Results Now for Nonprofits E-Book

Mark Light

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 485

Veröffentlichungsjahr: 2011

Beschreibung

Build your nonprofit into a high performer with this practicalapproach to purpose, strategy, operations, and governance Planning is vital to achieving your nonprofit's purpose--toobad most nonprofits are strapped for time. Not anymore. Using a lightning-fast and inclusive process, Results Now®puts purpose, strategy, operations, and governance into oneuser-friendly, comprehensive plan that your board can pass in asingle vote and your organization can maintain as a regular part ofits business throughout the year. Results Now for Nonprofits relies on accountability andperformance measurement to increase the level of effectivedecision-making. This "big picture first, details next" planningprocess helps you: * Use the Results Now master plan as a centerpiece of boardmeetings and as a standard part of board meeting advanceinformation * Foster a welcome climate for give-and-take strategicthinking * Clarify the organization's story for the community and keeppeople on point about what's important * Develop team cohesion * Orient newer leadership members and recharge seasoned ones * Attract new funders who reward nonprofits who plan A must-have for all nonprofit executives and directors, membersof boards and trustees, and nonprofit managers, Results Now forNonprofits is a results-driven, practical tool that will help yourorganization achieve its mission, values, and destiny.

Leseprobe

Contents

Cover

Title Page

Copyright

Preface

Acknowledgments

Part I: Setting the Frame

Chapter 1: The Four Pillars of High Performance

Defining High Performance

The Third Envelope

Chapter 2: Planning Rules

Just Say No

Just Say Yes

Show Me the Money

Bottom Lines

Chapter 3: All Together

Master Plan

Be Quick

Part II: Purpose

Chapter 4: Values

Getting Real

Talk that Walks

Chapter 5: Mission

Customers

Difference

Advantage

Sweet Spot

Hoop Dreams

Part III: Strategy

Chapter 6: Lines of Business

Front Lines

Means and Ends

Making Lines of Business

Chapter 7: Success Measures

Measuring the Unmeasurable

Why Measure?

Making Success Measures

Chapter 8: Vision Statement

Vision Types

Making Statements

Chapter 9: Vision Strategies

Making Strategies

Part IV: Operations

Chapter 10: Goals

Making Goals

Chapter 11: Budget

Part V: Governance

Seven Realities

Chapter 12: Delegation

Levers

Duties

Guidelines

Chapter 13: Accountability

Agendas

Assessments

Chapter 14: Smart Board

Help Me Help You

Adding Value

Appendix A: BAM

Appendix B: First Cut

Strategies

Market

Muscle

Match

Appendix C: Final Answers

Strategy

Marketing

Money

Management

Final Answer

Appendix D: Board Meeting Advance Information Template

Notes

About the Author

Index

Copyright ©2011 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Light, Mark.

Results now for nonprofits: purpose, strategy, operations, and governance / Mark Light.

p. cm.

Includes bibliographical references and index.

ISBN 978-0-471-75824-2

1. Nonprofit organizations–Management. 2. Strategic management. I. Title.

HD62.6.L537 2010

658.4′012–dc22

2010032748

Printed in the United States of America

10 9 8 7 6 5 4 3 2 1

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 purpose, strategy, operations, and governance. 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 evidence 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 strategy; purpose, operations, and governance are ignored, but Results Now is different. It puts purpose, strategy, operations, and governance into a master plan that the board can pass in a single vote and the organization maintains as a regular part of its yearly work.

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 valuable, but not so much that the organization loses its adaptability. This is especially important because almost all nonprofits are smaller in size; four in five have expenses of less than $1 million.3 As such, formalized plans are not only time consuming (and often expensive) to make, but are often very difficult to use in practice. Though you want the wind in your sails from purpose, strategy, operations, and governance, you don't want an anchor. Results Now strikes the right 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 clarify the organization's story for the community and keep people on point about what's important. It can build team cohesion, orienting newer people and recharging seasoned ones. Making Results Now worth its weight in gold is the evidence that funders reward those who plan.4

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.”5 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 it 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 often made the centerpiece of an overall approach to board meeting advance information that puts everything in one document, including agenda, minutes, and the like. 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.”6

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.”7 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.”8 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 into five parts. The first part, Setting the Frame, makes the case for and introduces Results Now. The following four parts present the elements of the Results Now master plan: purpose, strategy, operations, and governance.

