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Contributors
'ord
Television, Inc.,
The service or non-profit sector of our soci- fit institutions, Lead-
r oundation for Non-
ety 1s growing rapidly (with, more than
8 million employees and more than 80 mil-
lion volunteers), creating a major need
for guidelines and expert advice on how to :-President of St. Jo-
Preface
run hospitals, churches, universities, health ,pitals headquartered
and community services, charitable and ser- Nursing Productivity
vice groups, and foundations. Peter Drucker
answers this need as he
presents clearly
and directly the tasks, responsibilities, Forty years ago, when I first began to work with non-profit institu-
and practices that must be followed to tions, they were generally seen as marginal to an American society
dominated by government and big business respectively. In fact,
manage these organizations effectively. He
gives examples and explanations on mis- the non-profits themselves by and large shared this View. We then
sion, leadership, resources, marketing, believed that government could and should discharge all major
goals, people development, decision social tasks, and that the role of the non-profits, if any, was to
making, and much more. Included are inter- supplement governmental programs or to add special flourishes to
them.
views‘with nine experts that address key Today, we know better. Today, we know that the non-profit
issues 1n the non-profit sector.
“Any institutions are central to American society and are indeed its most
book by Drucker is rewarding and it is im-
distinguishing feature.
possible to read the man without learning a We now know that the ability of government to perform social
lot....Drucker’s ideas continue to display a force
and resonance that leave him tasks is very limited indeed. But we also know that the non—profits
pretty much in a discharge a much bigger job than taking care of speciiic needs.
class by himself.” Fortune
With every second American adult serving as a volunteer in the
non-profit sector and spending at least three hours a week in
non-profit work, the non-profits are America’s largest “employer.”
Contents But they also exemplify and fullill the fundamental American
PART ONE: The Mission Comes First: and commitment to responsible citizenship in the community. The
your non-profit sector still represents about the same proportion of
role as a leader
1. The Commitment America’s gross national product 2 to 3 percent as it did forty
2. Leadership Is a Foul-Weather
Job years ago. But its meaning has changed profoundly. We now real-
3. Setting New Goals—Interview with ize that it is central to the quality of life in America, central to
Frances Hesselbein
4. What the Leader Owes—Interview with citizenship, and indeed carries the values of American society and
Max De Pree of the American tradition.
5. Summary: The Action Implications Forty years ago no one talked of “non-profit organizations” or

X111
(continued on back flap)
1190 L
——

xv
x1v Preface Preface
“bottom line.” They know that they need to learn how to
of a “non—profit sector.” Hospitals saw themselves as hospitals tional
overwhelmed by it. They
churches as churches, Boy Scouts and Girl Scouts as Scouts aml use management as their tool lest they be
“non-profit,” for know they need management so that they can concentrate on their
so on. Since then, we have come to use the term “management boom” going on among
all these institutions. It is a negative term and tells us only what mission. Indeed, there is a
these Institutions are not. But at least it shows that we have come the non-profit institutions, large and small.
institutions to
to realize that all these institutions, whatever their specific con- Yet little that is so far available to the non—profit
has been specifi-
cerns, have something in common. help them with their leadership and management for the
developed
And we now begin to realize what that “something” is. It is not cally designed for them. Most of it was originally distinct
to the
that these institutions are “non—profit,” that is, that they are not needs of business. Little of it pays any attention
specific central needs:
bus1nesses. It is also not that they are “non-governmental.” It is characteristics of the non-prohts or to their
To their mission, which distinguishes them so sharply from busi-
that they do something very different from either business or “results” in non-profit work; to
ness and government; to what are
government. Business supplies, either goods or services. Govern- services and obtain the
ment controls. A business has discharged its task when the cus- the strategies required to market their
challenge of introducing
tomer buys the product, pays for it, and is satished with it. Govern- money they need to do their job; or to the
that depend on volunteers
ment has discharged its function when its policies are effective. The innovation and change in institutions
less do the available materi-
“non-profit” institution neither supplies
goods or services nor con- and therefore cannot command. Even
organizational realities of
trols. Its “product” is neither a pair of shoes nor an effective als focus on the specific human and
role that the board
Its product is a changed human being. The non-profit non-profit institutions; on the very different
regulation. institution; on the need to attract volun-
1nst1tut1ons are human-change agents. Their “product” is a cured plays in the non-profit
them for performance; on
teers, to develop them, and to manage
<n‘m !‘{t\an\ patient, a child that learns, a young man or woman grown into a on fund—raising
self-respecting adult; a changed human life altogether. relationships with a diversity of constituencies;
matter) on the problem
and fund development; or (a very different
.— (I,

igag—yao Forty years ago, “management” was a very bad word in non- in non—profits precisely
“business” to them, and the one of individual burnout, which is so acute
profit organizations. It meant to them tends to be so intense.
thlng they were not was a business. Indeed, most of them then because the individual commitment
non-profits for materials
that they did not need anything that might be called There is thus a real need among the
their experience and focused
management.” After all, they did not have a “bottom line.”
b‘elleved that are specifically developed out of
this need that led a friend
For most Americans, the word “management” still means busi- on their realities and concerns. It was
a highly success-
Indeed, newspaper or television reporters who of mine, Robert Buford of Tyler, Texas—himself
Network, which works
ness management.
1nterv1ew me are always amazed to learn that I am working with ful business builder to found Leadership
institutions, and espe-
non-profit institutions. “What can you do for them?” they ask me on leadership and management in non—profit
Protestant and Catholic,
“Help them with fund-raising?” And when I answer “No we cially in the large pastoral churches, both
PA] in the last twenty years.
work together on their mission, their leadership, their marfage- that have grown so rapidly in this country
rol
I have been privileged to work with Bob Buford from the begin-
ment,” the reporter usually says, “But that’s business manage— of this experience that
ment, isn’t it?” ning on this important task and it was out
what emerged first was
But the “non—profit” institutions themselves know that they the idea for this book emerged. Or rather,
by me, directed by
need management all the more because they do not have a conven- a project for a set of audio cassettes designed
,1

