About Bob Bob serves as President and CEO of GuideStar and serves on the boards of Vision TV, Grameen Foundation USA, and the AAFRC Trust for Philanthropy. More...
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Posted By Bob Ottenhoff on March 13th, 2012, in these categories: Nonprofit Leadership | Nonprofit Practice In my last blog I wrote about the public pressure building for the IRS to move faster on awarding 501(c)(4) designation to politically active organizations. I urged the IRS to move cautiously and take the time to make sure these organizations truly meet the test to not be “primarily political.”
This past week’s newspapers reported on another assault on the integrity of the nonprofit sector. The stockholders of the Cato Institute, the Washington-based libertarian think tank, are in a battle over control. No, the term stockholders is not a mistake. Cato is governed by four people, each with a 25 percent stake in the organization. The governance stakes can be bought and sold for cash. Governance stakes that can be bought and sold? I’ll have to admit, that’s a first for me. According to Saturday’s Washington Post, the provisions are permissible under Kansas state law but generally frowned on by the IRS, which must make the final determination about the tax-exempt status of the organization.
 Charles and David Koch, courtesy of weirddream.com
The issue here isn’t profit, but control. Cato was started by Charles and David Koch, the Kansas-based billionaire brothers, in the 1970s. With the death of one of the four stockholders, they want to take on a larger stake of the governance. How does selling board seats and control of the organization square with the requirements of a nonprofit institution and a reason for obtaining tax-exempt status? And how is it that a funder – even if they are a founder – can literally control the nonprofit?
This is not some little organization that doesn’t matter. Cato has over 100 full-time staff, plus roughly 100 visiting or adjunct scholars. It has an operating budget of more than $30 million and is working on a capital campaign in the tens of millions. Donations to this stockholder-owned nonprofit organization are tax-deductible.
This is one decision the IRS needs to get right for the sake of the entire nonprofit sector.
Posted By Bob Ottenhoff on February 13th, 2012, in these categories: Nonprofit Leadership Former president Jimmy Carter gives inspiration to an aging executive like me. After a tumultuous four years as president of the United States, from 1977-1981, he survived a difficult primary battle and was defeated for re-election. It must have been a bitter disappointment for him personally. But he didn’t slink back to Plains, Georgia. Instead, he decided to follow his interests in human rights and with his wife Rosalynn created the Carter Center in Atlanta and transformed himself into an influential international ambassador at large.
The author Bob Buford, associated with the Drucker Institute, would call this a prime example of going from “success to significance” in one’s career. Today the Center is 30 years old, has a budget over $95 million, and employees about 175 people.
 Russell Family Foundation
I had the privilege of hearing President Carter speak the other day while attending meetings at the Russell Family Foundation, located in a beautiful setting in Gig Harbor, Washington, at the invitation of Henry Izumizaki, the CEO of One Nation The Russell Family Foundation is itself a remarkable story.
President Carter was introduced by the Foundation’s executive director, Richard Woo, who said he called a former employee from the White House for background and was told there were three words to describe Carter: integrity, humaneness, and loving. Today the Carter Center focuses on three activities: peace negotiations, election monitoring, and disease prevention and eradication in developing nations. Carter personally still remains active in Habitat for Humanity.
 Gig Harbor, Washington
After Carter told us about his work at the Center, we had a chance for questions. Knowing of his extensive work in Israeli-Palestinian relations, I asked him his thoughts about prospects for the eventual outcome of the Arab Spring. He was surprisingly upbeat, given the current unrest, and observed that people everywhere have a right to self rule.
Another wanted to know what lessons Carter has learned in his work. He said he has come to realize that poor people are just as intelligent, just as hard-working, and have the same family values and ambitions as he has. What they lacked was opportunity. One person I spoke to later thought this sounded condescending. I suspect Carter had U.S. politics on his mind when he said that and was responding the talk of ending bailouts, cutting entitlements, and standing on your own two feet.
Finally, an attendee asked if he had advice for young children interested in entering politics. He said the principles guiding the life of a politician are no different than the principles for you and me:
- Tell the truth
- Work for peace
- Promote justice and equity
- Be modest about yourself
- Work for the benefit of others
Good words to live by for anyone in the nonprofit sector and a good reminder about what really matters in life.
