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`Managing the Nonprofit Organization` by Peter F. Drucker
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* Subtitle: “Practices and Principles”
* `Amazon.ca `__
* `Amazon.com `__
* Good overview on `Nick’s Book Blog
`__ in five parts
(`1 `__,
`2 `__,
`3 `__,
`4 `__,
`5 `__)
**DO NOT COPY THIS DOCUMENT TO A PUBLIC SITE.** It contains extensive quotations from a copyrighted work, and should remain internal.
This summary makes extensive use of direct quotes from the book,
either “in quotation marks” ...
... or in block quotes.
The summarizer’s notes and opinions are [written in square brackets].
.. contents:: :local:
Preface
=======
Individual burnout ... is so acute in non-profits precisely
because the individual commitment to them tends to be so intense.
Non-profits face very big and different challenges.
The first is to convert donors into contributors. ... We know
that we can no longer hope to get money from “donors”; they have
to become “contributors.”
It is much more than just getting extra money to do vital work.
Giving is necessary above all so that the non-profits can
discharge the one mission they all have in common: to satisfy the
need of the American people for self-realization, for living out
our ideals, our beliefs, our best opinion of ourselves. To make
contributors out of donors means that the American people can see
what they want to see---or should want to see---when each of us
looks at himself or herself in the mirror in the morning: someone
who as a citizen takes responsibility. Someone who as a neighbor
cares.
The second major challenge for the non-profits: to give community
and common purpose. ... It is working as unpaid staff for a
non-profit institution that gives people a sense of community,
gives purpose, gives direction. ... “Here I know what I am
doing. Here I contribute. Here I am a member of a community.”
Precisely because volunteers do not have the satisfaction of a
paycheck, they have to get more satisfaction out of their
contribution. They have to be managed as unpaid staff.
Part One: The Mission Comes First
=================================
—and your role as a leader
1. The Commitment
-----------------
The first job of the leader is to think through and define the
mission of the institution.
Setting Concrete Action Goals
`````````````````````````````
A mission statement has to be operational, otherwise it’s just
good intentions. A mission statement has to focus on what the
institution really tries to do and then do it so that everybody in
the organization can say, This is *my* contribution to the goal.
The task of the non-profit manager is to try to convert the
organization’s mission statement into specifics. The mission may
be forever—or at least as long as we can foresee. ... But the
goal can be short-lived, or it might change drastically because a
mission is accomplished.
Managers of non-profits also have to build in review, revision,
and organized abandonment. The mission is forever ... the goals
are temporary.
One of our most common mistakes is to make the mission statement
into a kind of hero sandwich of good intentions. It has to be
simple and clear. As you add new tasks, you deemphasize and get
rid of old ones. You can only do so many things.
As you add on, you have to abandon. But you also have to think
through which are the few things we can accomplish that will do
the most for us, and which are the things that contribute either
marginally or are no longer of great significance.
So you constantly look at the sate-of-the-art. You look at the
opportunities in the community. ... The specific objective may
change. Things that were of primary importance may become
secondary or even totally irrelevant. You must watch this
constantly, or else very soon you will become a museum piece.
The Three “Musts” of a Successful Mission
`````````````````````````````````````````
Look at strength and performance.
Look outside at the opportunities, the needs.
Look at what we really believe in.
And so one asks first, what are the opportunities, the needs?
Then, do they fit us? Are we likely to do a decent job? Are we
competent? Do they match our strengths? Do we really believe in
this?
You need three things: opportunities, competence; and commitment.
Every mission statement ... has to reflect all three or it will
fall down on what is its ultimate goal, its ultimate purpose and
final test. It will not mobilize the human resources of the
organization for getting the right things done.
2. Leadership Is a Foul-Weather Job
-----------------------------------
Fortunately or unfortunately, the one predictable thing in any
organization is the crisis. That always comes. That’s when you
*do* depend on the leader.
The Problems of Success
```````````````````````
Problems of success have ruined more organizations than has
failure, partly because if things go wrong, everybody knows they
have to go to work. Success creates its own euphoria. You outrun
your resources. And you retire on the job, which may be the most
difficult thing to fight.
If the market grows, you have to grow with it, or you become
marginal.
The lesson for the leaders of non-profits is that one has to grow
with success. But one also has to make sure that one doesn’t
become unable to adjust. Sooner or later, growth slows down and
the institution plateaus. Then it has to be able to maintain its
momentum, its flexibility, its vitality, and its vision.
Otherwise, it becomes frozen.
Hard Choices
````````````
Non-profit organizations have no “bottom line.” They are prone to
consider everything they do to be righteous and moral and to serve
a cause, so they are not willing to say, if it doesn’t produce
results then maybe we should direct our resources elsewhere.
Non-profit organizations need the discipline of organized
abandonment perhaps even more than a business does. They need to
face up to critical choices.
Once you acknowledge that, you can then innovate—provided you
organize yourself to look for innovation. Non-profit institutions
need innovation as much as business or governments.
The starting point is to recognize that change is not a threat.
It’s an opportunity.
* Unexpected Success in Your Own Organization
* Population Changes
* Changes in Mind-Set and Mentality
The lesson is, Don’t wait. Organize yourself for systematic
innovation. Build the search for opportunities, inside and
outside, into your organization. Look for changes as indications
of an opportunity for innovation. To build all this into your
system, you, as the leader of the organization, have to set the
example.
First, organize yourself to see the opportunity. If you don’t
look out the window, you won’t see it.
Then, to implement the innovation effectively, there are a few
points you must be aware of. First, the most common mistake—the
one that kills more innovations than anything else—is the attempt
to build too much reinsurance into the change, to cover your
flank, not to alienate yesterday.
Next, you have the problem of organizing the new. It must be
organized separately. ... If you put new ideas into operating
units ... the solving of the daily crisis will always take
precedence over introducing tomorrow. ... And yet you have to
make sure the existing operations don’t lose the excitement of the
new entirely. Otherwise, they become not only hostile but
paralyzed.
The Innovative Strategy
```````````````````````
You need ... a way to bring the new to the marketplace.
Successful innovation finds a target of opportunity. Somebody who
is receptive, who welcomes the new, who wants to succeed and
... has enough stature, enough clout in the organization so that,
if it works for him or her, the rest of the organization will say,
Well, there must be something to it.
If you first plan and then try to sell, you’re going to miss the
important things. ... Selling has to be built into planning, and
that means involving the operating people. But don’t forget one
thing: everything new requires hard work on the part of true
believers—and true believers are *not* available part time.
How To Pick a Leader
````````````````````
The first thing to look for is strength—you can only perform with
strength—and what they have done with it.
Second, ... look at the institution and ask: What is the one
immediate key challenge?
Then ... look for ... character or integrity. A leader sets an
example, especially a strong leader. He or she is somebody on
whom people, especially younger people, in the organization model
themselves.
In the non-profit agency, mediocrity in leadership shows up almost
immediately. One difference clearly is that the non-profit has a
number of bottom lines—not just one. ... You deal with balance,
synthesis, a combination of bottom lines for performance.
The non-profit executive does not have the luxury of dealing with
one dominant constituency, either.
You can’t be satisfied in non-profit organizations with doing
adequately as a leader. You have to do exceptionally well,
because your agency is committed to a cause. You want people as
leaders who take a great view of the agency’s functions, people
who take their roles seriously—not *themselves* seriously.
Your Personal Leadership Role
`````````````````````````````
The new leader of a non-profit doesn’t have much time to establish
himself or herself. Maybe a year. To be effective in that short
a time, the role the leader takes has to fit in terms of the
mission of the institution and its values. ... To work, the role
has to fit in three dimensions. First, the role has to fit
you—who you are. ... The role you take also has to fit the task.
And, finally, the role has to fit expectations.
You have two things to build on: the quality of the people in the
organization, and the new demands you make on them.
The leaders who work most effectively ... never say “I.” ...
They don’t *think* “I.” They think “we”; they think “team.” They
understand their job to be to make the team function. They accept
the responsibility and don’t sidestep it, but “we” gets the
credit. There is an identification ... with the task and with the
group. This is what creates trust, what enables you to get the
task done.
As a leader, you are visible; incredibly visible. And you have
expectations to fulfill.
You are visible; you’d better realize that you are constantly on
trial.
Basic leadership competences:
* The willingness, ability, and self-discipline to listen.
Listening is not a skill; it’s a discipline. Anybody can do it.
All you have to do is keep your mouth shut.
* The willingness to communicate, to make yourself understood.
That requires infinite patience. ... You have to tell us again
and again and again. And demonstrate what you mean.
* Not to alibi yourself. Say: “This doesn’t work as well as it
should. Let’s take it back and re-engineer it.” We either do
things to perfection, or we don’t do them. We don’t do things
to get by. Working that way creates pride in the organization.
* The willingness to realize how unimportant you are compared to
the task. Leaders need objectivity, a certain detachment. They
subordinate themselves to the task, but don’t identify
themselves with the task. The task remains both bigger than
they are, and different. The worst thing you can say about a
leader is that on the day he or she left, the organization
collapsed.
When effective non-profit leaders have the capacity to maintain
their personality and individuality, even though they are totally
dedicated, the task will go on after them. They also have a human
existence outside the task. Otherwise they do things for personal
aggrandizement, in the belief that this furthers the cause. They
become self-centered and vain. And ... jealous.
One gives one’s very best efforts. What attracts people to an
organization are high standards, because high standards create
self-respect and pride. ... It is the job of the leaders to set
high standards on one condition—that they be performance-focused.
