Management Philosophy

Nonprofit Drucker

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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

My Terrible Secret

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After These Messages…

Before I reveal my terrible secret, I just wanted to direct readers’ attention to a piece by Richard Florida in which he refutes the criticisms of his Creative Class work.

Now Back to the Show

The terrible secret that I have been harboring is the fact I have never read any of Peter Drucker’s books. For those of you who don’t know who he is, it isn’t as great a sin as I make it out to be. Peter Drucker is probably one of the most respected authorities/writers on management, economics, and societial and political trends. As a person who purports to be exploring how arts managers can apply business trends to the non-profit world, it would probably be irresponsible of me not to have read some of his work.

Honestly, I have wanted to read his books and feel I am long overdue in doing so. Of what I have read of Mr. Drucker by those who admire him, he seems to be the real deal rather than the management theory flavor of the month. (He has been at it since at least 1950.) His work seems to have a degree of sincerity associated with it whereas many other management theories seem to be tinged with uncertainity and desperation. It is almost as if those systems work and people get paid a lot to write and talk about the theories, but no one is quite certain why it works and for how much longer it will.

Currently, I am reading his Managing for the Future. He has actually written a text specifically for non-profit management but they didn’t have it at the library branch I frequent. That will be the next book I read. I haven’t gotten through the entire book and I haven’t seen a lot that would be applicable to the non-profit world, but there was one area he wrote on that did start me thinking.

He speaks of companies in the same lines of work in different countries banding together. They are run independently of one another, but each one handles an area in which they have greater expertise and resources. One handles the manufacturing for both firms, the other does research, product development and marketing for both.

I have been pondering if the same could be true for non-profits. I don’t know if there is any value in international efforts outside of organizations located on the borders. There could be value in local or regional partnerships. In trying to think of divisions of labor, I came up against the insular and protective nature of non-profits that both I and Drew McManus have recently noted. Unless they engaged an outside company to handle marketing and development, I would imagine there would be accusations of staff bias in the areas of promotion and fund raising. Or else one would feel they deserved a larger chunk of the monies since their audience was larger and more affluent and they had more performances.

The Asolo Theatre Company and Sarasota Ballet have both occupied the same building and used the same stage since FSU moved their Film Conservatory back up to Tallahassee. They have completely separate staffs and neither of their webpages mentions the other exists, nor does the other appear on their “other arts links” pages. The separation isn’t as readily apparent in the building though. I was just there last month and unless you are watching very closely, you can’t tell when you are leaving the theatre’s part of the administrative floor and are entering the ballet’s.

They do share a box office staff and might share front of house staff. There is no indication that volunteering to usher for the theatre will include working for the ballet. The ballet does perform in other venues so they might need to recruit an usher corps of their own anyway. The ballet may get scenery via the Asolo Scenic Studios, but it isn’t mentioned as a client. They might share costuming resources as the wife of the ballet’s Marketing and Development Director is listed as a costume designer for the theatre. Considering the co-habitation arrangement was motivated by financial crisis, it is a pity there hasn’t been continued exploration of cooperative and money saving efforts.

The areas I could see non-profits pooling their resources or splitting functions between them would be in box office/front of house, accounting, human resource and benefit management, publications/web administration, set & costume design/construction, concessions, physical plant & grounds maintenance. Though organizations would want their own people performing, they might also be able to cooperate on booking outreach events and creating support materials. Cooperative efforts might not be possible in all these areas, but they are probably places in which there could be the least contention about how resources were allocated. Development and promotion would take far more trust and honesty.

If anyone knows of organizations that have a high level of cooperation or you have additional suggestions, I would be interested as always.

Volunteers to the Rescue!

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I have been closely watching a series of articles Drew McManus is writing on the topic “How to Save Classical Music.” He is using the docent program at the Denver Zoo as a case study of how to use volunteer labor to aid in the revitalization of orchestras. He begins by defining the problem, then talks about the Denver Zoo program and has most recently written on how to apply these lessons to orchestras. Volunteer programs are of special interest to me so I have already put a fair bit of thought into his entries. I suspect that additional consideration will so occupy me that this entry meant for Friday won’t be posted until Saturday.

Drew starts out with the premise that while most arts organizations inevitably have education as part of their mission, the focus of education departments is typically on school programs rather than on audience education. He suggests training and empowering docents will provide support in the areas of marketing, public relations, education and outreach. Docents are traditionally individuals who do tours and lectures at museums and cathedrals. Mr. McManus’ suggestion is to minimize the teaching posture and position docents more as knowlegeable companions.