xv1 Preface Preface xvu

me, and largely spoken by me on Leadership and Management in The first is to convert donors into contributors. In total
the Non-Front Institutions (“The Non-Profit Drucker"). amounts, the non-prolit organizations in this country collect many
We chose audio cassettes as our first vehicle for two reasons. times what they did forty years ago when I iirst worked with them.
First, versatility; they can be listened to in one’s car driving to But it is still the same share of the gross national product (2—3
work, in one’s own home, or at a meeting. But also we thought it
percent), and I consider it a national disgrace, indeed a real failure,
important to bring to the non-proiit audience the experience and that the aflluent, well-educated young people give proportionately
thinking of distinguished people who have built and led important less than their so much poorer blue-collar parents used to give. If
non-profit institutions, both large and small. And this is better the health of a sector in the economy is judged by its share of the
done by the spoken word than by a printed text. Accordingly, we GNP, the non-profits do not look healthy at all. The share of GNP
produced, in the spring of 1988, a set of twenty-hve one-hour audio that goes to leisure has more than doubled in the last forty years;
cassettes. They are being used successfully across the spectrum of the share that goes to medical care has gone up from 2 percent of
non-profit institutions, especially to train new stalf people, new the GNP to 11 percent; the share that goes to education, especially
board members, and new volunteers. to colleges and universities, has tripled. Yet the share that is being
From the beginning, we also thought of a book that would
given by the American people to the non-profit, human—change
address itself to the non-profit audience, and a good many of the agents has not increased at all. We know that we can no longer
users of the “Non-Profit Drucker" have urged us to make available hope to get money from “donors”; they have to become
“contribu-
the same material in book form. “We want to read you,” these tors.” This I consider to be the first task ahead for non-profit
cassette users told us, “but in such a way as also to hear the person institutions.
and especially you, Peter Drucker, as well as the people you inter- It is much more than just getting extra money to do vital work.
viewed on these tapes.” Giving is necessary above all so that the non-profits can discharge
the one mission they all have in common: to satisfy the need of the
This book starts out with the realization that the non-profit institu- American people for self-realization, for living out our ideals, our
tion has been America’s resounding success in the last forty beliefs, our best opinion of ourselves. To make contributors out of
years.
In many ways it is the “growth industry” of America, whether we donors means that the American people can see what they want
talk of health-care institutions like the American Heart Associa- to see or should want to see when each of us looks at himself
tion or the American Cancer Society which have given leadership or herself in the mirror in the morning: someone who as a citizen
in research on major diseases and in their prevention and treat- takes responsibility. Someone who as a neighbor cares.
ment; of community services such as the Girl Scouts of the U.S.A.
and the Boy Scouts of the U.S.A. which, respectively, are the Then there is the second major challenge for the non-prolits: to
world’s largest women’s and men’s organizations; of the fast-
give community and common purpose. Forty years ago, most
growing pastoral churches; of the hospital; or of the many other Americans already no longer lived in small towns, but they had
non-profit institutions that have emerged as the center of effective still grown up in one. They had grown up in a local community.
social action in a rapidly changing and turbulent America. The It was a compulsory community and could be quite stilling. Still,
non-prolit sector has become America’s “Civil Society.” it was a community.
Today, however, the non-profits face very big and different chal- Today, the gre'at majority of Americans live in big cities and
lenges. their suburbs. They have moved away from their moorings, but
xviii
Preface Preface
they still need a community. And xix
it is working as unpaid staif for
a non-proiit institution that field. Each part then concludes with a short, action-focused sum-
gives people a sense of community,
gives purpose, gives direction‘whether it is mary.
work with the local
Girl Scout troop, as a volunteer in
the hospital, or as the leader
of a Bible circle in the local church.
Again and again when I talk
to volunteers in non-profits, I ask, “Why I owe a heavy debt to many people. First, I wish to express my
are you willing to give thanks to the contributors, the non-profit leaders who so gener-
all this time when you are already
working hard in your
And again and again I paid job?” ously gave of their experience and thereby made this book possible.
get the same answer, “Because here I know Their achievement in their own institutions shows all of us what
what I am doing. Here I contribute.
Here I am a member of a can be done and how it should be done.
community.”
The non-profits are the American Then I owe more than I can express in words to my friend
community. They increas- Robert Buford, who throughout this entire project has
ingly give the individual the ability stead-
to perform and to achieve. been
fast in his support, in his advice, in his commitment: His
Precisely because volunteers do example,
not have the satisfaction of a that of a successful business leader who is dedicating more and
paycheck, they have to get more satisfaction out
of their contribu- more of his great competence, his time, andhis to leader-
tion. They have to be managed
as unpaid staff. But most non- ship in the non-profit, human-change institution, money
glves guldance to
profits still have to learn how to do this. And I all of us.
hope to show them
how not by preaching, but by . . .
giving successful examples. Finally, this book owes a great deal to three editors: to Philip
Henry, the producer and editor of the audio tapes; to my'friend
and editor at HarperCollins, Cass Canfield, Jr., who skillfully
This book consists of five
parts: designed a structure that transforms the spoken into the
I. THE MISSION COMES FIRST word and yet maintains the immediacy of oral communication; written
—and your role as and to another old friend, Marion Buhagiar, who, as so often in
a leader
II. FROM MISSION TO PERFORMANCE the past, edited my text with respect both for the integrity of the
effective strategies for marketing, work itself and for the integrity of the English language.
innovation, and To all of them, my warmest thanks.
fund development
III. MANAGING FOR PERFORMANCE
Claremont, California
how to denne it; how to measure July 4, 1990
it
IV. PEOPLE AND RELATIONSHIPS
your staff, your board, your volunteers,
community your
V. DEVELOPING YOURSELF
—as a
person, as an executive, as a leader
In each part I tirst address the topic.
This is then followed by one
or two interviews with a distinguished
performer in the non-profit
PART ONE

The Mission
COmes First
and your rale as a leader

1. The Commitment
2. Leadership Is a Foul-Weather Job
3. Setting New Goals Interview with Frances
Hesselbein
. What the Leader Owes Interview with Max De
Pree
. Summary: The Action Implications
The COmmitment

in
The non-proflt organization exists to bring about a change
to talk about is what
individuals and in society. The iirst thing
define
missions work and what missions don’t work, and how to
mission
the mission. For the ultimate test is not the beauty of the
statement. The ultimate test is right action.
The most common question asked me by non-profit executives
assume
is: What are the qualities of a leader? The question seems to
But
that leadership is something you can learn in a charm school.
an end.
it also assumes that leadership by itself is enough, that it’s
leader who basically focuses on
And that’s misleadership. The
himself or herself is going to mislead. The three most charismatic
race
leaders in this century inflicted more suffering on the human
What
than almost any trio in history: Hitler, Stalin, and Mao.
What matters is the leader’s
matters is not the leader’s charisma.
through
mission. Therefore, the first job of the leader is to think
and define the mission of the institution.