Most leaders I’ve seen were neither born nor made. They were
self-made. We need far too many leaders to depend on the
naturals.
It’s [the] willingness to make yourself competent in the task
that’s needed that creates leaders.
The Balance Decision
````````````````````
One of the key tasks of the leader is to balance up the long range
and the short range, the big picture and the pesky little details.
You are always paddling a canoe with two
outriggers—balancing—while managing a non-profit. One is the
balance between seeing only the big picture and forgetting the
individual person. ... The opposite danger is becoming the
prisoner of operations. That’s much harder to avoid. The
effective people do it very largely through their work in
associations and other organizations.
Another [example], ... even harder to handle, is the balance
between concentrating resources on one goal and enough
diversification. If you concentrate, you will get maximum
results. But it’s also very risky. Not only may you have chosen
the wrong concentration, but—in military terms—you leave your
flanks totally uncovered.
The even more critical balance, and the toughest to handle, is
between being too cautious and being rash. Finally, there is
timing. ... People who always expect results too soon.
As in all Aristotelian means, the first law is “Know thyself.”
Know what is your degenerative tendency.
I’ve seen more institutions damaged by too much caution than by
rashness.
Make sure you know your degenerative tendency and try to
counteract it.
Then there is the balance decision between opportunity and risk.
One asks first: is the decision reversible? If it is, one usually
can take even considerable risks. In the non-profit institution,
you constantly must gauge whether the financial dimension of a
risk is too great. ... Then one asks: Is it a risk we can
afford? All right, if it goes wrong, it hurts a little. Or is it
a risk that, if things go wrong, will kill us? Or the trickiest
of them all, the risk we can’t afford not to take.
The balance decisions are what we need non-profit leaders for,
whether they are paid or volunteer.
The Don’t’s of Leadership
`````````````````````````
Far too many leaders believe that what they do and why they do it
must be obvious to everyone in the organization. It never is.
Far too many believe that when they announce things, everyone
understands. No one does, as a rule. Yet very often one can’t
bring in people before the decision. ... Effective leaders have
to spend a little time on making themselves understood.
Don’t be afraid of strengths in your organization. ... You run
far less risk of having able people around who want to push you
out than you risk by being served by mediocrity.
Don’t pick your successor alone. ... You end up with carbon
copies, ... weak. ... Leaders don’t pick their own successors.
They’re consulted, but they don’t make the decision.
Don’t hog the credit.
Don’t knock your subordinates.
The most important do: Keep your eye on the task, not on yourself.
The task matters, and you are a servant.
3. Setting New Goals — Interview with Frances Hesselbein
--------------------------------------------------------
Frances Hesselbein was National Executive Director of the Girl Scouts
of the United States of America, the world’s largest women’s
organization, from 1976 to 1990.
The interview covers the development and introduction of a new Girl
Scouts program: the Daisy Scouts for 5-year-olds. The program:
* was market-driven (a need was seen)
* sought targets of opportunity (areas and people willing to join)
* provided training to volunteers, which was essential
* emphasized recruiting volunteer leaders
* considered volunteers as the most important market or customers
* considered volunteers as unpaid staff
..
**Drucker:** You determine their job, you set the standard, you
provide the training, and you basically set their sights high.
... Volunteer professionals ... get their satisfaction out of
their work, not the paycheck.
**Hesselbein:** [Also] the recognition. It is important that
someone says: “Thank you very much, you’ve made a major
contribution.” This is an important part of the support and care
of that volunteer workforce.
**Drucker:** Isn’t it pretty typical of the non-profit
organization that it has more than one customer?
**Hesselbein:** Rarely does a non-profit organization have “a”
customer. If we market to only one of our customers, I think we
fail.
General conclusions about introducing a new program:
**Hesselbein:** You must carefully construct a marketing plan.
Not just disseminate information about it, but understand all the
ways there are to reach people and use them. Distributing written
materials isn’t enough. You need people in the marketing chain.
And there has to be continuing evaluation—getting feedback on how
we are doing. And if a strategy is not working, regroup and move
ahead in a different way.
4. What the Leader Owes — Interview with Max De Pree
----------------------------------------------------
Max De Pree is chairman of Herman Miller, Inc. and of the Hope College
Board, and is a member of the board of Fuller Theological Seminary.
He wrote `Leadership Is an Art` (1989).
**De Pree:** We come to life with a tremendous diversity of gifts.
I think from there, a leader needs to see himself in a position of
indebtedness. Leaders are given the gift of leadership by those
who choose or agree to follow.
The leader owes certain assets to an organization. [E.g.] the
ability to recruit the right people ... the ability to raise the
necessary funds ... the values of the organization. The leader is
accountable for expressing [the values], making them clear, and
ensuring to the people in the organization that the values will be
lived up to in a way in which decisions are made. Vision [and]
agreed-upon work processes come under this heading.
**Drucker:** You develop people, not jobs.
**De Pree:** Yes, ... when you take the risk of developing people,
the odds are very good that the organization will get what it
needs.
Here we’re talking about potential. [This] ... also applies
... to the development of an organization. I think if we focus on
goal achievement, we miss the chance we have of realizing our
potential. Goal achievement is an annual matter related to the
annual plan. But the realization of our potential, that’s a life
matter.
Any time we talk about accountability and about achievement, it
has to be clear that we are going to delegate thoroughly.
Delegate with a certain abandon so that people have space in which
to realize potential, in which to be accountable, in which to
achieve.
A leader must have vision. It is natural for a leader to be a
person who is primarily future-oriented. ... Those are not
exactly the same things. I believe that the first duty of a
leader is to define reality. Every organization, in order to be
healthy, to have renewal processes, to survive, has to be in touch
with reality.
We have to deserve the person who works for us. We owe him or
her, which is what you meant by indebtedness. Because they are
not committed to us by necessity; they are committed to us by
choice.
Opportunity is clearly one of the most important things that we
seek today in our working lives.
Mistakes are not terminal. Mistakes are part of education. ...
When we challenge people on the high side, the odds are much
better that we’re going to get *both* better performance and more
development of the person.
**Drucker:** On two conditions. ... One has to be willing to
give the person who tries a second and perhaps even third chance,
but I wouldn’t waste my breath on people who don’t try. And then
there has to be a mentor if you give that much load, that much
demand, that much responsibility to beginners...
**De Pree:** The way in which you judge the quality of leadership
[is] by what I would call the tone of the body, not by the
charisma of the leader, not by how much publicity the company
gets, or the leader gets, or any of that stuff. How well does the
body adjust to change? ... deal with conflict? ... meet the
needs of the constituency or customers?
**Drucker:** We are all used to talking about the leader as the
servant of the organization. ... The leader starts out with the
realization that he and the organization owe; they owe the
customers, the clients, the constituency, ... the followers,
... [and the] volunteers. And what they owe is really to enable
people to realize their potential, to realize their purpose in
serving the organization.
5. Summary: The Action Implications
-----------------------------------
Non-profit institutions exist for the sake of their mission. They
exist to make a difference in society and in the life of the
individual. ... The first task of the leader is to make sure
that everybody sees the mission, hears it, lives it. ... And
yet, mission needs to be thought through, needs to be changed.
One looks to the outside for opportunity, for a need.
The mission is always long-range. It needs short-range efforts
and very often short-range results.
But also we need to be result-driven. We need to ask, Do we get
adequate results for our efforts? Is this their best allocation.
... Need ... by itself is not enough. There also have to be
results.
Leadership is accountable for results. And leadership always
asks, Are we really faithful stewards of the talents entrusted to
us? The talents, the gifts of people ... [and] money. Leadership
is *doing*. It isn’t just thinking great thoughts; it isn’t just
charisma; it isn’t play-acting. It is doing. And the first
imperative of doing is to revise the mission, to refocus is, and
to build and organize, and then abandon.
The first action requirement [is] the constant resharpening, the
constant refocusing, never really being satisfied. And the time
to do this is when you are successful.
The next thing to do is to think through priorities. That’s easy
to say. But to act on it is hard because it always involves
abandoning things that look very attractive, that people both
inside outside the organization are pushing for.
Leaders set examples. The leaders have to live up to the
expectations regarding their behavior.
Ask yourself, as a leader, what do I do to set standards in the
organization? What do I do to enable the organization to tackle
new challenges, to seize new opportunities, to innovate? What do
*I* do? ... Take action responsibility. What are my own first
priorities, and what are the organization’s first priorities, what
*should* they be?
In the non-profit ... increasingly there are only leaders ... paid
and ... not paid. ... Mission and leadership are not just things
to read about, to listen to. They are things to do something
about. Things that you can, and should, convert from good
intentions and from knowledge into effective action, not next
year, but tomorrow morning.
Part Two: From Mission to Performance
=====================================
—effective strategies for marketing, innovation, and fund development
1. Converting Good Intentions into Results
------------------------------------------
The non-profit institution is not merely delivering a service. It
wants the end user to be not a user but a *doer*. It uses a
service to bring about change in a human being. ... It creates
habits, vision, commitment, knowledge. It attempts to become a
part of the recipient rather than merely a supplier. Until this
has happened, the non-profit institution has had no results; it
has only had good intentions.
You need four things ... a plan, marketing, people, and money.
Non-profit institutions that do well used to think they didn’t
need marketing. ... Nobody trusts you if you offer something for
free. You need to market even the most beneficial service. But
the marketing you do in the non-profit sector is quite different
from selling. It’s more a matter of knowing your market—call it
market research—of segmenting your market, of looking at your
service from the recipient’s point of view.
