Ed Batista

Organizational Effectiveness

What makes organizations effective?  For that matter, what do we even mean by effectiveness?  I've been giving these questions some thought recently and the following graphs are the result.  (Here's the whole 9-slide PowerPoint file, 75 KB.)

I love the Peters/Waterman/McKinsey "7s" Model, but we can extend it in two directions.  First, looking within an organization, if we reduce the model further and boil it down to its most essential core elements, I think we're left with People (or Staff, in 7s-speak) and Culture (an amalgam of Style, Skills and Shared Values.)  Second, if we look beyond the organization--if we ask why it exists and whether its fulfilling its purpose--we begin to assess its Impact, which includes not only profitability and financial sustainability but also the value created for any stakeholders, from a business's employees to a nonprofit's clients.

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My focus on these three elements is also due to their tightly interrelated nature--they all affect the other two in fundamental ways.

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I think one of the least-understood dynamics is the relationship that exists between an organization's people and its culture.  Sometimes it's difficult to even know where to draw a boundary between the two: Where do I stop and where do my contributions to the culture around me begin?  This may be why so many organizations operate without a clear understanding of their culture.  (And to be clear, every organization has a culture: "When you've decided you don't have a culture, you've got one...")

But what's most important to recognize is the dialectical nature of this relationship.  An organization's founders create the initial culture, which then exerts its influence on them in turn.  Future colleagues are attracted to the pre-existing culture because in some way it meets their needs, and so they reinforce it.

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I've also focused on People and Culture because I see these elements as most closely connected to an organization's Impact.  This isn't to say that other elements don't matter--but ultimately people implement an organization's plans, and the culture in which they operate helps them or hinders them.  Talented people can overcome misguided strategies and suboptimal systems, but they can't outrun a dysfunctional culture (not for long, anyway.)

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And an organization's Impact--its ability to achieve its goals, fulfill its purpose and create value for stakeholders--directly affects its ability to attract and retain effective people and to build and sustain a high-performance culture.

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OK, having mapped out the relationships that exist among these three elements, what do they actually look like?  How do we define People, Culture and Impact in effective organizations?

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Here's my definition of effectiveness as it pertains to People.  I emphasize connections with Culture and Impact; interpersonal skills and accountability; self-development and growth.

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Here's my definition of an effective Culture.  I emphasize distributed leadership, continuous learning, openness, and decentralization.  The final quote from Tom Peters deserves further explanation: The 7s Model is sometimes divided into "Hard" elements (Strategy, Structure and Systems) and "Soft" elements (Skills, Staff, Style and Shared Values).  Our business culture tends to value the former and dismiss the latter, and Peters thinks this is entirely ass-backwards.  The "hard" stuff, from strategic plans to complex financial structures, is actually pretty fuzzy and surprisingly easy to fake.  The "soft" stuff--relationships, leadership, interpersonal skills (in short, culture)--is actually pretty resilient and surprisingly difficult to get right.  Hard is soft, soft is hard.

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I don't believe there's a universal definition of Impact--organizations define value-creation in different ways, and they're answerable to different sets of stakeholders.  But I do believe that effective organizations share the characteristics listed above, which enable them to understand, measure and communicate their impact, and to use that information to drive decision-making (cf. Bob Sutton and Jeff Pfeffer's Hard Facts.)  At the same time, they reality-check regularly and don't let data dictate decisions.

Effective organizations also know when to give up and move on.  They take a pragmatic approach and never let sunk costs fuel persistence--instead, they've mastered the art of strategic quitting.

Finally, effective organizations have a vision of victory that they're driving toward.  What would it look like to win?  For some organizations (including many nonprofits), ultimate victory means putting themselves out of business because they've succeeded in fully and permanently meeting the need that they were created to fulfill.

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Again, if you're interested, here's the whole 9-slide PowerPoint file (75 KB).  As with the other models I post here, I consider this a work-in-progress that helps me make sense of the world, and I welcome any feedback to improve it or make it clearer.

Forces for Good and High-Impact Practices

What common practices are shared by "high-impact" nonprofits?  And can organizations in other industries benefit from these same practices?  Leslie Crutchfield and Heather McLeod Grant tackle the first question in their soon-to-be-published Forces for Good (due out October 19), and based on an excerpt that came out today in the Stanford Social Innovation Review, it's clear that the answer to the second question is an unqualified yes.

