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January 26, 2008

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Dave

Your post made me think of Ashoka's model of investing in the entrepreneur and also of the success of Kiva, DonorsChoose, and Men at the Side of the Road, as they've been able to forge that human connection.

phil

Dave, welcome and thank you for your thoughtful comment. Yes, backing gifted people seems the common denominator of many successful programs in not only philanthropy but in investing and business as well. The MacArthur grants might be another example. Rhodes Scholarships. I note that Bill Drayton founder of Ashokah was a MacArthur grant winner.

Gerry

The principle should be based on the fact that high quality leaders are capable of directing the management, accounting and deployment of a lot of resources. Someone like Drayton automatically uses the resources of an unrestricted grant to build more for all of us. They work to Grow Ours rather than to Get Mine. It doesn't take a lot of fancy metrics to tell the difference.

phil

Managing projects leads to paper work. That is one of the key points that Bill Somerville makes. If grantmakers want to sit at a desk, like managers or investors, they will demand plans, projects, reports, budgets, metrics, results, and numbers they can twiddle with on a spreadsheet. It puts them in their own comfort zone, as managers. But it imposes on others a large cost in faking up the plans, reports, etc to meet with the funders own need to appear businesslike. Every hour spent diddling with the paper work is one hour less spent delivering programs. To design projects with neat paperwork in mind is almost always to design trivial projects that can be neatly measured and managed. What Bill is suggesting, as simple as it is, is subversive. He goes out into the community asking for names of people who are making things happen. He checks around about them. He gets to know them. Then he may just write a check, based on a well-embedded person's gut call: "You want to help these kids, buy them a jukebox." And Bill will do it. Sounds crazy, but the juke box may keep the kids off the streets, and from that assembly hall in the evenings, a pastor can introduce the kids to other things. Bill has the guts and vision and the people sense to put scare dollars out in risky bets for real change. For us to create a whole class of white collar apparatchiks, as gatekeepers to measly grants, measuring and managing piddling projects seems a certain recipe for programs that will change little or nothing, rather they will tie Gulliver of Social Change down with tiny threads. If a guy like Holden went down to the loading docks and tossed crates of vegetables on a truck for a nonprofit he might learn more about the nonprofit sector than he will ever learn extracting reports and wonking out over a spreadsheet. (Bill's book starts with a scene like the one above, and Bill is utterly energized as the tosses a crate of donated onions onto the truck for the soup kitchen and mentally calculates how many bowls it will make.)

I can see recommending Bill's book to the kind of givers I might meet through our main street financial advisors. Bill Schambra is making some of the same points that Bill Somerville is - Push away from tha desk, and go looking face to face for active agents of change, and get behind them, rather than lording it over them, or breaking them to a bureaucratic managerial model. Settle for small changes you can see with your own eyes. Build on the successes and trust the vetted nonprofit leader as you would a partner, rather than treating them as bank treats a borrower, or as a manager treats a subordinate.

Gerry

Managing projects leads to paper work.

Maybe. I was searching for other words as I wrote that. It does seem to me that to be a leader implies at least organizing and leading one or more groups of people. I don't want to appose what you wrote because I agree with it. The point is that for the high quality leader that you want to invest in, you won't need a lot of oversight and controls. Give a Bill Drayton an unrestricted grant, and he can decide whether to use it to help found or expand Ashoka or for financial security while working on a speculative project or book. You don't need to manage people like this, you need to free them up so they can do the work. The managing I was referring to was more their management of the projects they choose to pursue.

Gerry

Phil, I also think you should reverse some of the rhetoric about business language and models. I'm sure you know that best practices in management are a lot closer to what you are arguing for here than the straw man stand-in for MBA logic.

Over reliance on metrics is a sign of a poorly performing organization whether it is for profit or non-profit. Lots of organization started drug testing, but isn't it a management failure if you can't tell you have alcoholic and substance dependent employees without knowing or at least suspecting based on performance and other clues?

It's bad MBA thinking and practice just as much as it is bad for philanthropic enterprises.

phil

Gerry, good points. JJ would be a key witness in defense of good business practices in every sector. Developing talent, encouraging people to lead, minimizing administrivia, measuring what matters, defering to those closes to the issue at hand, and looking for long term results are all part of good business practice, as you say.