To run a non-profit effectively, the marketing must be built into
the design of the service. This is very much a top management
job, although ... you need a lot of input from your people, from
the market, and from research.
An important point to remember ... in designing a non-profit’s
service and marketing is to focus only on those things you are
competent to do. ... Don’t put your scarce resources where you
aren’t going to have results. This may be the first rule for
effective marketing.
The second rule, know your customers. Yes, I said *customers*.
Practically everybody has more than one customer, if you define a
customer as a person who can say no.
The design of the right marketing strategy for the non-profit
institution’s service is the first basic strategy task: the
non-profit institution needs market knowledge. It needs a
marketing plan with specific objectives and goals. And it needs
what I call marketing responsibility, which is to take one’s
customers seriously. Not saying, We know what’s good for them.
But, What are their values? How do I reach them?
The non-profit institution also needs a fund development strategy.
... The non-profit institution has to raise money from donors.
It raises its money—at least, a large portion of it—from people
who want to participate in the cause but who are not
beneficiaries.
Almost by definition, money is always scarce in a non-profit
institution. Indeed, a good many non-profit executives seem to
believe that all their problems would be solved if only they had
more money. In fact, some of them come close to believing that
money-raising is really their mission.
But a non-profit institution that becomes a prisoner of
money-raising is in serious trouble and in a serious identity
crisis. The purpose of a strategy for raising money is precisely
to enable the non-profit institution to carry out its mission
without subordinating that mission to fund-raising. This is why
non-profit people have now changed the term they use from “fund
raising” to “fund development.” Fund-raising is going around with
a begging bowl, asking for money because the *need* is so great.
Fund development is creating a constituency which supports the
organization because it *deserves* it. It means developing what I
call a membership that participates through giving.
Your first constituency in fund development is your own board.
... You need a board that takes an active lead in raising money,
whose members give both of themselves and by being fund-raisers,
fund *developers*.
But you also want something else on the board which has to do with
money: the ability to audit the balance between your program and
your resources. That is what gives you assurance.
In fund development you appeal to the heart, but you also have to
appeal to the head, and try to build a continuing effort. The
non-profit manager has to think through how to define *results*
for an effort, and then report back to the donors, to show them
that they are achieving results.
You also have to educate donors so that they can recognize and
accept what the results are.
This moves us to constituency building over the very long term.
... Building up a long-term constituency, people who remember,
who are not giving simply because someone rings a doorbell. They
see the support of the institution as self-fulfillment. That is
the ultimate goal of fund development.
2. Winning Strategies
---------------------
There is an old saying that good intentions don’t move mountains;
bulldozers do. In non-profit management, the mission and the plan
... are the good intentions. Strategies are the bulldozers. They
convert what you want to do into accomplishments.
Strategies ... are action-focused.
Improving What We Already Do Well
`````````````````````````````````
To work systematically on the productivity of an institution, one
needs a strategy for each of the factors of production. The first
factor is always people. It’s not a matter of working harder; ...
It’s a matter of working smarter, and above all, of placing people
where they can really produce. The second universal factor is
money. How do we get a little more out of the [always scarce]
money that we have? ... And the third factor is time.
One needs productivity goals—and ambitious ones. ... Set your
objectives high. Not so high that people say this is absolutely
absurd, but high enough so that they say: we’ve got to stretch.
Constant improvement also includes abandoning the things that no
longer work; and it includes the innovation objective. ... What
is our innovation strategy? Where are we going to do something
different, or do the same thing quite differently? Set the
goals—and go to work.
You can set goals that are not measurable but can be appraised and
can be judged [qualitative goals].
Then you have to ask, What are the specific results I want? ...
First, you need the goal, and it’s got to fit your mission. But
it also has to fit the environment in which you work. Then you
thing through specific results for specific areas.
Look at the ultimate beneficiaries—call them the market—the
ultimate clients. ... Each of these groups [is] a separate
market ... you go after them separately. And you develop a
marketing plan. You will need money, and will have to allocate it
sensibly. You will have to communicate and you will have to have
feedback.
First, the goal must be clearly defined. Then that goal must be
converted into specific results, specific targets, each focused
on a specific audience, a specific market area. You may need a
great many such specific strategies.
Next, you will need a marketing plan and marketing efforts for
each target group. How are you really going to reach this
specific segment? You now need resources—people, above all—and
money. And the allocation of both.
Next comes communication—lost of it—and training. Who has to do
what, when, and with what results? What tools do they need? ...
You have to ask who must do what, and in what form they should get
it so that it becomes *their* work.
Then you need logistics. ... What resources are required?
Finally, you ask: “When do we have to see results?” Try not to be
impatient. But you must be able to see whether you are on course
when the results come in. What feedback do you need? How do you
measure your achievement ...? You need feedback and control
points.
To carry out the process, you need to use both written and verbal
communication. A written process has the great advantage that you
can [review it with everybody]. Above all, you invite questions.
But you also have to encourage people to come back and [ask
questions verbally].
But there is one *don’t* on strategy. Don’t avoid defining your
goals because it might be thought “controversial.”
With strategy, one always makes compromises on implementation.
But one does not compromise on goals, does not pussy-foot around
them, does not try to serve two masters.
Here is another *don’t*: Don’t try to reach different market
segments with the same message.
How To Innovate
```````````````
Usually, there is no lack of ideas in non-profit organizations.
What’s more often lacking is the willingness and the ability to
convert those ideas into effective results. What is needed is an
innovative strategy. The successful non-profit organization is
organized for the new—organized to perceive opportunities.
Innovative organizations systematically look both outside and
inside for clues to innovative opportunities.
One strategy is practically infallible: Refocus and change the
organization *when you are successful*. ... At that point, let’s
hope, you have some character in the organization who is willing
to be unpopular by saying, “Let’s *improve* it.” If you don’t
improve it, you go downhill pretty fast.
The great majority of major institutions that have gotten into
real trouble ... are successes that rested on their laurels. ...
When you are successful is the very time to ask, “Can’t we do
better?” The best rule for improvement strategies is to put your
efforts into your successes. Improve the areas of success, and
change them.
The responsibility for this rests at the top, as in everything
that has to do with the *spirit* of an organization. And so the
executives who run innovative organizations must train themselves
to look out the window, to look for change. The funny thing is,
it’s easier to learn to look *out* the window than to look
*inside*, and that’s also a smart thing to do systematically.
The change outside is an opportunity. ... Demographics ... is
your first source.
Then you look *inside* your organization and search for the most
important clue pointing the way to change: generally, it will be
the unexpected success. Most organizations feel that they deserve
the unexpected success and congratulate themselves on it. Very
few see it as a call to action.
The first requirement for successful innovation is to look at a
change as a potential opportunity instead of a threat.
The second question is, Who in our organization should really work
on this? That’s a crucial question. Most new things need to be
incubated. They need to be piloted by somebody who really wants
that innovation, who wants it to grow, who believes in it.
Everything new also gets into trouble, so look for somebody who
really wants to commit himself or herself and who has enough
standing in the organization.
Then thing through the proper marketing strategy. What are you
really trying to do?
Look into the possibility of developing a niche. ... That is a
strategy: if you come out with a specialty, don’t try to do
everything for everybody.
The Common Mistakes
```````````````````
There are a few common mistakes in doing anything new.
One is to go from idea into full-scale operation. Don’t omit
*testing* the idea. Don’t omit the pilot stage. If you do, and
skip from concept to the full scale, even tiny and easily
correctable flaws will destroy the innovation.
But also don’t go by what “everybody knows” instead of looking out
the window. What everybody knows is usually twenty years out of
date.
The next most common mistake is righteous arrogance. Innovators
are so proud of their innovation that they are not willing to
adapt it to reality. It’s an old rule that everything that’s new
has a different market from the one the innovator actually
expected.
Another common mistake is to patch up the old rather than to go
all-out for the new.
There comes a point when one has to look at what the job requires,
and design for the job, rather than saying, “This is how we’ve
always done it. Let’s improve it a little bit.” This is one of
the critical decisions. It is one of the crucial tasks of the
executive to know when to say, “Enough is enough. Let’s stop
improving. There are too many patches on those pants.”
Don’t assume that there is just the one right strategy for
innovations. Every one requires thinking through anew. ...
Before you go into an innovative strategy, don’t say, “This is how
we do it.” Say, “Let’s find out what this needs. Where is the
right place in the market? Who are the customers, the
beneficiaries? What is the right way to deliver it? What is the
right way to introduce it? Let’s not start out with what we know.
Let’s start out with *what we need to learn*.”
When a strategy or an action doesn’t seem to be working, the rule
is, “If at first you don’t succeed, try once more. Then do
something else.” The first time around, a new strategy very often
doesn’t work. Then one must sit down and ask what has been
learned. ... Try to improve it, to change it and make another
major effort. Maybe ... you should make a third effort. After
that, go to work where the results are.
There are exceptions. ... But they are very rare. ... There
are also true believers who are dedicated to a cause where
success, failure, and results are irrelevant, and we need such
people. They are our conscience. But very few of them achieve.
... So, if you have no results, try a second time. Then look at
it carefully and move on to something else.
3. Defining the Market — Interview with Philip Kotler
-----------------------------------------------------
Philip Kotler is a teacher at the J. L. Kellog Graduate School of
Management of Northwestern University, and author of `Strategic
Marketing for Non-Profit Institutions`.
**Kotler:** I felt very strongly that marketing, like the other
business functions, was generic and universal, and applied to all
institutions, and that it ought to be brought into the non-profit
world more consciously.
