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Bright Ideas Change the World

Management Practices

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.

A Culture of Mentorship

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Photo by Flickr user JonathanCohen.

Back in May, I wrote about the tech startup incubator program that Trey and I were participating in. The program (Founder Institute) was extremely intensive, really challenging, and very worthwhile, and we are now close to launching our first real mobile app.

One key element of the incubator program, and a pervasive part of the tech startup culture, is the idea of mentorship.

You’ll sometimes find mentorship in the nonprofit world, but it’s not pervasive and even when you find it the notion is typically much less rigorous and structured than we are finding in the tech startup world. Most of the serial entrepreneurs we’ve worked with have had mentors, most proudly talk about them and their ongoing relationships, and those relationships are often structured and even formalized through written agreements.

While I’m sure there are plenty of internet technology entrepreneurs that don’t have mentors, it’s a deep-seated part of the culture that, in my experience, exemplifies a strong ethic across the community of the experienced folks supporting the newer ones. The mentors themselves learn through the teaching, the new folks are more likely to succeed, and the entire community of entrepreneurs is strengthened.

The nonprofit community is dense with the entire spectrum of experience, from total newbies to grizzled veterans. Finding ways to strengthen the notion of mentorship as part of the nonprofit culture seems like a high-return opportunity.

A useful links:

Blackbaud, Convio, Dessert and Digital Strategy

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It was just two weeks ago today that a great deal of (electronic) ink began to spill and brou’s began to ha ha over the purchase of Convio by Blackbaud. For most of humanity (approximately 99.9% of it, anyway) this is about as relevant as the color of dried out chewing gum.

2011 Nonprofit Technology Conference
The masses assemble at 2011 Nonprofit Technology Conference. Clearly, organizations have a thing for technology. Photo via VolunteerMatch

So, let’s write about it here, shall we?

Let’s say you work in nonprofit fundraising or marketing. Or perhaps you run an organization. Maybe you deal with membership or perhaps accounting. Then again, you might run field organizing or online campaigns. Maybe social media. You run the website, write the emails to donors, or research reports that end up on said web, email or social media channels.

If you do any of those things at a nonprofit (and there aren’t many other things to do, really) then your work is affected by the software that Convio, Blackbaud and their peers produce. You see, these systems don’t just run email lists. These are CRM’s, CMS’s, donor management, social media, membership and advocacy systems. It’s no surprise, then, that 0.01% of the population (and a fair chunk of the 17 people  reading this) get worked up about the impact these companies (and their business practices) have on nonprofit organizations.

What does it mean?

Some are justly concerned about companies merging and making many millions of dollars on the backs of nonprofits struggling to improve the world, feed the poor, help children and protect clean air. Others point out that this reduces competition between the two biggest players in the market while creating opportunity for newer and/or smaller (and more nimble) operators.

[Read more…] about Blackbaud, Convio, Dessert and Digital Strategy

Run It Like a Business

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Being like a business isn't always all it's cracked up to be. Photo by Flickr user watz.

Denver Mayor Hancock vows to “run government like a business.” Charles Bronfman and Jeffrey Solomon, in the Wall Street Journal, argue that “philanthropy must be conducted like business.”

It’s a persistent if tiresome meme.

We understand the idea, of course: a nonprofit is more likely to be high-impact if it’s focused, disciplined, and outcome-focused. And we agree. But these aren’t characteristics of “business,” and the prescription shouldn’t be “run your nonprofit or government agency like a business.” Rather, they are characteristics of effective organizations regardless of sector, and the prescription ought to be: “run your organization using best practices and learning from across sectors.”

We’ve argued in this blog and elsewhere (and it’s a key argument of our forthcoming book, The Nimble Nonprofit), that nonprofits are like businesses in fundamental ways and have a lot to learn from the best practices of other sectors. There are plenty of practices common in the private sector that nonprofits would do well to draw from. (And yes, of course, the private sector can learn from nonprofits, too, but at Bright+3 our focus is on helping nonprofits improve).

But that’s very different than arguing that governments or nonprofits should be run “like a business.” In fact, for every example of a well-run, successful business you can point to others – Lehman Brothers, Enron, Kodak, Saab, Borders, Hollywood Video, MySpace, and Washington Mutual just to name a few – that exemplify poorly run businesses.

And while governments aren’t really our focus, it’s worth noting that the metaphor breaks down pretty quickly. Although part of what government does involves providing services – providing value to stakeholders – many of its responsibilities simply don’t track to conventional notions of return-on-investment: protecting rights, navigating the balance between the interests of individuals and those of groups or neighborhoods, ensuring that everyone in the community has a meaningful opportunity to participate in community decisions (if you wanted to create a slow, inefficient decision-making process, ensuring that everyone gets to play a role is a great strategy), and the like.

When it comes to government officials proclaiming that government should be run like a business, I worry that they don’t really understand the unique, non-market role of government. When nonprofit folks and philanthropists make the same assertion about nonprofits, I think they are idealizing the private sector (which has many, many more examples of poor practice and failure than it does of success).

Nonprofits (and government) have a lot to learn from best practices in the business world, and – to further complicate matters – nonprofits really are businesses in many important respects. Pretending that the laws of business physics don’t apply to nonprofits is a conceit that often undermines our ability to solve problems and effect change. But the facile “being like a business” sound bite obscures and undermines those lessons rather than highlighting then.