Posted By Bob Ottenhoff on February 10th, 2012, in these categories: Nonprofit Leadership I’ve been writing about what we in the nonprofit sector can learn from the ongoing debate about the value of private equity. Just to underscore there is a nonprofit for every occasion, POLITICO reports that the Private Equity Growth Capital Council (PEGCC), a 501c6, has launched “Private Equity at Work,” a new initiative aimed at educating media, policy makers and the public about the private equity industry, including videos and an advertising campaign.
Today I have two more observations.
Private Equity. Much of the support for private equity – and the tax advantages they receive – is based on the proposition that they are generating new jobs and ultimately new businesses. I don’t think the nonprofit sector gets enough credit for encouraging start-ups and innovation and we rarely fit into public policy job creation solutions. We’re often told in political debates that we need to do more to support small businesses through cuts in bureaucracy and final support since it’s with small businesses where job creation and innovation occurs. Rather than seeing this as a good thing, we sometimes fret that we’re adding too many new nonprofits. From my perspective, our challenge in the nonprofit sector isn’t coming up with new ideas, it’s figuring out how to generate more capital in order to increase impact and scale.
The Symbiotic Relationship of Nonprofits and Consumerism. Finally, no matter what our perspective about private equity, it is here to stay. Robert Reich observed in last week’s Financial Times that the “crisis marks the triumph of consumers and investors over workers and citizens.” He points out that “getting the best deal” often has national, employment, and environmental considerations that we don’t think about and there’s little stopping this trend as “technologies outpace the capacities of democratic institutions to counterbalance them.”
There’s another aspect to this issue as well. We should also remember that our endowments and retirement funds in the nonprofit sector provide much of the money that private equity needs to do its business, and in return we rely on them to be successful. The Wall Street Journal reported this week that public employee pension funds had about 11 percent of their assets invested in private equity. So, we’re part of the game. We may not like all aspects of the private equity model, but the profits they generate play a big role in the ultimate success of the nonprofit sector.
Crisis is said to be the mother of all invention, and who else but the nonprofit sector is more suited to take up the charge in these trying times? I’ve heard stories time and again of nonprofits seeing a problem and creating a structure – or working with others already in that space – to tackle that problem, despite funding challenges and all other obstacles. I applaud the entrepreneurs across this country for their creative thinking in tackling the world’s challenges, and for their imagination and foresight in sustaining their businesses while doing so.
Posted By Bob Ottenhoff on February 6th, 2012, in these categories: Nonprofit Leadership I love the debate the Republican presidential candidates are having about how capitalism should work and in particular the role that Bain Capital has played in Romney’s campaign. It’s been fascinating and has caught the nation’s attention – even the hyper-hyperbolic cable stations are talking about it. It’s about time. The debate is getting to some fundamental issues that ought to be discussed in a national campaign: what role do we want the government to play in our society, does growing economic inequality matter and is it a threat to democracy, and what do we need to do to assure economic opportunity for all?
The debate also has me thinking about lessons for the nonprofit sector.
 Bob Ottenhoff interviews for Money for Good II
Running Nonprofits Like a Business. I always shudder when I hear someone say we should run a nonprofit – or a government – like a business. This is a boast usually made by a crusading politician, who claims with his business know-how he can cut waste and make the tough decisions elected officials have been avoiding. But they really don’t get it. It sounds easy in a soundbite. It’s also a mistake that business professionals serving on nonprofit boards frequently make as well, causing them to focus on the wrong metrics or the wrong measures of success. As Paul Krugman put it the other day in his New York Times column “America is not a corporation.”