Many institutions misunderstand it. They confuse marketing with
either hard selling or advertising, and therefore, don’t show an
aptitude for it.
The most important tasks in marketing have to do with studying the
market, segmenting it, targeting the groups you want to service,
positioning yourself in the market, and creating a service that
meets needs out there. Advertising and selling are afterthoughts.
... The aim of marketing is to make selling unnecessary.
The shortest definition [of marketing] I’ve heard is that it is
finding needs and filling them. I would add that it produces
positive value for both parties. ... [When] you start with
customers, or consumers, or groups you want to serve well—that’s
marketing. If you start with a set of products you have, and want
to push them out into any market you can find, that’s selling.
The problem with many sales-oriented or product-oriented
organizations [is] that they think they have such a good product,
they don’t understand why people are not rushing to buy it or to
use it.
Every organization is swimming in a sea of publics. ... The
problem marketing has to solve is, How do I get the response I
want? The answer marketing gives is that you must formulate an
offer to put out to the group from which you want a response. The
process of getting that answer, I call exchange thinking. What
must I give in order to get? How can I add value to the other
party in such a way that I add value to what I want? Reciprocity
and exchange underlie marketing thinking.
Marketing is now thought of as a process of segmenting, targeting,
and positioning—I call it STP marketing.
Positioning raises the question: How do we put ourselves across to
a market we’re interested in? How do we stand out in some way?
You cannot be all things to all people. So most organizations
engage in the search for their own uniqueness, what we might call
a competitive advantage or advantages. That comes by cultivating
certain strengths and putting them across as meaningful to the
market you’re going after.
**Drucker:** So the mission may well be universal. And yet to be
successful, the institution has to think through its strategy and
focus on the main target groups in marketing and delivering its
service. The same thing is true for fund-raising, isn’t it?
**Kotler:** Fund-raising requires careful identification of the
appropriate sources of funds and the giving motives. Why does
that donor give money? To whom does the donor give money?
**Drucker:** I think we need product differentiation in the
non-profit institution as much as we need it in business.
**Kotler:** Marketing really is spurred by the presence and the
increase in competition that the institution faces in a way that
it never faced before. Most organizations don’t get interested in
marketing when they are comfortable. Suddenly they find that they
don’t understand their customers very well... And these
institutions become aware of a competitive situation.
The chief executive officer should, of course, be the chief
marketing officer. Marketing doesn’t get anywhere in an
organizations without the head of the organizations getting
interested in it, understanding it, and wishing to disseminate its
logic and wisdom to the staff and people connected with the
institution. Still, the CEO can’t do the marketing. The work has
to be delegated to someone who is skilled in handling marketing.
Most institutions appoint a director of marketing or a
vice-president of marketing. ... There’s a difference, of
course. The director of marketing is seen as a person who has
“skills will travel,” and not someone who is in a policy-making or
policy-influencing position. That’s why I favor a vice-president
of marketing position, because that person really should sit with
all the other officers as they try to visualize what the future of
their institution will be.
**Drucker:** And how can we tell whether marketing in a non-profit
institution ... is making a genuine contribution?
**Kotler:** Marketing is supposed to do the following. It is
supposed to build up what I call share of mind and share of heart
for the organization. ... A good marketing program will build up
more awareness and more loyalty or bonding with the public you are
trying to serve. ... It’s measurable through normal marketing
research.
The [right] order [of marketing is]: first, do so me customer
research to understand the market you want to serve and its needs.
Second, develop segmentation and be aware of different groups that
you’re going to be interacting with. Third, develop policies,
practices, and programs that are targeted to satisfy those groups.
And then the last step is to communicate these programs. Too many
... non-profit organizations go right into advertising before
they’ve gone into the other three steps, and that’s really doing
things backwards.
I’ve often said that non-profit organizations that have no
marketing, or little marketing, will probably take five to ten
years to really install effective marketing procedures and
programs if they’re fully committed to installing them. And mind
you, many organizations give up after one or two years. ... It
takes five to ten years because marketing is more than a
department, it’s really everyone in the organizations pursuing one
goal and that is to satisfy the customer, to serve the customer.
Marketing in a non-profit organization becomes effective when the
organization is very clear about what it wants to accomplish, has
motivated everyone in the organization to agree to that goal and
to see the worthwhileness of that goal, and when the organization
has taken the steps to implement this vision in a way which is
cost-effective, in a way which brings about that result.
Marketing is a way to harmonize the needs and wants of the outside
world with the purposes and the resources and the objectives of
the institution.
4. Building the Donor Constituency — Interview with Dudley Hafner
-----------------------------------------------------------------
Dudley Hafner is executive vice-president and CEO of the American
Heart Association.
**Drucker:** What we used to call fund-raising, we now call fund
development. [Why?]
**Hafner:** It’s recognizing that your true potential for growth
and development is the donor, is someone you want to cultivate and
bring along in your program. Not simply someone to collect this
year’s contribution from.
It applies to all of the non-profit organizations. One of the
things that helps an organization move forward is to have a broad,
sound, solid advocacy base. One of the places to develop that is
within your giver group. You need those advocates.
**Drucker:** It must greatly reduce the acquisition cost; the cost
of getting the money, when you have a donor base that is already
sold. You don’t have to sell every year.
**Hafner:** It’s just much more efficient to organize with the
notion that you are going to have a long-term relationship with
your donors, that you’re going to help them increase their support
to the organization. But from an effectiveness standpoint, it
also makes a lot of sense because for a non-profit organization to
be really successful, you have to have a lot of people caring
about how it does. You want that donor to take ownership in your
program.
You have to have a very clear mission and very clear goals.
Development means bringing the donors along, raising their sights
in terms of how they can support you, giving them ownership in the
outcome of your organization. That takes a long-term strategy
rather than putting together an annual campaign to go out and
collect money.
**Drucker:** You have to think through to whom you make sense.
**Hafner:** Then appeal to them in a very forceful, forthright
manner.
People [who] get involved ... do become advocates.
**Drucker:** What kind of materials do you supply [to local
groups]?
**Hafner:** We have a prescribed structure that we offer to the
local leadership. We have job descriptions. We have a way for
them to formulate goals for now and five years out. And then we
have the materials that support each one of those elements of the
fund-raising.
For long-term growth of the an organization, you have to appeal to
the rational in the individual as well as the emotional part of
the individual.
What we’ve found in asking for a specific gift is that it
dramatically improves the return in our campaign.
Once you’ve given a gift that is suggested, you fall into a
category that the non-profits should pay special attention to: the
long-term strategy of upgrading that gift.
**Drucker:** Your market research tries to identify two things, to
use technical terms: both market segmentation and market value
expectations.
You also look upon fund development as an educational campaign,
not just to get money but to strengthen [your] objectives.
**Hafner:** You have to have a strategy for your fund development
and know what you expect out of the various strategies, what your
return expectations are. Then you measure your success against
that.
**Drucker:** If you were to pick out one or two factors that are
crucial to fund development and fund-raising, ... what would you
pick out?
**Hafner:** The care and treatment and cultivation of the donor.
The second thing I would do is ask for a gift that is in
relationship to the individual’s ability to give. Those two
things will give you long-term, stable growth. It will give you
broad-based advocacy, and I think those are the two most important
parts.
**Drucker:** I think the strongest thing you said just now to me
is that fund development is *people* development. Both when you
talk of donors and when you talk of volunteers. You are building
a constituency. You’re building understanding, you’re building
support. You’re building satisfaction, human satisfaction in the
process. That is the way to create the support base you need to
do your job. But it’s also the way you use your job to enrich the
community and every participant. And it’s based on clear mission,
on extensive and detailed knowledge of the market, of making
demands on both your volunteers and your donors, but also on
feedback from your performance, which, I think, is something on
which a good many non-profits organizations are pretty weak. You
never hear from them what the results are.
5. Summary: The Action Implications
-----------------------------------
Strategy converts a non-profit institution’s mission and
objectives into performance. Despite its importance, however,
many non-profits tend to slight strategy. It seems so obvious to
most of them that they are satisfying a need, so clear that
everybody who has that need must want the service the non-profit
institution has to offer. One central problem is that too many
non-profit managers confuse strategy with a selling effort.
Strategy *ends* with selling efforts. It begins with knowing the
market—who the customer is, who the customer should be, who the
customer might be. ... The non-profit institution needs a
marketing strategy that integrates the customer and the mission.
An effective non-profit institution also needs strategies to
improve all the time and to innovate. The two overlap. Nobody
can ever quite say where an improvement ends and an innovation
begins.
And then the non-profit institution needs a strategy to build its
donor base. It needs to develop a donor constituency.
All three of these strategies begin with research... They require
organized attempts to find out who the customer is, what is of
value to the customer, how the customer buys.
The most important person to research is the individual who
*should* be the customer. ... The most important knowledge is
the *potential* customer.
This understanding of the importance of strategy is particularly
crucial to non-profit managers when it comes to their donors.
The ones that get results—the ones that attract and build a fund
constituency—say, “This is what *you* need. These are the
results. This is what we do for you.” They look upon the donor
as a customer. This is the essence of a strategy: it always
starts out with the other side.
The next step in non-profit strategy ... is the training of your
own people. ... The way to train people is behaviorally: *This
is what you do*.
In non-profit management, training doesn’t apply only to the
employees; training volunteers may be even more essential,
especially in an organization in which volunteers are the
interface with the customers, with the public.