In the SSIR article, Crutchfield and McLeod Grant discuss the six high-impact practices that make up the heart of their book, and in my opinion all of these concepts have relevance beyond the nonprofit sector.

Their key theme is that what's happening outside an organization is more important than what's happening inside, and yet so many of our efforts aimed at improving effectiveness are focused on activities within an organization's formal boundaries.  (And not, I suspect, because that's where we can have the greatest impact, but because that's what's easiest.)

Here's are the six high-impact practices identified by Crutchfield and McLeod Grant, with brief excerpts from the SSIR article and my interpretation of how these concepts could be applied more broadly:

1. Serve and Advocate

High-impact organizations may start out providing great programs, but they eventually realize that they cannot achieve large-scale social change through service delivery alone. So they add policy advocacy to acquire government resources and to change legislation. Other nonprofits start out by doing advocacy and later add grassroots programs to supercharge their strategy. Ultimately, all high-impact organizations bridge the divide between service and advocacy. They become good at both. And the more they serve and advocate, the more they achieve impact.

So what's the equivalent of "advocacy" outside the nonprofit sector?  Lobbying.  Just take a stroll through the Lobbying Database to see how much "high-impact" companies are spending.  Microsoft has topped $8 million annually for the last 4 years, and Google went from $200K in 2005 to over $800K last year.  I'm not saying this results in good public policy, but it's reality.

2. Make Markets Work

High-impact nonprofits have learned that tapping into the power of self-interest and the laws of economics is far more effective than appealing to pure altruism. No longer content to rely on traditional notions of charity, or to see business as an enemy, these nonprofits find ways to work with markets and help companies "do good while doing well."

Not much to add here.

3. Inspire Evangelists

High-impact nonprofits build strong communities of supporters who help them achieve their larger goals. They value volunteers, donors, and advisers not only for their time, money, and guidance, but also for their evangelism. To inspire supporters' commitment, these nonprofits create emotional experiences that help connect supporters to the group's mission and core values.

What jumps out at me is the emphasis on "emotional experiences."  Is your organization creating any emotional experiences for your supporters?  And if not, why would you expect them to evangelize on your behalf?

4. Nurture Nonprofit Networks

Although most nonprofits pay lip service to collaboration, many of them really see other groups as competition for scarce resources. But high impact organizations help their peers succeed, building networks of nonprofit allies and devoting remarkable time and energy to advancing their fields.

This is more industry-specific.  If you're in a mature industry and focused on stealing market share, collaborating doesn't make as much sense.  But if you're in an emerging industry and growing the overall market is a quicker and cheaper path to success, you need to take a broader view of the competition.  A zero-sum perspective will limit everyone's growth potential.

5. Master the Art of Adaptation

High-impact nonprofits are exceptionally adaptive, modifying their tactics as needed to increase their success. They have responded to changing circumstances with one innovation after another. Along the way, they've made mistakes and have even produced some flops. But unlike many nonprofits, they have also mastered the ability to listen, learn, and modify their approach on the basis of external cues.

I love the phrase "external cues."  What cues are you picking up from beyond the boundaries of your organization?  But listening is just the beginning--what are you doing with that information?

6. Share Leadership

The leaders of these 12 organizations all exhibit charisma, but they don't have oversized egos. They know that they must share power in order to be stronger forces for good. They distribute leadership within their organizations and throughout their external nonprofit networks, empowering others to lead.

I'm reminded of this comment on from Bill George: "To me, the great leaders today are able to align people around a sense of purpose and values and get that consistency all around the globe, and then empower other people to step up and lead.  And I've found that in organizations that are really effective at generating leaders, there are thousands of leaders because people empower them to step up and lead."

Why Bad Presentations Happen to Good People

Why do so many well-meaning people give such bad presentations?  Last year Andy Goodman and Cause Communications sought to answer that question in Why Bad Presentations Happen to Good Causes, an outstanding book that I can't recommend highly enough.  (Ironically, I've been involved in planning a series of presentations this year, but I only just rediscovered Goodman's book because my wife and I are moving to a new apartment and sifting through all our belongings. Timing really is everything.)  The title's emphasis on good "causes" stems from Goodman's work in the nonprofit sector, but his conclusions are broadly applicable in any industry.

