What Business Execs Don’t Know -- but Should -- About Nonprofits

A lot of social entrepreneurs out there are getting tired of being constantly lectured on how they need to operate more like businesses. Their spirits were buoyed by a recent Jim Collins piece saying in effect "Please don't operate your social ventures more like businesses, because the vast majority of businesses are mediocre."

Thanks to my friend Greg Kats at CapitalE, for sending me this excellent related article from the Stanford SocialInnovation Review.

In it, Les Silverman and Lyn Taliento argue that being a non-profit leader is much harder and more complex than running a business. An excerpt follows:

Business leaders play vital roles in the nonprofit sector -- as board members, donors, partners, and even executives. Yet all too often they underestimate the unique challenges of managing nonprofit organizations. In this article, 11 executives who have played leadership roles in both for-profits and nonprofits reveal the critical differences between the two, and suggest ways that business and nonprofit leaders can use this information to create a more effective social sector.

By Les Silverman & Lynn Taliento Summer 2006

Ask William Novelli, the CEO of AARP, if business executives underestimate the complexities of running a nonprofit organization, and his head starts nodding. The former Unilever marketer built Porter Novelli into a public relations powerhouse before embarking on his current career. Twelve years deep into the nonprofit sector, Novelli can attest that navigating Washington, D.C.’s land mines while running his sprawling $800 million operation is hardly the laid-back retirement farm that many businesspeople imagine.

Too many business CEOs just don’t get it, says Novelli. “It goes beyond underappreciated. CEOs are often disdainful of not-for-profit management. They think it’s undisciplined, nonquantified." But in fact, “it’s harder to succeed in the nonprofit world. For starters, nonprofits’ goals are both more complex and more intangible. “It may be hard to compete in the field of consumer packaged goods or electronics or high finance," he says, “but it’s harder to achieve goals in the nonprofit world because these goals tend to be behavioral. If you set out to do something about breast cancer in this country, or about Social Security solvency, it’s a hell of a lot harder to pull that off." And “it’s also harder to measure," he adds.

[GlobalGiving]

Little Kids Rock Rocks!

Check out the GlobalGiving homepage, which features a video of Little Kids Rock, a great group that helps grade school kids learn to play music. The effect on educational attainment is significant as these kids gain confidence and skill. So it is a serious development approach. But most of all, it is a delight. Check it out.


[GlobalGiving]

iTV

Earlier I posted about the desirability of Apple creating a media center that would get rid of all the wires and remote controls on my coffee table.

Yesterday Apple announced iTV, a device that will do just that.

What does this have to do with giving? Well, the question is when we will have an iPod for giving.

As BBC notes:

The new iTV device is due out early next year The future for Apple

Computer firm Apple has announced plans it hopes will put it at the heart of consumers' home entertainment systems.

The company has unveiled a device which will stream music and video wirelessly between televisions and computers.

[GlobalGiving]

DonorsChoose

Soon after we started GlobalGiving, I met Charles Best, who had just started a site called DonorsChoose. While GlobalGiving enables donors to give directly to causes overseas, DonorsChooses enables donors to give directly to projects designed by school teachers in the US.

GlobalGiving and DonorsChoose share a similar philosophy, approach, and values. This has made it possible for us to collaborate more and more. Sometimes we swap ideas about technology, marketing, or back-office processing. Other times we work together on stories that appear in print, radio, or TV.

I like Charles and I like DonorsChoose.

As DonorsChoose says, the first few weeks of school can make all the difference for at-risk kids. And so they have launched something called The Back to School Challenge. They are trying to raise $1.2 million before the end of September. I funded a project to promote reading in the science classrooms in North Carolina. What are you going to fund?

[GlobalGiving]

Doing good, well

Slate has a nice story about Zipcar, a car-sharing company that has taken off like a rocket here in Washington. Within easy walking distance from our office, I can find 20 or 25 Zipcars ranging from a Mini to a Honda Element to a Toyota pickup. Cost is less than $10/hour, gas and insurance included, and you can reserve on on the web in less than 5 minutes. I love it.

This is potentially a game changing company. Given how well it works and the modest cost, it is hard to rationalize buying a new car in the city. If this leads fewer people to buy cars, it not only saves money but also reduces congestion and pollution.

The article contrasts Zipcar, a socially oriented for-profit company, with an organization in San Francisco called City CarShare. CarShare claims that it is better than Zipcar because "it is a non-profit." This is a non-sequitur. What matters is how many people the service reaches.