The renowned quality expert Philip Crosby once said, “Good things only happen when planned; bad things happen on their own.”9 It is my hope that good things happen for you and your organization as a consequence of Results Now.

Acknowledgments

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 came 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.

Although acknowledgments should be bright, be brief, and be gone (the three Bs of presentations), I would be remiss if I didn't thank my incredibly patient senior editor Susan McDermott at John Wiley & Sons, her steady colleague Judy Howarth, and the ever-calm senior production editor Stacey Fischkelta. I am also grateful to my colleagues at Antioch University including Laurien Alexander, Al Guskin, Jon Wergin, and Dick Couto. I am deeply indebted to Susan Eagan, former executive director at Case Western Reserve University's Mandel Center for Nonprofit Organizations who took a chance on me by allowing me into the classroom. Relative to the Results Now model itself, I am grateful to Elaine Woloshyn at the Center for Nonprofit Excellence in Akron for early encouragement, and Ginny Strausburg of The Dayton Power and Light Company for recent support around earned income strategy. The students in my earned income classes at Case Western Reserve University's Mandel Center for Nonprofit Organizations have also been enormously helpful in successfully testing the earned income side of the model with a wide variety of Cleveland-based nonprofits.

Needless to say, there are countless others who have made a difference in this book for the better; that I do not acknowledge them by name does not lessen their contribution.

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.1 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).”2

The typical executive faces challenges of “high stress and long hours, anxiety about agency finances, fundraising, and managing people.”3 The chief executives of nonprofits—whether called chief executive officer (CEO), president, director, or the widely used 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.”4

Though many experts on nonprofit bemoan the state of the field,5 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.”6 As a result, almost all experience a high level of enjoyment in their work.7 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.”8 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.9

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.”10 The good news here is that when it comes to working conditions, it's better than the private sector or government.11 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.”12

Parade's annual report on what people make closes by saying, “in any economy, the best jobs provide emotional as well as financial rewards.”13 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.14 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.15

If it is true that “in our hearts, we would all like to find a purpose bigger than ourselves,”16 where better to find it than the nonprofit sector? But what if that purpose is embedded in an organization; how do you bring it to life in that context?

Results Now is one way to bring an organization's purpose to life. Understanding this process begins with setting the frame. In the first chapter, you will learn about four pillars of high-performance and be introduced to the Results Now model. Chapter 2 makes the case for why you should embrace planning, but not get too carried away with it. Chapter 3 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 from when he was a dean about a board member at the University of Pennsylvania. The board member asked a question about student–faculty ratios. Dr. Gregorian replied with pride that there was a one-to-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 what high performance means. For many of us, high performance is equivalent to effectiveness.1 And for the late, great Peter Drucker in the mid-1970s, the definition couldn't have been any simpler, “Effectiveness is the foundation of success—efficiency is a minimum condition for survival after success has been achieved. Efficiency is concerned with doing things right. Effectiveness is doing the right things.”2 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.”3

If you think that defining high performance in the nonprofit sector has been any easier, think again.4 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.”5

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 are often advised to look to the for-profit sector;6 eBay founder Pierre M. Omidyar, for example, wants “charities to run like businesses.”7 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.”8

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.”9 Although mice and humans share 99 percent of their genetic code10 (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 tempting, but it is faulty logic.11

First, “effectiveness measures applied in the private and public sectors are significantly different.”12 Second, we know that 64 percent of 1,072 respondents to a national study of nonprofit executive directors were outsiders when they took their positions,13 inverse to the 36 percent rate of outsiders in for-profit successions.14

Third, we know that “the centrality of mission for nonprofit organizations places limitations on their flexibility of action”15 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 businesses: a large share fail. The difference is, with the social mission attached, it is harder for nonprofits to let go.”16 Perhaps this is why Robert Shriner argues that “running a non-profit is very much harder than operating a similar sized for-profit business.”17

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 approach, multidimensional approach, and emergent approach. 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 on how others see you. Multidimensional approaches “recognize that NPOs have multiple performance criteria (related to programs, finances, advocacy, etc.).”18 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.”19 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.”20

The argument here is that nonprofit executive directors should understand that “different constituencies are judging their organizations’ effectiveness in different 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.”21 Remember the story told by Vartan Gregorian and his board member that began 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.”22 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 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.23

