"You gain strength, courage, and confidence by every experience in which you really stop to look fear in the face. You must do the thing which you think you cannot do." — Eleanor Roosevelt
In order to contribute to Africa (Waianae), I would have to know myself better and be clearer about my goals. I would have to be ready to take Africa (Waianae) on its own terms, not mine, and to learn my limits and present myself not as a do-gooder with a big heart, but as someone with something to give and gain by being there. Compassion wasn't enough.
The first step in solving any problem is to identify and name it.
My ability to solve the problem did little to help if the women themselves didn't want to implement a solution.
I should have been clearer about having a mandate first and gotten real buy-in, not just a perfunctory agreement, and then brought the right people along throughout the process so there were no surprises. The question was one of leadership, of having the patience and skills to bring people with me— and I had yet to learn that fully.
...how to build accountability into non-profit organizations. Donors could convince themselves to give to nonperforming organizations based on hearing a few good stories. The world needed something better than that.
...it can take years for a new kind of organization to get on its feet and a few years after that for it to walk. The key is to find local leaders who own the dream and will make it happen.
Tuesday, March 29, 2011
The Blue Sweater, Chapter 1, Innocent Abroad
"There is no passion to be found playing small in settling for a life that is less than the one you are capable of living." — Nelson Mandela
Our actions— and inaction— touch people we may never know and never meet across the globe.
'Regardless of what you become, remember always that to whom much is given, much is expected. God gave you many gifts and it is important that you use them for others as best you can.'
I suggested to my boss an experiment, even a small one, to lend to Brazil's working class might actually provide better results than lending to the rich. He patted me on the head and reminded me of the poor's lack of collateral, the high transaction costs of making small loans, and the culture of poverty, which would result in no one repaying.
...a combination of service and adventure could lead to a lkife of passion and constant renewal.
Many commercial banks now also have a part of their portfolio dedicated to m icrofinance and are doing is successfully and profitably. None of this was thought to be possible 20 years ago; change doesn't happen overnight. (gulp)
...one way to solve poverty is to link grassroots organizations to the resources and skills of mainstream corporations.
Our actions— and inaction— touch people we may never know and never meet across the globe.
'Regardless of what you become, remember always that to whom much is given, much is expected. God gave you many gifts and it is important that you use them for others as best you can.'
I suggested to my boss an experiment, even a small one, to lend to Brazil's working class might actually provide better results than lending to the rich. He patted me on the head and reminded me of the poor's lack of collateral, the high transaction costs of making small loans, and the culture of poverty, which would result in no one repaying.
...a combination of service and adventure could lead to a lkife of passion and constant renewal.
Many commercial banks now also have a part of their portfolio dedicated to m icrofinance and are doing is successfully and profitably. None of this was thought to be possible 20 years ago; change doesn't happen overnight. (gulp)
...one way to solve poverty is to link grassroots organizations to the resources and skills of mainstream corporations.
The Blue Sweater, Prologue
My work in Africa taught me about the extraordinary resilience of people for whom poverty is a reality not because they don't work hard, but because there are too many obstacles in their way.
To address poverty in a more insightful way, in 2001 I started a nonprofit organization called Acumen Fund. We raise charitablefunds, but instead of just using money for giveaways, we make careful investments in entrepreneurs who are willing to take on some of the world's toughest challenges...like health care, safe water, housing, and alternative energy.
We measure our results in social as well as financial terms and share lessons and insights learned with the greater world.
We've seen what can happen when an entrepreneur views the market as a listening device that reveals how to tailor services and products to the preferences of low-income people who are viewes as consumers, not victims.
...we can end poverty. Never before in history have we had the skills, resources, technologies, and imagination to solve poverty that we do now...fundamental change is possible in a single generation.
Today, poor people the world over are seeking opportunity and choice to have greater dignity in their lives— and they want to so it themselves, even if they need a little help. Today we have the tools and technologies to bring real opportunities to people all across the world.
The time has come to extend to every person on the planet the fundamental principle that we hold so dear: that all human beings are created equal. Rather than seeing the world as divided among different civilizations or classes, our collective future rests upon our embracing a vision of a single world in which we are all connected. Indeed, maybe this notion of human connection is the most important— and complex— challenge of our time. Market play a role in this vision, and so does public policy. So does philanthropy. We all play a role in the change we need to create.
To address poverty in a more insightful way, in 2001 I started a nonprofit organization called Acumen Fund. We raise charitablefunds, but instead of just using money for giveaways, we make careful investments in entrepreneurs who are willing to take on some of the world's toughest challenges...like health care, safe water, housing, and alternative energy.
We measure our results in social as well as financial terms and share lessons and insights learned with the greater world.
We've seen what can happen when an entrepreneur views the market as a listening device that reveals how to tailor services and products to the preferences of low-income people who are viewes as consumers, not victims.
...we can end poverty. Never before in history have we had the skills, resources, technologies, and imagination to solve poverty that we do now...fundamental change is possible in a single generation.
Today, poor people the world over are seeking opportunity and choice to have greater dignity in their lives— and they want to so it themselves, even if they need a little help. Today we have the tools and technologies to bring real opportunities to people all across the world.
The time has come to extend to every person on the planet the fundamental principle that we hold so dear: that all human beings are created equal. Rather than seeing the world as divided among different civilizations or classes, our collective future rests upon our embracing a vision of a single world in which we are all connected. Indeed, maybe this notion of human connection is the most important— and complex— challenge of our time. Market play a role in this vision, and so does public policy. So does philanthropy. We all play a role in the change we need to create.
Peter Drucker— Chapter 1, The Commitment
The non-profit organization exists to bring about a change in individuals and in society...the ultimate test is not the beauty of the mission statement. The ultimate test is the right action.
The leader who basically focuses on himself or herself is going to mislead...What matters is the leader's mission.
Setting Concrete Action Goals
A mission statement has to be operational, otherwise it's just good intentions.
The task of the non-profit manager is to try to convert the organization's mission statement into specific.
One of our most common mistakes is to make the mission statement into a kind of hero sandwich of good intentions. It has 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. As you add on you have to abandon...which are the few things we can accomplish that will do the most for us, and which are the things that contribute either marginally or are no longer of great significance.
So you constantly look at the state-of-the-art. You look at the opportunities in the community.
The Three "Musts" of a Successful Mission
Look at strength and performance. Do better what you already do well— if it's the right thing to do. The belief that every institution can do everyhting is just not true. When you violate the values of an institution, you are likely to do a poor job.
Look outside at the opportunities, the needs. Where can we, with the limited resources we have— and I don't just mean people and money, but also competence— really make a difference, really set a new standard? One sets the standard by doing something and doing it well. You create a new dimension of performance.
I have never seen anything done well unless people were committed.
After asking "what are the opportunities, the needs?" then, do they fit us? are we likely to do a decent job? Are we competent? Do they match our strengths? Do we really believe in this?