Goodman's perspective is similar to Seth Godin's Really Bad PowerPoint, but he dramatically expands the scope of his critique with the help of data generated by 2,501 respondents to a 43-question online survey in Q1 2005.  Here are Goodman's "Fatal Five," common problems that can derail a presentation, with comments from survey respondents:

1. Reading the slides. ("Watching someone read PowerPoint slides is a form of torture that should be banned under the Geneva Convention.")
2. Too long, too much information. ("Too many slides with too many words, too many points, too much data, too long, too didactic.")
3. Lack of interaction. ("Presenters have a responsibility to mine [their audience's life and work experience], direct it, and facilitate the economical sharing of that information among the group.")
4. Lifeless presenters. ("Even if I'm interested in the topic...if the speaker is boring, I'm easily distracted by other goings-on in the room like someone's cool shoes or outfit.")
5. Room/technical problems. ("The frequency with which respondents mentioned these kinds of problems suggests that...presenters often do not anticipate them or fail to have a backup plan.")

But Goodman's respondents didn't just complain about bad presentations--they also told him what factors contribute to an excellent presentation.  Their "Three Most Wanted" list:

1. Interaction. ("Interactive presentations that create opportunities for the audience members to work together and with the presenter are almost always top notch.")
2. Clarity. ("Clarity of three to four well-framed key points the speaker wanted the audience to take away, coupled with smart use of metaphors/anecdotes that helped drive them home.")
3. Enthusiasm. ("Whether respondents used the words energy, passion, engaging, dynamic or lively, they all wanted the same thing: presenters who were enthusiastic about their topic and conveyed that interest to the audience.")

If an audience and a PowerPoint deck are in your future, "Bad Presentations..." is well worth your time.  And if you're a full-time employee at a nonprofit, foundation, government agency, or educational institution, you can get one free copy.  (If you work for The Man, it's still just $17.50.)

UPDATE: A digital version of "Bad Presentations..." is available for free from Andy Goodman.  Printed  copies are no longer available from Goodman, but you can usually find a few copies on Amazon.

Making Lemonade

A colleague of mine runs a nonprofit that's staffed almost exclusively by people who are formerly homeless and seeking to stabilize their lives.  The organization is both a training program that allows its employees to re-enter the working world and a social venture that runs a successful online business to support its operations.

The database that supports their online services recently melted down, resulting in several agonizing weeks of technical troubleshooting that my colleague said she wouldn't wish on her worst enemy.

But she also found a silver lining in the experience: it was an incredible training opportunity in crisis management for her employees.  She wasn't minimizing the frustrations that her team suffered or the negative impact on their business, but she was determined to see the upside as well.

The nature of her organization's work compels her to look at the big picture regarding the impact on her staff, but that's hardly the exclusive prerogative of a training program manager.  It makes me wonder what opportunities the rest of us routinely miss because we're conditioned to focus on the downside of a crisis.  I'm not advocating a Candide-like approach to management, but there's something to be said for looking at a bowl of lemons and realizing you're about to make lemonade.

Photo by Alanna St. Laurent.  Yay Flickr and Creative Commons.

More on Recovery 2.0

As noted below, I was lucky enough to sit in on a session at Web 2.0 last night organized by Jeff Jarvis and Greg Burton on Recovery 2.0, i.e. working to prevent future Katrinas through better disaster planning, preparedness and response.  One of the primary exercises we went through was coming up with a list of characteristics disaster systems should have--and which were often seen to be lacking on the Gulf Coast.

I think it's important to keep in mind, as Jeff noted, that there's no one single IT here--we're not talking about building an uber-system, some sort of Ultimate Defense Against Bad Things Happening.  We know that's not realistic--or even desirable, thinking about what fun the laws of unintended consequences would have with such a venture.

What we're talking about is 1) building a network of loosely joined people and initiatives who care and who want to take action (and a great place to start is the Recovery 2.0 wiki), and 2) working to insure that all the systems involved in helping people prepare, survive and recover from disasters benefit from the lessons that Katrina taught us (in short, insuring that Katrina's victims did not die or suffer in vain.)