At last count, CarShare was only in San Francisco. ZipCar is in about ten cities and expanding fast. Spurred on by competition with FlexCar, another socially oriented for-profit company, Zipcar has been focusing like crazy on cost, scaleability, convenience, and style.

[GlobalGiving]

Outfoxing the experts

Thanks to Tyler Cowen for pointing me to a great book by Philip Tetlock called "Expert Political Judgement: How Good Is It? How Can We Know?"

The answer is that experts' predictions are no better than those made by regular people. In fact, many experts have a worse track record than would be achieved by a toss of the dice. (The worst performing experts are "hedgehogs: thinkers who 'know one big thing.'" By contrast, "foxes: thinkers who 'know many small things'" tend to do somewhat better.)

Louis Menand's review in the New Yorker notes that this phenomemon holds across a variety of disciplines and over one hundred studies. College counsellors who were provided detailed information about students and even allowed to interview them did worse in predicting their freshman grades than a simple mathematical algorithm. Psychologists were unable to outperform their secretaries in a test to diagnose brain damage.

As a former "expert" at the World Bank for fourteen years, I can say that this resonates with me. I cannot speak highly enough of the technical expertise of my colleagues, and I have many friends still there. Yet, it was a highly sealed and self-referential environment that admitted little input from other experts, much less from the average guy on the street in Jakarta or Nairobi.

Although I became a reasonably senior executive and was successful by most measures, the truth was that I found the place intimidating. So many decisions and predictions had to be made about so many complex things, and I often found myself wondering how people could walk around the halls looking so self-assured.

This all changed when Mari and I did the Development Marketplace, which opened the front doors of the Bank to anyone in the world with a good idea. Over one thousand groups --many of them grassroots -- applied to the first marketplace. The result was extraordinary - the quality of the ideas, the energy, the commitment, and the resources that "regular" people brought to the Marketplace were in aggregate far superior to what most Bank experts like me could think up.

The amazing potential unleashed at that Marketplace was enough to give me the courage (some say temerity) to leave the World Bank and help launch GlobalGiving. I have never looked back.



[GlobalGiving]

Help, let me out!

Today I read an email that went something like:

"Hi, I am writing to tell you that I am leaving my organization. I feel I'm spinning my wheels here. There are so many things we could be doing, but nothing ever seems to happen, and there is no willingness or even interest in changing the way things are done."

I see this all the time. The writer is late 20s, smart as heck, creative, and very motivated. But the organization - a well respected and longstanding pillar of the community - cannot make use of the energy or new ideas.

We are entering a new age where organizations that are unable to harness the potential of their people will be unable to survive. I feel bad for the writer's late employer, because it may well fade into irrelevance after making a major contribution to the field in the last twenty years.



[GlobalGiving]

How about an iPod for Giving?

Recently I wrote a chapter for a book to be published next year. They asked for 2,000 words. I gave them 4,000, explaining that I did not have time to write something shorter.

It is true that short and simple often require more work than long and convoluted.

The same holds true for features on a web site.

Earlier, I blogged on the value of simplicity. As an example, I reflected on how difficult it is to watch TV these days. There are often three or four remote controls to contend with - all with different sequences of buttons, etc. Compare that to how it used to be: You went up to the TV, pushed one switch to turn it on, and turned a dial to change the channel.

I wondered if Apple would ever take up the challenge to simplify the TV situation.

Steven Johnson recently wrote about this topic in Slate. He is far more eloquent than I:

One of the ironies of the last decade of technological change is that things that used to be difficult for ordinary folks to master—setting up an e-mail account, getting an Internet connection—have grown far simpler. Meanwhile, lots of things that used to be easy—say, changing channels while watching TV—have gotten more perplexing. You know the drill: You try to change the channel using the TV remote when you actually need to use the cable box remote (or the TiVo remote), and suddenly the screen goes blank because it's on Channel 4 instead of Channel 3. I know many people who have printed instructions near their media system that explain how to turn it on or how to turn up the volume.

GlobalGiving is growing steadily, and people generally report that they like our web site. While I am happy to hear that, I know it can be much better and much simpler.

Maybe we will never become the iPod for giving. But that does not mean we should not try.




[GlobalGiving]

Focus - yes. But on what?

Katya Andresen's blog over on Amazon.com is recommended reading. Katya is VP of marketing at Network for Good and author of Robin Hood Marketing: Stealing Corporate Savvy to Sell Just Causes.