So you need three things: opportunities, competence, and commitment. every mission statement has to reflect all three or it will fall down on what is its ultimate goal, its purpose and final test. It will not mobilize the human resources of the organization for getting the right things done.
The leader who basically focuses on himself or herself is going to mislead...What matters is the leader's mission.
Setting Concrete Action Goals
A mission statement has to be operational, otherwise it's just good intentions.
The task of the non-profit manager is to try to convert the organization's mission statement into specific.
One of our most common mistakes is to make the mission statement into a kind of hero sandwich of good intentions. It has 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. As you add on you have to abandon...which are the few things we can accomplish that will do the most for us, and which are the things that contribute either marginally or are no longer of great significance.
So you constantly look at the state-of-the-art. You look at the opportunities in the community.
The Three "Musts" of a Successful Mission
Look at strength and performance. Do better what you already do well— if it's the right thing to do. The belief that every institution can do everyhting is just not true. When you violate the values of an institution, you are likely to do a poor job.
Look outside at the opportunities, the needs. Where can we, with the limited resources we have— and I don't just mean people and money, but also competence— really make a difference, really set a new standard? One sets the standard by doing something and doing it well. You create a new dimension of performance.
I have never seen anything done well unless people were committed.
After asking "what are the opportunities, the needs?" then, do they fit us? are we likely to do a decent job? Are we competent? Do they match our strengths? Do we really believe in this?
So you need three things: opportunities, competence, and commitment. every mission statement has to reflect all three or it will fall down on what is its ultimate goal, its purpose and final test. It will not mobilize the human resources of the organization for getting the right things done.
Micro-lending skeptics
I sent my formal proposal to Paul Brewbaker, formerly Chief Economist at Bank of Hawaii, and now of TZ Economics. Although he hadn't actually read the proposal, he didn't seem to think much of our idea:
I haven’t read the attachment but here are some quick thoughts, actually a critique on first principles.
Micro-lending occurs in markets that are characterized by: (1) low levels of per capita income; and (2) inadequate financial “deepening.” The two are not independent, but the causality runs from (2) to (1). Hawaii is not a (1) market. Hawaii is a “G-22” market. Honolulu is not Mumbai.
Modern finance and banking theory typically asks why (1) and (2) co-exist in the context of information asymmetry. That is, financial development overcomes two forms of asymmetry—adverse selection and moral hazard—which is it absent in some contexts (like, low-income countries). For a variety of reasons related to cultural and historical specificity, without getting into post-colonial mush, the absence of well-developed private property rights systems in many developing contexts has often been an impediment to the development of traditional bank lending. Collateralization institutions require clear property rights, and credible enforcement of the associated state-contingent contracts (“if you don’t pay back the loan then this happens”). For example, much of the hangup immediately after the start of the Asian Financial Crisis was the lack of credibility of bankruptcy law enforcement in places like Thailand. (Within 90 days of the collapse of the Thai baht in July 1997, acting on an IMF recommendation, Thailand re-wrote its constitution, dissolved the Parliament, had new Parliamentary elections, and passed the necessary bankruptcy law reforms, something that could never happen in Hawaii.) Collateralization, information technology (to confirm borrowers’ financial status), monitoring of covenants in loan agreements, all are tools designed to create an incentive-compatible environment between borrowers and lenders. They mitigate risks of lenders selective adversely, and mitigate risks of borrowers behaving in morally hazardous ways, before and after a loan is made, respectively. Certain substitutes for the enforcement of such contracts—such as peer monitoring, where village elders or “kupuna” ensure credible enforcement threats of loan covenants—have been successful in some micro-lending contexts where other information asymmetry-reducing institutions are not well-developed. That’s not Hawaii, is it?
So the question is: where, in Hawaii, are existing lending institutions inadequate to the needs of a micro-lending borrower segment? We already have a thriving, non-profit, small- (if not micro-) lending community in Hawaii. They are called credit unions. So ubiquitous are they, and so large a share of deposits do they comprise in Hawaii, that during the 1990s the U.S. Justice Department changed antitrust law interpretation to recognize the importance of credit unions in Hawaii when calculating concentration ratios in their due diligence of bank and savings and loan acquisitions. In no other state does the role of credit unions even approximate their role in Hawaii. That’s before we even talk about banks, all of whom are under the (dubious) requirements of the Community Reinvestment Act (CRA) to lend in economically-disadvantaged communities. Call it forced adverse selection: even the legacy of the sub-prime financial crisis has not led anybody to question the wisdom of CRA, at least not very publicly. (Only nerds talk about it at financial economics conferences.) At least one Hawaii bank routinely receives an “outstanding” CRA rating by federal bank examiners, a designation conferred on only 7% of commercial banks nationwide.
I’ll take a look at the doc file in the next couple days but I guess my first concern would be—all kidding about the People’s Republic of Hawaii aside—why would anybody do this in Hawaii and, even more importantly, why would anybody expect a non-profit lender to do it well? The point is to have skin in the game, both borrower and lender, so that the loan gets paid back. Non-profits have nothing at stake, except the self-perception of the goodness of the deeds they do, hardly a basis for good credit allocation. It’s not clear to me that the track record of credit unions in terms of loan quality makes the non-profit channel appealing, and there is plenty of evidence of such clowns as DBEDT, OHA and DHHL that government is an even worse non-profit lender than private not-for-profit institutions. The only way I could see this making sense is if somebody had a better computer algorithm than commercial banks already do (who, let’s remember, do this stuff on-line already). With their existing information technology banks screen borrowers, originate loans, and manage payments and settlement, all with a less than 4% loan loss rate for credit card issues (which is about the max that the last 20 VISA and Mastercard issuers will actually tolerate) or, if you’re a Bank of Hawaii, at a less than 1% loan loss rate. In fact, come to think of it, credit cards ARE the micro-lending channel in the U.S., and every kid in college can get one of those. What is the market here?
OK, harsh reaction, I know. The more I contemplate it, the harsher my reaction gets. Start by having the gang think through answers to those questions and I’ll get back to you.
pb
I haven’t read the attachment but here are some quick thoughts, actually a critique on first principles.
Micro-lending occurs in markets that are characterized by: (1) low levels of per capita income; and (2) inadequate financial “deepening.” The two are not independent, but the causality runs from (2) to (1). Hawaii is not a (1) market. Hawaii is a “G-22” market. Honolulu is not Mumbai.