When it comes to introducing something new, when it comes to
innovation, non-profit strategy requires careful thought and
planning: where to start and with whom. Start with people who
want the new to succeed. Don’t try to have everybody in the
organization run with the new first. That route always gets into
trouble.
Look for a target of opportunity, for somebody in the organization
who wants the new, who is convinced of it, who is committed to it.
The strategy in innovation is to think through this process at the
start, so that you can identify somebody willing to work hard at
making the new successful, and somebody whose success then becomes
a multiplier in the organization.
Knowing the customer also enables the non-profit organization
... to know what results to expect. It is important to define
goals and know what realistically should work. ... Then one can
feed back from results.
Strategy also demands that the non-profit institution organize
itself to abandon what no longer works, what no longer
contributes, what no longer serves. ... If you don’t build
[abandonment] in, you’ll soon overload your organization and put
good resources where the results don’t follow.
The question always before the non-profit executive is: What
should our service do for the customer that is of importance to
that customer? Then think through how the service should be
structured, be offered, be staffed. End up with nuts and bolts:
What to do, when to do, where to do. And most importantly, who is
to do it?
Strategy begins with the mission. It leads to a work plan. It
ends with the right tools—a kit, say... Without that kit, there
is no strategy.
The last thing to say about strategy is that it exploits
opportunity, the right moment. ... The need presents itself in a
specific form, and it is the function of research to find out, at
this time, what that form is.
Strategy commits the non-profit executive and the organization to
action. Its essence is action—putting together mission,
objectives, the market—and the right moment. The tests of
strategy are results. It begins with needs and ends with
satisfactions. For this you need to know what the satisfactions
should be for *your* customers... What is really meaningful to
them? Non-profit people must respect their customers and their
donors enough to listen to *their* values and understand *their*
satisfactions. They do not impose the executive’s or the
organization’s own views and egos on those they serve.
Part Three: Managing for Performance
====================================
—how to define it; how to measure it
1. What Is the Bottom Line When There Is No “Bottom Line”?
----------------------------------------------------------
Non-profit institutions tend not to give priority to performance
and results. Yet performance and results are far more
important—and far more difficult to measure and control—in the
non-profit institution than in a business.
When non-profit executives face a risk-taking decision, they must
first think through the desired results—\ *before* the means of
measuring performance and results can be determined. The
executive who leads must first answer the question, How is
performance for this institution to be defined?
It is not enough for non-profits to say: We serve a need. The
really good ones create a *want*.
As non-profit executives begin to define the performance that
makes the mission of their institution operational, two common
temptations have to be resisted. First: recklessness. It’s so
easy to say that the cause is everything, and if people don’t want
to support it, too bad for them. Performance means concentrating
*available* resources where the results are. It does not mean
making promises you can’t live up to.
But equally dangerous is the opposite—to go for the easy results
rather than for results that further the mission. Avoid
overemphasis on the things the institution can easily get money
for, the popular issues, the easy things.
The non-profit does not get paid for performance. But it does not
get money for good intentions, either.
Planning For Performance
````````````````````````
Performance in the non-profit institution must be *planned*. And
this starts out with the mission. ... For the mission defines
what results are.
And then one asks: Who are our constituency, and what are the
results for each of them?
One of the basic differences between businesses and non-profits is
that non-profits always have a multitude of constituencies.
The first—but also the toughest—task of the non-profit executive
is to get all of these constituencies to agree on what the
*long-term* goals of the institution are. Building around the
long term is the only way to integrate all these interests.
If you focus on short-term results, they will all jump in
different directions. ... Unless you integrate the vision of all
constituencies into the long-range goal, you will soon lose
support, lose credibility, and lose respect. ... [Successful
non-profit executives] start out by defining the fundamental
change that the non-profit institution wants to make in society
and in human beings; then they project that goal onto the concerns
of each of the institution’s constituencies.
This kind of planning is quite different from what business people
usually mean by the term. To formulate the plan successfully,
non-profit executives think through the concerns of each of the
institution’s constituencies. They try to understand what is
really important... Long-term concerns must be identified.
Integrating constituency goals into the institution’s mission is
almost an architectural process, a structural process,. It’s not
too difficult to do once it’s understood; but it’s hard work.
Moral Vs. Economic Causes
`````````````````````````
The discipline of thinking through what results will be demanded
of the non-profit institution can protect it from squandering
resources because of confusion between moral and economic causes.
Non-profit institutions generally find it almost impossible to
abandon anything. Everything they do is “a good cause.” But
non-profits have to distinguish between moral causes and economic
causes. A moral cause is an absolute good. ... In an economic
cause, one asks: Is this the best application of our scarce
resources?
To believe that whatever we do is a moral cause, and should be
pursued whether there are results or not, is a perennial
temptation for non-profit executives—and even more for their
boards. But even if the cause itself is a moral cause, the
specific way it is pursued better have results. There are always
so many more moral causes to be served than we have resources for
that the non-profit institution has a duty—toward its donors,
customers, and staff—to allocate its scarce resources for results
rather than to squander them on being righteous. The non-profits
are human-change agents. And their results are therefore always a
change in people. ... The non-profit institution, ... has to
judge itself by its performance in creating vision, standards,
values, commitment, and human competence. The non-profit
institution therefore needs to set specific goals in terms of its
*service* to people. And it needs constantly to raise these
goals—or its performance will go down.
2. Don’t’s and Do’s — The Basic Rules
-------------------------------------
Disregarding them will damage and may even impair performance.
Non-profits are prone to become inward-looking. People are so
convinced that they are doing the right thing, and are so
committed to their cause, that they see the institution as an end
in itself. But that’s a bureaucracy. ... And that not only
inhibits performance, it destroys vision and dedication.
In every move, decision, and policy, the non-profit institution
needs to start out by asking, Will this advance our capacity to
carry out our mission? It should start with the end result,
should focus outside-in rather than inside-out.
Dissent ... is essential for effective decision making. Feuding
and bickering are not. In fact, they must not be tolerated. They
destroy the spirit of an organization.
Feuding and bickering ... usually are symptoms of the need to
change the organization. It may have grown very fast and in the
process outgrown its structure; nobody quite knows what he or she
is responsible for. Then people begin to blame each other.
That’s a sign that you’d better look at your organization. Are
you organized for yesterday rather than today? ... When the
noise level rises, it’s a sign of discomfort. Your organization
structure and the reality of your operation aren’t congruent
anymore. Then you need a change in your structure.
A final *don’t*: Don’t tolerate discourtesy. ... Manners are the
social lubricating oil that smooths away friction. ... One
learns to be courteous—it is needed to enable different people who
don’t necessarily like each other to work together. Good causes
do not excuse bad manners. Bad manners rub people raw; they do
leave permanent scars. And good manners make a difference.
The most important *do* is to build the organization around
information and communication instead of around hierarchy.
Everybody in the non-profit instead—all the way up and down—should
be expected to take information responsibility. Everyone needs to
learn to ask two questions: What information do I need to do *my*
job—from whom, when and how? And: What information do I owe
others so that they can do *their* job, in what form, and when?
Above all, people in the information-based organization need to
take responsibility for upward communication.
In the information-based institution, people must take
responsibility for informing their bosses and their colleagues,
and, above all, for *educating* them. And then all members of the
non-profit institution—paid staff and volunteers—need to take the
responsibility for making themselves understood.
This requires that everyone think through and put down in writing
what the organization should hold him or herself accountable for
by way of contribution and results. Then, everybody has to make
sure that this is understood from the bottom up, from the top
down, and sideways.
This is also the one way to build mutual trust. Organizations are
based on trust. Trust means that you know what to expect of
people. Trust is mutual understanding. Not mutual love, not even
mutual respect. Predictability. This is far more important in
the non-profit organization, because typically it has to depend on
the work of so many volunteers and on so many people whom is does
not control.
You need mutual trust—and if you don’t know what to expect from
one another, you will soon feel let down by that fellow or that
woman next door. People assume—rightly so in a non-profit
institution—that they are all dedicated to the same cause. So,
when they are betrayed, or feel betrayed, it hurts much more.
It’s more important in the non-profit institution than it is in a
business to insist on the clarity of commitments and
relationships, and on the responsibility for making yourself
understood and for educating your co-workers.
Everyone believes in delegation. But it needs clear rules to
become productive. It requires that the delegated task be clearly
defined, that there are mutually understood goals and mutually
agreed-on deadlines, both for progress reports and for the
accomplishment of the task. Above all, it requires clear
understanding of what the person who delegates and the person who
takes on the assignment expect and are committing themselves to.
Delegation further requires that delegators follow up. They
rarely do—they think they have delegated, and that’s it. But they
are still accountable for performance. And so they have to follow
up, have to make sure that the task gets done—and done right.
Finally, it is the duty of the person to whom a task is delegated
to inform the delegator of anything unexpected that happens, and
not to say, “But I can take care of it.”
Standard Setting, Placement, Appraisal
``````````````````````````````````````
For each person to take responsibility for his or her own
contribution and for being understood requires standards.
Standards have to be concrete.
Standards have to be set high; you cannot ease into a standard.
... *Slow* is different from low. Sure, at the beginning of a
new effort with a new person, you go slow. You make mistakes.
But the standard is clear.
Clear standards are particularly important in the non-profit
institution that is both centrally run and a “confederation” of
autonomous locals.
Next, such organizations need *control of standards*. That’s the
most difficult thing to do. That’s where the chief executive
officer needs not so much skill as respect, so that a local
council will accept a veto from the center even though it doesn’t
like it. ... A confederation requires that the top people
constantly visit the organization’s various locations—that they do
so *personally* rather than through staff.
