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Leadership

A Nonprofit Turnaround Story: The Santa Cruz Museum of Art & History

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I’m an energetic fan of Nina Simon’s commitment to designing deeply participatory engagement, her willingness to experiment and take risks, and her transparency and candor in writing about her experiences.

This morning, on her Museum 2.0 blog, she reflects on her one-year anniversary as the director of the Santa Cruz Museum of Art & History. It’s a great post, in part because of her candor about things that worked and things that didn’t. We would all benefit if more nonprofit executive directors wrote a post like this once a year about lessons learned.

I also love the post because of her characterization of their strategy for recovering a near-fatal financial situation:

“Just doing it. We didn’t go through an extensive planning process followed by deliberative, careful steps forward. We had a vision, a short list of goals for the first year, and an energetic (if underfunded) attack. Over the past year, we’ve developed several planning methodologies and approaches to our work—such as our exhibition philosophy and community program development process—and we did it iteratively through a series of experiments. We tried and tested and played and worked our way forward, and we’re still doing it. It is, as Kathleen McLean puts it, “museum as prototype,” and it is exhilarating, thoughtful work for all of us.”

The approach aligns well with an argument Trey and I make in The Nimble Nonprofit: strategic plans can be really valuable, but do them quickly, write them in pencil, and aggressively experiment, learn, and adjust along the way. It’s a powerful model that enables groups to sidestep the typical – and painfully laborious and lengthy – strategic planning process while still taking the time to set a clear, thoughtful course. Importantly, it fundamentally integrates a learning cycle into the execution. The prototype model is powerful so long as it’s explicit and so long as there’s a real commitment to frequent assessments and adjustments. The assessments themselves shouldn’t resemble a traditional strategic planning process, either … they have to be smart, targeted, and fast.

Huge congrats to Nina for the post, and even huger congrats to the entire Santa Cruz Museum team for pulling off a remarkable turnaround.

The Board Of Directors: Guest Post From Matt Blumberg

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Photo by Flickr user EMSL.

This is a cross-post of a guest post originally written by Matt Blumberg for Brad Feld’s blog but re-posted on Fred Wilson’s terrific A VC blog (with thanks to Fred for permission to run it here on the brightplus3 blog).

Did you follow that? The blog post (despite its complicated journey) is a great read. It’s focused on what makes for a terrific board of directors member, and while it’s written in the context of a private company, most of what Matt writes here is very applicable to nonprofit boards.

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In last week’s guest post Scott Kurnit advised entrepreneurs to put a friend on the Board and keep co-founders off. This week we’ll continue the theme of “who should be on your Board?” with a re-run of a post that Matt Blumberg wrote for Brad Feld earlier this year. The topic is “what makes an awesome Board Member.” I am the person who made the point about firing executives. Brad Feld is the person who downed two shakes in one meeting.

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I’ve written a bunch of posts over the years about how I manage my Board at Return Path.  And I think part of having awesome Board members is managing them well – giving transparent information, well organized, with enough lead time before a meeting; running great and engaging meetings; mixing social time with business time; and being a Board member yourself at some other organization so you see the other side of the equation.  All those topics are covered in more detail in the following posts:  Why I Love My Board, Part II, The Good, The Board, and The Ugly, and Powerpointless.

But by far the best way to make sure you have an awesome board is to start by having awesome Board members.  I’ve had about 15 Board members over the years, some far better than others.  Here are my top 5 things that make an awesome Board member, and my interview/vetting process for Board members.