How to operationalize this multiple constituencies approach is straightforward. Step 1 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.”24 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).25

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.”26 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?”27

In other words, “You're either getting better or you're getting worse each day. There's no such thing as staying the same.”28 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?’”29

In step 2, you don't ask the stakeholder how the agency is doing with regard to this or that characteristic (e.g., fund raising); you ask instead “how well the organization has been doing on whatever is important to them.”30 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.”31 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.32

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 the same realities of all approaches, “Criteria for judging organizational effectiveness are founded in the preferences and guidelines of individuals. Individual differences preclude consensus regarding one universal set of criteria.”33 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.”34

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.”35 Melissa Stone and Susan Cutcher-Gershenfeld also found this in a review of ten studies on high performance in nonprofit organizations.36 Ditto for Barbara Blumenthal, who reviewed over 100 articles on organization high performance and organization change and more than 30 assessments of capacity building, and had interviews with more than 100 people practiced in capacity building. And which were the most important high-performance factors? She found that “it all depends.”37

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.”38

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.”39

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.”40 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 achieved 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 from 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 indicators of nonprofit effectiveness.”41 Like Kim Cameron's declaration that “agreement about effectiveness is mainly an agreement to disagree,”42 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.”43

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.’”44

Thus, whether your organization is a high performer is in the eyes of the beholder; the criteria they will use are going to be theirs and theirs 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 stakeholders think. 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 fund-raising 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’”?45 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 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.46

The trick is to do exactly what Robert Herman and David Renz recommend and “find out what criteria are important to the different constituencies.”47 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.48 That's because capacity at the most general level is described as an organization's abilities to accomplish its mission.49

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,”50 a “blend of sound management, strong governance, and a persistent re-dedication to achieving results,”51 and the “development of an organization's core skills and capabilities, such as leadership, management, finance and fundraising, programs and evaluation.”52

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.”53 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.”54

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.”55 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, training/speaking abilities, technical skills, organizing skills, and other areas of personal and professional development.56

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.”57 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.58 Barbara Kibbe says that planfulness, effective leadership, and strong governance are the three central features of high performance.59 Christine Letts, William Ryan, and Allen Grossman talk about the ability of organizations to fulfill their missions in a dynamic world where they “not only develop programs, but also operate, sustain, improve, and grow them—eventually replacing them with new approaches.”60

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.”61 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”?62

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 study63 and Robert Herman and David Renz's objective effectiveness criteria.64 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

Translating these uses into a graphical representation reveals the Results Now model as shown in Figure 1.1.

Figure 1.1Results Now Model

Chapter 2

Planning Rules

Good things only happen when planned; bad things happen on their own.

—Philip B. Crosby1

It should come as no surprise that the four pillars have 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.2 David Lester goes even further in saying that “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?’”3

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.”4 This is true whether it is a solution to an intractable problem, a goal, or dealing with things that need to be done.5

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,6 which was the same position as it was in 2000.7 The first place position of strategic planning did not change in 2007.8 Though strategic planning ceded its highest-usage position in 2009 to benchmarking, it still earned top billing for overall satisfaction.9

The nonprofit sector reflects the for-profit sensibility to plan, and high-performing 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.10 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.11

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: 52 percent of organizations with budgets under $250,000 have them compared to 80 percent of organizations with budgets of $10 million and over.12

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 even more significant is that help with fund raising is most sought after by their clients, but it was tied for fifth place with management and human resources.13 Though you might be hungry for fund raising, 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”14 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.”15

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 approach to planning, including Results Now, have any real value?

Boards and executive directors thinking about planning 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, an organization 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).16

Building an organization that can achieve a chosen destiny is a perplexing challenge. The people who are needed to push the envelope for innovation chafe 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.17

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 a way to address real agency problems.18 The authors of the study suggest that the cause of this “may be that managers are overwhelmed with the problems with which they have to contend, and that may interfere with strategic problem-solving.”19 Or it could be that 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.”20

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.”21 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.”22

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 four are less than $500,000, and 45 percent are smaller than $100,000.23 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.24

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.25 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.26

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.27 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.28 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.29

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.30 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 right before Thanksgiving when the S&P 500 was down nearly 40 percent to about 750.

Those who 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 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?

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.31

Adding more weight to a “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 fewer 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.”32

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 seized opportunities without planning.”33 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.”34

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.”35 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 in 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 because of the impossibility of predicting the kind of stability that will eventually emerge.36

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.”

