
4
Comments:
What can be done to help you do What do you like about being a
What don’t you like about being a
your best as a board member?
board member?
board member?
Executive Director Assessment Form
Executive Director Duties: Circle how the ED has done recently to accomplish the duties (4=best)
1
2
3
4
1
2
3
4
Executive Director Guidelines: Circle how the ED has done recently to respect the guidelines (4=best)
1
2
3
4
1
2
3
4
1
2
3
4
Comments:
What should our executive
What do you like about the way
What one thing would you change
director discuss at the next board our executive director works with about the way our executive
meeting?
the board and/or board members? director works with the board
and/or board members?
March 6, 2016 Page 245
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H. Mintzberg, 1994a, p. 111
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M. M. Stone, B. Bigelow and W. Crittenden, 1999, p. 409
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K. LeRoux and N. S. Wright, 2010, p. 583
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R. S. Kaplan and D. P. Norton, 1996, p. 81
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J. Carver and M. M. Carver, 1997, p. 30
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W. G. Bowen, 1994b, p. 29 italics as written
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P. B. Crosby, 1979, p. 66
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J. Peters and T. Wolfred, 2001, p. 4
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Ibid., p. 21
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Ibid., p. 3
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J. G. Dees and P. Economy, 2001, p. 1
J. Carver, 1997; R. Chait, T. Holland and B. Taylor, 1996; J. G. Dees, P. Economy and J. Emerson, 2001;
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J. Peters and T. Wolfred, 2001, p. 14
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Ibid., p. 20
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P. Light, 2002a, pp. 9-10
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Ibid., p. 10
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C. J. D. Vita and C. Fleming, 2001, p. 4
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P. Light, 2002a, p. 12
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Ibid., p. 9
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L. Brenner, 2008, p. 8
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J. Peters and T. Wolfred, 2001
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How the economy looks to you, 2008
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C. B. Handy, 1998, p. xix
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C. Letts, W. P. Ryan and A. Grossman, 1999
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P. F. Drucker, 1974, p. 45
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K. S. Cameron, 1986, pp. 539-544
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D. P. Forbes, 1998, p. 183
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R. Herman and D. Renz, 1999, p. 121
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B. Wolverton, 2004
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R. Herman and D. Renz, 1999, p. 122
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P. F. Drucker, 1999, p. 8
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C. Gunter, 2003
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D. L. Farror, E. R. Valenzi and B. M. Bass, 1980
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A. M. Parhizgari and G. R. Gilbert, 2004, p. 221; ibid.
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J. Peters and T. Wolfred, 2001
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M. Wiersema, 2002
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N. Kleiman and N. Rosenbaum, 2007, p. 4
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R. D. Shriner, 2001, emphasis as written
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D. Renz and R. Herman, 2004, p. 10
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R. Herman and D. Renz, 1998, pp. 25-26
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R. Herman and D. Renz, 2004, p. 695
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D. Renz and R. Herman, 2004, p. 10 bolded as written
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M. E. Porter, 1996, p. 62
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D. Renz and R. Herman, 2004, p. 10
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D. Linnell, 2003, p. 5
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E. E. Olson and G. H. Eoyang, 2001, p. 62
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P. Sellers and E. Gustafson, 2009
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J. C. Collins and J. I. Porras, 1994, p. 10
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R. Herman and D. Renz, 2003, p. 6
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R. Herman and D. Renz, 2008, p. 405
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D. Renz, 2005
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K. S. Cameron, 1984, p. 279
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A. S. Tsui, 1984, p. 93
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R. M. Kanter and D. Brinkerhoff, 1981, p. 345
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M. M. Stone and S. Cutcher-Gershenfeld, 2002, p. 39
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B. Blumenthal, 2003, pp. 21,
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What? Me Measure?, 2004, p. 5
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K. P. Enright, 2004, pp. 10-11
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K. S. Cameron and D. A. Whetten, 1983, p. 2
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R. Cohen, 2004, pp. 147-148
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K. S. Cameron, 1986, p. 544
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J. E. Sowa, S. C. Selden and J. Sandfort, 2004, pp. 711-712
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R. Herman and D. Renz, 1997, p. 202
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K. S. Cameron and D. A. Whetten, 1983, p. 2
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R. Herman and D. Renz, 1997, p. 202
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P. Connolly and P. York, 2002, p. 33; K. P. Kearns, 2004, p. 438
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R. Cohen, 2004, p. 4; D. Linnell, 2003, p. 13; P. McPhee and J. Bare, 2001, p. 1
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P. Connolly, P. York, S. Munemitsu, C. Ruiz-Healy, A. Sherman and C. Trebb, 2003, p. 1; ibid.
75
Organizational effectiveness - updated, 2003
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L. Campobasso and D. Davis, 2001, p. 4
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B. Kibbe, 2004, p. 4
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K. P. Kearns, 2004, p. 437
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D. Linnell, 2003, p. 13
80
Ibid., p. 13
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B. Kibbe, 2004, p. 4
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J. E. Lee, ibid., pp. 64-65
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B. Kibbe, ibid.