SETTING CONCRETE ACTION GOALS

Here is a simple and mundane example the mission statement

“it’s our mission to give assurance
of a hospital emergency room:
the
to the alliicted.” That’s simple and clear and direct. Or take
into
mission of the Girl Scouts of the U.S.A.: to help girls grow
women. There is
proud, self-confident, and self-respecting young mission
an Episcopal church on the East Coast which defines its

3
4 THE MISSION COMES FIRST
The Commitment 5
as making Jesus the head of this church and its chief executive
ohicer. Or the mission of the Salvation Army, which is to make We worked it out, but it sounded awfully obvious. Yet translat-
citizens out of the rejected. Arnold of Rugby, the greatest English ing that mission statement into action meant that everybody who
educator of the nineteenth century, who created the English public comes in is now seen by a qualified person in less than a minute.
school, defined its mission as making gentlemen out of savages. That is the mission; that is the goal. The rest is implementation.
My favorite mission definition, however, is not that of a non- Some people are immediately rushed to intensive care, others get
“Go back home,
a lot of tests, and yet others are told: go to sleep,
profit institution, but of a business. It’s a deiinition that changed
Sears from a near-bankrupt, struggling mail-order house at the take an aspirin, and don’t worry. If these things persist, see a
beginning of the century into the world’s leading retailer within physician tomorrow.” But the first objective is to see everybody,
less than ten years: It’s our mission to be the informed and respon- almost immediately because that is the only way to glve assur-
sible buyer first for the American farmer, and later for the Amer- ance.
ican family altogether. The task of the non-profit manager is to try to convert the
Almost every hospital I know says, “Our mission is health organization’s mission statement into specifics. The mission may
care.” And that’s the wrong definition. The hospital does not take be forever or at least as long as we can foresee. As long as the
care of health; the hospital takes care of illness. You and I take care human race is around, we’ll be miserable sinners. As long as the
of health by not smoking, not drinking too much, going to bed human race is around, there will be sick people. And, as long as
early, watching our weight, and so on. The hospital comes in when the human race is around, there will be alcoholics and drug addicts
health care breaks down. An even more serious failing of this and the unfortunate. For hundreds of years we’ve had schools of
mission is that nobody can tell you what action or behavior follows one kind or another trying to get a little knowledge into seven-
from saying: “Our mission is health care.” year-old boys and girls who would rather be out playing. .
A mission statement has to be operational, otherwise it’s But the goal can be short—lived, or it might change drastically
just because a mission is accomplished. A hundred years ago, one of
good intentions. A mission statement has to focus on what the
institution really tries to do and then do it so that everybody in the the great inventions of the late nineteenth century was the tubercu—
organization can say, This is my contribution to the goal. losis sanatorium. That mission has been accomplished, at least 1n
Many years ago, I sat down with the administrators of a major developed countries. We know how to treat TB with antibiotics.
hospital to think through the mission statement of the emergency And so managers of non-profits also have to build in rev1ew,
room. It took us a long time to come up with the very simple, and revision, and organized abandonment. The mission is forever and
may be divinely ordained; the gOals are temporary. .
(most people thought) too obvious statement that the emergency
room was there to give assurance to the aiiiicted. To do that well, One of our most common mistakes is to make the missron
statement into a kind of hero sandwich of good intentions. It has
you have to know what really goes on. And, much to the surprise
of the physicians and nurses, it turned out that in a good emer- to be simple and clear. As you add new tasks, you deemphasize
and get rid of old ones. You can only do so many things. Look at
gency room, the function is to tell eight out of ten people there is
nothing wrong that a good night’s sleep won’t take care of. You’ve what we are trying to do in our colleges. The mission statement
been shaken up. Or the baby has the tiu. All right, it’s got convul- is confused we are trying to do fifty different things. It won’t
sions, but there is nothing seriously wrong with the child. The work, and that’s why the fundamentalist colleges attract so many
doctors and nurses give assurance. young people. Their mission is very narrow. You and I may quar-
rel with it and say it’s too narrow, but it’s clear. It enables the
6 THE MISSION COMES FIRST The Commitment
students to understand. And it also enables the faculty to know.
And it enables that administration to say, We aren’t going to teach THE THREE “MUSTS” OF A SUCCESSFUL MISSION
accounting. Look at strength and performance. Do better what you already
As you add on, you have to abandon. But you also have to think
do well if it’s the right thing to do. The belief that every institu-
through which are the few things we can accomplish that will do
tion can do everything is just not true. When you violate the values
the most for us, and which are the things that contribute either
of an institution, you are likely to do a poor job. In the 1960s, all
marginally or are no longer of great significance. A hundred years
ago, about the greatest contribution the hospital could make was of us in academia rushed into the urban problem. We were totally
in obstetrics, though it took a long time before the population incompetent: our values don’t fit what are political issues; acade-
accepted that, because childbirth at home in the growing city was micians don’t understand power. At the same time, hospitals
perceived to be, well, dangerous, what with infection and un- rushed into what they called health education. Here are the people
trained people. Well, now I would say that not every hospital who come in, such as the diabetic, and before they go home maybe
should do obstetrics, and a great many don’t. Partly because it’s we can feach them how to handle their diet and their stress and
become so much safer, so much more predictable. But also because so on so that they don’t come back. It hasn’t worked. That’s not
if anything does go wrong, it’s so much more critical, so you need what hospitals are good at. Hospitals are not good at prevention;
a concentration of resources. In a suburban community there just hospitals are good at taking care of damage that’s already been
might not be enough volume to do a really good job. So perhaps done.
you don’t abandon obstetrics, but you phase it out slowly. On the Look outside at the opportunities, the needs. Where can we,
other hand, fifty or sixty years ago, before the psychotropic drugs, with the limited resources we have and I don’t just mean people
no hospital could do much for mental diseases. Today, almost a and money, but also competence—really make a difference, really
majority of people who are mentally sick or endangered can be
set a new standard? One sets the standard by doing something and
taken care of in the community hospital, with short-term stays for
doing it well. You create a new dimension of performance.
depression and so on. You can make a major contribution there.
The next thing to look at is what we really believe in. A mission
So you constantly look at the state-of—the-art. You look at the
is not, in that sense, impersonal. I have never seen anything being
opportunities in the community. The hospital isn’t going to sell
shoes and it’s not going into education on a big scale. It’s going done well unless people were committed.
to take care of the sick. But the specific objective may change. All of us know the story of the Edsel automobile. Everybody
Things that were of primary importance may become secondary thinks the Edsel failed because Ford didn’t do its homework. In
or even totally irrelevant. You must watch this constantly, or else fact, it was the best-engineered, the best—researched, the best-
very soon you will become a museum piece. everything car. There was only one thing wrong with it: nobody
in the Ford Motor Company believed in it. It was contrived. It was
designed on the basis of research and not on the basis of commit-
ment. And so when it got into a little trouble, nobody supported
the child. I’m not saying it could have been a success. But without
that personal commitment, it certainly never could be.
THE MISSION COMES FIRST
And so one asks first, what are the opportunities, the needs?
Then, do they {it us? Are we likely to do a decent job? Are we
competent? Do they match our strengths? Do we really believe in
this? This is not just true of products, it’s true of services.
So, you need three things: opportunities; competence; and com-
mitment, Every mission statement, believe me, has to rellect all
Leadership Is a
three or it will fall down on what is its ultimate goal, its ultimate
purpose and final test. It will not mobilize the human resources of
Foul-Weather Job
the organization for getting the right things done.