And the people in the central organization must remind themselves
all the time: We are the servants of the local chapter. ... They
do the work. We are not their bosses; we are their conscience.
And the people in the local chapter ... must remind themselves all
the time: we represent the larger institution. What we do or not
do, and how we do it, is seen by all our constituents as the
deeds, the standards, the personality of the entire organization.
Standards should be very high and goals should be ambitious. Yet
they should be attainable. Indeed, they should be attained, at
least by the star performers of the institution. The non-profit
institution therefore needs to work hard at placing people where
they can perform.
But one also needs to use the star performers to raise the sights,
the vision, the expectations, and the performance capacity of the
entire organization. *One features performers.* The best way—and
the way that conveys the most recognition and builds the most
pride—is to use star performers as the teachers of their
colleagues.
People need to know how they do—and volunteers more than anyone
else. For if there is no paycheck, achievement is the sole
reward. Once goals and standards are clearly established,
appraisal becomes possible. Sure, it’s the responsibility of the
superior. But with clear goals and standards, the people who do
the work appraise themselves.
An appraisal should always start out with what the person has done
well. Never start out with the negative: You’ll get to it soon
enough. But one can only base performance on strengths, on what
people have got rather than on what they ain’t got.
And it is the function of any organization to make human strengths
effective in performance and to neutralize human weaknesses. This
is the ultimate test.
The Outside Focus
`````````````````
One more basic rule: Force your people, and especially your
executives, to be on the outside often enough to *know* what the
institution exists for. There are no results inside an
institution. There are only costs. Yet it is easy to become
absorbed in the inside and to become insulated from reality.
Effective non-profits make sure that their people get out in the
field and actually work there again and again.
And don’t let people stay forever in a staff position in the
office. Rotate them regularly back into work in the field.
3. The Effective Decision
-------------------------
Executives, whether in a non-profit institution or in a business,
actually spend little time on decision making. Far more of their
time is spent in meetings, with people, or in trying to get a
little information. Yet it’s in the decision that everything
comes together. That is the make or break point of the
organization. Most of the other tasks executives do, other people
could do. But only executives can make the decisions.
The least effective decision makers are the ones who constantly
make decisions. The effective ones make very few. They
concentrate on the important decisions.
The most important part of the effective decision is to ask: What
is the decision really about? Very rarely is a decision about
what it seems to be about. That’s usually a symptom.
Decisions always involve risk taking. And effective decisions
take a lot of time and thought. For this reason, one doesn’t make
unnecessary decisions.
And don’t make decisions on trivia. ... Don’t waste time on
them.
Opportunity and Risk
````````````````````
One starts out with the opportunity, not with the risk: If this
works, what will it do for us? Then look at the risks. There are
three kinds of risks.
There is the risk we can afford to take. If it goes wrong, it is
easily reversible with minor damage. Then there is the
irreversible decision, when failure may do serious harm. Finally
there is the decision where the risk is great but one cannot
afford *not* to take it.
The Need For Dissent
````````````````````
All the first-rate decision makers ... had a very simple rule: If
you have consensus on an important matter, don’t make the
decision. Adjourn it so that everybody has a little time to
think. Important decisions are risky. They *should* be
controversial. Acclamation means that nobody has done their
homework.
Because it is essential in an effective discussion to understand
what it is really about, there has to be dissent and disagreement.
If you make a decision by acclamation, it is almost bound to be
made on the apparent symptoms rather than on the real issue. You
need dissent; but you have to make it productive.
Instead of arguing what is right, assume that each faction has the
right answer. But which question is each trying to answer? [They
each see a different part of the reality.] Then, you gain
understanding. You also gain, in many cases, the ability to bring
the two together in a synthesis. ... Look upon dissent as a
means of creating understanding and mutual respect.
Emotions always run high over any decision in which the
organization is at risk if that decision fails, or in one that is
not easily reversible. The smart thing is to treat this as
constructive dissent and as a key to mutual understanding.
If you can bring dissent and disagreement to a common
understanding of what the discussion is all about, you create
unity and commitment. ... In essentials unity, in action
freedom, and in all things trust. And trust requires that dissent
come out into the open, and that it be seen as honest
disagreement.
This is particularly important for non-profit institutions, which
have a greater propensity for internal conflict than businesses
precisely because everybody is committed to a good cause.
Disagreement isn’t just a matter of your opinion versus mine, it
is your good faith versus mine. Non-profit institutions,
therefore, have to be particularly careful not to become riddled
by feuds and distrust. Disagreements must be brought out into the
open and taken seriously.
A second reason to encourage dissent is that any organization
needs a nonconformist. If and when things change, it needs
somebody who is willing and able to change. ... You want a
critic—and one the organization respects.
Bringing disagreement into the open also enables non-profit
executives to brush aside the unnecessary, the meaningless, the
trivial conflict. It enables them to concentrate on the real
issues.
Conflict Resolution
```````````````````
*You use dissent and disagreement to resolve conflict.* If you ask
for disagreement openly, it gives people the feeling that they
have been heard. But you also know where the objectors are and
what their objections are. And in many cases you can accommodate
them, so that they can accept the decision gracefully.
Another way to resolve conflict is to ask the two people who most
vocally oppose each other, especially if both of them are
respected community members, to sit down and work out a common
approach. They do this by starting out with the areas in which
they agree.
The third way is by defusing the argument. ... You play down the
areas of disagreement and play up the areas of agreement.
One cannot prevent conflict. But one can make it ... secondary.
And the best tool for this is the constructive use of dissent.
From Decision To Action
```````````````````````
A decision is a commitment to action. But far too many decisions
remain pious intentions. There are four common causes for this.
One is that we try to “sell” the decision rather than to “market”
it. [Difference between decision-making in Japan and in the
West.]
A second way to lose the decision is to go systemwide immediately
with the new policy or the new service. This jumps the testing
stage. ... [Concentrate on targets of opportunity.]
Third: no decision has been made until someone is designated to
carry it out. Someone has to be accountable—with a work plan, a
goal, and a deadline. Decisions don’t make themselves effective;
people do.
Fourth: Nobody really thought through who has to do what.
[Communication, training, tools.]
Every decision is a commitment of present resources to the
uncertainties of the future. This ... means that decisions will
turn out to be wrong more often than right. At the least they
will have to be adjusted.
The decision always has to be bailed out. That requires two
things. First, that you think through alternatives ahead of time
so that you have something to fall back on if and when things go
wrong. Second, that you build into the decision the
responsibility for bailing it out, instead of going in and arguing
about who made what mistakes.
4. How to Make the Schools Accountable — Interview with Albert Shanker
----------------------------------------------------------------------
Albert Shanker is president of the American Federation of Teachers.
Discusses performance from the perspective of schools and teaching.
**Shanker:** I think the priority is to assess achievement longer
range.
5. Summary: The Action Implications
-----------------------------------
Performance is the ultimate test of any institution. Every
non-profit institution exists for the sake of performance in
changing people and society. Yet, performance is also one of the
truly difficult areas for the executive in the non-profit
institution.
In a non-profit organization, there is no ... bottom line. But
there is also a temptation to downplay results. There is the
temptation to say: We are serving a good cause. ... *That is not
enough.* ... Service organizations are accountable to donors,
accountable for putting the money where the results are, and for
performance.
There are different kinds of results. First, you have immediate
results. Then, you have the long-term job of building on those
first results.
We need to remind ourselves again and again that the results of a
non-profit organization are always outside the organization, *not*
inside.
One starts with the mission, and that is exceedingly important.
What do you want to be remembered for as an organization—but also
as an individual? The mission is something that transcends today,
but guides today, informs today. ... From the mission, one goes
to very concrete goals.
Only when a non-profit’s key performance areas are defined can it
really set goals. Only then can the non-profit ask: “Are we doing
what we are supposed to be doing? Is it still the right activity?
Does it still serve a need?” And above all, “Do we still produce
results that are sufficiently outstanding, sufficiently different
for us to justify putting our talents to use in that area?” Then,
you can do the *next* important thing, which is every so often to
ask: “Are we still in the right areas? Should we change? Should
we abandon?”
One needs to define performance for each of the non-profit’s key
areas.
Good intentions, good policies, good decisions must turn into
effective actions. The statement, “This is what we are here for,”
must eventually become the statement, “This is how we do it. This
is the time span. This is who is accountable. This is the work
for which we are responsible.” Effective organizations take it
for grated that work isn’t being done by having a lovely plan.
Work isn’t being done by a magnificent statement of policy. Work
is only done when it’s done, by people, with a deadline. By
people who are trained, who are monitored and evaluated, who hold
themselves responsible for results.
The ultimate question, which I think people in the non-profit
organization should ask again and again and again, both of
themselves and of the institution, is: “What should I hold myself
accountable for by way of contribution and results? What should
this institution hold itself accountable for by way of
contribution and results? What should both this institution and I
be remembered for?”
Part Four: People and Relationships
===================================
—your staff, your board, your volunteers, your community
1. People Decisions
-------------------
People decisions are the ultimate—perhaps the only—control
of an organization. People determine the performance capacity of
an organization. No organization can do better than the people it
has. ... An effective non-profit manager *must* try to get more
out of the people he or she has.
The quality of these human decisions largely determines whether
the organization is being run seriously, whether its mission, its
values, and its objectives are real and meaningful to people
rather than just public relations and rhetoric.
