Drucker on Management

Continuing with the Drucker thread. He says that non-profits don’t focus enough on performance and results. He contends that while it is extremely hard to measure, it is more important in the non profit world than in the for profit one.

The question is how are performance and results measured? Most arts organizations talk about educating the community, but they measure success by the number of people who pass through the doors. How many times does an arts organization even survey its adult audience in regard to how much more they feel they have learned since they started attending performances?

Is performance measured by how quickly an audience can be processed? Is it how politely they are handled? Is it how often they return or tells their friends? Is it how diverse the audience is? Is it the size of the audience or the impact you have in the community?

Performance and results are informed by the organization’s mission. The problem, Drucker says, is that: “People are so convinced that they are doing the right thing…that they see the institution as an end in itself…Soon people in the organization no longer ask: Does it service our mission? They ask: Does it fit our rules? And that not only inhibits performance, it destroys vision and dedication.”

He lists a number of do’s and don’ts. His most important do is focussing the organizational information and communication flow. Each person, he says, should be asking what information they need to do their job correctly and what information they can provide others so they can do their job well. This doesn’t simply apply to coworkers, but to educating ones supervisors as well. Everyone from the executive to the volunteers are responsible for providing information to others along the chain.

Drucker speaks of setting the standard of success high. It is better to be slow at approaching the standard than to set the standard too low and thus inhibit progress beyond that point.

One of the most interesting parts of his management discussion revolves around decision making. He echos some of my earlier thoughts when he points out that many times executives make decisions subordinates are able to make. The best decision makers make few decisions and they focus on the tough decisions rather than tackling the easy, but irrelevant ones.

His idea is that the best way to make decisions is to try to discover what the true decision being made is. Is it not really about cutting the budget, but actually about abandoning a segment of the institutional mission? Will diminishing the funding of one area essentially make the functions of other areas extraneous and in need of cutting themselves or merging into other areas?

This idea seems to be core to his ideas on conflict resolution. He suggests looking at the real core issue rather than the ancillary ones that lead to people calling each other names.

An example to tie both these idea together– You may decide to decrease the size of an event to save money. Suddenly half the office is fighting with the other half, shouting that the cuts should come from the other’s area. The real issue isn’t that someone will have less money to work with as much as the decision signals that the organization’s focus will no longer be on a certain segment of the market. That segment may attend 90% of the other events, but the one being diminished is a signature event for that demographic. The ultimate consequence may end up being that the people who dealt with activities for that segment will be dissolved or have their duties shifted to other areas. This is the topic that needs to be addressed, not whether the cut should be shared across the organization instead of borne by one area.

Drucker underscores the need for dissent. He uses the example of Franklin Roosevelt who had the rule that: “If you have consensus on an important matter, don’t make the decision. Adjourn it so that everyone has time to think. Important decisions are risky. They should be controversial. Acclamation means that nobody has done the homework.”

He points out the dissent is not conflict. In fact, he quotes political scientist Mary Parker Follet who said “when you have dissent in an organization you should never ask who is right. You should never even ask what is right. You must assume that each faction gives the right answer, but to a different question. Each sees a different reality.”

To go back to the example of cutting a program. One faction may see the cut as abandoning the character of the organization. Another faction may see cutting it as a path to expanding what is great about the organization. They are both right because they are talking about two different questions-maintaining character vs. increasing efficiency.

He encourages cultivating dissent and disagreement because getting it out in the open lets people feel they are heard and makes you aware of the objector and what their objections are. It provides the manager with the opportunity to come to some accommodation that will help them accept the decision even if they don’t agree with it. He also points out that this process can reduce conflict by showing that the people on the other side differ with their point of view rather and are not “stupid or malicious” by nature.

I have to say from my own experience at a few organizations, but for and non profit, that this is some valuable advice. With all the pressures directors and managers face in trying to run an organization, these guidelines are not easy to follow. Having read these chapters, it suddenly becomes clear to me what those who employed what Drucker suggests were trying to do. It also opens my eyes to how they succeeded in many little ways I hadn’t recognized at the time.

Good stuff I say!

Marketing by Drucker

To continue the discussion about Peter Drucker’s thoughts on Non-profit management that I started yesterday, I thought I would look at his view of marketing.

There are a number of interviews included in Managing the Nonprofit Organization where Drucker asks different people their views on a set topic. One of the interviews associated with marketing features Philip Kotler who teaches at Northwestern University. One of the things he says is that many people confuse marketing with hard selling and advertising.