So here's my copy of the list we brainstormed.  As someone pointed out, it's contradictory.  (Do we contradict ourselves?  Very well then, we contradict ourselves.)  And without last evening's discussion as context, it's somewhat cryptic, but I still think it's interesting:

Recovery 2.0

The highlight of Web 2.0 today was actually a very low-key, low-tech session on "Recovery 2.0," i.e. working to prevent future Katrinas through better disaster planning, preparedness and response.  Jeff Jarvis led the session, having raised the call to arms in a recent post and arranged for the space with the Web 2.0 organizers, and we had a great turnout, given the competition (free booze at any of a number of sponsored events) and the timeslot (6pm after a long day of conferencing).  Even some bigshots like Michael Powell and Craig Newmark showed up.

We introduced ourselves (a very valuable community-building experience, even if it does entice some people who really should know better into talking at great length about their Special Story),  brainstormed a list of characteristics that any Recovery 2.0 initiatives should have, and agreed to keep working together at the Recovery 2.0 wiki.  A good meeting--focused but inclusive, open-minded but with a tangible outcome, and it ended on time!  Kudos to Jeff and Greg Burton for pulling it together--I'm excited about the next steps.

recovery2

Staying On Message...Or Not

Mark Frederickson commented on my recent post about Michael Stein's interview with Michael Gilbert:

I think I have to weigh in on the Gilbert side of this debate, and for one simple reason: message. Email allows for better control of what you are saying and to whom. I believe the thought of allowing anyone the opportunity to add, change or diffuse an organization's message is scary (to me at least).

I come from an electoral background, where message manipulation is the primary focus of the campaign. I've seen campaigns burned by allowing anyone to use their websites as a soap box. In a similar vein, remember MoveOn.org's "Bush = Hitler" ad fiasco?

(I apologize in advance for linking to a Washington Times article - I would have found something better but I'm in a hurry ;-).

With email, an organization does not need to worry any (even well meaning) person hijacking the message.

My $0.02

Thanks for the comment, Mark.  As I noted in my post, I agree with Gilbert's underlying philosophy, but I also think that the combined proliferation of (on the one hand) self-publishing tools and (on the other) spam are working to move dialogue out of the Inbox and onto more public online spaces.

And for related reasons, I disagree with the idea that nonprofits should be focused on delivering a honed message (and on preventing anyone from altering that message.)  I'm sure you didn't intend it to sound this way, but that idea strikes me as patronizing, suggesting that "we" (i.e. the organization) have the right answer, and our job is to deliver a compelling message that will convince "them" (i.e. activists, donors, etc.) that we're right and motivate them to act accordingly.

Instead, I think that nonprofits should be focused on engaging their constituents in an active dialogue that's about listening and learning as much as anything else.  The idea that the people at the center--the organizational professionals--have all the answers just isn't true.  No matter what issues you're involved with, there are vast networks of people out there with a great deal of expertise and plenty of creative ideas. 

These people are your audience, and they want to get involved.  But they don't want to be told what to think.  They want to tell you what they think.  They're willing to listen, to be educated, and to be recruited to your cause as well, but treating them like passive recipients of your message is a sure way to turn them off and drive them away.

In recent years there's been a steady progression toward greater interactivity and responsiveness on the part of all institutions (except where they exercise monopoly control).  Nonprofits, schools, political campaigns, and businesses in every industry are increasingly engaged in conversations with their markets (see Cluetrain).

Email is great for broadcasting messages, broadcasting will continue to be important for most institutions, and email isn't going away any anytime soon.  But blogs and other public, visible, searchable and archivable web tools provide a much better platform for ongoing dialogues between an institution and its constituents.  Continuing to prioritize email over these other tools is a mistake and a missed opportunity for any institution.

cluetrain

Michael Stein and Michael Gilbert

Michael Stein posted an interview with Michael Gilbert at GetActive's Word of Net yesterday, and the results were as interesting as you'd expect, given their extensive involvement in the nonprofit technology field.  Gilbert made a particularly good point on the question of whether ample resources (i.e. staff time, money, and management support) are preconditions for successful nonprofit technology initiatives:

I am not convinced of the generalization that more resources devoted to Internet strategies are the key to success. Rather, I think success is the key to more resources. In other words, I think that careful change management, with an eye toward the right first steps, can be far more powerful than asking people to pour resources in and wait for results down the road.