Nonprofit organizations are created to provide a service or address a social problem. Of course, revenue is important – without it the organization can’t operate and the mission can’t be met. And profit is necessary as well if the organization hopes to be sustainable. But at the end of the day, the measure of a nonprofit’s success is not money in the bank, but the impact of its work. Operating like a business also has a “command and control” sound to it that I think doesn’t work very well in the nonprofit sector and government. One of the reasons that decision-making can be more difficult in the public sector is that decision-making isn’t made by a handful of people; it is the result of a complex process of checks and balances between the board of directors, senior management, program officers and others—it is a give and take between varying points of view. Nonprofit leaders tend to look to the long term, building institutions and tackling big problems. A school or a community center isn’t easily replaced. Steel mills and neighborhood restaurants come and go. For-profit managers are pulled in the direction of quarterly profits. And shorter term decisions.
Driving Money to High Performing Organizations. How many times have you heard someone say we have too many nonprofit organizations and we need to take a lesson from the business world and force more organizations to go out of business? Creative destruction, it’s called. Some of Mitt Romney’s critics charge that this is what Bain Capital has done, sucking all the value out of certain companies, including jobs and facilities–basically dismantling the company and walking away with the profits. Often this is done through leveraged buy-outs, where investors take on debt in order to take control of a company and then either dismantle it or make it better before selling it. Neither of these models holds much promise for the nonprofit sector.
Rarely is there a lot of underutilized or surplus value in a nonprofit organization waiting to be exploited for a profit. In my experience, nonprofits either lack the resources to scale up or don’t have a revenue model that offers a path for growth. They slide into mediocrity or get disinter mediated. Our Money for Good II research with Hope Consulting, underscores the critical need to drive more money to high-performing organizations, which could ultimately end up causing a few organizations to merge or become acquisition candidates. But this isn’t without some complications. As Greg Ulrich of Hope Consulting wrote to me recently, “Some nonprofits should be shut down – or merged. But, there are some important caveats. Just as in business, there are times when it is best for organizations to fold when they are not able to provide – and generate – sufficient value. And, just as in business, there are times when this can go too far. In the nonprofit sector we have to recognize that there is not an efficient marketplace driving things. Nonprofits are treating market failures. That can be difficult, and sometimes, they provide the only solution.”
I’d personally like to see funders take on more of the role of venture capitalists. At their best, venture capitalists try to build things. If they’re lucky, they’ll generate many times their investment when the company is sold. But in the process, seed money and expertise is made available, and a company is built that creates jobs and develops a product or service. That’s the model I would like to see emulated more often in the nonprofit sector. We still lack the kind of venture capital that is necessary to build an organization and grow it to scale and sustainability. It might also be a way to explore how to promote more mergers and acquisitions in order to encourage more consolidation.
Posted By Bob Ottenhoff on January 26th, 2012, in these categories: Nonprofit Leadership I was honored to introduce Robert Egger, founder and president of the DC Central Kitchen, at the Nonprofit CFO of the Year Award Luncheon Tuesday at the Mayflower in Washington, DC.
 Bob Ottenhoff speaks at the Nonprofit CFO of the Year Award luncheon
As I worked my way around the room at the reception at the start of the event, it was inspiring to hear discussions from CFOs at nonprofits big and small. It was striking how similar their concerns are: Will they be able to continue strategic funding of their organization’s work? What is the new revenue model in the new philanthropic normal? How do they juggle all their priorities?
Although they are rarely visible to the donating public, the CFO role is absolutely critical to the success of a high-performing nonprofit. I salute the important and essential work they do in making our organizations successful.
From our viewpoint at GuideStar as both a provider of nonprofit information and a nonprofit ourselves, we have a unique vantage point of the sector. Tens of thousands of nonprofits – and people who interact with nonprofits – come to our site every day. Nearly 25 reporters call us every week. Many of them are looking for how to find a high-performing nonprofits.
Two characteristics about high-performing nonprofits in particular are piquing people’s interest these days: sustainability and impact.
In this difficult economy, with revenues expected to decline or remain flat over the next few years, while at the same time, demand for services is increasing, nonprofits are being asked to demonstrate that they have the ability to not only hold on during these tough times but have a plan for being robust and reliable financially. After all, if you’re not strong financially, how do you expect to make a difference in addressing serious social issues?