He goes on to discuss the similarities between the Denver Zoo and orchestras which make the comparison valid. He also mentions the problems facing orchestras echoing the sentiments of the McPhee Knight Foundation speech I cited last week. The solution, he says, lies in adopting the Denver Zoo’s aims:

They facilitate people in their community with the tools they need to become an integral part of the zoos mission instead of looking at them as merely check writing automatons. The zoo gives up a measure of its own control over the institution, but in turn they create a passionate group of stakeholders that perpetuate ongoing community interest and involvement with the zoo. They enable members of the community to become involved partners as opposed to static participants. In turn, the zoo entrusts these individuals with the important responsibility of communicating with the public the value of their mission and to create an interest in the actual ‘product’.

Personally, I have always been interested in getting volunteers more involved in the organizations for which I have worked. However, I have been concerned about the administration’s commitment and investment in the volunteers. This is why I would be cautious about starting such a program in an arts organization.

The problem I have faced is that administration often looks upon volunteer help as a forgone conclusion. There is a Field of Dreams assumption similar to the one made about audiences–if you are offering the opportunity to volunteer, then certainly people are going to want to do it so they can be associated with the wonderful things the organization does.

One place I worked had often discussed, but never held, a volunteer appreciation event in the 15-20 years of the program. I felt victorious at having been the first to successfully organize one. When it came time to plan for the next one, I was told money wasn’t the issue but in light of the fact that after 20 years without an event, only 40 out of 350 invitees came, maybe it was better to have it every 2-3 years.

I was extremely annoyed. We had started doing performances at a 1000 seat venue that was much more accessible to major roadways than our other performance spaces, but with which our audience base was not familiar. The first show we hardly had 200 people attend. However, we didn’t abandon doing shows there but worked on increasing awareness of the venue. In my mind, we could have done the same thing by noting the party date 6 months out on every piece of correspondence sent to participating volunteers.

As a result of perceiving an exploitative motivation with little thought of appreciation, I have never proposed additional programs in which volunteers could be involved. I do, however, collect ideas such as Drew’s against the day I am in a position to direct policy.

In the second day’s entry, McManus discusses how the program of the Denver Zoo is structured. I was impressed by the amount of training the docents underwent and how much they were invested in the zoo. One of the biggest complaints the volunteers had was that the program became too formalized and that full time employees assumed functions they once performed. It is to the volunteers’ credit that they feel such ownership for the program. The zoo is so happy with the program they intend to double its size to 600 docents in the near future.

In his third entry, Mr. McManus discusses the problems with orchestras and how the docent program can help. One of the biggest problems, he says, is that orchestras devote an increasingly larger portion of their ticket revenue to market to the same, ever decreasing, segment of the public. When they do try to attract more diverse audiences, “it often comes off looking like a tragically unhip old guy trying his best to look young and cool.”

Educational information that is provided is usually in the form of reams of printed material utilizing arcane terminology and might be supplemented by a brief pre-performance lecture. What it lacks, he says, is personal face to face contact with someone who is passionate and knowledgeable, but like you, doesn’t have all the answers. He also suggested essentially gutting the PR department of everyone except an editor and let docents write press releases.

My reservations about the exploitation of volunteers aside, I found his suggestions very exciting. Certainly the training of docents would have to be well planned and executed. I know that some people volunteer for the social prestige association with an organization or art form brings. People who want to impress others with what they know may only compound the intimidation a novice feels. Excluding a volunteer from being a docent can lead to a whole other set of PR problems.

The benefits for this program could be enormous. You could offer any level of interaction from having docents mingling in the lobby answering questions to offering a low intimidation program people register for in advance. In the latter program you might have a docent contact a person on Wednesday saying “Hey, why don’t I meet you for coffee before the show Friday night, my treat. Then I will make sure you get to your seat, we can talk at intermission and after the show. But if you have to get home to your kids, you can always email me with questions.”

If your worst problem is that the new attendee ties up your docent by wanting to meet for coffee before every concert, is that really a problem? You can always introduce new attendees to each other and encourage them to meet for coffee as a group. (Then hit up the coffee shop for a program book ad at the very least since you are sending so many people his way.) You can also direct people to internet tools like meetup.com (which includes classical.meetup.com and theater.meetup.com) and evite.com that make it easy for those who share interests to organize discussions with people they have never met.

The idea about volunteers writing press releases was very intriguing. I am not as confident about the writing skills of volunteers as Drew is, but I have never tried it. This actually may be the answer to the boring press release thread Greg Sandow brought up. If you have docents submit press releases that highlight why they are excited by the piece or person performing, you excise the boring “professionally” written junk. As Drew suggested, all it takes is an editor (who can resist the temptation to insert boring stuff) to polish it up and perhaps reorder some points so the release starts out with the attention grabbing details.

Drew also suggests that docents could be valuable in attracting new audiences from the diverse communities they live in by disseminating information and generally acting as an advocate for the insititution. My thought was that unless people from these communities were already experimenting with attendance and just needed to be empowered by such a program in order to gain the confidence to volunteer as a docent, there wasn’t much chance of achieving diversity.

I mentioned this to Drew and he agreed drawing docents from the current audience would only serve to continue drawing the current audience. He said instead “the trick is to get the program started with a core group that is not entirely representative of the current audience. A few ideas I’ve had is for orchestras to utilize individuals such as private music teachers who have adult students, retired school teachers.” This sounded like the most prudent course to me.

A variation of the Denver Zoo docent program could certainly be worth the effort to implement. I didn’t check out the Denver Zoo marketing budget, but the fact they estimated it only cost them about $25,000 to run a 300 person docent program is probably a miniscule portion of the budget. However, according to Drew’s survey they heavily depend on the program to enhance the visitor’s attending experience, educate visitors about the zoo’s mission, provide staffing for in-school and summer education programs and provide paid staffers with time to attend to zoo operations. The docents are essentially the public face of the zoo.

I took a quick look at Baltimore Symphony’s 2002 990 return. They reported 1.5 million for marketing. Even if Drew is wrong and a docent program only reduces expenses by 10% instead of 25%, $150,000 is still a fairly significant savings. Imagine what sort of docent training program you might have if you added half of that savings to a current volunteer budget?

To make all this work requires the docents to be invested in and well informed about the organization they represent. This level of investment and information can only be achieved if the docents have control of their program. It is straight from Management 101 that when you assign people responsibilities, you need empower them with the authority to act. The program also needs to receive the full support and cooperation of the organization administration. Essentially this ties in with the concept of open source management I wrote on back in February.

Drew doesn’t think this is likely in symphonies due to an insular nature that resists releasing authority and transparency of information. His fear is that “Without their continuous support and involvement, the program will come across as nothing more than another propaganda tool that orchestra’s are already well known for.”

Drawing from my background in theatre and popular music, I would say it depended on the age of the organization and how entrenched current management was in their ways. If it was relatively young in its institutional development, I would say there was a fair chance such a program might be adopted. Otherwise, I would have to agree with Drew that there would be too much inertia in the corporate culture to make progress. It seems that the biggest contributions of innovation and change in areas of business like the tech sector come from people who admit they didn’t know any better. I imagine it change in the arts world would originate in the same place.

Of course, this is not to say that old dogs can’t learn new tricks. Looking to the tech sector again you have IBM who have shown they can do just that. We should always strive to do better at every age.

Educated Giving

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Since I talked about funding yesterday I thought it might be useful for readers to know a bit about how funding decisions were made.

Foundations typically ask for mission statements, information about programs, goals that have been met and financial statements. The information they require is often similar, but just different enough that you spend as much time recasting existing informaiton as you would had you written it from scratch. This is why the paper I cited yesterday encourages foundations to consolidate their reporting.

All this basic information is available to the public by law. The IRS and most states hold this information on file for public viewing. It can be very difficult to find out how to acquire it though.

Another option is to visit Guidestar.org. Many donors and grantors go there to learn about organizations they are considering giving money to or to find out what organizations meet their giving criteria. Anyone can access the information there.

Some of the information is provided by the organizations themselves so the amount available tends to vary from place to place. You can pretty much depend on at least finding the 990 filing. The latest filing I could find for most places was the 2002 filing which covers the 01-02 ficial year. The 990s give information on earned and unearned revenue, revenues and expenses, mortage information, etc. You can also discover the salaries of the highest paid officers and employees. A 990 is a good place to look if you are considering a job with a non profit and want to know about the financial stability of your future employer.

For most organizations, Guidestar also lists profit/loss and balance sheet financial statments. You can get the same essential information from the 990s, but it is much simpler to read in this format.

As mentioned earlier, you can also learn about the institutional missions and goals, the names of people serving on the board of directors and types of programs the organization conducts.

Guidestar is very easy to use. Check it out if you are even the least bit curious about an arts organization.