Modern finance and banking theory typically asks why (1) and (2) co-exist in the context of information asymmetry. That is, financial development overcomes two forms of asymmetry—adverse selection and moral hazard—which is it absent in some contexts (like, low-income countries). For a variety of reasons related to cultural and historical specificity, without getting into post-colonial mush, the absence of well-developed private property rights systems in many developing contexts has often been an impediment to the development of traditional bank lending. Collateralization institutions require clear property rights, and credible enforcement of the associated state-contingent contracts (“if you don’t pay back the loan then this happens”). For example, much of the hangup immediately after the start of the Asian Financial Crisis was the lack of credibility of bankruptcy law enforcement in places like Thailand. (Within 90 days of the collapse of the Thai baht in July 1997, acting on an IMF recommendation, Thailand re-wrote its constitution, dissolved the Parliament, had new Parliamentary elections, and passed the necessary bankruptcy law reforms, something that could never happen in Hawaii.) Collateralization, information technology (to confirm borrowers’ financial status), monitoring of covenants in loan agreements, all are tools designed to create an incentive-compatible environment between borrowers and lenders. They mitigate risks of lenders selective adversely, and mitigate risks of borrowers behaving in morally hazardous ways, before and after a loan is made, respectively. Certain substitutes for the enforcement of such contracts—such as peer monitoring, where village elders or “kupuna” ensure credible enforcement threats of loan covenants—have been successful in some micro-lending contexts where other information asymmetry-reducing institutions are not well-developed. That’s not Hawaii, is it?
So the question is: where, in Hawaii, are existing lending institutions inadequate to the needs of a micro-lending borrower segment? We already have a thriving, non-profit, small- (if not micro-) lending community in Hawaii. They are called credit unions. So ubiquitous are they, and so large a share of deposits do they comprise in Hawaii, that during the 1990s the U.S. Justice Department changed antitrust law interpretation to recognize the importance of credit unions in Hawaii when calculating concentration ratios in their due diligence of bank and savings and loan acquisitions. In no other state does the role of credit unions even approximate their role in Hawaii. That’s before we even talk about banks, all of whom are under the (dubious) requirements of the Community Reinvestment Act (CRA) to lend in economically-disadvantaged communities. Call it forced adverse selection: even the legacy of the sub-prime financial crisis has not led anybody to question the wisdom of CRA, at least not very publicly. (Only nerds talk about it at financial economics conferences.) At least one Hawaii bank routinely receives an “outstanding” CRA rating by federal bank examiners, a designation conferred on only 7% of commercial banks nationwide.
I’ll take a look at the doc file in the next couple days but I guess my first concern would be—all kidding about the People’s Republic of Hawaii aside—why would anybody do this in Hawaii and, even more importantly, why would anybody expect a non-profit lender to do it well? The point is to have skin in the game, both borrower and lender, so that the loan gets paid back. Non-profits have nothing at stake, except the self-perception of the goodness of the deeds they do, hardly a basis for good credit allocation. It’s not clear to me that the track record of credit unions in terms of loan quality makes the non-profit channel appealing, and there is plenty of evidence of such clowns as DBEDT, OHA and DHHL that government is an even worse non-profit lender than private not-for-profit institutions. The only way I could see this making sense is if somebody had a better computer algorithm than commercial banks already do (who, let’s remember, do this stuff on-line already). With their existing information technology banks screen borrowers, originate loans, and manage payments and settlement, all with a less than 4% loan loss rate for credit card issues (which is about the max that the last 20 VISA and Mastercard issuers will actually tolerate) or, if you’re a Bank of Hawaii, at a less than 1% loan loss rate. In fact, come to think of it, credit cards ARE the micro-lending channel in the U.S., and every kid in college can get one of those. What is the market here?
OK, harsh reaction, I know. The more I contemplate it, the harsher my reaction gets. Start by having the gang think through answers to those questions and I’ll get back to you.
pb
Muhammud Yunus
Micro-lending's credibility takes another hit as Muhammud Yunus is removed as the head of Grameen Bank.
There was also a story on NPR this morning that also cited his creation of a rival political party as the underlying reason for the government to ask him to resign under the guise of exercising the rule concerning mandatory retirement age. Another interesting component of this story is that the people of Bangladesh, as reported by the correspondent, are actually ambivalent about Muhammud Yunus. Apparently they feel that he has used a portrayal of Bangladesh as a backwards nation with scores of poverty-stricken people as the means to gain his international fame.
Here's the transcript:
RENEE MONTAGNE, host:
The Bangladeshi government recently ordered him out as head of his bank, which is based there, but he's refusing to go. He's now battling his government in court to try and stay on.
To find out more, we reached Amy Kazmin, the South Asia correspondent for the Financial Times.
Thanks for joining us.
Ms. AMY KAZMIN (South Asia correspondent, Financial Times): Thank you.
MONTAGNE: Now from what I understand, the government says Yunus has to leave Grameen Bank that's the one that he founded - because he's in violation of retirement laws. That is, he's 70 years old, and according to the law in Bangladesh, company heads have to retire at 60.
Ms. KAZMIN: I mean, that is the technicality that the Central Bank of Bangladesh has used in ordering him to immediately relinquish his responsibilities as managing director. But actually, most people in Bangladesh believe that this is basically an orchestrated political campaign against him by the government of Prime Minister Sheikh Hasina.
MONTAGNE: Now, why would that be?
Ms. KAZMIN: Basically, in 2007, Muhammad Yunus, fresh off the back of his Nobel glory, announced plans to set up his own political party and clean up political life in Bangladesh, which is pretty notoriously corrupt. He dropped the idea within a couple of months, but as a result, I think the politicians in Bangladesh still see him as a potential political threat.
MONTAGNE: Well, for those who have heard of him, Muhammad Yunus is a hero, because he tackles social ills. He helps people better themselves, perhaps the most famous Bangladeshi in the world. What is his reputation inside Bangladesh?
Ms. KAZMIN: I think many people in Bangladesh are quite ambivalent, and they feel that his success has actually come on the back of the image of the country as being this kind of poor basket case, this deeply impoverished society. And I think many Bangladeshis actually kind of feel resentful towards that, because they feel that perhaps Bangladesh isn't quite so bad as he makes out in order to make his own case seem even stronger for his achievements.
MONTAGNE: Do you see a negative impact on Grameen Bank, or for that matter, on microlending in general, which also does have its problems in that area of the world already?
Ms. KAZMIN: Well, I think there's a few things. I mean, there's concern about the impact on the bank. There's a lot of concern that if Yunus is thrown out very unceremoniously and there's not kind of a stable, amicable transition plan, that depositors' confidence will be undermined, and that there could be a run on the bank. Because Grameen Bank doesn't just lend out money, they also take deposits. And they have over a billion dollars, I believe, of deposits. So if there was a run on the bank, that would be very destabilizing for the institution.
There's also the concern about microfinance in general. Globally, microfinance is actually in a bit of a crisis, going through a very intense soul-searching period because of a crisis not in Bangladesh, but in India, where microlenders - which have promoted themselves as these helping hands to poor - actually were accused of, like, over-lending and driving the poor into debt situations that they couldn't possibly ever get out of.
MONTAGNE: So his - if he is pushed out, what? That will make the whole microlending effort look that much worse?
