Monday, September 29, 2014

Fact-based Decision Making

By Steven M. Worth, President at Plexus Consulting Group, LLC

When I was a staffer on Capitol Hill I recall hearing two different stories told quite often during debates on the Senate floor.

One was: There are three types of lies in the world—simple lies; damn lies; and then there are statistics!

The other was: As the Bible says, “Come let us reason together.” We all have our points of view on which we differ, but we should at least be able to agree on the facts—they are what they are. Facts are stubborn things….

Both assertions are true of course. No one needs a course in statistics to know that the gathering and presentation of facts is a serious matter and that a lot of pseudo-science underlies a lot of the “facts” we see cited in advertising that bombards us every day. But it is also true that no rational debate can occur and no sound decision can be made that is not founded on the facts. This is true in all cases and particularly true in board of director meetings—those groups of leaders made up of “type A” personalities, all of whom are quite certain they know the way forward…..

As association managers, we have all had to herd cats on occasion, haven’t we? In this, facts have a way of focusing attention in the right direction. Lacking this compass, we are faced with rule by the most dominant personality, the loudest voice, or the one most skilled in Machiavellian intrigue.

But what are these facts on which your organization makes its decisions? Are they what is true for your board of directors, according to their experience?--your membership, according to their needs and perceptions?—or are they what is true for the market at large? When they differ, which set of facts weigh most heavily on the scales for your organization?

Monday, September 22, 2014

Rising to the Challenge—a need for a new level of nonprofit leadership

By Steven M. Worth, President at Plexus Consulting Group, LLC

The world we live in is reeling from problems that the traditional economic and political order seem ill-equipped to handle. It is in fact a situation tailor made to those organizations dedicated to the public good, but can they rise to the challenge?
The primary challenge—
How will historians characterize our times? After the fall of the Soviet Union, Francis Fukuyama famously declared the “end of history.” With western liberal democracy the definitive “winner” nothing more need be said or written!
But it doesn’t feel like we are winners, does it? For the first time in our country’s history we are facing the very real possibility that a succeeding generation will live less well than the preceding one. We are definitely not entering the land of milk and honey; it is more like the land of rising temperatures, pollution, and competition for scarce resources on a global scale. Rather than an ideological struggle, our times will be marked by how we handle what sociologists call the “tragedy of the commons”—a struggle that nonprofit organizations are uniquely qualified to address.
The tragedy of the commons is a social phenomenon characteristic of human activity throughout the world. Its thesis is that individuals take care of what personally belongs to them; but they tend to abuse and rush to exploit resources that are shared in common, in their haste to get what they can for themselves before these resources run out entirely.
This human tendency to see no further than our own limited interest has always existed of course; but, apart from a few sociologists and environmentalists, it did not attract a great deal of attention until relatively recently. Now with global warming reaching a tipping point, global fisheries in full collapse and every other shared global resource in crisis, even ordinary citizens are starting to realize the impact six billion human souls are having on our planet. Something has to give…
It seems a natural fit that nonprofit organizations could be/should be especially involved in all of the critical issues stemming from these “tragedies of the commons.” Nonprofit organizations are by definition enterprises that are intended to benefit society; to this point, they are or should be the antithesis of the tragedy of the commons.
Can human behavior be changed in a democratic society that respects individual rights and free enterprise? There is ample evidence that it can; but in this, historically governments and corporate communities both have ambitions and competencies that are regarded with a certain amount of skepticism by the general public—and perhaps rightfully so. An overly aggressive government—be it local, national or multinational--is sometimes seen as a menace to individual liberties, while unfettered corporations are often seen as rapacious. Only the nonprofit community has the vocation, public trust and competency to fill this role as a catalyst for societal change. Or does it?
The secondary challenge—
The time may be right for the nonprofit community to play an historic role in our society and in the global community at large, but will these organizations be up to the challenge? Traditionally there are three categories of key strategic and organizational issues that challenge the effectiveness of nonprofits. These relate to: relevancy; insightfulness; and efficiency/effectiveness. As volunteer leaders, here are the kinds of questions you should be asking your organization.
Are you responding to market need?
  • If you are a membership organization, are your members representative of the market as a whole
  • How have you segmented your markets and do your products and services match the needs of each?
  • Are your products and services perceived to set the market standard?
  • Are your sales figures matching or exceeding market growth rates year to year, and do your prices more than cover your costs?
Are you preparing for where these needs will have moved in 5, 10, and 15 years? 
  • What percentage of your annual resources--as measured in terms of time and money--are spent in new product development, market surveys, benchmarking and trend analysis? At least once every few years it pays to do some trend analysis and from there to envision what your world will look like in 5, 10 or 15 years. The results can sometimes be heart-stopping or, alternatively, they can produce “eureka” insights. Of course predictions can sometimes be wrong; but it is also true that “surprising” organizational collapses in retrospect generally tend to be not all that surprising.
  • Nonprofit organizations tend to be inward or outward looking--how outward looking is yours? Do you rely on affiliates and/or partnerships or are you more comfortable in employee and vendor relationships? Do you have high turnover in your volunteer leadership positions—are your leadership positions eagerly sought out by newcomers--or do you typically keep the same volunteer leaders for 6 or 10 years or longer? Do you have any board members from outside your industry to provide an outsiders perspective? If you are seeking to change the world—or at least that part of it that relates to your mission—you need, by definition, to be outwardly-focused; and for each and every organization this requires a conscious effort to achieve.
 Are you operating efficiently? 
  • As fast, as efficiently, and as effectively as the best possible?
  • Do you have a clear and recognized brand image/reputation that matches your vision
  • Do you have a memorable and meaningful purpose as perceived by your stakeholders inside and outside your organization?
  • Do you have the market-focused tools and resources you need to achieve your mission?
  • Your challenge in working with volunteer leaders—
How can you expect to change the world if you cannot attract and constantly replenish your supply of volunteer talent?
Volunteering implies three things: a voluntary commitment in which all parties (meaning the nonprofit organization itself as well as the volunteers) bring something to the table that the others cannot as easily do for themselves; that each party’s strategic goals and missions complement the other’s; and that the overriding goal of this voluntary partnership serves a greater purpose. In these respects volunteering is a partnership.
Ideally partnerships carry with them at least five benefits:
1. they allow and encourage a sharing of resources—they permit all partners to do
more than they could on their own;
2. they allow all to expand their networks of professional contacts;
3. nonprofit partnerships (ideally) provide an opportunity to do well by doing good;
4. they are enriching experiences through which all parties can learn from each other
new ways of doing things; and
5. partnerships allow all concerned to gain greater credibility and influence.
Work is hard—even volunteer work, so it may seem counter intuitive to say that having fun is a good litmus test for the effectiveness of your operations. The ancient Greeks defined happiness as the full employment of one’s abilities in endeavors that matter. As serious as the issues are that you and/or your volunteer leaders may be tackling, the work itself should be fun, because you are employing your unique abilities in furtherance of something that matters!