[Those who make good people decisions] start out with a commitment
to a diagnostic process.
Properly done, the selection process starts with an *assignment*\
—not merely with a job description. Next, the executive forces
himself or herself to look at more than one person. ... Thirdly,
while reviewing candidates, the focus must always be on
performance. ... The right questions are: How have these people
done in their last three assignments? Have they come through?
Then, fourth, look at people's specific strengths. What have they
shown they *can do* in their last three assignments.
How To Develop People
`````````````````````
Any organization develops people; it has no choice. It either
helps them grow or it stunts them.
What not to do. First, one doesn't try to build on people's
weaknesses. ... If you want people to perform in an
organization, you have to use their strengths—not emphasize
their weaknesses. ... One can expect adults to develop manners
and behavior and to learn skills and knowledge. But one has to
use people's personalities the way they are, not the way we would
like them to be.
A second don't is to take a narrow and shortsighted view of the
development of people. One has to learn specific skills for a
specific job. But development is more than that: it has to be for
a career and for a life. The specific job must fit into this
longer-term goal.
[Don't] establish crown princes ... "comers". ... Look always at
performance, not promise.
With the focus on performance rather than potential, the
non-profit executive can make high demands. One can always relax
standards, but one can never raise them.
"Don't hire a person for what they can't do, hire them for what
they *can* do." [slogan of the Association of the Handicapped]
Next, the non-profit executive must learn how to *place* people's
strengths.
The lesson is to focus on strengths. Then make really stringent
demands, and take the time and trouble (it's hard work) to review
performance.
For all this to come together, the mission has to be clear and
simple. It has to be bigger than any one person's capacity. It
has to lift up people's vision.
One of the great strengths of a non-profit organization is that
people don't work for a living, they work for a cause... That
also creates a tremendous responsibility for the institution, to
keep the flame alive, not to allow work to become just a "job."
That sense of mission should be a tremendous source of strength
for any non-profit organization. But it comes with a price tag.
The non-profit executive is always inclined to be reluctant to let
a non-producer go. You feel he or she is a comrade-in-arms and
make all kinds of excuses. ... If they try, they deserve another
chance. If they don't try, make *sure* they leave.
Effective non-profit organizations also have to ask themselves all
the time: Do our volunteers grow? Do they acquire a bigger view
of their mission and greater skill? They look at the people who
work for them not as a static resource, but as a dynamic, growing
force.
The most important way to develop people is to use them as
teachers. Nobody learns as much as a good teacher. Selecting
someone to be a teacher is also the most effective recognition.
The final development tools is needed less for volunteers than it
is for regularly employed staff workers, who can so easily become
inbred and ingrown. Push them outside.
It is a common complaint that many bosses do not really want
top-performing subordinates because they put pressure on them.
That's just what an effective organization *does* want, and that's
where a volunteer organization has an advantage. The volunteer
who performs isn't out to get the paid executive's job, as a rule,
and is not seen as a threat. ... You want performers to put on
the pressure. You want them to ask: Why can't we do more? Why
can't we do better?
Building The Team
`````````````````
The more successful an organization becomes, the more it needs to
build teams. In fact, non-profit organizations most often fumble
and lose their way despite great ability at the top and a
dedicated staff because they fail to build teams. A brilliant man
or woman at the top working with "helpers" functions only to a
very limited extent; the organization outgrows what one person can
do. Yet teams do not develop themselves—they require
systematic hard work.
To build a successful team, you don't start out with people—you
start out with the job. You ask: What are we trying to do? ...
What are the key activities needed to achieve our results? Then,
and only then, do you ask, What does each of the dozen people at
the top have by way of strength? How do the activities and skills
match? ... You identify individual strengths, then you match the
strengths with key activities. And position your players to take
action.
A common mistake is to believe that because individuals are all on
the same team, they all think alike and act alike. Not so. The
purpose of a team is to make the strengths of each person
effective, and his or her weaknesses irrelevant.
Personal Effectiveness On The Job
`````````````````````````````````
Once the right match is made, there are two keys to a person's
effectiveness in an organization. One is that the person
understands clearly what he or she is going to do and doesn't ride
off in all directions. The other is that each person takes the
responsibility for thinking through what he or she needs to do the
job. That done, the person goes to all the others on whom he
depends [in person!]... and says, "This is what *you* are doing
that helps me. This is what *you* are doing that hampers me. And
what do *I* do that helps you? What do *I* do that hampers you?"
The individual who goes through these steps every six months will
find that most obstacles disappear.
As an organization grows, the non-profit executive must also
encourage people at all levels to ask themselves: What does our
top management really have to know? I call that educating the
boss. It fosters cohesion by forcing individuals to look beyond
the scope of their own efforts, departments, and needs.
The Tough Decision
``````````````````
An effective non-profit executive owes it to the organization to
have a competent staff wherever performance is needed. To allow
non-performers to stay on means letting down both the organization
and the cause.
One common problem is the person who has been in the same job
twenty-two years and clearly finds no more stimulus left in it.
... The solution is "repotting"—to put the person in a
different environment.
A tougher problem is the conflict non-profit executives often face
between the need to ensure competence and the need for compassion.
But the executives who agonize over this decision do worse than
those who say, "We made a mistake. I cut. It's going to hurt,
but I cut." It's usually cleaner, faster, and less painful.
The Succession Decision
```````````````````````
The most critical people decision, and the one that is hardest to
undo, is the succession to the top. ... Every such decision is
really a gamble. The only test of performance in the top position
is performance in the top position—and there is very little
preparation for it.
You don't want a carbon copy of the outgoing CEO ... carbon copies
are always weak. Be a little leery, too, of the faithful
assistant who for eighteen years has been at the boss's side
anticipating his or her every wish, but has never made a decision
alone. ... Stay away, too, from the anointed crown prince.
Look at the assignment. ... What is going to be the biggest
challenge over the next few years? Then look at the people and
their performance. Match the need against proven performance.
In the end, what decides whether a non-profit institution succeeds
or fails is its ability to attract and to hold committed people.
Once it loses that capacity, it's downhill for the institution,
and this is terribly hard to reverse.
Are we attracting the right people? Are we holding them? Are we
developing them? ... Are we attracting people we are willing to
entrust this organization to? Are we developing them so that they
are going to be better than we are? Are we holding them,
inspiring them, recognizing them? Are we, in other words,
building for tomorrow in our people decisions, or are we settling
for the convenient and the easy today?
2. The Key Relationships
------------------------
One of the most basic differences between non-profit organizations
and businesses is that the typical non-profit has so many more
relationships that are vitally important. ... Every non-profit
organization has a multitude of constituencies and has to work out
the relationship with each of them.
Begin with the board. ... In the typical non-profit organization
... the board is deeply committed.
To be effective, a non-profit needs a strong board, but a board
that does the board's work. The board non only helps think
through the institution's mission, it is the guardian of that
mission, and makes sure the organization lives up to its basic
commitment. The board has the job of making sure the non-profit
has competent management—and the *right* management. The
board's role is to appraise the performance of the organization.
And in a crisis, the board members may have to be firefighters.
The board is also the premier fund-raising organ... If a board
doesn't actively lead in fund development, it's very hard to get
the funds the organization needs.
A board that understands its real obligations and sets goals for
its own performance won't meddle. But if you leave the board's
role open and undefined, you'll get one that interferes with
details and yet doesn't do its job.
In my experience, the chief executive officer is the conscience of
the board.
Over the door to the non-profit's boardroom there should be an
inscription in big letters that says: *Membership on this board is
not power, it is responsibility*. ... Board membership means
responsibility not just to the organization but to the board
itself, to the staff, and to the institution's mission.
Another common problem is the badly split board. Every time an
issue comes up, the board members fight out their basic policy
rift. This is much more likely to happen in non-profit
institutions precisely because the mission is, and should be, so
important. In my experience, the role of the board then becomes
both more important and more controversial. At that point,
teamwork between chairperson and chief executive officer becomes
absolutely vital.
Two-Way Relationships
`````````````````````
Only two-way relationships work. Every organization wants stars
and needs stars. But ... the star is not separate from the cast.
An effective non-profit executive starts building this two-way
relationship with the staff, with the board, with the community,
with donors, with volunteers, and with alumni by asking: "What do
you have to tell me?" Not, "This is what I am telling you." That
question brings problems out in the open. And the funny thing is
that most of the problems that bother people so much turn out to
be non-problems when you bring them out in the open.
Relations With The Community
````````````````````````````
Non-profit institutions serve one specific community interest.
Each has to maintain relations with governmental agencies, with
all the other institutions in the community, and with the
community's people in genera. ... It requires that the service
organization *lives* its mission. That is why volunteers are so
important. They live in the community and they exemplify the
institution's mission.
3. From Volunteers to Unpaid Staff — Interview with Father Leo Bartel
---------------------------------------------------------------------
Father Leo Bartel is Vicar for Social Ministry of the Catholic Diocese
of Rockford, Illinois.
**Bartel:** Our volunteers are now "colleagues." In fact, we
shouldn't even talk of "volunteers" anymore; they are really
"unpaid staff."
It seems to me ... that quality control is maintained because of
the common vision. These people are truly dedicated. And we can
depend on their goodwill.
If people are properly motivated ... developing competence becomes
part of their very need.
We hold them to high standards. We have high expectations for
them. I believe firmly that people will tend to live up to the
expectations that others have for them.
**Drucker:** The board is there for specific assignments.
4. The Effective Board — Interview with Dr. David Hubbard
---------------------------------------------------------
Reverend David Hubbard is president of Fuller Theological Seminary in
Pasadena, California.