Ms. KAZMIN: To be honest, I really don't think that Yunus being pushed out would necessarily heavily affect microfinance one way or the other, though it is a reminder of the political risks that microfinanciers face, as they say that they're trying to help the poor. Lots of politicians also want to be the allies of the poor and the protectors of the poor and may feel a little bit resentful about microfinanciers coming in and usurping that role.
MONTAGNE: Amy Kazmin is the South Asia correspondent for the Financial Times. She joined us from New Delhi.
Thanks very much.
Ms. KAZMIN: Thank you.
Bangladesh currently ranks 57th in the world in terms of GDP with approximately $105 billion in economic activity, ahead of Vietnam and just behind Kuwait. But with a population of 166 million and a resulting nominal per capita GDP of $641 (Wikipedia) it appears that Mr. Yunus' portrayal is mostly accurate.
There was also a story on NPR this morning that also cited his creation of a rival political party as the underlying reason for the government to ask him to resign under the guise of exercising the rule concerning mandatory retirement age. Another interesting component of this story is that the people of Bangladesh, as reported by the correspondent, are actually ambivalent about Muhammud Yunus. Apparently they feel that he has used a portrayal of Bangladesh as a backwards nation with scores of poverty-stricken people as the means to gain his international fame.
Here's the transcript:
RENEE MONTAGNE, host:
The Bangladeshi government recently ordered him out as head of his bank, which is based there, but he's refusing to go. He's now battling his government in court to try and stay on.
To find out more, we reached Amy Kazmin, the South Asia correspondent for the Financial Times.
Thanks for joining us.
Ms. AMY KAZMIN (South Asia correspondent, Financial Times): Thank you.
MONTAGNE: Now from what I understand, the government says Yunus has to leave Grameen Bank that's the one that he founded - because he's in violation of retirement laws. That is, he's 70 years old, and according to the law in Bangladesh, company heads have to retire at 60.
Ms. KAZMIN: I mean, that is the technicality that the Central Bank of Bangladesh has used in ordering him to immediately relinquish his responsibilities as managing director. But actually, most people in Bangladesh believe that this is basically an orchestrated political campaign against him by the government of Prime Minister Sheikh Hasina.
MONTAGNE: Now, why would that be?
Ms. KAZMIN: Basically, in 2007, Muhammad Yunus, fresh off the back of his Nobel glory, announced plans to set up his own political party and clean up political life in Bangladesh, which is pretty notoriously corrupt. He dropped the idea within a couple of months, but as a result, I think the politicians in Bangladesh still see him as a potential political threat.
MONTAGNE: Well, for those who have heard of him, Muhammad Yunus is a hero, because he tackles social ills. He helps people better themselves, perhaps the most famous Bangladeshi in the world. What is his reputation inside Bangladesh?
Ms. KAZMIN: I think many people in Bangladesh are quite ambivalent, and they feel that his success has actually come on the back of the image of the country as being this kind of poor basket case, this deeply impoverished society. And I think many Bangladeshis actually kind of feel resentful towards that, because they feel that perhaps Bangladesh isn't quite so bad as he makes out in order to make his own case seem even stronger for his achievements.
MONTAGNE: Do you see a negative impact on Grameen Bank, or for that matter, on microlending in general, which also does have its problems in that area of the world already?
Ms. KAZMIN: Well, I think there's a few things. I mean, there's concern about the impact on the bank. There's a lot of concern that if Yunus is thrown out very unceremoniously and there's not kind of a stable, amicable transition plan, that depositors' confidence will be undermined, and that there could be a run on the bank. Because Grameen Bank doesn't just lend out money, they also take deposits. And they have over a billion dollars, I believe, of deposits. So if there was a run on the bank, that would be very destabilizing for the institution.
There's also the concern about microfinance in general. Globally, microfinance is actually in a bit of a crisis, going through a very intense soul-searching period because of a crisis not in Bangladesh, but in India, where microlenders - which have promoted themselves as these helping hands to poor - actually were accused of, like, over-lending and driving the poor into debt situations that they couldn't possibly ever get out of.
MONTAGNE: So his - if he is pushed out, what? That will make the whole microlending effort look that much worse?
Ms. KAZMIN: To be honest, I really don't think that Yunus being pushed out would necessarily heavily affect microfinance one way or the other, though it is a reminder of the political risks that microfinanciers face, as they say that they're trying to help the poor. Lots of politicians also want to be the allies of the poor and the protectors of the poor and may feel a little bit resentful about microfinanciers coming in and usurping that role.
MONTAGNE: Amy Kazmin is the South Asia correspondent for the Financial Times. She joined us from New Delhi.
Thanks very much.
Ms. KAZMIN: Thank you.
Bangladesh currently ranks 57th in the world in terms of GDP with approximately $105 billion in economic activity, ahead of Vietnam and just behind Kuwait. But with a population of 166 million and a resulting nominal per capita GDP of $641 (Wikipedia) it appears that Mr. Yunus' portrayal is mostly accurate.
Monday, March 28, 2011
Small Business Development Center
Kim Horan set up a meeting with Pia Chock from the Small Business Development Center about possibly partnering with them for business consulting/mentoring of for our loan recipients. The SBDC is federally funded resource that allows clients to meet with their mentors as often as they need and it would provide its services for free.
Also joining us was Len Fukushima from Merrill Lynch. Len had a nbunch of really interesting ideas to consider:
— go to banks and credit unions around town, ask for $5,000 to fund a micro-loan, and in return they get to place one person on the Loan Selection Committee to ensure accountability
— go to the respective Chambers of Commerce (Filipino, Chinese, Japanese) and ask them for free membership for the loan recipients
— centralized bookkeeping system: standardize the process by having a link from the central website to Quickbooks or other accounting software; each borrower would have her/his own password and account; the SBDC mentor could help with inputting the data (sales, receipts, etc.)
Ultimately, as Len and Pia pointed out, there needs to be accountability built into this program. How does the mentoring work after the loan is given out? How do encourage borrowers to work together with their peer groups to enable success? And when things go wrong, we need to be able to ask "Who is to Blame?" And then we need to know how to fix the problems and educate the people so that we can continue moving forward.
Also joining us was Len Fukushima from Merrill Lynch. Len had a nbunch of really interesting ideas to consider:
— go to banks and credit unions around town, ask for $5,000 to fund a micro-loan, and in return they get to place one person on the Loan Selection Committee to ensure accountability
— go to the respective Chambers of Commerce (Filipino, Chinese, Japanese) and ask them for free membership for the loan recipients
— centralized bookkeeping system: standardize the process by having a link from the central website to Quickbooks or other accounting software; each borrower would have her/his own password and account; the SBDC mentor could help with inputting the data (sales, receipts, etc.)
Ultimately, as Len and Pia pointed out, there needs to be accountability built into this program. How does the mentoring work after the loan is given out? How do encourage borrowers to work together with their peer groups to enable success? And when things go wrong, we need to be able to ask "Who is to Blame?" And then we need to know how to fix the problems and educate the people so that we can continue moving forward.