And by the way – hope is not a business plan. All across the country nonprofits are learning how to think creatively about the diversity and strength of their revenue streams, including new ways to generate earned revenues. At my organization, GuideStar, I’m pleased to say we continue to offer over 98 percent of services at no charge to our users, while generating nearly 100% of our revenues from earned revenues. Our business plan includes a mix of renewable revenue streams from product sales and membership combined with philanthropic grants and contributions.
As an example, the DC Central Kitchen has developed one of the strongest and most innovative business models in the country. It mixes plentiful earned revenues with a creative way to employ hundreds of workers and create new careers.
I shudder when I hear politicians say that they want to run government or nonprofits like a business, because they rarely have the background to truly understand. Yesterday’s speaker knows what that means, combining the best of social activism with financial strength.
The other issue we hear about frequently at GuideStar these days is impact. With money tightening and services increasing, the public is increasingly asking the question: what is your organization trying to do and how successful are you in achieving it? So many nonprofits have wonderful charitable missions at their core but have failed to take proactive steps to measure progress and chart their impact.
What is the role of your nonprofit’s CFO?
Posted By Bob Ottenhoff on January 4th, 2012, in these categories: Nonprofit Leadership As leaders, we quickly learn that much of the success of our organization depends on our abilities to attract, motivate, inspire and retain skilled, committed people. Several newspaper articles over the last week gave me some special insights into how to do it right. From Ahmet Ertegan and Tom Friedman I learned that trusting in our people to do the right thing is essential. Walter Isaacson used lessons from Steve Jobs to point out the critical role of intuition and attention to the needs of customers. Ross Douthat reminds us that leaders have much to be humble about.
See what you think:
From the Wall Street Journal review of Robert Greenfield’s new book, The Last Sultan, on Ahmet Ertegun, the famous record company executive:
Ertegun founded Atlantic Records in 1947 with his friend and fellow jazz and blues lover Herb Abramson, though the major shareholder was the Ertegun family dentist, Vahdi Sabit. On the original three-page contract, the name ‘Horizon Records, Inc.’ is crossed out and replaced by “Atlantic Recording Corporation.” Ertegun explained: “The name Atlantic was probably about our eightieth choice, because every name we came up with . . . had already been taken. . . . It wasn’t a name we were crazy about—it was so generic. There are so many Atlantics, A&P and all that, but finally we said, who cares what we call it?”
Ertegun could play plenty of angles, but his primary occupation was simply being out and about. David Geffen, the record executive and film producer, recalls asking Ertegun how to make money in music only to have the older man stand up and shuffle across the floor. After Mr. Geffen says twice that he doesn’t get it, Ertegun finally says: “If you’re lucky, you bump into a genius and that makes you rich in the music business!”
No mention is made here of the thousands of non-starters that Ertegun must have encountered in his nightly prowls. His focus was on the geniuses, and once he found them he gave them free rein. Rather than try to shape his artists’ work to meet the desires of some perceived audience, as other executives did, Ertegun trusted the instincts of his artists as he trusted his own.
New York Times’ columnist Tom Friedman’s article titled “Help Wanted”:
We are present again at one of those great unravelings — just like after World War I, World War II and the cold war. But this time there was no war. All of these states have been pulled down from within — without warning. Why?
The main driver, I believe, is the merger of globalization and the Information Technology revolution. Both of them achieved a critical mass in the first decade of the 21st century that has resulted in the democratization — all at once — of so many things that neither weak states nor weak companies can stand up against. We’ve seen the democratization of information, where everyone is now a publisher; the democratization of war-fighting, where individuals became superempowered (enough so, in the case of Al Qaeda, to take on a superpower); the democratization of innovation, wherein start-ups using free open-source software and “the cloud” can challenge global companies.
And, finally, we’ve seen what Mark Mykleby, a retired Marine colonel and former adviser to the chairman of the Joint Chiefs of Staff, calls ‘the democratization of expectations’ — the expectation that all individuals should be able to participate in shaping their own career, citizenship and future, and not be constricted.