The most successful leader of this century was Winston Churchill.

But for twelve years, from 1928 until Dunkirk in 1940, he was
totally on the sidelines, almost discredited because there was no
need for a Churchill. Things were routine or, at any rate, looked
routine. When the catastrophe came, thank goodness, he was
available. Fortunately or unfortunately, the one predictable thing
in any organization is the crisis. That always comes. That’s when
you do depend on the leader.
The most important task of an organization’s leader is to antici-
pate crisis. Perhaps not to avert it, but to anticipate it. To wait until
the crisis hits is already abdication. One has to make the organiza-
tion capable of anticipating the storm, weathering it, and in fact,
being ahead of it. That is called innovation, constant renewal. You
cannot prevent a major catastrophe, but you can build an organi-
zation that is battle-ready, that has high morale, and also has been
through a crisis, knows how to behave, trusts itself, and where
people trust One another. In military training, the first rule is to
instill soldiers with trust in their officers, because without trust
they won’t fight.
10 THE MISSION COMES FIRST Leadership Is a Foul-Weather Job 11

THE PROBLEMS OF SUCCESS

results then maybe we should direct our resources elsewhere. Non-
profit organizations need the discipline of organized abandonment
Problegns of success have ruined more organizations than has perhaps even more than a business does. They need to face up to
failure, partly because if things go wrong, everybody knows they critical choices.
have to go to work. Success creates its own euphoria. You outrun Some of these choices are very difficult. I have a friend, a Catho-
your resources. And you retire on the job, which may be the most lic priest, who is Vicar General of a large diocese. The bishop
difficult thing to fight. I’m now in California instead of New York called him in to deal with the shortage of priests. Which services
University, where I was for twenty years, in part because the should they keep and which should they abandon? There is the
Graduate Business School at NYU decided to cut back rather than terrible dilemma of Catholic schools in a big metropolitan archdio-
grow with the growing student demand. That’s why I left. When cese where 97 percent of the kids are not Catholics and aren’t
I started to build a management school at Claremont, I made sure going to be Catholics; they’re fleeing the misery of the public
that we did not overextend ourselves. I was very careful to ensure schools. I’ve been arguing with the diocese for years. Some of the
“Our first task is to save souls; it’s not to educate
that we kept the faculty first rate but small, and that we used priests say,
adjuncts, part-time people, then built a strong administration. And people. Let’s put our few priests and nuns on our hrst priority.”
then we could run with success. If the market grows, you have to And I say, “Look, it says in the Bible, ‘But the greatest of these
grow with it, or you become marginal. is Charity,’ and that’s what you are doing. You cannot possibly
I am arguing these days with our pastor, who wants to keep our leave those kids in the lurch. That’s a value choice, and it’s critical
church small. This is in a community where we have a lot of young that it’s faced up to and not pushed under the rug, as we like to
people, students, and a lot of people in retirement homes who want do.”
to come to church. My very nice and able pastor likes to keep it Once you acknowledge that, you can then innovate provided
small so that he knows everybody. I said to him, “Look, Father you organize yourself to look for innovation. Non-profit institu—
Michael, it won’t work.” Five years after he had come in, the tions need innovation as much as businesses or governments. And
church began to shrink. The lesson for the leaders of non-profits we know how to do it.
is that one has to grow with success. But one also has to make sure The starting point is to recognize that change is not a threat. It’s
that one doesn’t become unable to adjust. Sooner or later, growth an opportunity. We know where to look for changes.‘ Here are a
slows down and the institution plateaus. Then it has to be able to few examples:
maintain its momentum, its fiexibility, its vitality, and its vision.
Otherwise, it becomes frozen.
Unexpected Success in Your Own Organization

Some institutions of higher education, for instance, have learned

HARD CHOICES that continuing education of already highly educated adults is not
a luxury, or something to bring in additional money, or good
Non-profit organizations have no “bottom line.” They are prone
to consider everything they do to be righteous and moral and to public relations. It is becoming the central thrust of our knowledge
serve a cause, so they are not willing to say, if it doesn’t produce ‘See my Innovation and Entrepreneurship (Harper & Row, 1985).