Hawaii Angels, Women's Fund
Met with Chenoa Farnsworth from Farnsworth Consulting, Hawaii Angels, and the Women's Fund.
She cited mentoring as the key component to making sure a micro-lending project could work. For reference she recommended Jump Start, "a nationally recognized non-profit transforming the economic impact of entrepreneurial ventures and the ecosystems supporting their growth." They key to having effective mentors is to 1) pay them a reasonable wage to ensure that they are 2) reasonably, if not highly, qualified. This makes me second guess my desire to partner with undergraduates from the Shidler School of Business. If we go that route then we should probably focus exclusively on graduate students.
Other resources we could pursue are:
— Hawaii Alliance of Non-Profit Organizations
— Economic Development Administration, Gail Fujita
— American Savings Bank, Kaulana Park
— Oahu Economic Development Board/Enterprise Honolulu, Pono Shim
Finally, one area we need extra help and expertise in is servicing of loans. To accomplish that we will probably need to get a loan officer from a local bank either to join our board or provide us with consultation on how best to achieve that goal.
She cited mentoring as the key component to making sure a micro-lending project could work. For reference she recommended Jump Start, "a nationally recognized non-profit transforming the economic impact of entrepreneurial ventures and the ecosystems supporting their growth." They key to having effective mentors is to 1) pay them a reasonable wage to ensure that they are 2) reasonably, if not highly, qualified. This makes me second guess my desire to partner with undergraduates from the Shidler School of Business. If we go that route then we should probably focus exclusively on graduate students.
Other resources we could pursue are:
— Hawaii Alliance of Non-Profit Organizations
— Economic Development Administration, Gail Fujita
— American Savings Bank, Kaulana Park
— Oahu Economic Development Board/Enterprise Honolulu, Pono Shim
Finally, one area we need extra help and expertise in is servicing of loans. To accomplish that we will probably need to get a loan officer from a local bank either to join our board or provide us with consultation on how best to achieve that goal.
Thursday, March 24, 2011
House Bill 198 and 1380
Representative Jessica Wooley crafted the following "School gardens" legislation, House Bill 198:
‘S302A- School gardens. (a) All schools are authorized to grow food in school gardens for consumption in their school meals programs; provided that food products used in
a school meals program shall be inspected and certified as safe by the department of agriculture.
Testimony in favor came from the Environmental Caucus of the Democratic Party of Hawaii as well as the Kokua Foundation, and the National Heart Association. The main objections came from local farmers who cited the food safety certification process as not being articulated clearly enough in the language. DOE Superintendent Kathryn Matayoshi also submitted testimony that the schools would not be allowed to use produce harvested in school gardens as part of the National School Lunch Program unless the Department of Agriculture certified it. Apparently they can, however, eat the lunch as part of a snack or other program so long as it's not part of lunch.
Ultimately this bill was combined with House Bill 1380, Relating to Hawai'i Grown Produce, but there was no authorization. Instead this bill calls for a task force to:
"Examine the feasibility of establishing school gardens, to grow food for consumption as part of each school's lunch program, specifically looking at food safety certification issues;" The task force will submit its findings prior to the 2012 session when it will be taken up again. (It would be great to get Eliza Lathrop on that task force.)
So it looks like liability concerns are slowing this idea down, but progress was made and there is a chance to fight for it another day.
‘S302A- School gardens. (a) All schools are authorized to grow food in school gardens for consumption in their school meals programs; provided that food products used in
a school meals program shall be inspected and certified as safe by the department of agriculture.
Testimony in favor came from the Environmental Caucus of the Democratic Party of Hawaii as well as the Kokua Foundation, and the National Heart Association. The main objections came from local farmers who cited the food safety certification process as not being articulated clearly enough in the language. DOE Superintendent Kathryn Matayoshi also submitted testimony that the schools would not be allowed to use produce harvested in school gardens as part of the National School Lunch Program unless the Department of Agriculture certified it. Apparently they can, however, eat the lunch as part of a snack or other program so long as it's not part of lunch.
Ultimately this bill was combined with House Bill 1380, Relating to Hawai'i Grown Produce, but there was no authorization. Instead this bill calls for a task force to:
"Examine the feasibility of establishing school gardens, to grow food for consumption as part of each school's lunch program, specifically looking at food safety certification issues;" The task force will submit its findings prior to the 2012 session when it will be taken up again. (It would be great to get Eliza Lathrop on that task force.)
So it looks like liability concerns are slowing this idea down, but progress was made and there is a chance to fight for it another day.
Island Innovation Fund
Jessica Horiuchi, Kevin Kawahara, and I had a good conference call conversation with Kina Mahi to get feedback about our IIF proposal.
On the positive side, they liked our connections to community partners and the level of in-kind contributions. She mentioned that to their knowledge no one else out in the community seems to be making loans at the $5,000 level so they found that attractive.
On the other end, they questioned the impact and scalability of our proposal (only 3-5 loans for an $85,000 grant) and our ability to sustain the effort over the long term. One factor that worked against us is that we don't have any cash at the moment or any other funding source to provide stability for our operations. They were also hoping to see a greater understanding of the loan processing and default procedures for the loans and a stronger connection to existing local micro-lending organizations.
On the positive side, they liked our connections to community partners and the level of in-kind contributions. She mentioned that to their knowledge no one else out in the community seems to be making loans at the $5,000 level so they found that attractive.
On the other end, they questioned the impact and scalability of our proposal (only 3-5 loans for an $85,000 grant) and our ability to sustain the effort over the long term. One factor that worked against us is that we don't have any cash at the moment or any other funding source to provide stability for our operations. They were also hoping to see a greater understanding of the loan processing and default procedures for the loans and a stronger connection to existing local micro-lending organizations.
Monday, March 14, 2011
USS Abraham Lincoln
Last week I had the opportunity to land on the aircraft carrier USS Abraham Lincoln— "Shall Not Perish!" What an incredible sensory experience to go from 150 mph to 0 in less than three seconds and then to walk out on the flight deck to see the hive of activity undertaken every day to launch fighter jets and then land them safely. As was my experience on the submarine USS Charlotte, the level of professionalism and competence of these sailors, some of them barely college age, was incredibly impressive and patriotism-inspiring. The leadership of the commanders was first rate as they went out of their way to make sure their charges received constant feedback and acknowledgment for their efforts. We got to speak to the Captain as he navigated the ship, the Admiral about the overall strategy of our naval forces, and every support commander from the Air Boss to the meteorolgists to the main mechanics. At each meal we sat with sailors, pilots, or Chief Warrant Officers to hear their "Navy stories" and they were all impressive. Just the thought of being away from families for six months— many of them missed the births of their children— and the forthrightness with which they approached their duties was truly admirable. Allright enough writing; I will let the pictures speak for themselves.