84
C. Letts, W. P. Ryan and A. Grossman, 1999
85
P. Light, 2002b, p. 30
86
R. Herman and D. Renz, 1999, p. 123
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P. Light, 2002b
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R. Herman and D. Renz, 1998
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P. B. Crosby, 1979, p. 66
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G. A. Miller, E. Galanter and K. H. Pribram, 1960
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D. Lester, 1995, p. 72
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J. M. Burns, 1978, p. 455
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R. A. Heifetz, 1994; P. G. Northouse, 2001; G. Yukl, 2002
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D. Rigby, 2003, p. 2
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C. Krauss, 2003
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W. G. Bennis and R. J. Thomas, 2002
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D. Rigby and B. Bilodeau, 2009
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P. Light, 2002b, pp. 171-176
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Ibid., pp. 171, 176
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S. J. Wiener, A. D. Kirsch and M. T. McCormack, 2002, p. 68
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2005 MSO Benchmarking Survey Results, 2005
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S. J. Wiener, A. D. Kirsch and M. T. McCormack, 2002
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Ibid., p. 26
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P. Light, 1998, p. 16
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R. S. Kaplan and D. P. Norton, 1996, p. 82
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K. M. Hopkins and C. Hyde, 2002, p. 11
107
Ibid., p. 11
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H. Mintzberg, 1994b, p. 324
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H. Mintzberg, 1994a, p. 111
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D. Lovallo and D. Kahneman, 2003, p. 57
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S. J. Wiener, A. D. Kirsch and M. T. McCormack, 2002, p. 66
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T. Wolfred, M. Allison and J. Masaoka, 1999
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J. M. Bryson, 1995
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M. Allison and J. Kaye, 1997, pp. 52-53
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B. W. Barry, 1997
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R. Bradford, J. P. Duncan and B. Tarcy, 2000, pp. 30-31
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J. C. Collins and J. I. Porras, 1994, p. 9
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C. R. Schwenk and C. B. Shrader, 1993, p. 60
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Ibid., p. 152
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H. Mintzberg, 1994b, p. 342
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H. Mintzberg, 1978, p. 943; ibid., p. 943
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J. A. Kay, 1995, p. 266
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B. K. Boyd, 1991, p. 369
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N. Capon, J. U. Farley and J. M. Hulbert, 1994, pp. 109-110
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C. Miller and L. Cardinal, 1994, p. 1662
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M. M. Stone, B. Bigelow and W. Crittenden, 1999, p. 391
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P. Light, 2002b
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M. M. Stone, B. Bigelow and W. Crittenden, 1999, p. 391
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R. Herman and D. Renz, 1999, p. 117
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J. I. Siciliano, 1997, p. 387
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M. M. Stone, B. Bigelow and W. Crittenden, 1999, p. 391
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H. Mintzberg, 1994b, p. 333
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D. Myers and A. Kitsuse, 2000, p. 221
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H. Mintzberg, 1994b, p. 379
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J. C. Collins and J. I. Porras, 1994, p. 9
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L. Bossidy, R. Charan and C. Burck, 2002, p. 15
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H. Mintzberg, 1994b, p. 393
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L. D. Goodstein, T. M. Nolan and J. W. Pfeiffer, 1993, pp. 4-5
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E. D. Beinhocker and S. Kaplan, 2002, p. 51
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M. Allison and J. Kaye, 1997, pp. 7-8
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J. M. Bryson and F. K. Alston, 1996
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J. M. Bryson, 1995, p. 7
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B. W. Barry, 1997
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W. G. Bowen, 1994b, p. 29
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H. Gardner and E. Laskin, 1995, p. 43
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D. Rigby and B. Bilodeau, 2009
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P. Light, 2002b, pp. 171, 176
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2005 MSO Benchmarking Survey Results, 2005
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M. M. Stone, B. Bigelow and W. Crittenden, 1999, p. 409
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Ibid., p. 409
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L. R. Frank, 2001, p. 833
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W. F. Crittenden, V. L. Crittenden, M. M. Stone and C. J. Robertson, 2004, p. 99
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W. E. Crittenden, V. L. Crittenden and T. G. Hunt, 1988, p. 68
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S. R. Covey, 1989, p. 76
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P. Light, 1998, p. 23
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L. R. Frank, 2001, p. 934
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E. D. Beinhocker and S. Kaplan, 2002, p. 55