Er
aetiiai‘t
12 THE MISSION COMES FIRST Leadership Is a Foul-Weather Job 13
soc1ety. So, they have organized themselves and their faculties to tive decisions t0 be made and implemented and, at the same time,
attract the doctors, engineers, and executives who want and need encourage the operation to go on at the necessary level while it is
to go back to school. being changed? Let me try to outline a simple series of steps.
First, organize yourself to see the opportunity. If you don’t look
out the window, you won’t see it. What makes this particularly
Population Changes important is that most of our current reporting systems don’t
reveal opportunities; they report problems. They report the past.
About twelve years ago, the Girl Scouts of the U.S.A. realized Most answer questions we have already asked. So, we have to go
that shifts in the United States, with the fast growth beyond our reporting systems. And whenever you need a change,
demographic
of mlnorlties, were creating a new frontier for the organization ask: If this were an opportunity for us, what would it be?
new needs and the opportunity to change. They now have a 15 Then, to implement the innovation effectively, there are a few
percent enrollment of minority kids, which explains why they kept mistake
points you must be aware of. First, the most common
grow1ng even though the total number of girls of scouting age fell the one that kills more innovations than anything else is the
quite steadily during that period. attempt to build too much reinsurance into the change, to cover
made that
youf flank, not to alienate yesterday. The Japanese
mistake in the one area where their export drive failed signifi-
cantly: telephones. They had the technology but tried to hedge
Changes in Mind-Set and Mentality
their bets by selling switchboards that were both electromechani—
Very few factors have so altered our view of society as the cal (and therefore could be plugged into existing old systems) and
women’s movement of the last twenty years. What opportunities electronic. The electronic switchboards force customers to tear out
does 1t create? As you will see a little later on in the interview with their old equipment, even though it may be perfectly good. But
Father Leo Bartel in Part Four, it created the opportunity in one those who did go either into expansion or improvement of their
dlocese to expand dramatically despite a sharp drop in the number existing system decided to pull out the old and go straight to the
of priests and sisters. Another example: about fifteen state-of-the-art.
years ago
one of our largest volunteer organizations, the American Hearf The same sort of mistakes can be found in the pharmaceutical
Assoc1at10n, realized that, even though its original big industry and in educational programs. Twenty years ago, a good
job re-
search was not yet accomplished, a new opportunity had opened many hospitals, seeing the trend toward taking care of patients
to take advantage of the tremendous growth in health awareness outside the hospital, built outpatient clinics into the hospital. That
by the American public. It decided to redirect its national forces. didn’t work. The free-standing surgical clinic, however, did work
lesson 1s, Don’t wait. Organize yourself for systematic inno- because it was not in the hospital.
The
vatlon. Build the search for opportunities, inside and outside into Next, you have the problem of organizing the new. It must be
your organization. Look for changes as indications of an opp’ortu- organized separately. Babies don’t belong in the living room, they
nity for 1nnovation. To build all this into your system belong in the nursery. If you put new ideas into operating units
you as the
leader of the organization, have to set the example. I’low can we whether it’s a theological seminary or an automobile plant the
set up systems to release energy that will allow the proper innova- solving of the daily crisis will always take precedence over intro-
14
THE MISSION COMES FIRST
Leadership IS a Foul-Weather Job 15
ducing tomorrow. So, whon
you try to develop the new within an
ex1sting operation, toilets. When they opened, you cannot imagine the pandemonium.
you are always postponing tomorrow. It
be set separately. And yetyou have must And that’s typical.
up
operations to make sure the existing If you first plan and then try to sell, you’re going to miss the
dont lose the exc1tement of
the new entirely. Other-
w1se, they become not only hostile important things. But you also waste years of time. Selling has to
but paralyzed.
be built into planning, and that means involving the operating
people. But don’t forget one thing: everything new requires hard
work on the part of true believers and true believers are not
THE INNOVATIVE STRATEGY
available part time.
The Churchills may be very rare. But another group is, fortu-
nately, quite common. These are the people who can look at a
tumty. Somebody who is receptive, Situation and say: This is not what I was hired to do or what I
who welcomes the new, who
wants to succeed and, at the expected to do, but this is what the job requires and then roll up
same time, has enough stature,
enoug h clout in the organization their sleeves and go to work. I know a college president who was
so that, if it works for him or her,
of the organization will say, Well, conned into taking his job with the usual promises by the board
ttileitrest there must be something
that it would raise the money. He came out of tax-supported state
I am always being asked, “If universities. He arrived with a wonderful program of faculty re-
you were running a metropolitan
museum, or a major cruitment and educational reform, took one good look, and came
public library, or a relief or service agency
a community, would in to me, very unhappy. Somebody has to raise money, he said,
you have part of your organization
some kind of small task force set up otherwise that institution won’t be there in five or ten years. And
committed to R&D or to marketing?
Some group working w1th1n
the organization that would
I said, You know, there is only one person who can raise money
ing the possibilities be weigh: in a college the president. And he said, I’m afraid you’re right.
innovation for the organization?”
Well, the answer is of He found an exceedingly able man on his faculty who for five years
yes and the answer is no. Yes
need a few people who do the ran the school, while the president concentrated on raising money,
work, who have the time to
Its hard work. No, because do It. in which he proved himself incredibly able. He saved that institu-
if you isolate the
gomg to end up overlooking planning, you’re tion.
perhaps the small but crucial things.
Let me give-you a very simple Let me give you another example of a rural electric cooperative,
example. The executives of a
museum deCIded to move from big one of the large ones, founded during the 19303 when the Ameri-
t
the art works In and the can farmer couldn’t get any power. Well, by now everybody has
people out, to the modern kind of mu-
power, so the question is: What do we do now? There was strong
a separate planning community. They set up sentiment on the board and in the membership for selling out t0
group, which did a magnificent
job planning the nearest large power company. A new chief executive came in,
exhibitions and public1ty and so on. But being isolated from opera-
tions, the planners overlooked took a look, and said: “Yes, as an electric cooperative we have
a few “housekeeping” details
for Instance, that you need a much bigger They fulfilled our mission, but as a community development organiza-
forgot, parking lot: Also
1f you suddenly have three tion, it has only begun. Here is a tremendous farm crisis [this was
hundred fourth graders in,
you need in the early eighties]. All kinds of basic social services need to be
16 THE MISSION COMES FIRST 17
Leadership Is a Foul-Weather Job
supplied t0 our farm members, and they can only be supplied by
famous for putting the right people into the right enterprises all
somebody with a distribution system.” “What do