‘The days of leading countries or companies via a one-way conversation are over,” says Dov Seidman, the C.E.O. of LRN and the author of the book “How.” “The old system of ‘command and control’ — using carrots and sticks — to exert power over people is fast being replaced by ‘connect and collaborate’ — to generate power through people.” Leaders and managers cannot just impose their will, adds Seidman. “Now you have to have a two-way conversation that connects deeply with your citizens or customers or employees.”
A lot of C.E.O.’s will tell you that this shift has taken them by surprise, and they are finding it hard to adjust to the new power relationships with customers and employees.
“As power shifts to individuals,” argues Seidman, “leadership itself must shift with it — from coercive or motivational leadership that uses sticks or carrots to extract performance and allegiance out of people to inspirational leadership that inspires commitment and innovation and hope in people.”
An opinion piece in the New York Times by Walter Isaacson on Steve Jobs:
One of the questions I wrestled with when writing about Steve Jobs was how smart he was. On the surface, this should not have been much of an issue. You’d assume the obvious answer was: he was really, really smart. Maybe even worth three or four reallys. After all, he was the most innovative and successful business leader of our era and embodied the Silicon Valley dream writ large: he created a start-up in his parents’ garage and built it into the world’s most valuable company.
So was Mr. Jobs smart? Not conventionally. Instead, he was a genius. That may seem like a silly word game, but in fact his success dramatizes an interesting distinction between intelligence and genius. His imaginative leaps were instinctive, unexpected, and at times magical. They were sparked by intuition, not analytic rigor. Trained in Zen Buddhism, Mr. Jobs came to value experiential wisdom over empirical analysis. He didn’t study data or crunch numbers but like a pathfinder, he could sniff the winds and sense what lay ahead.
He told me he began to appreciate the power of intuition, in contrast to what he called “Western rational thought,” when he wandered around India after dropping out of college. “The people in the Indian countryside don’t use their intellect like we do,” he said. “They use their intuition instead … Intuition is a very powerful thing, more powerful than intellect, in my opinion. That’s had a big impact on my work.”
Mr. Jobs’s intuition was based not on conventional learning but on experiential wisdom. He also had a lot of imagination and knew how to apply it. As Einstein said, “Imagination is more important than knowledge.”
The ability to merge creativity with technology depends on one’s ability to be emotionally attuned to others. Mr. Jobs could be petulant and unkind in dealing with other people, which caused some to think he lacked basic emotional awareness. In fact, it was the opposite. He could size people up, understand their inner thoughts, cajole them, intimidate them, target their deepest vulnerabilities, and delight them at will. He knew, intuitively, how to create products that pleased, interfaces that were friendly, and marketing messages that were enticing.
Ross Douthat, Op-Ed columnist for the New York Times in a piece titled “Our Reckless Meritocracy”:
“In meritocracies, though, it’s the very intelligence of our leaders that creates the worst disasters. Convinced that their own skills are equal to any task or challenge, meritocrats take risks that lower-wattage elites would never even contemplate, embark on more hubristic projects, and become infatuated with statistical models that hold out the promise of a perfectly rational and frictionless world. (Or as Calvin Trillin put it in these pages, quoting a tweedy WASP waxing nostalgic for the days when Wall Street was dominated by his fellow bluebloods: “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”)
Inevitably, pride goeth before a fall. Robert McNamara and the Vietnam-era whiz kids thought they had reduced war to an exact science. Alan Greenspan and Robert Rubin thought that they had done the same to global economics. The architects of the Iraq war thought that the American military could liberate the Middle East from the toils of history; the architects of the European Union thought that a common currency could do the same for Europe. And Jon Corzine thought that his investment acumen equipped him to turn a second-tier brokerage firm into the next Goldman Sachs, by leveraging big, betting big and waiting for the payoff.
What you see in today’s Republican primary campaign is a reaction to exactly these kinds of follies — a revolt against the ruling class that our meritocracy has forged, and a search for outsiders with thinner résumés but better instincts.
In place of reckless meritocrats, we don’t need feckless know-nothings. We need intelligent leaders with a sense of their own limits, experienced people whose lives have taught them caution. We still need the best and brightest, but we need them to have somehow learned humility along the way.”
What do you think? What did the above teach you about nonprofit leadership?