Thursday, March 10, 2011
Native Hawaiian Government Reorganization Act
I've been working with Rep. Jessica Wooley on HB 1627 the state version of the Akaka Bill which seeks to "provide a process for the reorganization of a first nation government by Native Hawaiians and its subsequent recognition by the State of Hawai'i."
The arguments for such a measure are the same as for the Akaka Bill on the federal level: the Hawaiian monarchy was illegally overthrown, the United States issued a formal Apology Resolution acknowledging that violation of international law, native Americans and Alaskans have that type of relationship already.
The arguments against, based on the testimony submitted, is much more extensive and is summarized as follows:
• Violates constitution of Kingdom of Hawaii
Richard Kinney, Free Hawaii: “Queen Liliuokalani was the Constitutional Soveriegn of all her subjects of the Hawaiian Kingdom. Not only those of the Indigenous Native people of her Kingdom.”
Ken Conklin: “…violates the first sentence of the first Constitution of the Kingdom of Hawaii (1840)… the kokokahi (one blood) sentence: God has made of one blood all rces of people to dwell upon the Earth in unity and blessedness.”
KeAloha Aiu: “The Hawaiian Kingdom was a fully operational, fully recognized, progressive, sovereign, independent, neutral nation. Its body politic consisted of people from many different ethnicities and races, not just ‘native’ Hawaiians.’”
William Burgess: “…there has never been in Hawaii, even during the years of the Kingdom, any ‘tribe’ or government of any kind for Native Hawaiians separate from the government of the rest of Hawaii’s citizens.”
Joseph Heaukulani: “In regard to self-determination, this bill seems to have forgotten those subjects of the Hawaiian Kingdom who were not of ‘aboriginal, indigenous, native descent,’ but were instead naturalized alien foreigners that were thereafter considered to be native and who also lost their natural to self-determination with the overthrow of the Hawaiian Kingdom on January 17, 1893.”
Dennis Ragsdale, Kingdom of Hawai’i: “Neither the written Constitution for the Kingdom of Hawai’i or its statutory laws made any reference to aboriginal status, right or privileges of anyone. The Constitution and statutory laws of the Kingdom of Hawai’i did make provisions for citizens and aliens, and their respective rights within and under the representative government.”
• Violates U.S. Constitution
Ken Conklin: “The clear purpose of the bill is to authorize the creation of an entity with governmental powers, but restricted to people who have at least one drop of Hawaiian native blood. That racist concept is unconstitutional under the 14th amendment of the U.S. Constitution.
William Burgess: “Congress…does not have the power to create a tribe arbitrarily (U.S. vs. Sandoval)
Charles Zahn: ..restricted to people who have at least one drop of Hawaiian blood…is unconstitutional under the 14th amendment of the U.S. Constitution.”
Garry P. Smith: “How can the state recognize native Hawaiians as a tribe when they are not and never have been a tribe?”
Kealii Makekau: “Creation of a Nation or Tribe is not authorized in the Constitution.”
• Disenfranchises Hawaiians
Sue Haglund: “HB 1627 does not establish a proper representation of native Hawaiian voice… in creating a ‘commission’ appointed by a governor, and the required criteria in defining ‘qualified Native Hawaiian constituent’ yet fails to establish a required criteria of a commission nine-member appointees.”
Raymond Heaukulani: “…sounds as if the governor can appoint anyone s/he wills regardless of whether they should be qualified to decide who is Hawaiian and who is not…”
David M.K. Inciong, II: “To usurp the Hawaiian Kingdom by creating a tribal governing entity to replace it, is repugnant to the international laws, U.S. Constitutional laws, Hawaiian Kingdom laws and moral rights of its citizens…We Hawaii patriots do not subscribe to the racist WASP Manifest Destiny doctrines that this bill supports. (?)”
• Does not recognize the illegality of annexation
Koani Foundation: “HB 1627 does not address the real issue of the theft of the Hawaiian nation and the injuries that stem from that… joint resolution, (not an official treaty, therefore, no lands were ceded) title to the lands of the Hawaiian Islands, to this day, still reside with the lawful Hawaiian Kingdom government and its people.”
Leon Siu, Free Hawaii: “There was no ‘treaty of annexation.’…the Hawaiian Kingdom still exists…”
• Clarification of “native Hawaiians”
Cheryl Lovell-Obatake: “I am a Kuleana land owner. I request clarification on the definition of native Hawaiians.”
• Unnecessary bureaucracy
KT Yungeirott: “Just creating another department. Hawaii cannot afford this.”
I used to think that it made sense for Hawaiians to have the same government to government relationship with the US that native Americans and Alaskans enjoy. But after reading over the bill and the testimony I'm having a hard time reconciling the fact that the government being proposed never actually existed in the history of Hawai'i. None of the constitutions of the Kingdom of Hawai'i required a person to have "aboriginal" blood so I find it hard to conceive of how this bill restores something based on that unprecedented premise. If it remains "race-based" then it's also easy to see how this proposal violates the 14th amendment of the US Constitution, and therefore won't stand up if brought to trial as it most certainly will by Bill Burgess, Ken Conklin et. al.
The arguments for such a measure are the same as for the Akaka Bill on the federal level: the Hawaiian monarchy was illegally overthrown, the United States issued a formal Apology Resolution acknowledging that violation of international law, native Americans and Alaskans have that type of relationship already.
The arguments against, based on the testimony submitted, is much more extensive and is summarized as follows:
• Violates constitution of Kingdom of Hawaii
Richard Kinney, Free Hawaii: “Queen Liliuokalani was the Constitutional Soveriegn of all her subjects of the Hawaiian Kingdom. Not only those of the Indigenous Native people of her Kingdom.”
Ken Conklin: “…violates the first sentence of the first Constitution of the Kingdom of Hawaii (1840)… the kokokahi (one blood) sentence: God has made of one blood all rces of people to dwell upon the Earth in unity and blessedness.”
KeAloha Aiu: “The Hawaiian Kingdom was a fully operational, fully recognized, progressive, sovereign, independent, neutral nation. Its body politic consisted of people from many different ethnicities and races, not just ‘native’ Hawaiians.’”
William Burgess: “…there has never been in Hawaii, even during the years of the Kingdom, any ‘tribe’ or government of any kind for Native Hawaiians separate from the government of the rest of Hawaii’s citizens.”
Joseph Heaukulani: “In regard to self-determination, this bill seems to have forgotten those subjects of the Hawaiian Kingdom who were not of ‘aboriginal, indigenous, native descent,’ but were instead naturalized alien foreigners that were thereafter considered to be native and who also lost their natural to self-determination with the overthrow of the Hawaiian Kingdom on January 17, 1893.”
Dennis Ragsdale, Kingdom of Hawai’i: “Neither the written Constitution for the Kingdom of Hawai’i or its statutory laws made any reference to aboriginal status, right or privileges of anyone. The Constitution and statutory laws of the Kingdom of Hawai’i did make provisions for citizens and aliens, and their respective rights within and under the representative government.”