over the globe. I asked him: you look for?” And he said:
He made all the diiTerence. Farm prices are still low and de- “I always ask myself, would I want one of my sons to work under
pressed, but this six-county system is one of the few farm areas we that person? If he is successful, then young people will imitate him.
have that is, I wouldn’t say prosperous, but doing well because
of Would I want my son to look like this?” This, I think, is the
the action this man took seeing the opportunity. And it’s not that
ultimate question.
uncommon. This is effective crisis leadership.
I’ve seen lots of businesses and all of us have seen lots of govern-
ments survive with mediocre leaders for quite a long time. In the
non-profit agency, mediocrity in leadership shows up almost im-
HOW TO PICK A LEADER mediately. One difference clearly is that the non-profit has a num-
If I were on a selection committee to choose a leader for a ber of bottom lines—not just one. In business, you can debate
non-profit organization and there were a roster of men and women whether profit is really an adequate measuring stick; it may not be
as candidates, what would I look for? First, I would look at what over the short term, but it is the ultimate one over the long term.
the individuals have done, what their strengths are. Most selection In government, in the last analysis, you’ve got t0 get reelected. But
committees I know are overly concerned with how in non-profit management, there is no such one determinant. You
poor the candi-
date is. Most of the questions I get are not: What is he or she deal with balance, synthesis, a combination of bottom lines for
good
at, but we think this person is not too performance.
good at dealing with stu-
dents, or what have you. The hrst thing to look for is strength— Certainly, the non—profit executive does not have the luxury of
you can only perform with strength—and what they have done dealing with one dominant constituency, either. In a publicly listed
with it. company, the shareholder is the ultimate constituent. In govern—
Second, I would look at the institution and ask: What is the one ment, it is the voter. When you 100k at the school board, a public
immediate key challenge? It may be raising money. It may
be service agency, or a church, however, you have a multiplicity of
rebuilding the morale of the
organization. It may be redefining its constituencies—each of which can say no and none of which can
mission. It may be bringing in new technology. If I looked today say yes. The multiplicity of constituencies is reflected in your
for an administrator of a large hospital, I might look for the ability boards, your trustees, who are likely to be intensely involved in
to convert the hospital from a provider of sickness care to a man- running the agency. You could say public schools are governmen-
ager of sickness-care providers, because more and more will be tal, but the school board is not governmental. It has the constitu-
done outside the hospital. I would try to match the strengths with ency role. That’s what causes all the diiiiculty for school superin-
the needs. tendents. They are really public service agencies rather than
Then I would look for—call it character or integrity. A leader
government agenc1es.
sets an example, especially a strong leader. He or she is somebody You can’t be satisfied in non-profit organizations with doing
on whom people, especially younger adequately as a leader. You have to do exceptionally well, because
people, in the organization
model themselves. Many years ago I learned from a very wise
old your agency is committed to a cause. You want people as leaders
man, who was head of a large, worldwide organization. I
was who take a great view of the agency’s functions, people who take
about twenty, not even that—and he was in his late seventies,
their roles seriously—not themselves seriously. Anybody in that
18 THE MISSION COMES FIRST 19
Leadership Is a Foul-Weather Job
leadership position who think s he ’ s a “I.” They think “we”; they think
. . great man or a gmat woman say “I.” They don’t think
Will klll himself—and the agency. “team.” They understand their job to be to make the team func-
“we”
tion. They accept the responsibility and don’t sidestep it, but
uncon-
gets the credit. There is an identification (very often, quite
YOUR PERSONAL LEADERSHIP ROLE scious) with the task and with the group. This is what creates trust,
what enables you to get the task done.
The new leader of a non-profit doesn’t have much time to
‘ estab- In Shakespeare’s Henry V, the young prince whose father just
lish himself or herself. Maybe a year. To be elfective in that
short died he’s now king rides out. Falstaff, the old disreputable
a t1me,' the role the leader takes has to fit in terms of the
missi knight who has been the prince’s boon companion in drinking and
of the 1nstitution and its values. All of us “Sweet Prince Hal,” and the new king
as teachers, and as leaders. To work, the role has to tit
dimenslons. First, the role has to fit you who
ih
play roles as arenlm
thr
S’ wenching, calls up to his
rides by without even a look at him. Falstaff is cruelly hurt. He
you are No com: raised the prince because the old king was a very poor father and
actor has ever been able to play Hamlet. The role
you take also a cold one, and the young man found warmth only with that
has to fit the task. And, hnally, the role has to fit expectations
disreputable drunkard. Yet Henry is now king and has to set
One of the more brilliant young men I ever hired as a
teacher dilferent standards for himself because he is visible. As a leader,
completely failed in the college classroom. In teaching have expectations to
freshm you are visible; incredibly visible. And you
he abdlcated his authority, and the kids revolted. He didn’t
unden,
cr- fulhll.
stand that nineteen-year-old freshmen in an undergraduate
coll ege Then there is the story of the one leading German statesman
expect a teacher to have authority.
before World War I who saw the catastrophe Europe was sliding
You have two things to build on: the
quality of the people in the into and tried desperately to reverse the trend. He was the ambas-
organlzatlon, and the new demands
you make on them What sador to London in the early days of the century a leading dove.
those new demands will be can be determined by analysis
or b But he resigned his ambassadorship because the new English king,
perception, or by a combination of both. That depends on hdw oy
Edward VII, was a notorious womanizer who liked the diplomatic
operate. I am a perceptual person. I look. But I’ve also
able and effective people who are totally
seen Viru corps to give him stag parties at which the most popular London
paper-oriented ' The y t akye courtesans would pop naked out of cakes. The ambassador said he
a sharp pencil and come out right.
was not willing to be a pimp when he saw himself in a mirror
There are simply no such things as “leadership traits”
or “lead- shaving in the morning. I don’t think he could have averted World
ership characteristics.” Of course, some
people are better leaders War I. Still, politically, he may have made the wrong decision.
than others. By and large, though, we are talking about
skills that And yet, I think, it was the essence of leadership. You are visible;
perhaps cannot be taught but they can be learned by most of us The rule is:
some people genuinely cannot learn the skills. They may you’d better realize that you are constantly on trial.
genie,
not I don’t want to see a pimp in the mirror when I shave in the
or they d rather be followers. But most of
us Cr:rpog:rrilttt1:)ertrllrem, morning. If you do see one, then your people will see one, too.
“To every leader there is a season.” There is profundity in that
leaders who work most eifectively, it seems to me never
“ I.The sa statement, but it’s not quite that simple. Winston Churchill in
And that’s not because they have trained themselves
not t2; ordinary, peaceful, normal times would not have been very effec-
20 THE MISSION COMES FIRST Leadership Is a Foul-Weather Job 21