Posted By Bob Ottenhoff on December 14th, 2011, in these categories: Nonprofit Leadership It’s been fascinating to read all the adulation showered on Steve Jobs. People truly love his products. Not just like or use, – but love, and deeply! Apple’s competitors have so far been unable to match his phones, computers and tablets when it comes to building sheer delight and customer loyalty. I’m determined to get GuideStar to the point where users feel passionately about what we do and eagerly volunteer to help make us better.
It didn’t just happen for Apple. It’s clear that Jobs spent an enormous amount of energy trying to get things just right. In the process he drove a lot of people crazy. And as the new biography by Walter Isaacson points out, he was often self-centered and sometimes downright mean.
 Stephen Denning
I don’t think it’s necessary to be nasty to be successful. One of my principles for building GuideStar into a high performing organization is that I want us to be respectful and civil to each another and encourage a diversity of robust opinion. I think we do better work when we listen more and talk less. It be should be a guiding principle every nonprofit organization aspires to. But that doesn’t imply we should ease up on our expectations for our co-workers. Don’t confuse civil with soft. Or ease up on challenging each other’s assumptions or giving one another feedback regularly. Sal Giambanco of Omidyar says “giving feedback to each other is a gift.” At the end of the day, performance matters. As Jim Collins puts it: “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.”
I got to thinking about Jobs when reading a book by Stephen Denning. I can’t say I love the title – The Leader’s Guide to Radical Management - but there’s a lot of helpful material in it that furthered my understanding of agile leadership as well as agile software development.
Denning’s major point is that both the marketplace and the workplace have changed dramatically. Customers are now in charge. Their expectations have changed from expecting a zero-defect product to a product that delights.
I assumed that what Denning meant about “delight” was feature sets – all the cool things about features and design that make Apple products so special. And he does: “finding ways to produce something new, remarkable, different, or unexpected in a way that meets real needs and creates pleasant surprise.” But that’s not all. It also includes “finding ways to deliver the product or service sooner or more cheaply or more safely or in a more environmentally friendly way.”
Wow. There’s that Agile Development mantra again. Deming suggests the way to delight is to focus on people not products, by identifying your primary clients, meeting unrecognized needs and aiming for the simplest possible thing that will delight! This last one is key: delivering more value sooner or cheaper requires working in an iterative process – learn/adapt -thereby defining the work in the experience of the client rather than in abstractions. Good lessons to live by and principles that most nonprofits should be able to do better than most organizations.
To pull off this new client-focused marketplace, we need a different kind of organization. As I wrote in a blog last month, hierarchies and repetition don’t help us get things done anymore. In today’s dynamic workplace, we need to make decisions quicker and get closer to the customer. That’s why I like Agile so much. It suggests designing work in client-driven iterations. And even more important, making sure that every iteration delivers value to clients. Putting the customer first requires putting our employees first. Hierarchical bureaucracies no longer can do the job.
The way to do this is by creating self-organizing teams of diverse people assigned to work with customers. As Deming describes it: “the teams decide how the work will be organized, who will do what, and in what order, and select leaders.” The group has the responsibility and needs to solve the problem they’ve been assigned.
This is new territory for most of us. At GuideStar, our latest product (due to launch in the first quarter of 2012) has been designed and developed primarily in Agile. We’ve been able to step up the pace of development. Even better, we’re learning how to get closer to the customer. As a result, we’ve stopped doing some things we were planning to do and received some fantastic ideas from customers that we had never thought about. Next year, we have a new team assigned to work on how we can better serve our users with both fee-based and free products.
Denning urges us to “make friends with surprise.” Traditional managers live in dread of the unpredictable. How many times have you heard something like “The plan must be revised so that the future can be a copy of the plan!” This approach doesn’t work anymore. In today’s world, surprise should be welcomed as the source of future growth. Surprise is what generates delight. Building a better organizational structure to deal with surprise can empower all of us to use our capacity – those of our entire work force – to their fullest. That’s an exciting prospect.