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R. Herman and D. Renz, 1999, p. 117
164
Ibid., p. 123
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H. Mintzberg, 1994a, pp. 415-416
166
M. E. Porter, 1987, p. 18
167
P. F. Drucker, 1990, p. 152
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H. Mintzberg, 1994a, p. 111
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J. Carver and M. M. Carver, 1997, p. 30
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W. G. Bowen, 1994b, p. 29
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J. Carver, 1997
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J. L. Brudney and P. D. Nobbie, 2002
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C. Oliver and M. Conduff, 1999
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P. D. Nobbie and J. L. Brudney, 2003
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S. R. Covey, 1989, pp. 70-71
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P. F. Drucker, 1990, p. 152
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A. Hill and J. Wooden, 2001, p. 72
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H. Mintzberg, B. W. Ahlstrand and J. Lampel, 1998, p. 11
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L. R. Frank, 2001, p. 791
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T. J. Peters and R. H. Waterman, 1982, p. 13
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E. D. Beinhocker and S. Kaplan, 2002, p. 53 bolded as written
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C. Crowe, 1998, pp. 34-36
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Ibid., p. 34
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Ibid., p. 38
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D. H. Pink, 2009, p. 204
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R. Dawkins, 1989; R. Shorrock, 2007
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J. Ciulla, 1995, p. 5
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L. K. Treviño and K. A. Nelson, 2007, p. xv
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B. George, 2003, p. 1
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T. M. Jones, 1991, p. 366
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National business ethics survey: An inside view of private sector ethics, 2007, p. v
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National business ethics survey: Ethics in the recession, 2009, p. 10
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R. E. Freeman and L. Stewart, 2006, p. 2
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J. Badaracco, 2002, p. 35
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R. E. Freeman and L. Stewart, 2006, p. 2
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L. K. Treviño and M. E. Brown, 2004, pp. 71-72
200
National business ethics survey: An inside view of private sector ethics, 2007, p. 9
201
Ibid., p. 9
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K. S. Cameron and R. E. Quinn, 1999, p. 14
203
E. H. Schein, 1999
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J. C. Collins and J. I. Porras, 1994, p. 71
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G. Yukl, 2006, pp. 291-292
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S. Harter, 2002, p. 382
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F. Luthans and B. J. Avolio, 2003, p. 242 italics removed
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B. J. Avolio, W. L. Gardner, F. O. Walumbwa, F. Luthans and D. R. May, 2004, p. 802
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F. Luthans and B. J. Avolio, 2003, pp. 248-249
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J. H. Davis, F. D. Schoorman, R. C. Mayer and H. H. Tan, 2000
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L. Huff and L. Kelley, 2003
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J. M. Kouzes and B. Z. Posner, 2002, p. 14
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J. C. Collins and J. I. Porras, 1994, p. 73
214
J. Winokur, 1992, p. 194
215
J. C. Collins and J. I. Porras, 1994, p. 73
216
P. F. Drucker, 1989, p. 89
217
Ibid., p. 89
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P. Light, 1998, pp. 254-255
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C. E. Larson and F. M. J. LaFasto, 1989, p. 27
220
C. K. Bart, 1997, p. 9
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J. A. Phills, 2004, p. 52
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V. K. Rangan, 2004, pp. 112, 114
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F. David and F. David, 2003, p. 11
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J. A. Pearce II, 1982, p. 15
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M. Allison and J. Kaye, 1997, p. 57
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J. C. Collins and J. I. Porras, 1994
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D. Rigby and B. Bilodeau, 2009
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J. A. Phills, 2004, p. 52
230
P. Sellers and E. Gustafson, 2009
231
Quoted in K. Blanchard and S. Bowles, 1993, pp. ix-x
232
P. F. Drucker and J. C. Collins, 2008, p. 2
233
Ibid., p. 23
234
Ibid., p. 23
235
Ibid., p. 25
236
Ibid., p. 26
Numbers in parenthesis are results of a multi-voting rating process where participants could vote $3,
$2, and $1 in any combination for their highest rated grouping of ideas; higher numbers = higher rating.
237
238
J. A. Pearce II and F. David, 1987, p. 109
239
M. E. Porter, 1996
240
D. La Piana, 2008
241
M. E. Porter, 1996, p. 62
242
D. La Piana and M. Hayes, 2005, p. 22
243
T. O. Jones and W. E. Sasser, Jr., 1995, p. 89 italics removed
244
F. F. Reichheld, 2001, p. 2
245
D. La Piana, 2008, p. 36
246
M. A. Hitt, R. D. Ireland and R. E. Hoskisson, 2009
247
D. H. Pink, 2009, pp. 154-155
248
J. Carver and M. M. Carver, 1997, p. 144
249
C. Finney, 2008
250
P. F. Drucker, 1999, p. 20
251
J. C. Collins and J. I. Porras, 1994, p. 9
252
Muggsy Bogues, 2010
March 6, 2016 Page 265
253
M. E. Porter, 1998
254
M. A. Hitt, R. D. Ireland and R. E. Hoskisson, 2009, p. 4
255
D. La Piana and M. Hayes, 2005, p. xx
256
H. Mintzberg, 1994a, p. 111
257
Powering social change: Lessons on community wealth generation for nonprofit sustainability, 2003
258
M. E. Porter, 1998, p. xxviii
259
Ibid.