tive. He needed the challenge. Probably the same is true aggrandizement, in the belief that this furthers the cause.
of Frank- They
lin D. Roosevelt, who was basically a lazy man. I don’t become self-centered and vain. And above all, they become Jeal-
think that
FDR would have been a good president in the 19203. His ous. One of the great strengths of Churchill and one of the great
adrenalin
wouldn’t have produced. On the other hand, there are weaknesses of FDR was that Churchill, to the very end, when he
people who
are very good when things are pretty routine, but who was in his nineties, pushed and furthered young politicians. That
can’t take
the stress of an emergency. Most organizations need is a hallmark of the truly effective leader, who doesn’t feel threat—
somebody
who can lead regardless of the weather. What matters is ened by strength. In his last years, FDR systematically cut down
that he
or she works on the basic competences.
everybody who showed any signs of independence.
As the hrst such basic competence, I would .
put the willingness, I would not want any person to give his or her life to an organl-
ability, and self-discipline to listen. Listening is not a
skill; it’s a zation. One gives one’s very best efforts. What attracts people to
discipline. Anybody can do it. All have to do is keep your
you an organization are high standards, because highstandards create
mouth shut. The second essential competence is the willingness
to self-respect and pride. Most of us want to contribute. When you
communicate, to make yourself understood. That requires
infinite look at schools where kids learn and schools where kids don’t, s
patience. We never outgrow age three in that respect. You have it
not the quality of the teaching that’s diiferent. The school in which
to tell us again and again and again. And demonstrate
what you kids learn expects them to learn. Many years ago, I a survey
mean. The next important competence is not to alibi dld
“This doesn’t yourself. Say: of Boy Scout Councils with tremendous differences 1n perform-
work as well as it should. Let’s take it back and
re-engineer it.” We either do things to ance. In the performing ones, they expected the volunteers, the
perfection, or we don’t do scoutmasters, and so on, to put in very hard work. And I mean
them. We don’t do things to get by. Working that
way creates hard work, not just appearing Friday night for a couple of hours.
pride in the organization.
The last basic competence is the willingness to realize The ones with high demands attracted the volunteers and attracted
how and kept the boys. So it is the job of the leaders to set high
unimportant you are compared to the task. Leaders need
objectiv-
ity, a certain detachment. They subordinate themselves standards on one condition that they be performance-focused.
to the task,
but don’t identify themselves with the task. The task remains Most leaders I’ve seen were neither born nor made. They were
both
bigger than they are, and different. The worst thing self-made. We need far too many leaders to depend only on the
you can say naturals. The best example of one who surely was not a
about a leader is that on the day he or she left, the
organization .born
collapsed. When that happens, it means the so-called leader, had no training, and made himself into a very effective one,
leader had
sucked the place dry. He or she hasn’t built. They may was Harry Truman. When Truman became president, he
have been was
effective operators, but they have not created vision.
Louis XIV totally unprepared. An ordinary politician, he was chosen as v1ce
was supposed to have said, “L’état, c’est moi!” president because he presented no threat to FDR. Truman not
(The state, that’s
mel). He died in the early eighteenth century and the
long, not-so- only said, “I am president now and the buck stops here, he
“What .but
slow slide into the French Revolution immediately began. also asked, are the key tasks?” His entire preparatlon had
When effective non-profit leaders have the capacity been in domestic affairs. He forced himself to accept the fact that
to maintain
their personality and individuality, even though they the key tasks for his administration were outside the Un1ted States
are totally
dedicated, the task will go on after them. They also have and not the New Deal (much to the disappointment of the New
a human
existence outside the task. Otherwise they do things Deal liberals, beginning with Mrs. Roosevelt). He forced h1mself
for personal
22 THE MISSION COMES FIRST Leadership Is a Foul-Weather Job 23
to take a cram course in foreign affairs and to focus painfully a buying strategist and a statistician, purely a figures man. He
on what he considered to be key tasks. looked at the company and asked: What does it need so that it can
In a way, the hospital as we know it today is the creation of a be successful another twenty-five years? He concluded that it
totally obscure and forgotten Catholic hospital administrator of needed managers. So he forced himself into taking the leadership
the 19303 and 1940s (who taught me all I know), Sister Justina in of Sears’ manager development in a very eifective and yet very
Evanston, Indiana. She was the first person to think through what
quiet way. Everybody down to the manager of the smallest store
patient care is. For her contributions she got very few thanks in knew that the chairman in Chicago was watching him, and would
her life, especially not from the physicians, but she was a born know whether he was developing people. Sears hasn’t had a new
leader. She was retiring, shy, understated, very conscious of the idea since 1950, yet it remained very successful for twenty-five or
fact that her formal education had stopped in first grade in an Irish thirty years, almost up to 1980, because it had the people. That’s
country school. But there was a job to be done. And that, again what Ted Houser built.
and again, is what really makes the leaders. They are self-made.
Douglas MacArthur was a brilliant man and probably the last
great strategist, but that wasn’t his great strength. He built a team
second to none because he put the task first. He was also unbelieva- THE BALANCE DECISION
bly vain, with a tremendous contempt for humanity, because he One of the key tasks of the leader is to balance up the long range
was certain that no one came close to him in intelligence. Never- and the short range, the big picture and the pesky little details. You
theless, he forced himself in every single staff conference to start are always paddling a canoe with two outriggers balancing
the presentation with the most junior oliicer. He did not allow while managing a non-profit. One is the balance between seelng
anybody to interrupt. This contributed incredibly to his ability to only the big picture and forgetting the individual person who sits
build an organization that was willing to fight against the vastly there one lonely young man in need of help. I’ve heard of hospl-
superior enemy and win. It is very clear from his letters that this tals that talk health-care statistics and forget the mother with a
didn’t come easily to him, never. He always had to force himself. crying baby in the emergency room. That kind of failing is fairly
It wasn’t his nature, but it was the key task, and so it had to be easy to correct. Being on the nring line a few days, a few weeks,
done. a year, usually does it. The opposite danger is becoming the pris-
Tom Watson, Sr., the creator of IBM, began as a self-centered, oner of operations. That’s much harder to avoid. The effective
imperious man vain, with a very short fuse. He forced himself t0
people do it very largely through their work in associations and
build a team, a winning team. He once let somebody go who I other organizations. The successful chief executive of one of our
thought was very able and I asked why. Watson told me: “He is major community service organizations, one of the very large
not willing to educate me. I am not a technical man, I am a Scout Councils, sits on three boards of which only one is a commu-
salesman. But this is a technical company, and if they don’t edu- nity service organization quite intentionally. And she also sits on
cate me in technology, I can’t give them the leadership they need.” an advisory committee of the city government. That way she 1s
It’s that willingness to make yourself competent in the task that’s forced to see the same issues she faces in her own organization
needed that creates leaders. through the other end of the telescope. That works.
When Ted Houser took over in the early 1950s, Sears, Roebuck I’ve also seen it done on a smaller, much smaller, scale. A dean
had had twenty-tive years of unbroken success. Houser had been I worked with for many years, whom I considered singularly
f
24 THE MISSION COMES FIRST Leadership Is a Foul-Weather Job 25