So it's the culture, stupid?  But although I agree with Gilbert's emphasis on the importance of organizational culture and change management, I'm not convinced by his continued prioritization of email over websites:

The Internet has not changed in any way that fundamentally undermines those rules. [i.e. (1) Resources spent on email strategies are more valuable than the same resources spent on web strategies, (2) A website built around an email strategy is more valuable than a website that is built around itself, and (3) Email-oriented thinking will yield better strategic thinking overall.] You still get a higher return on investment on money invested in email. You still get better websites when you design them around your email strategies. And the better you are at thinking about email, the better you become at thinking about relationship management strategies in general.

At the root of Gilbert's philosophy is an absolutely correct emphasis on relationship management and attention to ROI.  Listen to your constituents and don't waste money on useless bells and whistles--and that advice will hold true forever.  And email isn't going away anytime soon--nonprofits must continue to think seriously about their email strategies.

But the Inbox isn't the only place to meet your constituents anymore--try their aggregators--and websites aren't static, glossy brochures--they're lively public spaces, with comments, guest bloggers, and wikis creating opportunities for direct participation.  And although these tools are still in their infancy, usage is exploding and they're dirt-cheap and easy to implement.  The Internet may not have changed, but the tools we use to access it certainly have, and nonprofits should be taking full advantage of them.

nptech

Clara Miller on Nonprofit Finance

The Spring 2005 issue of the Nonprofit Quarterly features an outstanding article by Clara Miller, President and CEO of the Nonprofit Finance Fund, that points out the insanity of many of the rules and practices that govern nonprofit finance.  She doesn't just criticize--she also suggests a number of solutions--but she's particularly good when she's taking on the status quo, such as when she mocks donors who refuse to pay for overhead:

Nonprofits, Blogs and Fear

Beth Kanter has a great interview with Michael Gilbert on nonprofit blogging.  Michael puts his finger on one of the key reasons so few nonprofits have jumped into the fray, and paints a bold vision for the future:

In my communication workshops, I still find that nearly every nonprofit organization is rather afraid of the idea of blogging. It's threatening to them to have their staff blogging, it's too much work to have their leaders blogging, and it seems irrelevant to have their stakeholders blogging. Obviously, I support all three of these blogging strategies and I think that together they represent a resurgence of a community based form of organizing, whether in support of social service or social change. But I think the vast majority of the sector isn't there yet.

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There are a great many different possible models for nonprofit blogging. Right now, I think the highest payback for individual nonprofits is to use the blog model as either the main or the most important organizing paradigm for their web sites. But for some time now, I have been advocating that nonprofits work to release authentic voices in their organizations by supporting individual blogging, starting with the leadership. Authentic voices of that nature will open all sorts of possibilities for organizations who want to mobilize and engage people, whether donors or activists or volunteers. But the long term implications are a more network centric nonprofit sector, rather than the organization centric system we have now. It's pretty threatening on a lot of levels.  [Emphasis mine]

Michael's comments are relevant for all organizations, not just nonprofits, and for all industries, not just the nonprofit sector.  Every organization is going to have to overcome the fear of their staff talking freely with the outside world, and of their stakeholders talking directly to each other--and they will when the risk of invisibility becomes greater than the risk of losing control.  And every industry is going to have to come to grips with a environment in which connections between networked individuals matter more than organizational boundaries--and they will when organizations become less important in the value creation chain.

But by design, the nonprofit sector is insulated from the sudden economic jolts that can often unleash those kinds of changes in other industries.  This stability can help to insure that vital services don't ebb and flow with the economic tides, but it can also lock in outmoded ways of doing business, and prevent conservative, risk-averse nonprofit managers from being held accountable for their inability to adapt.  So I worry that the forces driving the innovative use of blogs in other industries today are going to take a little longer to be felt in the nonprofit sector.  There are encouraging signs, to be sure, but it's still taking longer than it should.

nptech