260
R. D. Shriner, 2001
261
G. Mandler, 1967; G. A. Miller, 1956
262
C. Miller, 2008b
263
R. S. Kaplan and D. P. Norton, 1992, p. 71
264
M. E. Porter, 1998, p. xxviii
265
W. G. Bowen, 1994b, p. 9
266
J. C. Collins, 2005, p. 5
267
M. E. Porter and M. R. Kramer, 1999, p. 124
268
R. E. Herzlinger, 1996, p. 99
269
R. M. Kanter and D. V. Summers, 1987, p. 154
270
P. F. Drucker, 1989, p. 89
271
Y. Baruch and N. Ramalho, 2006; J. Masaoka, 2005
272
L. Silverman and L. Taliento, 2006, p. 39
273
B. A. Weisbrod, 2002, p. 275
274
S. Kerr, 1975
275
The sector's future depends on boards, 1996, p. 10
276
D. Renz and R. Herman, 2004, p. 10
277
W. G. Bowen, 1994b, p. 127
278
M. E. Porter, 1998, p. xxviii
279
J. S. Livingston, 1988, p. 126
280
H. Hatry, T. v. Houten, M. Plantz and M. Taylor, 1996, p. 8
281
C. Miller, 2010, p. 24
282
T. McLaughlin, 2001, p. 255
283
K. A. Froelich, T. W. Knoepfle and T. H. Pollak, 2000, p. 251
284
L. R. Frank, 2001, p. 791
285
M. E. Porter, 1998, p. xxviii
286
C. Crowe, 1998, p. 38
March 6, 2016 Page 266
W. G. Bennis and B. Nanus, 1997, p. 17; J. Collins and J. Porras, 1991, p. 30; S. R. Covey, 1989, p. 101;
M. De Pree, 1989, p. 9; J. Kotter, 1990, p. 5; J. M. Kouzes and B. Z. Posner, 1995, p. 95; P. M. Senge,
1990, p. 206
287
Y. Berson, B. Shamir, B. J. Avolio and M. Popper, 2001, p. 54; J. A. Conger, 1989, p. 29; J. W. Gardner,
1990, p. 130; M. Sashkin, 1995, p. 403; N. M. Tichy and M. A. Devanna, 1986, p. 28
288
289
W. G. Bennis, 1989, p. 194
290
P. B. Vaill, 2002, p. 18
291
P. M. Senge, 1990, p. 206
292
P. B. Vaill, 2002, p. 28
293
G. Yukl, 2002, p. 283
294
L. Larwood, C. M. Falbe, P. Miesing and M. P. Kriger, 1995
295
W. G. Bennis and B. Nanus, 1997
296
J. Kotter, 1990, p. 68
297
H. Mintzberg, 1994b, pp. 209-210
298
J. M. Strange and M. D. Mumford, 2002, p. 344
299
B. Nanus, 1992, pp. 8-9
300
R. Awamleh and W. L. Gardner, 1999, p. 359
301
J. R. Baum, E. A. Locke and S. A. Kirkpatrick, 1998, p. 52
302
J. Kotter, 1990
303
H. Mintzberg, 1994b, p. 293
304
L. Korn, 1989, p. 157
305
J. Kotter, 1996; L. Larwood, C. M. Falbe, P. Miesing and M. P. Kriger, 1995; B. Nanus, 1992
306
W. G. Bennis and R. J. Thomas, 2002
307
D. Rigby, 2003; D. Rigby and B. Bilodeau, 2009
308
B. M. Bass and R. M. Stogdill, 1990
309
A. E. Rafferty and M. A. Griffin, 2004, p. 348
310
B. Shamir, E. Zakay, E. Breinin and M. Popper, 1998, p. 400
311
All in a day's work, 2001, p. 58
312
N. M. Tichy and E. B. Cohen, 1997, p. 173
W. G. Bennis and B. Nanus, 1997; P. B. Crosby, 1979, p. 66; J. Kotter, 2000; N. M. Tichy and E. B.
Cohen, 1997, p. 173; M. Wheatley, 1999, p. 95
313
314
R. A. Heifetz, 1994, p. 24
315
H. Mintzberg, 1994b, p. 115
316
BrainyQuote, 2001-2010
317
J. A. Conger, 1989, p. 38; J. M. Kouzes and B. Z. Posner, 1995, p. 119; P. M. Senge, 1990, p. 208
318
H. Gardner and E. Laskin, 1995, p. 11
March 6, 2016 Page 267
319
R. J. House and B. Shamir, 1993, p. 97
320
BrainyQuote, 2001-2010
321
L. Larwood, C. M. Falbe, P. Miesing and M. P. Kriger, 1995; G. Yukl, 2002, p. 283
322
J. V. Quigley, 1993, p. xiii
323
G. Yukl, 2002
324
A. E. Guskin, 1997
325
W. G. Rowe, 2001, p. 82
326
J. C. Collins and J. I. Porras, 1996, p. 73
327
M. Light, 2007
328
P. Bronson, 2003, p. 75
329
as cited in H. Arden, S. Wall and White Deer of Autumn, 1990, pp. 14-15
330
J. A. Conger, 1989, p. 66
331
B. Nanus, 1992, p. 44
332
All in a day's work, 2001, p. 56
333
M. A. Hitt, R. D. Ireland and R. E. Hoskisson, 2009, p. 6
334
J. M. Bryson, 1995, p. 23
335
P. Tulenko, 2004
336
H. Mintzberg, 1994b, pp. 277-279
337
G. Hamel and C. K. Prahalad, 1989, p. 65
338
J. M. Bryson, 1988, p. 31
339
H. Mintzberg, 1994b, pp. 270-272
340
A. Bhide, 1994, p. 150
341
Ibid., p. 151
342
T. McLaughlin, 2002
343
M. Buckingham, 2007
344
T. Rath, 2007, p. 5
345
Ibid., p. 8
346
K. Subramaniam, J. Kounios, T. B. Parrish and M. Jung-Beeman, 2009
