Inherent in our current time of constraint (struggling economy, crumbling institutions, unhealthy planet) is the opportunity of possibility. As Margaret Drabble said, “When nothing is sure, everything is possible.”
But it is only possible if we seize the opportunity. Nowhere is this more true than in the nonprofit sector. Let’s admit it, the nonprofit sector tends to be risk averse. And you could argue that the many constraints that they endure incent them to be risk averse. But what if nonprofit organizations seized the opportunity that this restructuring offers and became bold. I mean really BOLD.
What if nonprofit organizations adopted massive, crazy, BOLD goals? The BHAGs (Big Hairy Audacious Goals) that Jim Collins in Good to Great describes:
A BHAG is a huge and daunting goal — like a big mountain to climb. It is clear, compelling, and people “get it” right away. A BHAG serves as a unifying focal point of effort, galvanizing people and creating team spirit as people strive toward a finish line. Like the 1960s NASA moon mission, a BHAG captures the imagination and grabs people in the gut.
It is a massive, energizing, crazy goal that can bring people together, give them something to work for, make them part of a team that is doing something inventive, game-changing.
To Nathaniel Whittemore of the Change.org blog we are obligated to move the solutions we seek to a loftier realm. Those working to solve social problems must be bigger, bolder, crazier, more disruptive in their goals:
Where I think it leaves us is with an obligation to push even harder. At the cusp of that last gasp of crazy, the forces that wish to uphold the status quo kick and fight even harder. The former gatekeepers will not leave without a fight. We need to be even more bold, because at the end of the day, I don’t want 20% better nonprofits with a fundraising strategy better optimized for online giving. I want disruptive change that rights wrongs and realigns incentives for a more sustainable, just future.
And Dan Pallotta agrees. He challenges nonprofits to take a cue from the moon program as well and create massive goals:
Nonprofit organizations have to join forces and begin committing themselves to impossible goals that address the massive social problems we confront, and they must define those goals in time and space — a cure for MS in 10 years; the end of homelessness in Boston in 10 years, and so on. Think of President Kennedy’s challenge: “I believe this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.” No wiggle room there…
But bold goals are not just for the sake of goals. Those massive, crazy goals propel an organization forward. They galvanize staff, board, volunteers, funders to get up from their chairs, to step away from mindless, boring meetings, to enlist their friends, family, colleagues, to invest time and resources until it hurts. Bold goals are the rallying cry that moves us toward solutions, compels us to fix broken systems, to break out of our inertia:
If a courageous group of nonprofits would call for the end of child hunger in D.C. within seven years, we’d have to start talking seriously about…all of the…structural problems like admin:program ratios, inadequate investment in infrastructure…and those discussions would actually be exciting. There would be a reason to reframe the present structure. To try to reframe that structure in the absence of a compelling context…[is] like trying to develop a lunar module in the absence of any goal to get to the moon. You wouldn’t know anything about the booster that would carry it, the rendezvous strategy, weight limits, etc. Everything you did would be ineffective…Daring goals, set in time and space are the only way to get there. Any less courageous path lands us exactly in the chaotic and ineffectual place we stand today. And that’s a long way from the moon.
I’ve seen with my clients how massive goals can transform organizations and galvanize them toward solutions. When they have decided to take on exponential growth instead of incremental growth. When they have moved from working to grow their services by 50% each year to working toward addressing 50% of the need. The former can address the needs of 100 new clients a year, the latter can move towards actually eradicating the problem all together. This change in perspective, in goals, can revolutionize an organization. No longer are the board, staff and funders content to add a few sites each year with no end goal in sight. Rather, they understand and rally around their long-term goal, which is to solve a problem. And they see every effort they make, every meeting they come to, every investment they secure as getting them that much closer to that solution. It can transform an organization, and ultimately transform a problem. And isn’t that really what we are all here to do?
Leadership is a nebulous, mysterious, misunderstood element of an organization’s success. But if we can re-frame successful leadership as a way to create social change, then perhaps there is something to be gained for social entrepreneurs.
What really is leadership? What can it do and how does it function effectively to help a company or organization achieve its goals? Many people are familiar with Jim Collins’ landmark book on the most successful American companies Good to Great. He discovered that “Great” companies all had a leader with “Level 5 leadership” during their pivotal transition from being a good company to becoming a great one. He defines a Level 5 leader as “an individual who blends extreme personal humility with intense professional will.” The Level 5 leader is the final rung on a ladder of increasingly advanced leadership styles:
The Level 5 leader is a humble one that has “ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great.” This leader moves beyond simply managing people and projects, and even beyond getting people behind a common vision, to ensuring that the group, organization, or company becomes exceptional.
But I think people are probably less familiar with Ronald Heifetz’s study of leadership, Leadership Without Easy Answers, several years before. Heifetz provides a framework for understanding what leadership is and how it can be practiced effectively to create social change. And I think his model, because it is about social change, could be very useful to social entrepreneurs.
He defines leadership as “mobilizing people to tackle tough problems.” Leadership, for him, is about getting a group of people (a community, or society) to make the adaptations necessary in order to survive and thrive. Indeed, Heifetz argues that the “most valuable task of leadership may be advancing goals and designing strategy that promote adaptive work.” “Tackling tough problems—problems that often require an evolution of values—is the end of leadership; getting that work done is its essence.”