• Violates U.S. Constitution
Ken Conklin: “The clear purpose of the bill is to authorize the creation of an entity with governmental powers, but restricted to people who have at least one drop of Hawaiian native blood. That racist concept is unconstitutional under the 14th amendment of the U.S. Constitution.
William Burgess: “Congress…does not have the power to create a tribe arbitrarily (U.S. vs. Sandoval)
Charles Zahn: ..restricted to people who have at least one drop of Hawaiian blood…is unconstitutional under the 14th amendment of the U.S. Constitution.”
Garry P. Smith: “How can the state recognize native Hawaiians as a tribe when they are not and never have been a tribe?”
Kealii Makekau: “Creation of a Nation or Tribe is not authorized in the Constitution.”
• Disenfranchises Hawaiians
Sue Haglund: “HB 1627 does not establish a proper representation of native Hawaiian voice… in creating a ‘commission’ appointed by a governor, and the required criteria in defining ‘qualified Native Hawaiian constituent’ yet fails to establish a required criteria of a commission nine-member appointees.”
Raymond Heaukulani: “…sounds as if the governor can appoint anyone s/he wills regardless of whether they should be qualified to decide who is Hawaiian and who is not…”
David M.K. Inciong, II: “To usurp the Hawaiian Kingdom by creating a tribal governing entity to replace it, is repugnant to the international laws, U.S. Constitutional laws, Hawaiian Kingdom laws and moral rights of its citizens…We Hawaii patriots do not subscribe to the racist WASP Manifest Destiny doctrines that this bill supports. (?)”
• Does not recognize the illegality of annexation
Koani Foundation: “HB 1627 does not address the real issue of the theft of the Hawaiian nation and the injuries that stem from that… joint resolution, (not an official treaty, therefore, no lands were ceded) title to the lands of the Hawaiian Islands, to this day, still reside with the lawful Hawaiian Kingdom government and its people.”
Leon Siu, Free Hawaii: “There was no ‘treaty of annexation.’…the Hawaiian Kingdom still exists…”
• Clarification of “native Hawaiians”
Cheryl Lovell-Obatake: “I am a Kuleana land owner. I request clarification on the definition of native Hawaiians.”
• Unnecessary bureaucracy
KT Yungeirott: “Just creating another department. Hawaii cannot afford this.”
I used to think that it made sense for Hawaiians to have the same government to government relationship with the US that native Americans and Alaskans enjoy. But after reading over the bill and the testimony I'm having a hard time reconciling the fact that the government being proposed never actually existed in the history of Hawai'i. None of the constitutions of the Kingdom of Hawai'i required a person to have "aboriginal" blood so I find it hard to conceive of how this bill restores something based on that unprecedented premise. If it remains "race-based" then it's also easy to see how this proposal violates the 14th amendment of the US Constitution, and therefore won't stand up if brought to trial as it most certainly will by Bill Burgess, Ken Conklin et. al.
Tuesday, March 1, 2011
Peter Drucker— Chapter 2, Leadership is a Foul-Weather Job
Chapter 2— Leadership is a Foul-Weather Job
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 anticipate crisis. Perhaps not to avert it, but to anticipate it. To wait until the crisis hits is already abdication. One has to make the organization capable of anticipating the storm, weathering it, and in fact, being ahead of it. That’s called innovation, constant renewal.
The lesson for leaders of non-profits is that one has to grow with success. But one also has to make sure that one doesn’t become unable to adjust. Sooner or later, growth slows down and the institution plateaus. Then it has to be able to maintain its momentum, its flexibility, its vitality, and its vision. Otherwise, it becomes frozen.
Non-profit organizations have no “bottom line.” They are prone to consider everything they do to be righteous and moral and to serve a cause, so they are not willing to say, if it doesn't produce results then maybe we should direct our resources elsewhere. Non-profit organizations need the discipline of organized abandonment perhaps even more than a business does. They need to face up to critical choices.
The starting point is to recognize that change is not a threat. It’s an opportunity.
Changes in Mind-Set and Mentality— The lesson is, Don’t wait. Organize yourself for systematic innovation. Build the search opportunities, inside and outside, into your organization. Look for changes as indicators of an opportunity for innovation.
First, organize yourself to see the opportunity. If you don't look out the window, you won’t see it.
Then, to implement the innovation effectively: the most common mistake± the one that kills more innovations than anything else— is the attempt to build too much reinsurance into the change, to cover your flank, not to alienate yesterday.
Next, the problem of organizing the new: It must be organized separately. If you put new ideas into operating units the solving of the daily crisis will always take precedence over introducing tomorrow. So when you try to develop the new within an existing operation, you are always postponing tomorrow. It must be set up separately. And yet you have to make sure the existing operations don't lose the excitement of the new entirely. Otherwise, they become not only hostile but paralyzed.
The Innovative Strategy— Successful innovation finds a target of opportunity. Somebody who is receptive, who welcomes the new, who wants to succeed and, at the same time, has enough stature, enough clout in the organization so that, if it works for him or her, the rest of the organization will say, Well, there must be something to it.
If you plan first and then try to sell, you’re going to miss the important things. But you also waste years of time. Selling has to 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 the true believers— and true believers are not available part time.
How to pick a leader— First I would look at what the individuals have done, what their strengths are. The first thing to look for is strength— you can only perform with strength— and what they have done with it.
Second, I would look at the institution and ask: What is the one immediate key challenge?
Then I would look for character, or integrity. A leader sets an example, especially, a strong leader. He or she is somebody on whom people, especially younger people, in the organization model themselves.
In the non-profit agency, mediocrity in leadership shows up almost immediately. One difference clearly is that the non-profit has a number of bottom lines— not just one…in non-profit management, there is no such one determinant. You deal with balance, synthesis, a combination of bottom lines for performance.
…the non-profit executive has a multiplicity of constituencies— each of which can say no and none of which can say yes. The multiplicity of constituencies is reflected in your boards, your trustees, who are likely to be intensely involved in running the agency.
You can’t be satisfied in non-profit organizations with doing adequately as a leader. You have to do exceptionally well, because your agency is committed to a cause. You want people as leaders who take a great view of the agency’s functions, people who take their roles seriously— not themselves seriously.
Your Personal Leadership Role— The new leader of a non-profit doesn’t have much time to establish him/herself. Maybe a year…the role has to fit you…the role you take also has to fit the task…the role has to fit expectations.
You have to two things to build on: the equality of the people in the organization, and the new demands you make on them.
The leaders who most effectively, it seems to me, never say “I.” They don’t think “I.” They think ”we”; they think “team.” They understand their job to be to make the team function. They accept the responsibility and don’t sidestep it, but “we” gets the credit. There is an identification (very often, quite unconscious) with the task and with the group. This is what creates trust, what enables you to get the task done.