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 are 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.37

A reactive approach to thinking about the future has validity. Take the case of the Victoria Theatre Association, where I was the chief executive from 1990 to 2005. Two of its biggest strategic changes during that period occurred serendipitously. The first began as a conversation with the board president of the Human Race Theatre Company and happened when we bumped into each other on a street corner. Ten months later, the Next Stage Series was born with an annual price tag of $1 million. The new series with its off-Broadway flavor was staged by the Human Race while the front-of-house including marketing, administration, fund raising, and the like was provided by the Victoria. Not only did it stabilize funding for the Human Race and pay off its accumulated deficit, the collaboration built new audiences and ensured that professional theatre would continue to be produced locally for years to come.

The second serendipity for the Victoria was even more dramatic and involved the Dayton Opera. On a beautiful spring day and quite out of the blue, the head of the Opera's executive committee called me to express interest in a possible alliance. “Could we get together with the committee that afternoon,” he asked. And get together we did.

That the Dayton Opera was one of the treasures of the community was not in question. That the Dayton Opera was going through one of the most difficult periods 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 and attendance, the board recognized its precarious situation and entered into a management alliance with the Victoria that was implemented in a few short months.

Unfortunately, the alliance came too late for the Opera to avoid its worst deficit ever. Subcriptions hit a rock-bottom low at less than 2,600. Coming off a high of over 5,000 in the late 1980s that earned the Opera the status of the state's best, the condition of the organization just 10 years later was a stunning reversal.

Fortunately, the community of funders applauded the alliance. Through an intensive effort, enough money was raised to pay off the Opera's accumulated deficit, capitalize its operations 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. The Opera was able to hire its first full-time artistic director, and the quality of its productions earned raves and new audiences. It was a classic turnaround that delivered standing ovations.

Both of these changes for the Victoria occurred as a result of luck. No visioning process anticipated these opportunities. No strategic planning process covered the possibility of such high-impact opportunities. As such, you might well argue that the right answer about planning is to simply “just say no,” as Nancy Reagan was known to do.

Just Say Yes

As suggested earlier, 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.”38 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 nonplanners.39 A different review of 35 studies found “strategic planning to positively affect firm performance … equally in large and small and capital-intensive and labor-intensive firms.”40

When it comes to nonprofits, Melissa Stone, Barbara Bigelow, and William Crittenden reviewed more than 65 studies representing over 2,000 nonprofit organizations and did not find a conclusive relationship between planning and performance.41 Though some have seen this as evidence of a weak link between strategic planning and performance,42 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.43 Moreover, Robert Herman and David Renz argue that the “evidence supports the view that strategic planning is related to effectiveness.”44

One of the studies that did examine that relationship was Julie Siciliano's, which looked at 240 YMCA organizations and found that “those organizations that used a formal approach to strategic planning had higher levels of financial and social performance than those with less formal processes.”45 This particular study is notable because the studies investigating the link between planning and performance are few and far between.46

At the most basic level, and according to Henry Mintzberg, there is only one reason to engage in planning—to “translate intended strategies into realized ones, by taking the first step that can lead to effective implementation.”47 Put another way, “the very purpose of a plan or the action of planning is to prepare for future activity.”48 Even though “strategies can appear at all kinds of odd times, in all kinds of odd ways, from all kinds of odd places,”49 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.”50 The problem with this statement is the word some in the first sentence. If visionary companies make only 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.”51

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.52 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.”53 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 process can guarantee brilliant flashes of creative insight, but much can be done to increase the odds that they will occur.54

Back to nonprofits, Michael Allison and Jude Kaye offer two reasons to plan: it improves focus and it improves the way people work together.55 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.56

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.”57 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.58

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

IdeasBenefitsUsesThe analysis, identification, and evaluation of potential strategies, to constantly adjust to current events and actions by competitors, greater influence over circumstances, increase innovativenessIdentify StrategiesCreateThe 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 peopleSet DirectionProgramCommunication media, improved communications and public relations, communication and marketing, prepared mindsImproves the way people work together, unleashes the energy of the organization behind a shared vision, teamwork-learning-commitment, improved understanding and better learning, devices for controlCommunication Coordinate ActionImplementEnhanced 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 makingIncreased political supportOperational Effectiveness Enhanced LegitimacyAchieve Results

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: