The best nonprofit organizations often innovate practices that for-profit companies should develop. Here's how to look for and benefit from those practices.
An idealist is a man who helps other people to be prosperous.
Henry Ford
Through my continuing studies into the nature of rapid improvements, I looked at all kinds of organizations. Having been a fan of Peter Drucker's writing since the early 1970s, I was familiar with his point that nonprofit organizations are often better at innovating breakthroughs than for-profit companies are. Why? Resources are usually so scarce in nonprofits that anyone who wants to provide more benefits has to do a great deal with very little.
In addition, nonprofits attract people who are inherently motivated by the organization's purpose to look for how to do the most. Imagine, for instance, the differences in perspective and motivation you would experience between working for a for-profit waste disposal company and a nonprofit organization aimed at eliminating breast cancer.
I continually go in touch with leaders of nonprofit organizations to see what they were doing. Mostly, I found bureaucracies more concerned with their own perpetuation than with making any improvements.
For instance, I worked on a project while with The Boston Consulting Group in the early 1970s to find ways to contain health-care costs. One idea that interested the United States Department of Health, Education, and Welfare (HEW) was to simplify billing in hospitals so that the same revenue was generated, but at less expense. In those days, a bill for a three-day hospital stay could run to 67 pages.
HEW gave a grant to our consulting firm and our accounting firm partner to put demonstration projects in place to generate shorter bills that would be less expensive to produce. There would be no cost to the organizations that participated in the demonstrations. The grant also provided payments to state hospital associations for their efforts in describing the project as one method for enlisting participants.
My colleagues and I traveled across the United States many times to describe the opportunity. The result? No nonprofit hospital in the United States wanted to work on this project.
How did we eventually find participants? We began to work with for-profit hospitals. Their leaders cared about cutting costs because they were financially rewarded for earning higher profits.
From that experience, I learned that breakthrough innovations from nonprofits were easier to spot than breakthrough-innovating nonprofits. Scanning for news stories, I began to find those nonprofits that had soared like eagles to go to a higher level of performance in some particular activity.
Then I studied how those organizations had succeeded and extracted the key lessons from these champions. In every case, I found high levels of personal identification among staff and volunteers with organizational goals to improve the world for others. This identification was just as strong among staff and volunteers as it was among the organization's founders.
Who were such organizations? Many were pursuing religious activities such as the emerging Protestant mega-churches that Peter Drucker often advised. The Salvation Army was another organization that effectively drew on Christian roots.
Secular concerns drove other groups, such as the Girl Scouts under Peter Drucker's tutee, Frances Hesselbein, to breakthrough excellence. Concerns about eradicating poverty provided the motivation to succeed for the Grameen Bank in Bangladesh, which provides low-cost, small loans to farmers and fledgling entrepreneurs in remarkably effective ways.
In addition, employees, volunteers, and beneficiaries found their lives were transformed in positive ways beyond what they could have expected. The enthusiasm became contagious, and rapid growth ensued that did not dilute the motivation. For-profit skills and innovations rapidly spread into the nonprofit organizations through the attention of volunteers and donors. From these observations, I realized that rate of improvement was often related to how strongly people felt about gaining the benefits from making improvements.
Copyright 2008 Donald W. Mitchell, All Rights Reserved
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