Top 5 things that make an awesome Board member:

  • They are prepared and keep commitments: They show up to all meetings.  They show up on time and don’t leave early.  They do their homework.  The are fully present and don’t do email during meetings.
  • They speak their minds: They have no fear of bringing up an uncomfortable topic during a meeting, even if it impacts someone in the room.  They do not come up to you after a meeting and tell you what they really think.  I had a Board member once tell my entire management team that he thought I needed to be better at firing executives more quickly!
  • They build independent relationships: They get to know each other and see each other outside of your meetings.  They get to know individuals on your management team and talk to them on occasion as well.  None of this communication goes through you.
  • They are resource rich: I’ve had some directors who are one-trick or two-trick ponies with their advice.  After their third or fourth meeting, they have nothing new to add.  Board members should be able to pull from years of experience and adapt that experience to your situations on a flexible and dynamic basis.
  • They are strategically engaged but operationally distant: This may vary by stage of company and the needs of your own team, but I find that even Board members who are talented operators have a hard time parachuting into any given situation and being super useful.  Getting their operational help requires a lot of regular engagement on a specific issue or area.  But they must be strategically engaged and understand the fundamental dynamics and drivers of your business – economics, competition, ecosystem, and the like.

My interview/vetting process for Board members:

  • Take the process as seriously as you take building your executive team – both in terms of your time and in terms of how you think about the overall composition of the Board, not just a given Board member.
  • Source broadly, get a lot of referrals from disparate sources, reach high.
  • Interview many people, always face to face and usually multiple times for finalists.  Also for finalists, have a few other Board members conduct interviews as well.
  • Check references thoroughly and across a few different vectors.
  • Have a finalist or two attend a Board meeting so you and they can examine the fit firsthand.  Give the prospective Board member extra time to read materials and offer your time to answer questions before the meeting.  You’ll get a good first-hand sense of a lot of the above Top 5 items this way.
  • Have no fear of rejecting them.  Even if you like them.  Even if they are a stretch and someone you consider to be a business hero or mentor.  Even after you’ve already put them on the Board (and yes, even if they’re a VC).  This is your inner circle, and getting this group right is one of the most important things you can do for your company.

I asked my exec team for their own take on what makes an awesome Board member.  Here are some quick snippets from them where they didn’t overlap with mine:

  • Ethical and high integrity in their own jobs and lives
  • Comes with an opinion
  • Thinking about what will happen next in the business and getting management to think ahead
  • Call out your blind spots
  • Remembering to thank you and calling out what’s right
  • Role modeling for your expectations of your own management team
  • Do your prep, show up, be fully engaged, be brilliant/transparent/critical/constructive and creative.  Then get out of our way
  • Offer tough love…Unfettered, constructive guidance – not just what we want to hear
  • Pattern matching: they have an ability to map a situation we have to a problem/solution at other companies that they’ve been involved in – we learn from their experience…but ability and willingness to do more than just pattern matching. To really get into the essence of the issues and help give strategic guidance and suggestions
  • Ability to down 2 Shake Shack milkshakes in one sitting
  • Colorful and unique metaphors

Disclaimer – I run a private company.  While I’m sure a lot of these things are true for other types of organizations (public companies, non-profits, associations, etc.), the answers may vary.  And even within the realm of private companies, you need to have a Board that fits your style as a CEO and your company’s culture.  That said, the formula above has worked well for me, and if nothing else, is somewhat time tested at this point!

Most Executive Directors Are Hacks (and That’s a Good Thing)

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Psychologist Anders Ericsson found that a critical factor in becoming an expert musician is spending 10,000 hours in solitary practice. To be an expert executive director, do you have to spend 10,000 hours practicing executive directoring?
The vast majority of nonprofit executive directors are hacks at their jobs. There, I’ve said it. They aren’t experts at their craft. They haven’t spent 10,000 hours honing their expertise. They aren’t well-versed in the wide spectrum of skill sets that a great executive director should need: fundraising, staff management, vision-crafting, priority-setting, financial management, motivating others, hiring and firing, negotiating, planning staff retreats, making coffee, and plenty of others. In fact, most executive directors are unusual if they’re really good at even one element of their job, much less a bunch of them.

(And yea, it is actually pretty hard to find people who are really, really good at making coffee.)

Yet these are the people that often run our nonprofits. These are the folks that see a need in their community and step up to fill it, or step into the breech when their own organization suddenly needs someone in that buck-stops-here role. They often bring some area of knowledge to the table … maybe they’ve been fundraisers for a few years, or they’ve led some successful advocacy campaigns, or they spearheaded a cool art or education or social services program. Most executive directors don’t come in cold. But they are often ill prepared for the challenges and demands of the role.