Antoine Möeller

If one lumped all sectors together (ick) what percentage of the total actors in said lump would be "good actors" at present?

Anyone have a sense, or better?

phil

Or maybe, what actors could do better, would do better, if properly cultivated?

Antoine Möeller

But too, is it fair to say there has been a "down" trend, in our withered old life times? And if so, has it yet bottomed? Reversed?

I have the schoolboy's sense of this, when I fling my poo at starlings. They care not.

The world is a business, Mr. Beale. It has been since man crawled out of the slime.

phil

When people go from saying, "Humans are selfish, alas!" to saying, "Markets thrive on selfishness like mine, hurrah!" we have defined deviancy down and made a virtue of our vices. Good for the GNP, maybe. Bad for human flourishing, certainly?

Antoine Möeller

Ah, how deeply must we delve. They say a most reliable pattern is the double bottom. Perhaps the double bottom line as well?

phil

The double bottom line is one number or it is not a bottom line. How you add profit to virtue and get a number I have never understood.

Gerry

You see, only the most unwise today think that profit is just a number. Since economics has no stable reference of value, profit in a real sense is just as non-numerical as virtue.

Antoine Möeller

Yikes. Are we unmoored?

Gerry

Well yes, how do you expect to get anywhere without pulling up the anchor?

I good ship is much safer in the open ocean than cowering near the shore. And a double bottom didn't to the Titanic much good either.

phil

So if the bottom line is not a number, could it be a soundbite?

Gerry

I doubt it. What do you think?

So rather than thinking of an enterprise or organization, start smaller. What is the bottom line of a book? It could be the conclusions, which are rarely numbers. If there are numbers in the book, the conclusion sums them up not by adding or weighted averages but in terms of ideas, concepts, or even a call to action. The soundbite is not more than a stand-in, a sign of sorts, but not typically a very deep one.

phil

But businesses are run by the numbers. Metrics, budgets, benchmarks, financial results, profits, stock price. Plan A gets the numbers up 5%m. Plan B up 17%. Plan B has more pollution, more outsourcing, lower benefits, more corners cut. Your bonus and stock options are tied to the numbers. Do you pick plan A because it is more virtuous? Will the owners of the business keep you if you do?

Antoine Möeller

O God of Business, do not forsake us, I believe we are at sea, our sextant reads backs, thighs and wings, afoul, we pray to Thee.

phil

Go for Plan B. Of the extra 12% return put .5 % into a cancer clinic downstream from your polluting factory, 1.5% into PR for your role as Good Corporate Citizen, and 1% split between lobbying and a think tank. Now you are a double bottom line social venture. And you still are 9% up over Plan A. Through the lift from the marketing, and the savings from the rollbacks in pollution regulations that you get in return for the lobbying, in year two the numbers are up 19%, net of the charitable, pr, and lobbying expenses above. That proves virtue pays! Doing well by doing good.

Gerry

Any good manager knows that the numbers only tell you what happened. Running a business by the numbers is like trying to stay on the road by looking in the rear-view mirror. Metrics are only used in hindsight, they are not very useful for planning. Planning numbers are estimates and they can only be so good. If your plan doesn't have a lot of slack in it by the numbers, it probably won't work, unless you have a really exceptional team, and you don't get that by the numbers.

You can go for plan B, but you run the risk that your moral lack will become obvious to the community and you will lose market share. You don't think so? Ask the Walmart execs what they think? When all that political money that tilts the playing field starts to feel the law of diminishing returns it is too late to change strategies.

The only way a short term plan works out is if you kill the opponent. At some point the many will push back, and you will still be left with nothing.

phil

We seem to lurch from bubble to bubble, from dot.com to subprime, from war to war, from panic to panic. Meanwhile, you ride the winners and cull the losers. The luxury condos built by Halliburton, the Freedom Towers, rise inside the Green Zone in Iraq, as the losers live amidst the rubble outside the perimeter. Halliburton stock is way up. Freedom is spreading across the globe.

