Written by Mario Morino
Published: 07-08-2010 Venture Philanthropy Partners:Investing in Social Change
http://www.vppartners.org/learning/perspectives
Editor's Note: Mario Morino, a local Cleveland guy, is a founder and innovator behind Venture Philanthropy Partners in Washington, DC. Started in 2000, dedicated to investing in people and non-profits who can make a difference. VPP and The Morino Institute are widely respected and this article is a culmination of learning Mr. Morino has gained. For those of us trying to figure out how to make a difference, it's a must-read. [more]
"Social Outcomes": Lifting Sights, Changing Norms
By Mario Morino
Thu, 2010-07-08 All this year, I have been writing a blue streak—here, here, and here—on the topic of "managing to outcomes." In these articles, I´ve
■ argued that all but the smallest nonprofits have a mission-critical need and responsibility to make collecting, analyzing, and using information a core management function;
■ shared my fear that many current efforts to collect and use information "major on minors"—that is, leaders get bogged down in the details of measurement and metrics while losing sight of what they´re trying to accomplish for those they serve;
■ highlighted a handful of nonprofit innovators who are showing what is possible when organizations create a culture of information-based introspection and performance-management systems that allow them to use and apply the information they need on an ongoing basis;
■ offered a framework and questions to guide nonprofits that are motivated to begin managing to outcomes to ensure that they are creating meaningful, measurable, sustainable benefit for those they serve.
In this, the fourth and final column in this series, I will focus on what the nonprofit community and those that serve it—including funders, universities, infrastructure organizations, and service providers—can do to nurture and support the profound culture change that managing to outcomes requires.
In brief, I believe there are two overarching actions that the nonprofit community must take to lift the sights and change the norms in our sector. First, we must demonstrate the desirability of outcomes-based management to increase demand and acceptance. We can do this by showing what´s possible; illustrating how managing to outcomes helps nonprofits do what they do better; and rewarding and highlighting successful adoption of outcomes-based management that leads to increased benefit for those served.
Second, we must enhance the feasibility of outcomes-based management. We can do this by providing financial incentives, strategic assistance to encourage leadership to engage, and the tactical help to make it easier for motivated nonprofits to invest the tremendous time and effort in shifting their culture to one that can rigorously manage to outcomes.
Looking for a Catalyst
To demonstrate desirability and enhance feasibility, we must first find leaders with the motivation and capacity to play the role of catalyst. Although this issue is at the very core of VPP´s investment-selection and investment-management processes, VPP and I can play but a limited role. Ideally, we need one or more catalysts with clout and financial resources that far exceed ours to take up the charge.
Fortunately, there are a number of different entities that could play this catalytic role. The obvious place to look is the largest private foundations, which have proven that they can be good at convening players across different sectors and experience bases. By no means should funders drive the agenda; if they do, nonprofits will get top-down mandates that might produce compliance but will not spark true culture change. But funders can get the right people in the room to define an initiative focused on bringing the innovative outcomes-focused management practices on the periphery of our sector into the core.
Another place to look is the White House Office of Social Innovation and Civic Participation. The White House might well see outcomes-based management as I have characterized it in this series of articles as a critical driver of social innovation and worthy of the White House´s time and bully pulpit. The White House has been looking for ways to broaden the president´s social innovation agenda beyond the two major funds it has created: the Social Innovation Fund (administered by the Corporation for National and Community Service) and the I3 Fund (administered by the Department of Education). It has tremendous potential to convene leaders from all three sectors of the economy (although, like most large foundations, it does not have deep relationships with conservative thought leaders).
Finally, I could see a mash-up of high-profile, cross-sector management experts and exemplary practitioners coming together to make a clarion call in support of nonprofits adopting and the sector supporting outcomes-based management. Imagine the impact that leaders such as former McKinsey Managing Director Rajat Gupta, Bridgespan Founder Tom Tierney, former Edna McConnell Clark Foundation President Michael Bailin, author/business consultant Jim Collins, and former Mayor of Indianapolis and current Deputy Mayor of New York City Steve Goldsmith could have. I admire all of these leaders (and hope they don´t mind me putting them on the spot!). Together, they would make a true Dream Team.
The Missionary Sell
Back when I was in the high-tech industry, we used the term "missionary sell" to describe the introduction of a new product or service that would require a change in process or culture, always extremely challenging. In these cases, we focused our initial efforts on finding those organizations and catalytic leaders that were already "believers" or strongly predisposed to the new concept—especially those who were ahead of us and from whom we could learn. We didn´t allow time and effort to be diluted by the "non-believers" or those needing to be won over in these early stages. Instead, we concentrated our resources on helping these pioneers be successful in their implementation. Then, as Geoffrey Moore conveyed so well in his 1991 book Crossing the Chasm, we used this beachhead of demonstrated value to reach out to the more traditional institutions to spread the word to larger markets for much broader acceptance.