The amazing thing: a lot of them do a great job guiding kick-ass organizations despite their lack of expertise. They are hacks in the best sense: they care deeply about the work, they care deeply about learning what they don’t know, and they piece together all of their knowledge, experience, and intuition to chart a course, solve the problems that come up, and push their organizations to perform better. They try, they fail, they learn, and through all that they make it work.

This isn’t an argument for ignoring that long list of critical skill sets … those skills really are important. But it is an argument against the notion that you can only be a good executive director after you’ve become an expert. There are hack executive directors all over the place, and for that we are grateful.

Our First Book Launch: The Nimble Nonprofit Hits the Streets (and Barnes & Noble)

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The Nimble Nonprofit is now available at Barnes & Noble ($4.99)!
Yesterday Trey and I launched our first book, The Nimble Nonprofit: An Unconventional Guide to Sustaining and Growing Your Nonprofit, with a ton of help from our Bright+3 colleague Ted Fickes.

We’re only a day into it, but it’s been great fun so far: a ton of awesome reviews on Amazon, a bunch of great Twitter traffic, and even an unsolicited and really favorable full-on book review (thanks Bonnie Cranmer!).

In addition, I now have a “Jacob Smith” author page on Amazon. I wasn’t expecting much when I logged in to set it up, but I must not have paid author pages much attention previously because it turns out they’re actually set up pretty well. In addition to what you’d expect (profile, photo, etc.), they also allow you to bring in a Twitter feed and an RSS feed, which is a nice touch.

And great news if you are a Nook fan: The Nimble Nonprofit is now available at Barnes & Noble!

The book is in review at Apple, and as soon as it launches there we’ll announce it.

We’re thrilled to sent our little book out into the world, and we welcome your comments, critiques, and thoughts … send them our way:

The First Bright+3 Book Launch: The Nimble Nonprofit

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I am thrilled to announce the launch of The Nimble Nonprofit: An Unconventional Guide to Sustaining and Growing Your Nonprofit.

The nonprofit world truly is in a state of flux. Much of what used to work doesn’t anymore. The need to invest in growing ass-kicking staff and to develop sustained organizational capacity has never been greater, yet the difficulties of doing so are growing as quickly as the need. In The Nimble Nonprofit we cover a wide range of what we believe are critical challenges facing the nonprofit sector:

  • cultivating a high-impact innovative organizational culture;
  • building and sustaining a great team;
  • staying focused and productive;
  • optimizing your board of directors;
  • creating lasting relationships with foundations, donors, and members;
  • remaining agile and open; and
  • growing and sustaining a nimble, impactful organization.

We mean for The Nimble Nonprofit to be a guide – an unconventional irreverent, and pragmatic guide – to succeeding in a nonprofit leadership role, and to tackling this incredibly challenging nonprofit environment. We aimed for a conversational, practical, candid, and quick read instead of a deep dive. If you want to immerse yourself in building a great membership program, or recruiting board members, or writing by-laws, there are plenty of books that cover the terrain (and some of them are quite good).

But if you want the no-nonsense, convention-challenging, clutter-cutting guide to the info you really, really need to know about sustaining and growing a nonprofit, well, we hope you’ll check out The Nimble Nonprofit.

This is our first book, and the publishing industry is a state of disarray, so – following the spirit in which we wrote the book – we are taking an unconventional path. We decided to publish strictly as an e-book, and we decided to self-published (with a bunch of help from Ted here at Bright+3). We are offering the book through the big three e-bookstores (Amazon, Apple, and Barnes & Noble, and we might add a few more to the mix), and we’ve priced the book at $4.99, which is much less expensive than the vast array of other nonprofit books.

As of right now, the book is available on Amazon (and it’ll hit the other two stores shortly). If you’d like to score a copy of The Nimble Nonprofit and enjoy reading it on your Kindle, iPad, or another tablet, jump on Amazon and grab it (did I mention it’s only $4.99?).