Gerry

If the numbers aren't first, then you might ask where they should be in the process. One place is in measuring results, but even here the numbers are not first, first is your models about how the organization or project should work, and maybe a hypothesis or two about how to move forward.

This is more like how numbers show up in science as well. Mathematics is used to make the models (typically, if the field is advanced enough for mathematical analysis). Then the models are used to design experiments that will make measurements. Then you crunch the numbers so as to confirm or refute the hypothesis, or if you are now confident in the models you can start a process of continuous improvement (by the numbers).

All of this applies the same way to profit makers and non-profits as well. If you are crunching numbers based on a flawed theory, you aren't going to learn much. If you hypothesis fails or your model proves inadequate, the numbers don't actually mean very much but they tell you something just the same. Namely that the model didn't work, not that the experiment was a failure. The experiment fails only if you cannot tell what happened based on the measurements, and event then it might help to design the next steps. Knowing what not to do and what doesn't work is still knowledge worth having.

Gerry

We seem to lurch from bubble to bubble, from dot.com to subprime, from war to war, from panic to panic.

Yes, and that is an indictment of current theory (primarily of markets, that of market fundamentalism). The instability is a systems effect resulting from a misclassification of the economy as an static equalibrium system, when it is in dynamic equalibrium, and it in fact a chaotic system.

Note that this sort of classification is not "by the numbers", but is a qualitative assessment of the situation.

O Lucky Man

Look, what do you think wives are for? They are sufficiently non-numeric for me. Input. Output. Electricity.

But bidnis is bidnis. And good wives know when to knuckle under. They intuit it.

Soft is splattered by hard, and soft likes it. Don't be fooled.

Gerry

Very nice OLM. If we leave that one out there long enough, will it attract flies?

phil

I take it OLM that you are illustrating what not to say, think or act upon.

O Lucky Man

The half life of anything is minuscule, G. I can hardly remember writing it.

Maybe I can blame this. Yesterday I was on the throne and, OLM, no TP. Too late, work in progress. Well, from my old days of flat squatting I know that a square of newsprint, dampened, does the trick just fine - even plumbers approve.

I had an old paper within reach so I tears me a square and before dampening I unrumple it. It's a frag from a public forum the local publishes every week. And it's ripped, irregular like, so's you can read a rented sample of public's opinion, locked up together there, across columns, in a wrinkled little square.

The topic for the week was Michael Richards and Mel Gibson and the outbursts from whenever that was. Locally, some white girls had been beaten by a mixed group of black kids in a white neighborhood on Halloween. That amped it up a bit.

My neighbors our neighbors your neighbors theirs. Well acquitted, with conviction. Conclusion?

Beware the false bottom. Gravity flush.

Gerry

While we remain wary of every politico until they prove their metal, I cannot remain unmoved by a leader who tells us Yes">http://www.americablog.com/">Yes we can!

Whether he is bought by his funders or a true leader of the people, at least he speaks like the latter, and gives himself admirable goals. Such rhetoric can and will raise a public from its slumber, and once they are awakened their will cannot be denied if the leader sells out.

Meanwhile Lessig is on a new kick, corruption. He may also be ready to help redesign the Constitution to be more robust against corruption. I wonder if I can get him as a virtual faculty member.

O Lucky Man

[dawn]

The Parthenon has no right angles. Every column is curved minutely to create the illusion of perfection. Every piece unique.

Why? Because the architects discovered how men see.

Imagine a world where the goal was not the illusion but the reality. Imperfection in pursuit of excellence was embraced. "Bowed" columns and "sagging" beams inspired us to our humanity, not the illusion of immortal plumb.

What then?

[dusk]

Does anything die anymore? Or must we audaciously hope to defeat that, too?

Baby boomers have never died before. Therefore, it has never happened. Ego sum via.

[dawndusk]

Hope is a weakness. It can be. It may be. It will be... turned on you by your tormentors, the bad actors. I will sell into your rally, force you back down, test your conviction as your profit turns into a loss. Can I get you to puke it up as we break through to a lower low? I'll bet I can, and so will others. Be prepared.

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