Rethinking Responsibility and Authority in the Online Organization

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Seth Godin recently wrote about authority and responsibility in organizations. Achievers in traditional organizations, Godin says, lobby for more authority in order to get things done. In the top-down organization, one needs authority to act, build, implement. This structure doesn’t necessarily work in rapidly evolving and growing organizations, including nonprofits and others working to adjust to the impact of online networks. As Godin put it:

“Management by authority is top-down, risk-averse, measurable and perfect for the org chart. It’s essential in organizations that are stable, asset-based and adverse to risk.”

Those that demand responsibility should be granted authority, Godin concludes.

Having spent most of my career in and around nonprofit organizations that are “stable [more or less], asset-based [sorta] and adverse to risk [highly]” this got me thinking about the different natures of authority and responsibility in organizations, particularly those struggling to adapt to, integrate and manage digital programs and teams.

Perhaps the key word here is adapt. Online communications is a young and rapidly changing field. Few organizations had websites or email lists just 12 or 15 years ago. Those groups that created a website ten years ago have probably rebuilt it three or four times since (and are likely about the redo it again soon). Facebook, Twitter and much of what we call social media didn’t exist five years ago.

Today, more first gifts are coming in online than off. Organizations have Facebook pages, Twitter accounts, YouTube pages and more. Time and money are going into growing these networks, text messaging/SMS, iPhone apps and more. Meanwhile, it’s unclear who is doing what, how much it is worth, how to budget and staff for it all and whether this is a communications, development or policy department role.

In other words, rapid change is afoot and is pressuring organizations, boards, staff, budgets and plans. It is changing the expectations of members, activists and donors. People are scrambling to respond but evolving slowly, if at all.

Responding means adaptation, testing, rapid learning and, increasingly, the ability to empower staff (and even outsiders) to speak for the organization on social networks and online media.

Authority-driven hierarchies don’t work well when a premium is placed on rapid learning and adaptation. They assume that the people at the top (organizational leaders and middle managers that might run departments or teams) have complete understanding of the problem at hand, the tools needed to tackle it and what staff need to do.

Does the rapidly changing nature of online run afoul of most organizational structures? Quite possibly. Online teams and structures vary but are generally placed somewhere in an IT or communications department and responsible to the authority of someone with minimal experience in online networks. Online teams may be given responsibility (to put together emails, run Facebook pages, create web content) without clear authority over resources or strategy.

The networked nature of social media can add to the complexity for these organizations. Most everyone – not just online or communications staff – is present on social networks and talking about the issues that concern them, including those of the organization. Activists and donors are on the networks. All of them are tied to the organization and can be speaking on its behalf but how does an organization manage them? It’s hard enough (or impossible) to “manage” staff in other departments. Managing those outside the organization won’t happen. Many organizations fall back to not engaging those outside in a meaningful way. It limits potential but avoids messiness and time-consuming interaction.

Does this mean organizations should dissolve hierarchy, eliminate management/directors/supervisors and watch themselves slip into chaos? Probably not.

But isolating online in a single authority-based team limits the ability of the organization to adapt, grow and share responsibility across (and beyond) the organization. Indeed, responsibility for much of what we think of as “online” rests in many places. Most staff are potential online organizers, communicators and fundraisers. Encourage their responsibility to act appropriately and independently without relying on authority to act.

And online teams themselves are (or should be) stocked with people that are highly engaged online and understand trends. Encourage them to take responsibility for adaptation, innovation and success by granting authority to make decisions and lead. If this threatens authority placed in traditional management positions then deal with that. Online moves fast and the adaptive teams and organizations will come out ahead.

Hopping the Fence: A Couple of Nonprofit Geeks Jump Into the World of Tech Startups

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The Bright+3 crew has long been interested in how the nonprofit world can learn from the best practices or organizations in the private and public sectors.

And yes, of course, the private sector has a lot to learn from nonprofits, too, as we’ve argued elsewhere (such as our “Be More Like a Nonprofit” post), but we are a lot more interested in improving the capacity of the social sector to kick ass in its mission-based work.

Couple that with an entrepreneurial itch (to use Jon Stahl’s expression), add a healthy enthusiasm about technology, and throw in a heavy dose of fascination at the entrepreneurial world, and you get our new adventure: Trey & I applied for, were accepted in, and are now two weeks into a summer-long intensive incubator/accelerator for technology startups.

I can’t say that we picked Founder Institute based on a careful review of the options; really we stumbled into the application opportunity and did enough research to know it seemed solid and well-regarded. But it’s turned out to be a really strong fit. It caters to founders that have other jobs (rather than being fully immersive), the focus is more on producing skilled entrepreneurs rather than launching companies (e.g., acceptance into the program is based more on the strength of the applicants than on the strength of their business proposal), and the program takes a smaller cut of equity from new businesses than some other incubators (and creates a shared bonus pool for graduates to share in each other’s success).

Although the program started just a week ago it feels like it’s been a few months . . . intensive, demanding, and challenging. Fun, as well, especially now that we think we are starting to figure out a clear business idea (more on that later). And despite the emphasis on entrepreneurial skills over business-building, we are still expected to do the latter, and we are moving full steam ahead.

In the meantime, one early observation: it is extremely cool to watch some of the extremely skilled, serial entrepreneurs who mentor in the program think out loud when they are evaluating business ideas and when they are crafting their own ideas. On the former, it’s a sharp, incisive, and very quick ability to run every idea though a series of critical questions about the market size, getting to market, the competitiveness of the market, and a host of others. It’s impressive to watch (and it can be brutal to be on the receiving end of an analysis). The latter is even more impressive, seeing the world through a lens that identifies points of friction and pain and constantly asking “what if there was something that . . . ” or “wouldn’t it be cool if . . . ” A lot of those ideas might not, in the end, pass muster, but it’s a very cool way of thinking about the world that produces a constant stream of ideas for solving problems.