**Hubbard:** We need to think of the management of ... non-profit
institution's as a partnership between the board and the
professional staff.
A board needs to know that it owns the organization ... for the
sake of the mission which that organization is to perform. Board
members don't own it as though they were stockholders voting
blocks of stock; they own it because they care. ... They
actually own it in partnership because, in a sense, the
organization belongs just as much to others.
[This partnership] starts with the way the mission of the
institution is stated. And that mission itself needs to be stated
with sufficient breadth to allow for flexibility. The mission
needs to be welcoming of change. Then you need people who are
open to that mission.
Board members are governors. ... Board members are sponsors, and
here we get to their role in giving money and raising money. They
are ambassadors—interpreting the mission of the institution,
defending it when it's under pressure, representing it in their
constituencies and communities. Finally, they are consultants;
almost every trustee will have some professional skill which would
be expensive if you had to buy it.
It's the old principle of no surprises for the boss. Keeping a
board well informed is hard work. It takes time, it takes
communication.
Presentations to an entire board without a lot of spadework, when
feelings are strong and attitudes are entrenched, is very
difficult. A board can con itself into unity and take a unanimous
adversary stance to a proposal unless there is a lot of
preliminary conversation on a one-on-one basis to develop advocacy
for the idea within the board. The board has to have its own
internal advocates.
You have to talk to the people who would be viewed as the point
person on a particular issue. ... And you look particularly for
pockets of opposition and work with them. ... You have to work
with both sides and prepare the person, who may not, at first
glance, look like a supporter, for the fact that the subject is
coming up. You say, "You may not like it or support it. I'm not
asking you to, but let me explain in a little detail why I think
we need to do it."
If someone loses in a board vote, I make it my aim at the first
possible break to go to the person who lost and thank him or her
for the courage to express a contrary opinion.
**Drucker:** You depend on the board, and therefore you can be
more effective with a strong board, a committed board, an
energetic board, than with a rubber stamp.
Building relationships with the board is a crucial, central part
of the task of the CEO.
**Hubbard:** An organization hasn't come anywhere near its full
potential unless it sees the building of a great and effective
board as part of the ministry of that organization.
5. Summary: The Action Implications
-----------------------------------
[Volunteers] are different from paid workers in a non-profit only
in that they are not paid.
People require clear assignments. ... They need to know what the
institution expects of them. But the responsibility for
developing the work plan, the job description, and the assignment
should always be on the people who do the work.
The effective non-profit executive finally takes responsibility
for making it *easy* for people to do their work, *easy* to have
results, *easy* to enjoy their work. It's not enough for them, or
for you, that they serve a good cause. The executive's job is to
make sure that they get *results*.
Part Five: Developing Yourself
==============================
—as a person, as an executive, as a leader
1. You Are Responsible
----------------------
The first priority for the non-profit executive's own development
is to strive for excellence. That brings satisfaction and
self-respect.
Paying serious attention to self-development—your won and
that of everyone in the organization—is not a luxury for
non-profit executives.
You want constructive discontent.
The key to building an organization with such a spirit is
organizing the work so everyone feels essential to a goal they
believe in.
To Make A Difference
````````````````````
From the chief executive of a non-profit on down through the ranks
of paid staff and volunteers, the person with the most
responsibility for an individual's development is the person
himself—not the boss.
You can only make *yourself* effective—not anyone else.
Creating a record of performance is the only thing that will
encourage people to trust you and support you.
All the people I've known who have grown review once or twice a
year what they have actually done, which part of that work makes
sense, and what they should concentrate on.
Only by focusing effort in a thoughtful and organized way can a
non-profit executive move to the big step in self-development:
how to move beyond simply aligning his or her vision with that of
the organization to making that personal vision productive.
Executives who make a really special contribution enable the
organization to see itself as having a bigger mission than the one
it has inherited.
The critical factor for achieving this kind of success is
accountability—holding *yourself* accountable. Everything
else flows from that. ... The important thing is not that you
have rank, but that you have *responsibility*. To be accountable,
you must take the job seriously enough to recognize: I've got to
grow up to the job. Sometimes that means acquiring skills. ...
You ask: What do I have to learn and what do I have to do to make
a difference?
Setting An Example
``````````````````
In all human affairs there is a constant relationship between the
performance and achievement of the leaders, the record setters,
and the rest. In human affairs, we stand on the shoulders of our
predecessors.
An executive leads by example.
2. What Do You Want to Be Remembered For?
-----------------------------------------
To develop yourself, you have to be doing the right work in the
right kind of organization. The basic question is: "Where do I
belong as a person?"
"Repotting" Yourself
````````````````````
Sometimes a change—a big change or a small change—is
essential in order to stimulate yourself again.
The switch doesn't have to be something far afield.
When you begin to fall into a pleasant routine, it is time to
force yourself to do something different. "Burnout," much of the
time, is a cop-out for being bored.
The excitement is not the job—it is the result.
To build learning into your work, and keep it there, build in
organized feedback from results to expectations. Identify the key
activities in your work—perhaps even in your life. When you
engage in such activities, write down what you *expect* to happen.
Nine months or a year later, compare your expectations to what
actually happened. From that you will learn what you do well,
what skills and knowledge you need to acquire, what bad habits you
have.
Look at the people in your own organization, your own environment,
your own set of acquaintances. What do they do really well—and
how do they do it? In other words, look for successes. ... Then
try to do it yourself.
It's up to you to manage your job and your career. To understand
where you best belong. To make high demands on yourself by way of
contribution to the work of the organization itself. To practice
what I call preventative hygiene so as not to allow yourself to
become bored. To build in challenges.
Doing The Right Things Well
```````````````````````````
Most of us who work in organizations work at a surprisingly low
yield of effectiveness. ... Effectiveness is more a matter of
habits of behavior, and of a few elementary rules. ... In solo
work, the job organizes the performer; in an organization, the
performer organizes the job.
The first step toward effectiveness is to decide what are the
right things to do. Efficiency, which is doing things right, is
irrelevant until you work on the right things. Decide your
priorities, where to concentrate. Work with your own strengths.
You identify strengths by performance. There is some correlation
between what you and I *like* to do and what we do well. There is
a strong correlation between what we hate to do and what we do
poorly simply because we try to get it out of the way as fast as
possible, with minimum effort, and postpone ... working on it at
all.
Strengths are not skills, they are capacities. The question is
not, can you read, but are you a reader or a listener, for
instance? This particular characteristic is almost as strongly
determined as handedness.
People have become more understanding in recent years of how
strengths vary from person to person. ... Too many think they
are wonderful with people because they talk well. They don't
realize that being wonderful with people means *listening* well.
Self-Renewal
````````````
Expect the job to provide stimulus only if you work on your own
self-renewal, only if you create the excitement, the challenge,
the transformation that makes an old job enriching over and over
again. Seeing both yourself and the task in a new dimension can
sometimes expand this capacity.
The most effective road to self-renewal is to look for the
unexpected success and run with it. Most people brush the
evidence of success aside because they are so problem-focused.
The three most common forcing tools for sustaining the process of
self-renewal are teaching, going outside the organization, and
serving down in the ranks.
All the individuals who have the greatest ability for self-renewal
focus their efforts. In a way, they are self-centered, and see
the whole world as nourishment for their growth.
What Do You Want To Be Remembered For?
``````````````````````````````````````
It is a question that induces you to renew yourself, because it
pushes you to see yourself as a different person—the person
you can *become*.
3. Non-Profits: The Second Career — Interview with Robert Buford
----------------------------------------------------------------
Robert Buford is chairman and CEO of Buford Television, Inc. (Texas),
and founder of two non-profit institutions, Leadership Network and the
Peter F. Drucker Foundation for Non-Profit Management.
**Buford:** Stay in touch with your constituency, or you run the
risk that they will change and you won't. You'll be left a
prisoner of your own tradition, a prisoner of the insiders in an
organization and their desires, and will miss the role of a
service organization, which is to serve.
4. The Woman Executive in the Non-Profit Institution — Interview with Roxanne Spitzer-Lehmann
---------------------------------------------------------------------------------------------
Roxanne Spitzer-Lehmann is corporate vice-president of St. Joseph
Health System, a chain of non-profit hospitals headquartered in
California.
**Spitzer-Lehmann:** I think the best self-development is
developing others. I'm fortunate enough that people will tell me
when I'm wrong, when I come on too strong, and when I don't give
them enough time to do their own thinking.
My role is not to give the answers. My role is to facilitate
their brainstorming and thinking. And then to pull it together
into something that we all go out and implement. My job is to
establish the goal and the vision. *Their* job is to figure out
how we can do it together.
5. Summary: The Action Implications
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"You are responsible for allocating your life. Nobody else will
do it for you." [Joshua Abrams] ... When we talk of
self-development, we mean two things: developing the person, and
developing the skill, competence, and ability to contribute.
These are two quite different tasks.
Developing yourself begins by *serving*, by striving toward an
idea outside of yourself—not by leading. Leaders are not
born, nor are they made—they are self-made.
Change when you are successful—not when you're in trouble.
Self-development becomes self-renewal when you walk a different
path, become aware of a different horizon, move toward a different
destination. This is a time when outside help, a mentor, can
provide useful help.
Probably the best of the nuts and bolts of self-development is the
practice of keeping score on yourself. It's also the best lesson
in humility.
Self-development is neither a philosophy nor good intentions.
Self-renewal is not a warm glow. Both are action.