347
J. Lehrer, 2008
348
T. McLaughlin, 2002
349
J. A. Beineke and R. H. Sublett, 2002, p. 51
350
M. E. Porter, 1998, p. xxviii
351
P. Brinckerhoff, 2000; M. Light, 2007, p. 166
352
P. Brinckerhoff, 2000, p. 32
353
P. F. Drucker and J. C. Collins, 2008, p. 2
March 6, 2016 Page 268
354
Ibid., p. 11
355
P. F. Drucker, 1999, p. 17
356
L. M. Salamon, S. L. Geller and K. L. Mengel, 2010, p. 11
357
Ibid., p. 14
358
P. F. Drucker and J. C. Collins, 2008, p. 23
359
Ibid., p. 25
360
Ibid., p. 28
361
Ibid., p. 29
362
K. Majeska, 2001, p. 247
363
T. J. Peters and R. H. Waterman, 1982, p. 156
364
M. Buckingham, 2007, p. 6
365
D. Rigby and B. Bilodeau, 2009
366
J. Saul, 2004, p. 1 italics added
367
G. J. Stigler, 1958, p. 58
368
S. M. Oster, 1995, p. 42
369
A. Bhide, 1994
370
L. M. Salamon, S. L. Geller and K. L. Mengel, 2010, p. 3
371
W. C. Kim and R. Mauborgne, 2004, p. 80
372
D. Lovallo and D. Kahneman, 2003
373
Ibid., p. 60
374
Adapted from P. Brinckerhoff, 2000, p. 47
375
G. J. Wedig, 1994
376
L. Wagner and M. Hager, 1998
377
P. Brinckerhoff, 2001, p. 13
378
Ibid., p. 13
379
C. F. Chang and H. P. Tuckman, 1991, pp. 560-561
380
J. M. Trussel, 2002, p. 28
381
Ibid., pp. 23-24
382
B. Nanus, 1992, pp. 8-9
383
M. Allison and J. Kaye, 1997, p. 73
384
J. M. Bryson, 1995, p. 139
385
P. F. Drucker, 1985, p. 68
386
M. E. Porter, 1996
387
R. Moyers and K. Enright, 1997
388
T. Holland and M. Blackmon, 2000, p. 7
March 6, 2016 Page 269
389
(J. C. Collins & Porras, 1994, pp. 95-96)
390
J. M. Bryson, 1995, p. 139
391
L. R. Frank, 2001, p. 910
392
C. Crowe, 1998, p. 58
393
L. M. Salamon, S. L. Geller and K. L. Mengel, 2010
394
J. A. Schumpeter, 1983
395
J. G. Dees, 2001, pp. 163-164
396
Ibid., p. 169
397
R. Brewster, 2008, p. 63
398
Ibid., p. 63
399
H. I. Ansoff, 1957, p. 113
400
P. B. Carroll and C. Mui, 2008; B. Nolop, 2007
401
T. J. Peters and R. H. Waterman, 1982, p. 293
402
S. T. Helm and F. O. Andersson, 2010
403
Ibid., p. 263
404
W. C. Kim and R. Mauborgne, 2004, p. 80
405
P. C. Nutt, 1999, p. 75
406
Ibid., p. 75
407
M. Light, 2007
408
J. S. Hammond, R. L. Keeney and H. Raiffa, 1998
409
M. Gladwell, 2005
410
H. A. Simon, 1987, p. 63
411
J. Peters, K. Hammond and D. Summers, 1974, p. 131; ibid., p. 131
412
D. Leonard and S. Straus, 1997, p. 113
413
T. Gilovich, 1991, p. 9
414
A. Dijksterhuis, M. W. Bos, L. F. Nordgren and R. B. van Baaren, 2006, p. 1007
415
A. Dijksterhuis, 2007, p. 32
416
D. Leonard and S. Straus, 1997, p. 121
417
H. A. Simon, 1987
418
J. Kotter, 1999, p. 45
419
V. H. Vroom and P. W. Yetton, 1973
420
G. Yukl, 2010, p. 98
421
D. Meehan and E. Arrick, 2004; C. Reinelt, P. Foster and S. Sullivan, 2002
422
W. H. Drath, 1996
423
G. Yukl, 2010, p. 116
March 6, 2016 Page 270
424
H. Mintzberg, 1983, p. 141
425
L. M. Salamon, S. L. Geller and K. L. Mengel, 2010, p. 7
426
B. M. Staw, 1976
427
M. E. Porter, 1996, p. 70
428
Abbreviated from B. Hedley, 1977
429
R. E. Gruber and M. Mohr, 1982, p. 17
430
Adapted from I. C. MacMillan, 1983, pp. 65-68
431
Ibid., p. 68
432
H. A. Simon, 1987, p. 57
433
D. Ulrich, S. Kerr and R. N. Ashkenas, 2002, p. 137
434
B. Nanus, 1992
435
M. E. Porter, 1996, p. 70
436
P. Brinckerhoff, 2000, p. 59 italics removed
437
(Bryson, 1995, p. 139)
438
V. Carucci, 2009
439
D. Hellriegel, 2009, p. 192
440
Ibid., p. 195
441
L. D. Goodstein, T. M. Nolan and J. W. Pfeiffer, 1993, p. 325
442
L. Bossidy, R. Charan and C. Burck, 2002, p. 21
443
M. J. Worth, 2009, p. 181
444
L. Bossidy, R. Charan and C. Burck, 2002, pp. 227-228
445
S. J. Wiener, A. D. Kirsch and M. T. McCormack, 2002, p. 64
446
D. Hellriegel, 2009, p. 195
447
J. M. Bryson, 1995, p. 139
448
M. Tushman, W. Newman and D. Nadler, 1988, p. 111
449
G. T. Doran, 1981, p. 35
450
R. Bauer, 2009
451
D. Hellriegel, 2009, p. 195
452
Ibid., p. 195
453
Ibid., pp. 194-195
454
Ibid., p. 195
455
J. S. Livingston, 1969, p. 81