And, because our main goal is contributing to the conversations around these critical questions, we are also making a .pdf version of the book available for free.

We suspect that most readers will agree with some of what we argue and disagree with other parts, and because we challenge much of the conventional wisdom about building strong nonprofits, we’re pretty sure that some folks will disagree with a lot of what we write. And we look forward to the conversations. Please send us your thoughts, critiques, comments, and ideas

Tell us where you think we’re wrong and where we’ve hit the nail on the head, and please share with us other examples of nonprofits doing a great job of tackling these challenges and where they are just getting it wrong.

Happy reading –

Jacob

(P.S. The Nimble Nonprofit is available right now on Amazon.)

Two Kinds of People in the World

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A nesting osprey (photo by Flickr user Yai&JR).
There are two kinds of people in the world, as the saying goes, those who divide the world up into two kinds of people and everyone else. One way to draw the line: those, when presented with a new idea, a challenging opportunity, or a risky possibility, who come up with reasons to say no, and those who come up with ways to make it happen.

A couple of decades ago, while sharing office space with an environmental law firm, I posed a question to one of the attorneys: could I use the Migratory Bird Treaty Act to prevent a local government from placing a trail near an osprey nest. The answer, in a word, was no, accompanied by a host of reasons. The law wasn’t designed to prevent that sort of activity. It was hard to enforce. No one had done anything like this before.

You know how this kind of conversation goes. They may be highly skilled at their work, friendly, and supremely earnest. But when presented with the new and different, they tap their creativity and cleverness to present barriers – all of the reasons why it’s a bad idea, why it won’t work, why it will cost too much – rather than ferret out how to pull it off.

Government (sadly) tends to cultivate and reward this approach. Large organizations of all types are notorious for doing the same thing. Even small organizations can inadvertently find themselves elevating inertia over taking risks and tackling the hard problems.

Not liking the answer to my bird protection question, like a kid who tries the other parent when the first answer is no, I tried again with another attorney. The answer: it’ll be really tough, but sure, it might be possible. You’d have to find strong science showing trail impacts to the birds. You’d probably need documents showing that the local government knew there might be impacts. You’d probably even need to show actual dead birds to more clearly establish the link. No sugarcoating and no false sense of optimism, to be sure, but a profoundly different attitude to the challenge: it won’t be easy, but here’s what it would take.

Inertia and the art of ‘no’ cohabitate, and it can take some real effort to hold it at bay, but if your organization wants to uncover better solutions to the problems you are hoping to solve, if it wants to delight its customers and frustrate its adversaries, and if it wants to generate extraordinary results, it’s worth encourage your colleagues to adopt the “here’s a puzzle to solve” attitude instead of the “here’s a bunch of reasons why it’s a bad idea” approach.

Cultivating a Culture of Innovation at Your Nonprofit

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Photo by Flickr user elycefeliz (and h/t to Beth Kanter).
A persistent focus of conversation among nonprofit folks – and the highlight of one of the plenaries at the Nonprofit Technology Conference a couple of weeks ago – is the challenge of fostering a climate of innovation within the nonprofit community.

Why does it matter? For one thing, nonprofit folks know that some of the challenges they face aren’t solvable with conventional approaches. For another, funders often explicitly emphasize their interest in funding innovative approaches (a topic for another day). And innovative just sounds cool. Who wouldn’t prefer to be innovative and ground-breaking instead of dull and conventional?

The trick about innovation, though: it’s one thing to say we encourage it, but quite another to actually follow through. Cultivating a culture of innovation means encouraging your staff and colleagues to take risks. It means embedding an expectation about learning from those risks – the successes and the failures – and sharing that knowledge. It means rewarding people on the team for questioning assumptions and suggesting new ideas. And if fostering a culture of innovation is important enough to you, you may even need to penalize people for not taking risks.

Most importantly, you need to convey – not just pay lip service – to your staff and colleagues that you genuinely support them thinking creatively, testing their ideas, and sharing what they learn, even when it fails.