He makes a distinction between two types of situations and their appropriate leadership responses. A technical situation is when the problem facing a group is recognizable and can be solved with a response that has worked in the past. In this case the leadership response should be authoritative; if the problem is recognizable, the leader simply demands that the group employ the solution that has worked before. For example, a city manager will ask city departments to cut their budgets by 10% when there is a budget shortfall.
However, in an adaptive situation, progress on the problem requires changes in the group’s values, attitudes, or habits. Therefore, the leadership response cannot be authoritative–a leader cannot simply tell people to change. Rather in the adaptive situation the leader must help the social system “learn its way forward.” The leader helps guide this new learning, and thus helps guide the group towards change. For example, a mayor facing rising city crime rates cannot simply demand that crime go down. Rather, a skilled mayor would analyze the problem and help the entire community (homeowners, business owners, police, schools) work together to create a new solution to the problem, which would, no doubt, involve changes in behaviors, attitudes and habits.
I think there is much to be learned here for social entrepreneurs. Aren’t the most successful social entrepreneurs ultimately adaptive leaders? Social entrepreneurs are trying to help a system “learn its way forward.” They identify some sort of disequilibrium and then work tirelessly to help people within a community change their values, attitudes, habits, behaviors in order to solve the disequilibrium. As David Bornstein, author of How to Change the World: Social Entrepreneurs and the Power of New Ideas, says:
An important social change frequently begins with a single entrepreneurial author: one obsessive individual who sees a problem and envisions a new solution, who takes the initiative to act on that vision, who gathers resources and builds organizations to protect and market that vision, who provides the energy and sustained focus to overcome the inevitable resistance and who – decade after decade – keeps improving, strengthening, and broadening that vision until what was once a marginal idea has become a new norm.
So a true social entrepreneur is really just a very successful adaptive leader. Perhaps Heifetz’s model of leadership could be instructive to the many burgeoning social entrepreneurs throughout the world.
The struggles and challenges nonprofits face all come down to one key problem: a misalignment of mission, money and core competencies.
For any organization three things must be aligned: 1) their mission, or reason for existing 2) their core competencies–what they do better than anyone else in the world, and 3) their resource engine–all the ways in which they sustain themselves financially. So that an organization, at equilibrium looks like this:
The mission is supported by the organization’s core competencies which both feed into how it generates money.
Jim Collins calls this the “Hedgehog Concept,” Mark Moore, a professor at the JFK School of Government at Harvard, calls it “The Strategic Triangle.” It’s such a simple and powerful concept, but it seems to be one that is often left on the bookshelf, a better theory than practice.
But how transformative would it be if this concept were dusted off and applied to the challenges a nonprofit faces? When one or two of these three elements are out of alignment, chaos can ensue.
Mission is misaligned: A nonprofit that can generate money and operates great programs, but can’t bring it all together in a coherent single purpose, this is otherwise known as “mission creep.”
Core competencies are misaligned: A nonprofit that has a great, clear idea of what they want to do (mission) and can raise money around it, but can’t deliver. This is reminiscent of the dot com era when there were countless businesses with fabulous ideas that successfully raised VC and angel money, but didn’t really have a core competency or product to deliver and eventually went bust.
Resource engine is misaligned: This final misalignment is probably the one nonprofits are most familiar with. A nonprofit has a great mission and can produce great results, but they can’t find a way to make the organization financially sustainable. FORGE, a nonprofit working with African refugee camps, which I wrote about before, is a great example of this misalignment. Their mission and programs are solid, but they struggled with the right financial engine (switching from individual fundraising to web-based fundraising without having the core competencies to make the switch). The end result was a $100K deficit.
And there are various other combinations of misalignment where two, or all three, areas are out of sync. But often it is the financial piece that causes the most problems. Financial misalignment is so difficult for nonprofits to overcome because the sector is undercapitalized. It can seem impossible to nonprofit leaders, who tend to be focused on the program and mission they are trying to deliver, to connect a sustainable financial engine to their work. And indeed, many foundations and government funders will pay for programs and mission, but not a sustainable overall organization. The incentives do not reward an organization in alignment.
But there are solutions. If an organization can take a step back and look at all three elements and how they fit together they can start to make strides toward better integrating all three activities:
- A nonprofit’s mission needs to be one that they can generate financial support around, but it also needs to be something that they can deliver on better than anyone else.
- The financial support a nonprofit generates needs to complement, not detract from, their mission and core competencies, and
- The nonprofit must integrate what they do really well with their mission and financial model.
You can no longer leave the fundraising staff alone and hope for the best. You can no longer let the board say fundraising is not their role. You can no longer create a strategic plan without a corresponding financial plan. Money, mission and competence must all be at the table finding a way forward together.
If you want to learn more about creating a sustainable financial engine for your nonprofit, download the Develop a Financial Model Tool Bundle.
Jim Collins, author of a pivotal business text Good to Great (about what differentiates companies that just survive from those that thrive and become great), wrote a short monograph on the social sector a few years ago called Good to Great and the Social Sectors. If you haven’t already read it, I highly recommend it. He clearly and articulately lays out what, he suggests, makes a great social sector organization. It is not, as many have argued in the last decade or so, that it becomes more like a business. Rather, as Jim writes, “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.” To be a great social sector organization you must be disciplined about the talent you hire, the decisions you make, the actions you take, the strategies you create, the results you attempt to achieve, the mission you seek. As Jim puts it, “To do the most good requires saying “no” to pressures to stray, and the discipline to stop doing what does not fit.” To be a great social sector organization you must focus on what you can be great at and create a disciplined strategy to get there. A really interesting read. Some excerpts are here.
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