Fleas can jump many times their own height, but not elephants.
Large organizations cannot be versatile. A large organization is effective through its mass rather than through its agility. Mass enables the organization to put to work a great many more kinds of knowledge and skill than could possibly be combined in any one person or small group. But mass is also a limitation. An organization, no matter what it would like to do, can only do a small number of tasks at any one time. This is not something that better organization or “effective communications” can cure. The law of organization is concentration.
Yet modern organization must be capable of change. Indeed it must be capable of initiating change, that is innovation. It must be able to move scarce and expensive resources of knowledge from areas of low productivity and nonresults to opportunities for achievement and contribution. This, however, requires the ability to stop doing what wastes resources.
Membership on this board is not power; it is responsibility.
To be effective, a nonprofit needs a strong board, but a board that does the board’s work. The board not only helps think through the institution’s mission, it is the guardian of that mission and makes sure the organization lives up to its basic mission. The board has the responsibility of making sure the nonprofit has competent management—and the right management. The board’s role is to appraise the performance of the organization. The board is also the premier fund-raising organ of a nonprofit organization.
Over the door to the nonprofit’s boardroom there should be an inscription in big letters that says: MEMBERSHIP ON THIS BOARD IS NOT POWER; IT IS RESPONSIBILITY. Board membership means responsibility not just to the organization but to the board itself, to, the staff, and to the institution’s mission. A common problem is the badly split board. Every time an issue comes up, the board members fight out their basic policy rift. This is much more likely in nonprofit institutions precisely because the mission is, and should be, so important. The role of the board then becomes both more important and more controversial. At that point, teamwork between the chairperson and chief executive officer becomes absolutely vital.
The nonprofit institution needs a fund-development strategy. The source of its money is probably the greatest single difference between the nonprofit sector and business and government. A business raises money by selling to its customers; the government taxes. The nonprofit institution has to raise money from donors. It raises money, or at least a large portion of it—from people who want to participate in the cause but who are not beneficiaries.
A nonprofit institution that becomes a prisoner of money-raising is in serious trouble and in a serious identity crisis. The purpose of a strategy for raising money is precisely to enable the nonprofit institution to carry out its mission without subordinating that mission to fund-raising. This is why nonprofit people have now changed the term they use from “fund raising” to “fund development.” Fund development is creating a constituency that supports the organization because it deserves it. It means developing a membership that participates through giving.
“It’s much easier to sell the Brooklyn Bridge than to give it away.”
The nonprofit institution is not merely delivering a service. It wants the end user to be not a user but a doer. It uses a service to bring about a change in human beings. It attempts to become a part of the recipient rather than merely a supplier.
Nonprofit institutions used to think they didn’t need marketing. But, as a famous old saying by a great nineteenth-century con man has it, “It’s much easier to sell the Brooklyn Bridge than to give it away.” Nobody trusts you if you offer something for free. You need to market even the most beneficial service. But the marketing you do in the nonprofit sector is quite different from selling. It’s more a matter of looking at your service from the recipient’s point of view. You have to know what to sell, to whom to sell, and when to sell.
In dealing with constituencies outside the primary task, managers have to think politically.
When it comes to the performance of the primary task of an institution—whether economic goods and services in the case of the business, health care in that of a hospital, or scholarship and higher education in that of the university—the rule is to optimize. There, managers have to base their decisions on what is right rather than on what is acceptable. But in dealing with the constituencies outside and beyond this narrow definition of the primary task, managers have to think politically—in terms of the minimum needed to placate and appease and keep quiet constituent groups that otherwise might use their power of veto. Managers cannot be politicians. They cannot confine themselves to “satisficing” decisions. But they also cannot be concerned only with optimization in the central area of performance of their institution. They have to balance both approaches in one continuous decision-making progress. The corporation is an economic institution. But it is also a political institution.
Managers have to think through what the constituencies are that can effectively veto and block decisions, and what their minimum expectations and needs should be.
Knowledge workers are, to coin a term, “uniclass.”
The new majority, the “knowledge worker,” does not fit any interest-group definition. Knowledge workers are neither farmers nor labor nor business; they are employees of organizations. Yet they are not “proletarians” and do not feel “exploited” as a class. Collectively, they are “capitalists” through their pension funds. Many of them are themselves bosses and have “subordinates.” Yet they also have a boss themselves. They are not middle-class, either. They are, to coin a term, “uniclass”—though some of them make more money than others. It makes absolutely no difference to their social position whether they work for a business, a hospital, or a university. Knowledge workers who move from accounting work in a business to accounting work in a hospital are not changing social or economic position. They are changing a job.
This status implies no specific economic or social culture. So far there is no political concept, no political integration that fits them.
To become again a dynamic, effective, legitimate organ, the labor union will have to transform itself.
The true strength of the labor movement in developed countries has been moral: its claim to be the political conscience of a modern secular society.
Management—no matter who “owns” and no matter whether the institution is a business, a government agency, or a hospital—has to have considerable power and authority—power and authority grounded in the needs of the enterprise and based on competence. And power, as the drafters of the American Constitution knew, needs to be limited by countervailing power. Modern society, a society of organizations each requiring strong management, needs an organ such as the labor union. In the last few years events have amply proved this. But to become again a dynamic, effective, legitimate organ, the labor union will have to transform itself drastically. Otherwise the union will become irrelevant.
Environmental protection might well be the most productive purpose of foreign aid.
We need strong, effective governments in the international sphere so that we can make the sacrifices of sovereignty needed to give us working supranational institutions for the world society and world economy.
Protection of the environment today requires international ecological laws. We might “quarantine” polluters and forbid shipment in international commerce of goods produced under conditions that seriously pollute or damage the human habitat—for example, by polluting the oceans, by raising the temperature of the atmosphere, or by depleting its ozone. This will be decried as “interference with sovereign nations”—and so it is. It will probably require that the developed rich countries compensate the developing poor ones for the high costs of environmental protection, such as sewage treatment plants. In fact, environmental protection might well be the most productive purpose of foreign aid and far more successful than development aid.