He says “The most important tasks in marketing have to do with studying the market, segmenting it, targeting the groups you want to serve, positioning yourself in the market and creating a service that meets the needs out there. Advertising and selling are afterthoughts.” The difference is a function of how you start out. Do you look at who you want to serve or do you start with a product and then look for markets to push it into. The former is marketing, the latter is selling.

I will be the first to admit, I am guilty of selling under the guise of marketing. Part of this is due to pressure from above to fill seats and lacking the time, staff and environment to be asking if my actions properly served a market. Actually, pretty much all of it is due to those influences. I learned what marketing was supposed to be in school, much as Kotler defines. When I got out in the real world, I was never in a position to work under the proper definition.

Still, it is easy to market incorrectly even if you are acting in accordance with the definition. You may be clear about the needs you want to serve, “but don’t understand the needs from the perspective of the customers. They [organizations] make assumptions based on their own interpretation of the needs out there.”

I have been seeing this idea cropping up a lot recently in the articles I am reading. Arts organizations have been accused of not being cognizant of the changing needs and expectations of its audience. One of the things Mr. Kotler says is marketing can “help us understand why customers chose to be with us in the first place and why they’re not choosing to be with us any more.”

A couple ideas I came away from the reading with was that arts organizations could do a better job marketing by assessing their strengths. Even if there are a couple other theatres, orchestras, ballet companies, etc in the area, they can certain examine the market, see what there might be a demand for and fulfill it. This can range from things arts organizations already do like positioning themselves to the Shakespeare or modern dance niche or offering classes to adults and children and providing outreach programs free of charge to underserved schools.

It can also be new programs that recognize the different needs of all the segments you wish to serve. Instead of only having one format for an audience education program, you might pitch different ones for different segments. Older audiences might like a formal lecture/talk back after a Thursday performance that started at 7pm. Younger audiences might prefer a coffee house format discussion after a Saturday night performance that started at 8pm. Churches have different ministries under one roof to suit different segments of their congregations. This is a structure that arts organizations can adapt to their needs.

The methods that Drucker and Kotler discuss for making sure your organization is market rather than selling driven are fairly obvious but perhaps difficult to implement because it can require fighting institutional inertia. The first is to do market research to understand the market and its needs, the second is to develop segmentation and be aware of the different groups you want to serve, the third is to develop policies and programs that are structured to the meet needs of the groups. Everyone in the organization has to be invested in these programs over the long haul because the desired result won’t be attained immediately.

More Drucker to come.

Nonprofit Drucker

As I noted in an earlier entry, Peter Drucker, one of the most highly regarded management and leadership authorities in the world has written a book on managing the non-profit organization. I am about half-way through Managing the Nonprofit Organization: Principles and Practices. Though it might be better to discuss the book as a whole when I finished it, I thought it wise to attack a portion of it at a time lest I create an entry so long no one would have the time to read it. Also, I placed so many Post-It notes to mark passages in the book, it begins to appear a hedgehog.

Rather than try to summarize the whole book, I am mainly going to note some interesting concepts he speaks of that I hadn’t thought of, or at least, had not thought of to the extent his writing inspired.

The first was his idea that the product of a non-profit is a changed human being. In this he refers to the change a hospital, scouting organization or church might produce as well as exposure to the arts. This is an interesting idea because as much as mission statements declare their purpose is to effect this change, the focus of most arts organizations tends to be on presenting/producing shows.

He notes that since non-profits don’t have a conventional bottom line to achieve, they need guidance in management and leadership all the more “lest they be overwhelmed by it.” The problem, he says, is that most management texts and resources don’t address the particular needs and challenges of the non-profit and thus the impetus for writing this book.

One of the negative effects of not having a bottom line is that non-profits tend to view everything they do as “righteous and moral” and are reluctant to scrap efforts in one area to redirect organizational resources elsewhere. Drucker feels “they need the discipline of organized abandonment even more than a business does” in part because of the dearth of resources they possess.

The process of change and innovation necessitates looking outside of the organization. He notes that consulting “current reporting systems doesn’t reveal opportunities; they report problems. They report the past. Most answer questions we have already asked.” He says the biggest impediment to successfully innovating is trying to hedge your bets too much so that you are safe if your plans don’t work out. All that does is anchor you too much to the past and prevents you from creating the proper degree of change to provide success in the future.

Drucker has some thoughts about choosing leaders for change. He says that too often “selection committees are overly concerned with how poor the candidate is. Most of the questions I get are not: What is he or she good at, but we think this person is not too good at dealing with….The first thing to look for is strength–…and what they have done with it.”