456
D. A. Nadler and E. E. L. III, 2006
457
D. Hellriegel, J. W. Slocum and R. W. Woodman, 1989, p. 408
458
Ibid., p. 408
March 6, 2016 Page 271
459
W. Thompson, 2010
460
L. M. Salamon, S. L. Geller and K. L. Mengel, 2010, p. 7
461
W. G. Bowen, 2008, pp. 4-5
462
T. Wolfred, M. Allison and J. Masaoka, 1999, p. 16
463
B. E. Taylor, R. P. Chait and T. P. Holland, 1996, p. 36
464
R. Chait, W. P. Ryan and B. E. Taylor, 2004, p. 11
465
J. Carver, 1997, p. xviii
466
J. Carver, 2006, p. xiii
467
W. G. Bowen, 1994b, p. 1
468
J. C. Leifer and M. B. Glomb, 1995, p. 5
469
Nonprofit governance index 2007, 2007, p. 4
470
P. F. Drucker, 1998, p. 156
471
R. Chait, T. Holland and B. Taylor, 1996, pp. 1-2
472
R. Chait, W. P. Ryan and B. E. Taylor, 2004, p. 11
473
W. G. Bowen, 1994b, p. 35
474
K. N. Dayton, 2001, p. 4
475
Nonprofit governance index 2007, 2007, p. 4
476
J. Peters and T. Wolfred, 2001, p. 3
477
Ibid., p. 6
478
R. Herman and D. Renz, 2000, pp. 157-158
479
Ibid., pp. 157-158
480
W. G. Bowen, 1994b, p. 2
481
Nonprofit governance index 2007, 2007
482
R. Moyers and K. Enright, 1997, p. 12
483
M. Middleton, 1987, p. 149
484
Ibid., p. 150
485
Nonprofit governance index 2007, 2007, p. 4
486
J. R. Katzenbach and D. K. Smith, 1993, pp. 45-46
487
J. Masaoka, 2004b
488
Nonprofit governance index 2007, 2007
489
Ibid.
490
L. Fredricks, 2006, p. xv
491
R. Moyers and K. Enright, 1997, p. 12; ibid; Nonprofit governance index 2007, 2007
492
R. Moyers and K. Enright, 1997
493
Ibid., p. 4; ibid.
March 6, 2016 Page 272
494
Nonprofit governance index 2007, 2007
495
R. Moyers and K. Enright, 1997, p. 12; ibid.
496
J. Peters and T. Wolfred, 2001; Top position is one-time shot for many executive directors, 1999
497
J. Peters and T. Wolfred, 2001; Top position is one-time shot for many executive directors, 1999
498
A. Blackwood, K. Wing and T. Pollak, 2008
499
S. J. Wiener, A. D. Kirsch and M. T. McCormack, 2002
500
T. J. Tierney, 2006
501
J. Peters and T. Wolfred, 2001, p. 13
502
W. G. Bowen, 1994b, p. 110
503
L. Brenner, 2008, p. 8
504
J. Peters and T. Wolfred, 2001
505
A. Blackwood, K. Wing and T. Pollak, 2008
506
United we stand: How to make your board work like a championship team, 2000, pp. 3-6
507
C. E. Larson and F. M. J. LaFasto, 1989, pp. 33-34
508
L. F. Seltzer, 2009
509
C. Crowe, 1998, p. 121
510
Ibid., p. 122
511
Ibid., p. 122
512
R. Herman and R. Heimovics, 1991; R. D. Herman and D. Heimovics, 2005
513
C. O. Houle, 1989, p. 88
514
Ibid., p. 89
515
R. C. Andringa and T. W. Engstrom, 2001, pp. 4-5
516
Ibid., p. 4
517
Nonprofit governance index 2007, 2007, p. 4
518
Quoted in D. La Piana, 1998, p. 13
519
R. C. Andringa and T. W. Engstrom, 1998, pp. 4-5
520
P. Light, 2002b
521
C. E. Larson and F. M. J. LaFasto, 1989
522
Ibid., pp. 55-56
523
Ibid., p. 108
524
K. Mathiasen, 1999, p. 17
525
The sector's future depends on boards, 1996, p. 10
526
R. T. Ingram, 2003 The 10 responsibilities of non-profit boards are as follows:
1. Determine the Organization’s mission and Purpose
2. Select the Chief Executive
March 6, 2016 Page 273
3. Provide Proper Financial Oversight
4. Ensure Adequate Resources
5. Ensure Legal and Ethical Integrity and Maintain Accountability
6. Ensure Effective Organizational Planning
7. Recruit and Orient New Board Members and Assess Board Performance
8. Enhance the Organization’s Public Standing
9. Determine, Monitor, and Strengthen the Organization’s Programs and Services
10. Support the Chief Executive and Assess His or Her Performance
As you read these, you will see more than 10 responsibilities. For example, the ninth is actually three
responsibilities because determine, monitor, and strengthen are very different action verbs in their
implications. And five, seven, and 10 are combinations of two responsibilities. Thus, there are 15 distinct
responsibilities.