Here is an excerpt from a recent blog of hers and my own thoughts on the art of focusing:

I am convinced each of the Echoing Green organizations is needed, because the fellows have followed a verison of the hedgehog concept. They focus like a laser beam on the intersection between three key areas: what they are best at, what makes them different from all others working on their issue, and what their stakeholders care about. BBMG says that intersection is your brand sweet spot -- Collins says it's your raison d'etre. I agree with both ideas and encourage you to find your intersection and stick to it. If we all restricted ourselves to that intersection -- even when board members or funders tempted us to set out in other directions -- we'd all be more effective. If we stray too far, we may wake up one day to find ourselves saying, "We save the manatees. Oh, and we have a program for the elderly... And have I told you about our North Korean initiative?" (Credit to Lara Galinsky on that question!) If it's the manatees, stick to the manatees. And if someone else is saving the manatees, make sure what you're doing is different, needed and supported.

And here are some comments I made on her blog:

Katya,

I could not agree more on Echoing Green. Most of the fellows I have met or know are absolutely outstanding.

I am wary about the usefulness of advice from business writers, gurus, and business school professors. Most of them study success stories and try to infer lessons from them. These lessons are often not tested in any rigorous way, and though they sound good, in practice they are descriptive rather than helpful to others. Often, they observe that successful people did A and B, but it is far from clear that A and B were the primary factors behind the success. Sometimes A and B may be necessary but not sufficient. So people go out and do A and B and wonder why they don't succeed! And sometimes A and B are irrelevant.

While Collins is by far one of the most rigorous and thoughtful - and hence most useful - writers, readers need to think carefully for themselves about what he is saying. How many times have we heard the bromide "To succeed, you must focus"? The question is what to focus on.

I have been reading a number of business books lately, and one of the better ones ("Pour Your Heart Into It") was by Howard Schultz, co-founder and CEO of Starbucks. He describes how his idea of what Starbucks was good at evolved over time. The original founders were furious at Schultz for putting tables in the stores and allowing customers to sit down! And Schultz himself absolutely hated the idea of introducing low-fat lattes, which he thought was a travesty. Similar story about frappucinnos. In each case, the founders were trying to remain true to their visions. And in each case, being flexible, and adapting those visions to the market was key to growth and success.

Gradually, Schultz realized that Starbucks' focus should not be on the perfect cup of non-adulterated espresso. Rather it should be on the creation of a customer experience which he began referring to as the creation of a "third place" in society for people to escape to. The refinement of the third place concept has really been the key to Starbucks remarkable growth.

As we build organizations and businesses, we all face a similar set of issues. How flexible should we be? Is it the COFFEE we are passionate about or is it the EXPERIENCE of DRINKING coffee in a comfortable "third place" away from both the home and office that we are passionate about?

For us at GlobalGiving, we constantly ask ourselves questions such as "Is it PROJECT-SPECIFIC giving that we are passionate about - and good at - or is our passion and expertise really around giving directly to INTERNATIONAL projects?" There are ususally no easy answers, only answers that evolve with experience over time.

This is not to negate or rebuff the good advice to focus. But it is to reinforce the importance of understanding - and refining - what to focus on is as important as the act of focusing itself.

That is the hard part.

[GlobalGiving]

Apres Moi...

This past weekend, I finished reading an excellent history of a relatively young company we all know. It was written by one of the founders. The author details the trials and tribulations of the early days, with the usual multitudes of naysayers. (In fact, some time ago, I met with a major venture capitalist who said that he had declined to fund the company because he thought the whole concept was stupid.)

I especially appreciated the author's mea culpas regarding product introductions that he thought were off-mission - but which in the end turned out to fuel the company's growth.

But one thing that really bothered me was the prevalent use of the first person "I." The book is all about how "I" created the company, and how "My" vision was critical to its success, and how proud "I" am of what "I" created.

To be fair, he does cite his senior management team members many times in the story. But in the end, it is all about "I."

Now, if there is one thing I have learned over my 20+ year career, it is that few enduring great initiatives, companies, or organizations are based on "I". Instead, they are based on "We."

Things that are based on "I" can burn bright for a short period, but then usually burn out. Things based on "We" endure.

We have a great team here at GlobalGiving, and by that I mean not only those of us on staff, but also the community of project leaders and donors. I am proud to have been one of the founders, and I am lucky to work with a great bunch of people. But our success - hopefully an enduring one - is built on the "We" of the GlobalGiving community, and not just on "me."

[GlobalGiving]