Monday, September 15, 2014

What are Strategic or Organizational Values?

By Steven M. Worth, President at Plexus Consulting Group, LLC

Strategic values are sometimes defined as the "glue" that holds an organization together. In effect, values act as a sort of constitution that clearly defines what an organization stands for both for those inside as well as outside any given organization.

For example, we all instinctively know what McDonald's Corporation's values are. If we walk into a McDonald's restaurant and see that things are dirty we know immediately that a key value has been violated. Or if we were to order a hamburger and find that it costs $20 we also know something is amiss. In fact it is safe to say that McDonald's employees, shareholders, customers and stakeholders everywhere in the world know that McDonald's values are: cleanliness; affordability; convenience; and family friendliness.

A distinguishing value of Nordstrom's department store is to ensure all customers walking into their stores leave satisfied--even if Nordstrom employees need to refer them to another store for a product that Nordstrom's does not carry. Similarly, a key value around which L.L. Bean built
their success as an outdoor outfitter is that all their customers shall be satisfied with the quality of L.L. Bean's products, or they get their money back. Such values might seem counterintuitive in a business environment. These values cost money! But on the other hand, the confidence they inspire has led to fiercely loyal customers and stakeholders who truly believe in these institutions. Values are not goals but, like goals, they do key off an organization's vision and mission and are in many ways special to that organization.

As can be seen by the McDonald's, Nordstrom's and L.L. Bean's examples values oftentimes serve as an organization's competitive advantage in the marketplace. At the very least, the more successful organizations have a very clearly defined sense of themselves through the values they embrace and incorporate in their day-to-day activities. planning groups focus on strategic issues, they eventually always need to ask themselves, what does our organization stand for?