The second thing he says is that selection committees have to look at what the one immediate challenge is and select a person whose strengthes matches that need. Then he says he would look for character or integrity because a leader needs to be a model for others in the organization. He says that the ultimate question to ask is would you want one of your children to work under the candidate. Would you want one of your children to look like that person one day.

He talks about the fact that a non-profit leader doesn’t have a single dominant constituency to serve like business has the shareholder and government has the voter. He actually defines the ones a non-profit serves as those whose “No” can adversely effect your organization. For an arts organization it can be the audience and volunteers and funders and students, etc. He points out that there has to be separate marketing and handling plans for each group as well as perhaps for segments of each group. They may all be coming to view the same product but what motivates their arrival differs.

He says the best time to innovate is when things are going so well, you don’t want to try to fix anything for fear you will break something and plunge to ruin. However, as everyone knows, the worst time to try to institute effective change is when the institution is fighting for its life. No one will be thinking about the best course for the next 10 years if they are worried they won’t be getting a pay check next week.

It isn’t always a matter of completely changing course, but heading in the same direction more efficiently. If you have achieved your objectives, figure out how to improve on them. Ask “Can’t we do better?” Build upon your strengths. Look at how expectations are changing and decide how your strengths fit into that world.

He also points out, somewhat amusingly, that “It’s an old rule that everything that’s new has a different market from the one the innovator actually expected.” He points out a number of examples where people intended a product or program for one group but ended up being wildly successful with a segment they didn’t intend to reach. Automobile manufacturers have a terrible time with this today when they roll out a vehicle with the intent of attracting young people only to have the parents buy it in droves instantly branding the car as unhip.

Although the book was written in 1990, many of Drucker’s messages have resonance in literature and articles I have cited in the last few weeks and months. He says that organizations need to take customers seriously. “Not saying, We know what’s good for them. But, What are their values? How do we reach them?” He cautions against an organization becoming to entrenched in fund raising and defining its value in terms of economics lest they “subordinate that mission to fund raising.”

There is quite a bit of truth in this. As he says, non-profits don’t have a bottom line. Because of this, lately they have been making appeals for money based on the benefit to others’ bottom lines. It never really occurred to me so clearly as now that in doing so, non-profits risk pushing their identity and mission aside and making themselves servants to corporate and community well being. They position themselves as the new 401k and health benefits package that will attract employees. Rather than being about beauty and reflecting the human condition, they claim to be contributing to improving economic and social conditions. Fear then the day when the arts are held responsible for keeping it so. In utilizing the rationale that like sewer lines, their existence contributes to rising property values, arts organizations are in danger of being viewed as such.

Look for more Drucker insights in future entries

Various Notes

I was listening to Fresh Air on NPR yesterday where Bill Moyers was being interviewed. There were a couple comments he made that struck a cord with me. Moyers was a primer mover in the formation of what eventually became the Public Broadcasting System. In discussing public television, he said “the most important thing that we can do is to continue to treat Americans as citizens, not just consumers. If you look out and all you see is an audience of consumers, you want to sell them something. If you look out and see an audience of citizens, you want to share something with them.”

This seems important to remember in these times when cultural organizations are trying to discover ways to serve their audiences better. As much as we adopt the methods and techniques of the for profit in order to address the changing expectations of the population, it will become important to remember that there are a few characteristics that separate the non-profit world from the for, and that is the intent with which we approach audiences.

Moyers also discussed the rise of blogging and likens it to the early days of the US as a nation when the low cost of printing presses provided “ink stained wretches” like Tom Paine with the ability to disseminate their views of the world. He notes the material they printed was very partisan and lacked the objectivity that journalists at least claim to aspire to today. Blogging today, he says, is the closest society has approached to the democratic expression of the nation’s youth.

Speaking of blogging and democratic expression, (since I speak of it so often)I was pleased to see the Artful Manager mention a theatre in Seattle which has provided audiences with the opportunity to blog about the shows they have seen. The first comment apparently came within 40 minutes of the show’s end. Since then there have been some additional entries.

The only disappointing element of the project is that comments are apparently approved of by a gatekeeper on staff. The comments are written by a number of people, but they are listed as being posted by a single person. In fact, in order to comment, you have to email your thoughts to a person whereas with my blog, you can comment on what I have to say immediately.

True, I can eventually delete what you have to say, but I have to find the comment first. This being my 52nd or so entry, that will become more difficult as time goes on. There is also the chance someone will read a critical comment before I remove it and catch me when I delete it. As I have stated before, if an organization is going to invite candor, they have to remove any appearance that they censor it out.