Posted By Bob Ottenhoff on November 21st, 2011, in these categories: Nonprofit Leadership One of the most thought provoking books I’ve read over the last few years is The Starfish and the Spider by Rod Beckstrom and Ori Brafman. I was reminded about it as I listened to Bill Drayton’s acceptance speech as he was awarded the Independent Sector’s John W. Gardner Leadership Award for his ground-breaking work with social entrepreneurs at Ashoka. Drayton said organizational change is accelerating at the same pace that Moore’s law is changing computers and predicted that the change to come in organizational structure is “bigger than the industrial revolution and even the digital revolution.” This rate of change means today’s systems and institutions can no longer work. Drayton observed that for hundreds of years the world ran on “hierarchy and repetition.” Now this approach doesn’t work anymore. Relying solely on hierarchy – we’ve come to term them command and control systems – are no longer able to respond quickly or sufficiently enough. Depending on repetition to ensure authority and trust has been replaced by an explosion of information from all directions, thanks to the Internet and new technologies. Drayton believes the only way out of this dilemma is to tear down the walls and make everyone into a change maker. To cause change, we need to create teams – not hierarchies – and make sure that all the pieces are working together. The job of the leader is helping to set the goal and getting everyone to agree on it.
I heard Drayton just as I was completing a helpful book called Leadership Agility by Bill Joiner and Stephen Josephs, recommended to me by our Agile development coach Lyssa Adkins. The authors write about the fact that as the levels of complexity and uncertainty grow we need to be creating “agile” companies – organizations that can nimbly anticipate and respond to rapidly changing conditions.
Agile companies require leadership agility. The authors think most leaders aren’t prepared for this new world. They estimate that only 10 percent are truly ready to lead agile organizations and divide leaders into roughly three groups:
- Experts (roughly 45 percent of all managers) are strongly motivated to develop subject matter expertise and believe expertise is the leader’s legitimate power. They have a tactical orientation and believe success can be achieved by making incremental improvements to existing strategies. For these leaders, organizational initiatives focus primarily on incremental improvements inside unit boundaries with little attention to stakeholders. I would say many nonprofit leaders fit into this group – subject experts about a cause, but not able to see the big picture.
- Achievers (about 35 percent of today’s managers) are highly motivated to accomplish outcomes valued by the institutions with which they’ve identified themselves. They realize leaders’ power comes not only from authority and expertise but also from motivating others by making it challenging and satisfying to contribute to important outcomes. Achievers can be highly effective in moderately complex environments where the pace of change requires episodic shifts in corporate strategy. By the way, the authors think most of the level five leaders of Jim Collins Good to Great fall into this category.
- The authors estimate about only 10 percent of leaders achieve what they call “Catalyst leadership.” These are leaders that are “animated by a compelling vision that includes high levels of participation, empowerment and teamwork where collaboration, decisiveness and candid, constructive conversation are norms.” In this world, senior teams become living laboratories that create this kind of culture within the team and work together to promote and encourage this culture in the organizations they lead. “They are committed to developing a genuinely collaborative team and organizational relationships rooted in a deep sense of shared purpose.”
I asked Drayton about this collaborative team approach. I said it sounded a little bit like a committee, which the nonprofit sector has in excess. Drayton said “committees are poison to change, because they promote a status quo or a lowest common denominator.” Teams are different. They have a shared sense of purpose and share power.
The authors of Leadership Agility believe the level of agility often depends on what type of organization you run and where the manager fits within the leadership team. Some ways to increase organizational agility include:
- Emphasizing cross-functional teamwork.
- Setting up cross-functional teams to make needed organizational improvements.
- Telling stories that highlight the business value of cross-functional teamwork.
- Rewarding those who take constructive risk-taking is also important.
There’s a lot to think about here. In some ways, these observations seem to be stating the obvious. But if this is so simple, why aren’t we doing it? I think all too often it’s because we don’t know how to think this way. We and our organizations are trapped in old models and we often don’t even recognize it. The authors’ advice can best be summed up by two familiar quotes that seem to fit the Agile strategy perfectly:
Mahatma Gandhi: “You must be the change you want to see in the world.”
Lao Tzu: “Best leaders are the ones that when they finish people say we did this ourselves.
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