Time For Enterprise Thinking…and Talking
June 17, 2016
Have you ever heard someone say “I work for a scrappy non-profit; our budget is always tight, our computers are old, and I’m burned out”? This statement is a constant in our sector, and I loathe the thing.
“You mean,” I think, “you work for a poorly-run business.”
Somehow the term non-profit has become synonymous with slow, ancient and fiscally irresponsible. We’re doing ourselves an extreme disservice by not taking a more honest and entrepreneurial approach with our language. If we were able to untangle non-profit from poorly-run business we could actually get somewhere.
It’s not true that non-profits are by nature poorly-run. We’ve just come to believe that it’s okay to continue a poorly-run business if it’s a non-profit.
The entrepreneurial standards of non-profits have been set exceptionally low. We need to raise them to the same level as any other business if our sector is to thrive in the 20-teens and beyond.
Just because an entity has an attractive mission doesn’t mean it’s the best group to be doing the work.
If the typical for-profit enterprise had slow computers, burned-out staff and a consistently tight budget it wouldn’t last ten seconds on the market. Silicon Valley, Wall Street and The Cloud would gobble it up for a snack before sunrise. Yet because non-profits can leverage charity dollars, struggling organizations without a viable business plan limp along wasting valuable time, resources and market share.
Interestingly, we suffer more than we may realize from our name alone. What is inherently lost in the title non-profit is that we absolutely need to make a profit to survive, just like everyone else. The only difference? We don’t pay income tax. It’s surprising how many people, especially non-profit staff, don’t understand this.
Consider a recent statement by Ryan Shaening Pokrasso, Bay Area attorney, who says of social entrepreneurs: “By pursuing self-sustainable (i.e., revenue-generating) models, they challenge traditional thinking in the nonprofit world…”.
Clearly, our reputation of being able to capably run a business is seriously damaged. By calling ourselves non-profits we actually position ourselves outside the realm of capital success, rather than within it.
New businesses know they have to be extremely competitive to survive. They need a unique and clear value proposition, a revenue-positive business model, and an operational plan that includes the requisite staff and technology to get the job done quick.
The majority of non-profits lack a strong value proposition or a sustainable business model (sometimes even both), and as a result we’ve learned as a culture that non-profit work equals low compensation and high burnout, which only contributes further to the deterioration of the sector.
It doesn’t have to be this way. If we managed non-profits with an entrepreneurial mindset, we could change the world in five easy steps and go for a cappuccino by noon:
- Understand and articulate unique value proposition. If you don’t have one, get one. If you can’t get one, close up shop.
- Establish revenue-positive business model. As long as we’re operating under capitalism you need to make money, not lose it. If you can’t, close up shop.
- Attract key people. Fantastic people want to work for fantastic entities regardless of tax status. If you show you can grow (unique value proposition + revenue-positive business model = growth), extraordinary people will want a piece of the pie.
- Repeat. Those people will make your business better, which will attract more incredible people, who will make your business better.
- Change the world. When your non-profit grows, so does its impact.
The first and arguably most important way to get non-profits thinking entrepreneurially is to modernize our lingo. How we talk about ourselves can significantly impact how we run our organizations.
Instead of scrappy non-profit, let’s start saying poorly-run business.
If you’re not spending less than you earn, you might as well quit your day job. With this type of public relations statement on the line, all of a sudden business model challenges will rapidly jump to the top of the priority list.
Instead of overhead, let’s start saying R&D (research and development). R&D is exciting and innovative.
Successful companies budget a significant portion of their annual earnings for development of new products and services. Overhead is a burden nobody wants to fund and everybody wants to ignore, even though it is critical in achieving success. Luckily, initiatives like the Real Cost Project and Pay-What-It-Takes Philanthropy are starting to address overhead’s bad rep. We could really fling these initiatives into the future fast with a new name like R&D.
Instead of underpaid, let’s say my organization doesn’t currently practice fair pay.
Similar to point #1 above, being honest will publicize the truth and make it more uncomfortable. As long as companies earn money, they choose how to spend it. Advancement in the area of point #2 above will also help educate the sector about why spending money on salaries is vital to impact work. Tech companies realize people are power; why can’t we?
Finally, instead of non-profit, let’s call ourselves public-profit.
The corollary here would be private-profit instead of for-profit. We could probably shift the entire sector toward enterprise-thinking just by this change alone.
The term rhetoric is often used in American politics, and often delivered as an accusation. People are generally suspicious of rhetoric and I can understand why. Words are powerful. Americans have been refining the art of messaging since at least the 1800’s when the first political campaigns were thought to have been produced, though probably even earlier than that. We’re really good at it now.
So for all the suspicious messaging out there — vote for me, buy this snake oil, it’s imperative that we drop bombs on other people — let’s consider using those same tactics to advance the critical work of the public-profit sector: a sector that generates $208 billion in revenue annually in California alone and $37 billion in taxes annually at federal, state and local levels; a sector that is committed to changing the world.
As we’ve seen time and time again throughout history, the pen can be mightier than the sword.
I’d love to hear your thoughts!
Originally published at cfo.svbtle.com.