successful, went on the American Council of Deans. I said to him, brilliant man who came in and tried to convert what was a fair
“Paul,
you are so busy, why do you do it?” And he said, “I’m too metropolitan university into a world-class research institution in
Close to the details. Once a month, I need to see what the overall three years. He thought money would do it. Instead, he almost
issues really are.” That, too? is a fairly eifective way. killed the university, and it has never quite recovered. I’ve seen the
Let me say there are always balancing problems in managing same thing in a museum and the same thing in a symphony orches-
non-proiits. This is only one example. Another, which I think is tra. So, one has to have balance, and again the only advice I can
tendency and try
even harder to handle, is the balance between concentrating re- give is to make sure you know your degenerative
sources on one goal and enough diversification. If you concentrate, to counteract it.
you will get maximum results. But it’s also very risky. Not only Then there is the balance decision between opportunity and risk.
may you have chosen the wrong concentration, but—in military One asks first: is the decision reversible? If it is, one usually can
terms—you leave your iianks totally uncovered. And there’s not take even considerable risks. In the non-profit institution, you
enough playfulness; it doesn’t stir the imagination. You need that, constantly must gauge whether the financial dimension of a risk
so that there will be diversity, especially as any single task eventu- is too great. That’s all I can say. One looks at the decision: Is it
ally becomes obsolete. But diversity can easily degenerate into reversible? And what kind of risk is it? Then one asks: Is it a risk
splintering. we can afford? All right, if it goes wrong, it hurts a little. Or is it
The even more critical balance, and the toughest to handle, is a risk that, if things go wrong, will kill us? Or the trickiest of them
between being too cautious and being rash. Finally, there is tim— all, the risk we can’t afford not to take. I’ve been in a similar
ing—and this is always of the essence. You know the people who situation recently. I sit on a museum board—and a big collection
always expect results too soon and pull up the radishes to see was offered to us, way beyond our means. I said, Damn the
whether they’ve set root, and the ones who never pull up the torpedoes, let’s buy it. It’s the last chance we have. It’ll make us
radishes because they’re sure they’re never ripe enough. Those are, a world-class museum. We’ll get the money somehow. The balance
in philosophical terms, Aristotelian Prudences, so to speak. How decisions are what we need non-profit leaders for, whether they are
to find the right Mean. paid or volunteer.
It’s actually fairly easy to deal with people who want results too
soon. I’m one of them. And I’ve taught myself that if I expect
something to happen in three months, I say, make it five. But I’ve
THE DON’T’S OF LEADERSHIP
also seen people who say three years when they should say three
months. That’s very hard to counteract. As in all Aristotelian Finally, there are a few major don’t’s for leaders. Far too many
means, the first law is “Know thyself.” Know what is your degen— leaders believe that what they do and why they do it must be
erative tendency. obvious to everyone in the organization. It never is. Far too many
I’ve seen more institutions damaged by too much caution than believe that when they announce things, everyone understands. No
by rashness, though I’ve seen both. Maybe I’m conscious of it one does, as a rule. Yet very often one can’t bring in people before
because I was over-cautious when I ran institutions, or was part the decision; there just isn’t enough time for discussion or particr-
little time on making
of the running. I did not take risks, especially financial risks, I pation. Effective leaders have to spend a
should have taken. On the other hand, I’ve seen one of the coun- themselves understood. They sit down with their people and say:
try’s universities almost ruined—Pittsburgh, in the l950s—by a This is what we were faced with. These are the alternatives we saw,
27
26 THE MISSION COMES FIRST Leadership Is a Foul—Weather Job
A leader has responsibility to
the alternatives we considered. They ask: What is your opinion? people and never sang their praises.
Otherwise the organization will say: Don’t these dummies at the his subordinates, to his associates.
top know anything? What’s going on here? Why haven’t they Those are the don’t’s.
and again already:
The most important do, I have said again
considered this or that? But if you can say, Yes, we considered it, The task matters, and
Keep your eye on the task, not on yourself.
but still reached this decision, people will understand and will go
along. They may say we wouldn’t have decided that way, but at you are a servant.
least upstairs, they just didn’t shoot from the hip.
And the second don’t. Don’t be afraid of strengths in your
organization. This is the besetting sin of people who run organiza-
tions. Of course, able people are ambitious. But you run far less
risk of having able people around who want to push you out than
you risk by being served by mediocrity. And finally, don’t pick
your successor alone. We tend to pick people who remind us of
ourselves when we were twenty years younger. First, this is pure
delusion. Second, you end up with carbon copies, and carbon
copies are weak. The old rule both in military organizations and
in the Catholic Church is that leaders don’t pick their own succes-
sors. They’re consulted, but they don’t make the decision. I’ve seen
many cases in business but even more in non-profit institutions
where able people picked a good number two , to succeed them.
Somebody who is very able provided you tell him or her what to
do. It doesn’t work. Partly out of emotional commitment, partly
out of habit, the perfect number two is put into the top spot, and
the whole organization suffers. The last time I saw this was in one
of the world’s largest community chests. Fortunately the number
two who was picked by his predecessor because he was so much
like her realized after a year that he didn’t belong in the top job
and was utterly miserable in it and he left before either he or the
organization had been badly damaged. But that is a rare exception.
The last don’t’s are: Don’t hog the credit, and Don’t knock your
subordinates. One of the very ablest men I’ve seen do this headed
one of the most challenging new tasks in a non-profit organization
I know. His alumni now work for everybody else but for his
organization because the moment they went to work for him, he
saw nothing but their weaknesses. He didn’t promote any of his