Forty years after starting my Goodwill career, I attempted to summarize on one chart the essence of what I have learned about the ingredients necessary to sustain organizational success over a long period of time. Here’s a brief explanation of what appears at the end of this post.
- Every organization exists in a larger context and is affected by many external factors, including changes in the economy, demographics, technology, competition, laws or regulations, the political climate, and external shocks, which can be natural or man-made disasters. Organizations must be able to adapt quickly and effectively to such changes or risk becoming ineffective, irrelevant, or extinct.
- It can be useful to keep in mind that organizations change for three reasons: They see a need or an opportunity; they have a sense or fear of something that might happen; or they change in response to something that’s already happened.
- Organizational leadership in the not-for-profit sector is a function of three components: governance, management, and aspirations (or vision). The organization’s leaders should begin with the end in mind, i.e. by asking how they will measure success. They should translate the aspirations into concrete, measurable goals and align everything toward the goals, including organizational structure, business models, products and services, resource development and allocation, recruitment and hiring, training and development, performance reporting, recognition and reward systems, policies and practices, internal and external communication, and organizational culture. The leaders should be aware that most organizations are perfectly aligned for the results they are getting, and if any major factor is significantly out of alignment, it will be nearly impossible for the organization to excel.
- The leaders must also recognize that none of the above is static. Everything is subject to change as new opportunities or challenges arise and as the external environment changes.
- Success is a function of three elements: (1) impact, which is a function of mission-related results, (2) sustainability, which is a function of financial strength, and (3) adaptability, which is a function of the organization’s culture. An organization can be successful for a time with just the first two, but it will cease being so if its culture does not enable it to adapt effectively as the world in which it operates changes.
- A good overall objective for a not-for-profit organization is to maximize mission-related impact while maintaining a financial position that enhances long term viability.
- The leaders of a successful organization must constantly be aware that sustained success can result in succumbing to the demons of inertia, complacency, myopia, or arrogance. They must remind themselves of the old proverb, “Whom the gods would destroy they give forty years of success.” Today, though, it doesn’t take anywhere near forty years for any of those demons to cause an organization to be destroyed by outside forces or to self-destruct.
- In the final analysis, the most important factor determining the success or failure of an organization is the quality of its leadership or lack thereof. Successful organizations have leadership that:
- understands its context
- knows what it wants to accomplish
- aligns everything toward that end
- is never content with the status quo
- and continues to learn, adapt, and evolve
This is one model of the ingredients necessary for sustained organizational success. But it’s good to keep in mind George E. P. Box’s admonition, “All models are wrong. Some models are useful.”