What are the values or principles that are or should be incorporated into everything we do? But there is a distinction to be made in all this talk about values. Personal values are often captured in HR policies or documents such as employee manuals. Certainly trust, respect, nondiscrimination (and a long, long list of other values as well) are all part of the personal qualities, ethics and values that make life livable as well as help to make for a pleasant and efficient work environment. But are they strategic? Certainly no organization sees an advantage in fostering distrust, dishonesty, discrimination, etc.

So, if it is a given that all these personal values should be incorporated into every work and personal life environment, then what are the types of organizational values that distinguish one organization from another?

In effect, there are strategic considerations that enter into play that make almost every organization's set of values as unique as a fingerprint. Furthermore these organizational values are not just externally driven; they have internal implications as well, because if they are to be taken seriously then they need to be ingrained into the organization's culture from the time the first employee is hired.

One would hope that parents and schools have done a good job inculcating the personal values that your organization needs and expects of its employees; but your organization's responsibility is to help these same employees understand what makes working at your organization different from working elsewhere. This of course means knowing what these values are in the first place and why they are uniquely important to your organization.

Monday, September 8, 2014

Six Questions for Globalization

By Virgil R. Carter

Is your non-profit organization considering globalization? Or have you already begun efforts towards becoming a global organization, and are wondering what’s next? Last week we looked at three important initial questions about non-profit organizations and globalization. Here’s the second part of six key questions which may help guide your organization’s discussions and decisions about going global.

1. What does success look like?
Has your organization reached agreement on what constitutes success? Establishing and communicating clear, measurable benchmarks for success - strategic and operational - may be one of the single greatest ways of realizing success in globalization, and avoiding the criticism inherent in attempting worldwide leadership. Identifying success measures also supports continuing assessment of whether or not your association has the proper business model and business plans needed for successfully achieving the measures. Success measures and business models go hand in hand. It’s hard to have one without the other.

2. Does your organization offer open and equal leadership opportunities for members, regardless of geography?
Members and customers, regardless of geography, want to have something to say about (and participate in) the direction of the organization they support, and the quality and timeliness of your goods and services. Otherwise, they let their feet do the talking, and walk to another association that is more open and responsive. Global organizations have to find ways to share in leadership opportunities, regardless of geography. When was the last time your board’s chairman was from an emerging market country, or you held a board meeting in an emerging market country?

3. Should dues differ and reflect the annual salaries and earnings of members in emerging market and other nations?
Airline tickets and hotel reservations are no longer are priced at a single rate for all users. World-wide air travelers know that air fares purchased outside the U.S. tend to be cheaper than those of U.S. carriers (thanks to host government subsidies in many cases). Why should association dues be any different, especially when your annual dues in U.S. dollars may represent a host country amount equal to perhaps 20-25% of the annual salary of a potential member? The opposite side of this issue, however, is that expenses to support a new or renewing non-U.S. member generally exceed those of a U.S. member (at least for associations whose major business units reside totally in the U.S, and whose service must originate from the U.S.). What to do? Successful global organizations are likely to be those whose dues recognize the differential abilities to pay, and who can provide needed services and value outside the domestic U.S.

4. Are your globally available goods and services: a) timely; b) affordable; c) culturally and regionally relevant; d) available in the host country language?
The importance of this question is probably self-explanatory, but many nonprofits haven’t made the necessary important investments in their goods and services to ensure that they offer global value in a global market. It is all too common for U. S. nonprofits to believe that because they offer goods and services, there is interest and demand outside the U.S. Goods and services that are accessible in a timely manner, that have regional content, and have opportunity for host country language are among those that clearly bring highest value to the host country markets and customers.

5. Does your association work with, for, against or ignore similar host country

Sooner or later each association must have a policy and a business plan that provides consistent guidance in situations when there are similar associations, providing similar goods and services, elsewhere in the world. Cooperation and mutual respect is always a good goal, but it can be challenging to achieve. An effective approach for building good relations among similar global organizations is to launch annual exchange visits, followed by low-risk, low-threat joint activities. An early atmosphere of camaraderie and mutual purpose goes a long way towards building good long-term working relationships. Once established, these relationships will be immeasurable in maintaining cooperation and mutual respect.

6. Are you patient?
Globalization is a challenge. It’s usually a substantial investment, and it’s generally not a quick return on investment. It’s a challenge to prepare a suitable business plan and to use resources wisely. It’s a challenge to show measurable results. Patience is required (along with sound business planning and processes). Be prepared and prepare your volunteer leaders. You will be tested.