Over the past century, the nonprofit world has produced some very good examples of managing to outcomes—from the Rockefeller Sanitary Commission´s role in the eradication of hookworm in the American South to ClimateWorks´s systematic efforts today to catalyze measurable reductions in carbon emissions. Unfortunately, such examples are outliers. I believe that outcomes-based management and performance-management systems for nonprofits are still at the "missionary" stage
Going broad-based would, in my view, be a mistake. Instead, I urge a relentless focus on ferreting out, supporting, and sharing the results of those early adopters who are demonstrating the feasibility and desirability of outcomes-based management. This cadre of successful nonprofits and their catalytic leadership can then provide an invaluable asset from which to build a broader movement of nonprofits that want to do good better.
Doing Good Better
If leaders like those above were to step forward, we could design an initiative—let´s call it Doing Good Better, to borrow an evocative (if overused) phrase—to put in place the building blocks for making outcomes-based management the norm in our sector. Our motivation should not be the "elegance" of outcome metrics and management systems. We would do this for one reason and one reason only: to create meaningful, measurable, sustainable benefit for those served! To kick off the brainstorm, here are some thoughts about potential elements of a plan.
1. Convene a good cross-section of top leaders. The first step for the catalyst(s) should be bringing together a great group of nonprofit, foundation, and private sector leaders, especially those at the leading/bleeding edge of what´s possible, to explore the possibilities. The group would need to be composed of those who "have been there, done that" or are clearly engaged and working actively to adopt outcomes-based management. This core group could be augmented by the leaders of smart infrastructure organizations focused on nonprofit effectiveness (e.g., Center for Effective Philanthropy), management consultants who have been working in this area (e.g., McKinsey & Company, Bridgespan, The Monitor Group, BCG, and others), as well as corporate executives who have successfully implemented performance-management systems with relevance for nonprofits. Everyone involved should be the real doers and contributors rather than those who are merely interested.
2. Gain clarity on goals. Once the group has the "right people on the bus," it would then have to define what the Doing Good Better Initiative is trying to accomplish and to what end. They should be just as clear and up-front as to what this is not about. In my view, it is not about funder effectiveness. It is not about summative or formative evaluation. It is about giving leaders the information they need to do their jobs and meet the needs of those they serve.
3. Identify the audience. Given that advancing the Doing Good Better Initiative would involve heavy doses of advocacy, it must be rigorous about specifying whom it wants to influence. It should begin by segmenting the nonprofit sector to identify characteristics of early-adopter, "believer" organizations most likely to be ripe and ready for the discipline of managing to outcomes. It would then want to identify the best channels to reach these target nonprofits, their boards, and funders. We need to seed the change agents, those catalytic personalities who can go out and infuse this thinking into their organizations and other organizations. We need to reach and engage executives and boards—and only then do we get into the mechanics and systems. Most efforts never address leadership and culture, and they materially limit what´s possible by not doing so.
4. Change the understanding of what´s possible. As I stated in my last column, once nonprofits and their key stakeholders get a glimpse at how the innovators at the periphery are using information to create greater impact for those they serve, they will have a hard time going back. There are many different ways to show nonprofits and funders what´s possible. The group could commission a high-quality video with viral potential (e.g., the finalists in Tactical Philanthropy´s Fantastic Video Contest) to show what´s possible when nonprofits gain the power of information and what this means for the people they serve. It could use this video as the centerpiece of a "road show" at conferences attended by many nonprofits in the target audience. It could help generate media attention for "positive outliers" in publications that reach the target audience (e.g., Harvard Business Review, Stanford Social Innovation Review, Fast Company, McKinsey Quarterly). It could create an annual award, perhaps with a relevant publication or university, modeled perhaps on the successful public-private National Information Infrastructure Awards of the 1990s.
5. Build knowledge. In tandem with efforts to highlight successes, the initiative should build and make accessible the knowledge base on managing to outcomes. McKinsey´s Social Sector Office has already gotten the ball rolling with an impressive repository it calls Learning for Social Impact. The site includes tools, best practices, lessons learned, profiles, interviews, landscape analyses, and historical perspectives on outcomes assessment. (Unfortunately, it does not include materials authored by folks outside of McKinsey.) The Doing Good Better initiative could build on this by offering open-source tools for unleashing the wisdom of crowds to build the knowledge base on managing to outcomes. It could also analyze the critical knowledge gaps, fund research to fill these gaps, and provide incentives to nonprofits to document their experiences implementing new approaches to outcomes-based management.