527
BrainyQuote, 2001-2010
528
J. Carver, 2006, p. 224
529
Nonprofit governance index 2007, 2007
530
Ibid.
531
J. Carver, 2006, p. 264
According the U. S. Census Bureau, Earnings in the Past 12 Months (In 2008 Inflation-Adjusted
Dollars), American Community Survey 3-Year Estimates from the American Community Survey, Data Set:
2006-2008, the average income for a full-time, year-around worker is $54,698, which is $26.30 per hour
on a 40-hour workweek and $34.19 with a 30 percent benefit rate added. (http://factfinder.census.gov)
532
533
Nonprofit governance index 2007, 2007
534
Ibid.
535
Ibid.
536
Ibid.
537
F. W. McFarlan, 1999, p. 74
538
Ibid., p. 74
539
M. Light, 2004, p. xv
540
F. W. McFarlan, 1999, p. 74
541
Adapted from M. Light, 2004
542
Nonprofit governance index 2007, 2007
543
J. R. Hackman, 1990, p. 498
March 6, 2016 Page 274
544
J. R. Katzenbach and D. K. Smith, 2003, pp. 139-144
545
B. Lawrence, O. Flynn and K. Fletcher, 2006, p. 20
546
Nonprofit governance index 2007, 2007
547
J. R. Katzenbach and D. K. Smith, 2003, pp. 85-86
548
R. L. Gale, 2003, p. 5
549
The sector's future depends on boards, 1996, p. 10
550
C. E. Larson and F. M. J. LaFasto, 1989, pp. 133-134
551
J. C. Collins, 2005, p. 15
552
F. W. McFarlan, 1999, p. 80
553
J. R. Katzenbach and D. K. Smith, 2003, p. 48
The duty of care requires that directors of a nonprofit organization be reasonably informed about the
organization’s activities, participate in decisions, and do so in good faith and with the care of an
ordinarily prudent person in similar circumstances. Adapted from B. R. Hopkins, 2003, p. 3
554
555
The American heritage dictionary of the English language, 1996
556
J. Carver, 2006
557
R. D. Herman and D. Heimovics, 2005, p. 157
558
K. N. Dayton, 2001, p. 12
559
R. Heimovics, R. Herman and C. Jurkiewicz, 1995
560
R. Herman and R. Heimovics, 1991, p. 59
561
R. D. Herman and D. Heimovics, 2005, p. 156
562
J. C. Collins and J. I. Porras, 1994, p. 8
563
C. E. Larson and F. M. J. LaFasto, 1989, p. 95
“The duty of loyalty requires board members to exercise their power in the interest of the
organization and not in their own interest or the interest of another entity, particularly one in which
they have a formal relationship. When acting on behalf of the organization, board members must put
the interests of the organization before their personal and professional interests.” B. R. Hopkins, 2003,
p. 3
564
“The duty of obedience requires that directors of a nonprofit organization comply with applicable
federal, state, and local laws, adhere to the organization’s bylaws, and remain the guardians of the
mission. Ibid., p. 4
565
566
C. E. Larson and F. M. J. LaFasto, 1989, p. 134
567
Quoted in J. A. Kay, 1995, p. 17
568
J. B. Quinn, P. Anderson and S. Finkelstein, 1996, p. 75
569
J. Carver, 2006, p. 121
570
The standards of excellence, 2009
571
Standards for Charity Accountability, 2003
March 6, 2016 Page 275
572
M. McCarty, 2003
573
BrainyQuote, 2001-2010
574
J. C. Collins, 2001, p. 36
575
M. J. Worth, 2009, p. 115
576
M. Light, 2007, p. 87
577
Nonprofit governance index 2007, 2007
578
P. M. Jackson, 2006, p. 60
579
Ibid.