Surviving a Cash Flow Crisis

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What to do when the cash runs out? (Photo by Flickr user NoHoDamon).

One of the most difficult challenges of running a nonprofit, but one of the least discussed, is surviving a cash flow crisis. If you’re really lucky, you may never encounter the “crap, we’re going to run out of money before the end of the month” moment, but most folks who work for small or mid-sized nonprofits have experienced that moment at least once or twice. After you negotiate the immediate crisis you’ll need to buy yourself some breathing room and then tackle whatever systemic failure led to the cash crunch in the first place, and if happens more than once in a while you’ll need to grapple with the possibility that your organization simply doesn’t have a viable business model. But first you have to survive the crisis.

Some tips for surviving to fight another day:

  • Stop all of your discretionary spending. All of it. No computers, cameras, pencils, hotel reservations, coffee, or anything else. If it’s something your organization truly can’t live without, then do whatever you can to beg, borrow, or steal it.
  • Figure out what bills you can ignore. Some accounts payable won’t notice you haven’t paid them for a cycle or two. Others might notice but not care. Ignore (for now) any expense you can get away with ignoring.
  • Identify every automatic subscription expense. Cancel any you can get away with, and where canceling will cause you to lose critical data or severely hamper your organization’s ability to do its work, downgrade to the cheapest possible service level.
  • Identify every vendor to whom you owe money or will soon owe money. You may be able to directly approach some of them about your predicament to work out a payment plan. In many cases, for instance, a landlord would rather work out a deferred payment arrangement with you than kick you out (especially if you don’t have a habit of coming up short on the rent). For other vendors, you may need to take a more aggressive approach, and simply pay them a lot less than you owe them, perhaps with an explanatory note. As one of my favorite CFOs points out, a vendor is very unlikely to sue you if you are paying them something, even if it’s modest.
  • Talk to your staff about delaying payroll or in some other way reducing what you pay them in the short term. It’s a tough conversation to have, but for many nonprofits payroll represents a very large proportion of the monthly cash burn, so buying some time on payroll obligations can make a big difference in the short-term.
  • Identify any revenue stream you can accelerate. Any accounts receivable that you can get to pay you now instead of in a month? Any foundations who might be willing to cut you a check a little early? Any committed membership donations you can ask for early delivery on?
  • Calmly (but quickly) reach out to all of your mid-size and larger donors and ask them to make a one-time extra donation to help you out of this pinch. Before you start reaching out, arm yourself with at least something that looks like a plan to both stop the hemorrhaging and then recover your longer-term financial health. It’s much easier to ask for help in a crunch if the donor feels you really can solve the crisis and fix the deeper problems as well.
  • Think about donors that might not be directly invested in your organization specifically but might place a lot of value on your role in the community. Some of them might be willing to help on a one-time basis in a crisis if they know you and value your contribution even if your work isn’t part of their normal philanthropic giving.
  • Explore getting a line of credit from a bank. This is expensive money, and of course it’s easier to secure a line of credit before you find yourself in a crisis, but especially if your organization has some real assets, you might be able to come up with some short term cash.
  • Credit card debt is expensive and dangerous, and once you get into a hole it can be difficult to get back out, but in a real cash flow disaster it can be a lifesaver.

The problem with all of these strategies is that they truly are short-term solutions. They won’t generate any additional revenue, for instance, but at best they’ll simply accelerate payments you were already counting on for use in the future. Most of these spending cuts don’t change your organization’s burn rate; they simply push expenses into the future, where they pile up into even more ominous obligations.

Although surviving the cash flow crisis is your first priority, you should tackle this as best you can with the long-term challenge in mind, and you need to turn your attention to solving your long-term problems (whatever it was that led to the cash flow crunch in the first place) as soon as possible. You have to tackle the structural issues – too many staff for the revenue, overly expensive infrastructure investments, or whatever the problems are – or your organization will find itself dealing with the short-term cash crunch over and over again.