6. Develop common outcomes frameworks. The initiative should provide direct support for efforts to develop common frameworks in fields that best lend themselves to measurement and have enough "believers" that they could make real progress, such as early childhood development and community health. Foundations could easily create incentives that would bring forth early adopters in a particular field and then convene these early adopters to develop a common framework for their domain.
7. Provide education and insight. To change practices and norms among nonprofit leaders, education and training must be a key component of any plan. Doing Good Better would need to address the types of education that are relevant for the nonprofit executives it would seek to reach—including graduate education, executive education, and web-based distance learning. For example, the group might want to engage key academic centers in the US and abroad in building a curriculum for teaching managing to outcomes. It might want to help develop a multi-week symposium on managing to outcomes for sitting nonprofit leaders, with stipends and recognition for those who graduate. It could also leverage the above to build free online modules featuring top educators and practitioners for anyone who wants to learn on his or her own time.
8. Provide strategic and tactical help. The number one barrier to managing to outcomes is the dramatic cultural change it requires. But there is no reason an organization should have to take on this challenge alone. Over time, the sector will need to develop more consultants and foundation staff members with specialty knowledge who can help guide these major change efforts. In the meantime, it should not be difficult for the Doing Good Better Initiative to identify qualified consultants, increase transparency around their costs, enable clients to provide Amazon-like ratings of the value they add, and allow nonprofits to comparison shop more effectively than they do today. The initiative should foster peer "professional learning communities" for nonprofit leaders who are trying to influence their organizational cultures and establish systems for managing to outcomes. It could also consider creating outcomes-assistance centers, such as centers built around the remarkable Child Trends research on the outcomes that matter for children and youth.
9. Offer financial and other incentives. Few funders today provide the kind of general operating support that nonprofits need to advance the needed cultural change and develop the technology systems and human processes for managing to outcomes. That will have to change. There is no escaping the fact that funders will need to subsidize the hard work and outside expertise that´s required to move to managing to outcomes.
In its first portfolio of investments, VPP had direct investments of nearly $3 million and provided substantial strategic assistance to directly support the cultural change and development of outcome-management systems. VPP expects to invest even more with its second portfolio of nonprofit investment partners.
With support tailored to each organization´s needs and operational stage, VPP helps its nonprofit partners engage consultants with deep expertise in outcomes management; recruit experienced staff; work through their "theory of change;" develop an outcomes framework and the measures/indicators to assess progress; and build outcome-management systems and integrate them effectively into an organization. We stay focused on encouraging, nudging, and supporting leadership to embrace and act on this management-to-outcomes approach. And thanks to these leaders and the work of their boards and staffs, they have made great progress that is translating to better results for those they serve.
We have learned that it can take several years for organizations, even with the kind of intensive support VPP provides, to make the quantum jump from a place of little or anecdotal measurement to a place of rigorous outcomes-based management. Funders and others must be patient during these periods of culture and staff change and development. They should not expect instant answers or improvements.
Data Voracious
VPP will increase its efforts to support the leadership of the nonprofits in the VPP portfolios to build on the excellent progress they have made to date. In addition, we will devote time over the coming months to turn my musings on managing to outcomes into a monograph. The monograph will be enhanced significantly through contributions from practitioners and experts, including leaders of several VPP investment partners. These contributors will offer concrete, ground-level insights on what it really takes for a nonprofit to create a culture that supports managing to outcomes—the success factors, the pitfalls to avoid, the ways of building buy-in, and the tangible benefits. I hope the monograph will help nonprofit executives and boards explore how they can do more to ensure they´re doing the most good for those they serve.
And I will continue to plant a bug in the ear of potential Doing Good Better catalysts. Because if this initiative were to come to life, then "outcomes" could go from being the nonprofit world´s most anxiety-provoking topic to one of its most powerful forces.
"The minute our staff got a taste of data and saw how it could make jobs easier, they were voracious—more so than my former colleagues at GE," says Year Up National Capital Region´s Executive Director Tynesia Boyea Robinson. "They saw that data allowed them to make sure they were serving young people better."
A committed catalyst could help make Year Up´s experience the norm for nonprofit organizations and their staffs. That enormous cultural shift would mean the world to the millions of families for whom "outcomes" are not an abstraction but rather a living-wage job, quality childcare, a safe home, or a good school.
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