580
T. Holland and M. Blackmon, 2000, p. 7
581
C. O. Houle, 1989, p. xvi
582
BrainyQuote, 2001-2010
583
A. Korngold, 2007a, p. 32
584
A. Korngold, 2007b, p. 36
585
M. Buckingham and C. Coffman, 1999
586
R. Herman and R. Heimovics, 1991, p. xiii
587
R. D. Herman and D. Heimovics, 2005, p. 158
588
J. Carver, 2006, p. 189
589
R. Chait, W. P. Ryan and B. E. Taylor, 2004, p. 93
590
Ibid., p. 94
591
Ibid., p. 94
592
R. D. Herman and D. Heimovics, 2005, p. 156
593
K. N. Dayton, 2001, p. 15
594
M. Light, 2001
595
M. Brassard and D. Ritter, 1994, p. 20
596
Ibid., pp. 12-14
597
N. H. Borden, 1964
598
E. J. McCarthy, 1971
599
K. Majeska, 2001, p. 202
600
P. F. Drucker and J. C. Collins, 2008, p. 25
601
D. La Piana, 2008, p. 53
602
P. Caesar and T. Baker, 2004, p. 214
603
R. Kolker, 2010
604
C. Leonard, 2010, p. A7
605
P. Brinckerhoff, 2000, p. 61
606
K. Majeska, 2001, p. 223
March 6, 2016 Page 276
607
K. L. Barker and D. W. Burdick, 1985, p. 994
608
M. A. Hitt, R. D. Ireland and R. E. Hoskisson, 2009, p. 36
609
Ibid., p. 37
610
M. E. Porter, 1979
611
S. M. Oster, 1995
612
M. A. Hitt, R. D. Ireland and R. E. Hoskisson, 2009, p. 60
613
Ibid., p. 61
614
C. Miller, 2001, p. 6
615
M. A. Hitt, R. D. Ireland and R. E. Hoskisson, 2009, p. 78
616
Ibid., p. 81
617
Ibid., pp. 82-83
618
C. Miller, 2001, p. 3
619
Ibid., p. 5
This discussion of diversification is informed by the work of Michael Hitt, Duane Ireland, and Robert
Hoskisson M. A. Hitt, R. D. Ireland and R. E. Hoskisson, 2009
620
621
M. A. Taylor, J. G. Dees and J. Emerson, 2002, p. 236
For example, Leslie Crutchfield and Heather McLeod Grants’ Forces for good: The six practices of
high-impact nonprofits searched for exemplary agencies without regard to budget, but ended up finding
12 agencies with average revenues of $161.5 million (median $41.5 million) and purposely excluded
agencies with “only local impact” (L. R. Crutchfield and H. M. Grant, 2008, p. 27).
622
623
M. E. Porter, 1996, pp. 76-77
624
C. Miller, 2001, p. 6
625
Effective capacity building in nonprofit organizations, 2001
626
Capital Structure, 2010
627
C. Miller, 2003, p. 1
628
Glossary, 2010
629
A. Blackwood and T. Pollak, 2009, p. 2
630
T. McLaughlin, 2001; T. A. McLaughlin, 2009
631
M. E. Porter, 1996, p. 62
632
D. Renz and R. Herman, 2004, p. 10
633
N. Kleiman and N. Rosenbaum, 2007, p. 4
634
Powering social change: Lessons on community wealth generation for nonprofit sustainability, 2003
635
W. Foster and J. Bradach, 2005, p. 96
636
C. Massarsky and S. L. Beinhacker, 2002
637
Ibid., p. 10
638
Ibid., p. 10
March 6, 2016 Page 277
639
W. Foster and J. Bradach, 2005; Social enterprise: Hype or Reality, 2005
640
J. Trexler, 2007
641
C. Miller, 2008a, p. 12
642
W. Bielefeld, 1994, p. 19
643
Social enterprise: Hype or Reality, 2005
644
P. Brinckerhoff, 2000, p. 66
645
B. Ross and C. Segal, 2009, pp. 57-58
646
K. Majeska, 2001, p. 213
647
Ibid., p. 214
648
P. Brinckerhoff, 2000, p. 74
649
C. Lovelock, 2004, p. 46
650
T. McLaughlin, 2001, pp. 252-253
651
P. Brinckerhoff, 2000, p. 67 italics removed
652
J. Kelly, C. Cook and D. Spitzer, 1999, p. 2
653
W. G. Bowen, 1994a
654
D. La Piana, 2006
655
G. J. MacDonald, 2006
656
J. Masaoka, 2004a
657
T. Wallach, 2004
658
D. La Piana and M. Hayes, 2005, p. 28
659
P. Brinckerhoff, 2000, p. 183
660
Ibid., p. 176
661
P. Caesar and T. Baker, 2004, p. 221
662
S. Anthony, 2010
663
BrainyQuote, 2001-2010
664
P. Caesar and T. Baker, 2004, p. 207
665
Ibid., pp. 210-221 caps removed
666
R. M. Kanter, 2006, pp. 75-78
667
Nonprofit governance index 2007, 2007
668
M. E. Porter, 1996
669
Quoted in J. Pfeffer and R. I. Sutton, 2006, p. 157
670
L. Bossidy, R. Charan and C. Burck, 2002, p. 15
671
C. Massarsky and S. L. Beinhacker, 2002, p. 11
672
A. Bhide, 1994, p. 152
673
J. Rooney, 2001, p. 274
March 6, 2016 Page 278
674
A. Solas and A. M. Blumenthal, 2004, p. 131
675
W. A. Sahlman, 1997, p. 98
676
P. Brinckerhoff, 2000, pp. 74-75 italics removed
677
Small business planner: Write a business plan, 2010
678
W. A. Sahlman, 1997, p. 98
679
P. M. Senge, 1999, p. 6
680
J. P. Kotter, 1995, p. 59
681
B. M. Bass and R. M. Stogdill, 1990, p. 289; G. Yukl, 2002, p. 274
682
D. Miller and P. H. Friesen, 1980, p. 591
683
J. O'Toole, 1995, p. 253
684
C. M. Christensen and M. Overdorf, 2000, p. 68
685
J. Pfeffer and R. I. Sutton, 2006, p. 167
686
Ibid., p. 178
687
Ibid., p. 179
688
Ibid., p. 185
689
M. E. Porter, 1996, p. 70
690
D. Packard, D. Kirby and K. R. Lewis, 1995, p. 142