For those who have successful answers to these questions, you will find globalization to be a rewarding way for your association to continue to do business and to provide the leadership that is the basis for your mission. Good luck!

Tuesday, September 2, 2014

Globalization is Survival: Becoming Global as an Anecdote to Stagnant or Declining Markets

By Steven M. Worth, President at Plexus Consulting Group, LLC

The Milwaukee-based American Society for Quality (ASQ) is an individual membership society composed of corporate quality control officers as well as consultants. During the heyday of the total quality management (TQM) frenzy of the 1960s through the 1990s ASQ grew enormously fast. It bought and furnished its own building and filled it with the staff needed to serve a burgeoning membership base. But in the 1990s the novelty and sense of critical urgency of quality control started to wear off throughout the United States as corporations and management consultants turned their attentions elsewhere. This resulted in a gradual decline of ASQ’s membership that continued unabated through 2007. With no end in sight for this decline that persisted over a decade whether the economy was strong or weak, ASQ’s leadership decided that the time had come to look at markets outside the United States, which up to then had been considered as ancillary to their main interests.

ASQ prudently decided to research their options before choosing their path. They started by undertaking qualitative and quantitative market research starting with their overseas members. What they wanted to know was how they were perceived in markets outside the United States. Which products and services were most desired, which other organizations they were competing with in these various markets, and how their governance and operational structures were perceived in terms of their efficacy and relevancy to the needs and concerns of these markets?

What they found out was both good and bad. The good news was that their products and services fit very well with the needs of most overseas markets—particularly those markets in developing countries that traded heavily with the United States. Developed markets such as those in Western Europe and Japan were less enthusiastic as they felt they had their own resources and organizations that suited their needs just fine.

The bad news was that, regardless of market, ASQ was perceived to be a very US-centric organization—one in which foreign cultures and language and needs that were different from those in the United States were simply not understood or appreciated. In other words, although there were clear opportunities in overseas markets for ASQ to become more active, no one familiar with ASQ believed it had the institutional culture or structure to be able to do this effectively. Furthermore, while some liked that the “A” in ASQ stood for American, a significant part of the world believed that this label was restrictive and would hinder ASQ’s growth in their market beyond the limited sphere of US-based multinational companies that had a presence there.

In effect the ASQ realized that it had two markets abroad: one consisting of the employees and customers of U.S. multinational companies or those companies that otherwise traded with the United States; and the other was employees of indigenous companies that had an interest in quality quite apart from anything to do with the United States. While ASQ might have a quick advantage in penetrating the first market, the second market—which was and is much larger—was inaccessible to them unless they shed themselves of their US-centric structure, identity, and approach.

Following this primary research, ASQ undertook comparative market research using widely available secondary sources for the purpose of identifying the best markets for them to target. The best markets were identified as those that met the following criteria: they were large; they were growing quickly; they had a significant trading relationship with the United States; they were open legally and culturally to penetration by international associations; there were no competing organizations present; and ASQ had already identified potential partners and members that could facilitate their market entry.

Using the results of this tiered research, ASQ identified and prioritized the top four markets that they should target: China, India, Brazil, and Korea. Mexico and Canada were added to this list because, although ASQ already had a sizable presence in those two countries, they were treated operationally and in terms of ASQ governance structures as if they were part of the United States. To the extent ASQ knew it would have to restructure itself to accommodate the global opportunities identified in these four countries, they knew they would have to give special care to ensuring that the same principles also applied to the way ASQ worked with Mexico and Canada.

ASQ’s solution was to design operational and governance structures that allowed them to work effectively in the two types of overseas markets that had been identified. In other words, overseas members could continue to have a close relationship to the US side of ASQ if they so wanted; but indigenous markets could opt in favor of a generic ASQ International in which there was no “American” connection in name or in substance in any aspect of the operations or governance structures.

ASQ staffed up the international part of its operations with multilingual and internationally experienced staff, and it created a separate legal entity—ASQ International and a separate international governance body to ensure the direction would remain on track. Ultimately, three-year business plans were drawn up with budgets and measurable goals for each of the targeted markets.

Two years later the greatest economic downturn since the Great Depression hit the world’s economies. While ASQ’s US operations declined significantly with the onset of the recession, this decline was offset by the rapid growth of their international programs. In effect ASQ has experienced the same phenomenon as almost every global organization—that during times of economic turmoil, the organizations that do best have the widest market base, with global organizations tending to do better than those that are focused on just one national market.