As a leader you are visible; incredibly visible. And you have expectations to fulfill…You are constantly on trial.
Most organizations need somebody who can lead regardless of the weather. What matters is that s/he works on the basic competences.
1) As the first such basic competence, I would put the willingness, ability, and self-discipline to listen. Listening is not a skill; it’s a discipline.
2) The second essential competence is the willingness to communicate, to make yourself understood.
3) The next important competence is not to alibi yourself. We either do things to perfection, or we don’t do them. We don’t do things to get by. Working that way creates pride in the organization.
4) The last basic competence is the willingness to realize how unimportant you are compared to the task. Leaders need objectivity, a certain detachment. They subordinate themselves to the task, but they don’t identify themselves with the task. The task remains both bigger than they are, and different.
When effective non-profit leaders have the capacity to maintain their personality and individuality, even though they are both totally dedicated, the task will go on after them. That is the hallmark of the truly effective leader, who doesn't feel threatened by strength.
What attracts people to an organization are high standards, because high standards create self-respect and pride.
Most leaders I’ve seen were neither born nor made. They were self-made. We need far too many leaders to depend only on the naturals. It’s that willingness to make yourself competent in the task that’s needed to create leaders.
The Balance Decision— One of the key tasks of the leader is to balance up the long range and the short range, the big picture and the pesky little details…the balance between concentrating resources on one goal and enough diversification.
The even more critical balance, and the toughest to handle, is between being too cautious and being rash….timing— and this is always of the essence.
I’ve seen more institutions damaged by too much caution than by rashness, though I’ve seen both…know your degenerative tendency and try to counteract it
…the balance decision between opportunity and risk. One looks at the decision: Is it reversible? And what kind of risk is it? The one asks: Is it a risk we can afford? Or the trickiest of them all, the risk we can’t afford not to take…The balance decisions are what we need non-profit leaders for, whether they are paid or volunteer.
The Don't’s of Leadership— Effective leaders have to spend a little time on making themselves understood.
Don’t be afraid of strengths in your organization…you run far less risk of having pople around you want to push you out than you risk by being served by mediocrity.
Don't hog the credit.
Don’t knock your subordinates. A leader has responsibility to his subordinates, to his associates.
Keep your eye on the task, not on yourself. The task matters, and you are a servant.
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 anticipate crisis. Perhaps not to avert it, but to anticipate it. To wait until the crisis hits is already abdication. One has to make the organization capable of anticipating the storm, weathering it, and in fact, being ahead of it. That’s called innovation, constant renewal.
The lesson for leaders of non-profits is that one has to grow with success. But one also has to make sure that one doesn’t become unable to adjust. Sooner or later, growth slows down and the institution plateaus. Then it has to be able to maintain its momentum, its flexibility, its vitality, and its vision. Otherwise, it becomes frozen.
Non-profit organizations have no “bottom line.” They are prone to consider everything they do to be righteous and moral and to serve a cause, so they are not willing to say, if it doesn't produce results then maybe we should direct our resources elsewhere. Non-profit organizations need the discipline of organized abandonment perhaps even more than a business does. They need to face up to critical choices.
The starting point is to recognize that change is not a threat. It’s an opportunity.
Changes in Mind-Set and Mentality— The lesson is, Don’t wait. Organize yourself for systematic innovation. Build the search opportunities, inside and outside, into your organization. Look for changes as indicators of an opportunity for innovation.
First, organize yourself to see the opportunity. If you don't look out the window, you won’t see it.
Then, to implement the innovation effectively: the most common mistake± the one that kills more innovations than anything else— is the attempt to build too much reinsurance into the change, to cover your flank, not to alienate yesterday.
Next, the problem of organizing the new: It must be organized separately. If you put new ideas into operating units the solving of the daily crisis will always take precedence over introducing tomorrow. So when you try to develop the new within an existing operation, you are always postponing tomorrow. It must be set up separately. And yet you have to make sure the existing operations don't lose the excitement of the new entirely. Otherwise, they become not only hostile but paralyzed.
The Innovative Strategy— Successful innovation finds a target of opportunity. Somebody who is receptive, who welcomes the new, who wants to succeed and, at the same time, has enough stature, enough clout in the organization so that, if it works for him or her, the rest of the organization will say, Well, there must be something to it.
If you plan first and then try to sell, you’re going to miss the important things. But you also waste years of time. Selling has to 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 the true believers— and true believers are not available part time.
How to pick a leader— First I would look at what the individuals have done, what their strengths are. The first thing to look for is strength— you can only perform with strength— and what they have done with it.
Second, I would look at the institution and ask: What is the one immediate key challenge?
Then I would look for character, or integrity. A leader sets an example, especially, a strong leader. He or she is somebody on whom people, especially younger people, in the organization model themselves.
In the non-profit agency, mediocrity in leadership shows up almost immediately. One difference clearly is that the non-profit has a number of bottom lines— not just one…in non-profit management, there is no such one determinant. You deal with balance, synthesis, a combination of bottom lines for performance.
…the non-profit executive has a multiplicity of constituencies— each of which can say no and none of which can say yes. The multiplicity of constituencies is reflected in your boards, your trustees, who are likely to be intensely involved in running the agency.
You can’t be satisfied in non-profit organizations with doing adequately as a leader. You have to do exceptionally well, because your agency is committed to a cause. You want people as leaders who take a great view of the agency’s functions, people who take their roles seriously— not themselves seriously.
Your Personal Leadership Role— The new leader of a non-profit doesn’t have much time to establish him/herself. Maybe a year…the role has to fit you…the role you take also has to fit the task…the role has to fit expectations.
You have to two things to build on: the equality of the people in the organization, and the new demands you make on them.
The leaders who most effectively, it seems to me, never say “I.” They don’t think “I.” They think ”we”; they think “team.” They understand their job to be to make the team function. They accept the responsibility and don’t sidestep it, but “we” gets the credit. There is an identification (very often, quite unconscious) with the task and with the group. This is what creates trust, what enables you to get the task done.
As a leader you are visible; incredibly visible. And you have expectations to fulfill…You are constantly on trial.
Most organizations need somebody who can lead regardless of the weather. What matters is that s/he works on the basic competences.
1) As the first such basic competence, I would put the willingness, ability, and self-discipline to listen. Listening is not a skill; it’s a discipline.
2) The second essential competence is the willingness to communicate, to make yourself understood.
3) The next important competence is not to alibi yourself. We either do things to perfection, or we don’t do them. We don’t do things to get by. Working that way creates pride in the organization.
4) The last basic competence is the willingness to realize how unimportant you are compared to the task. Leaders need objectivity, a certain detachment. They subordinate themselves to the task, but they don’t identify themselves with the task. The task remains both bigger than they are, and different.
When effective non-profit leaders have the capacity to maintain their personality and individuality, even though they are both totally dedicated, the task will go on after them. That is the hallmark of the truly effective leader, who doesn't feel threatened by strength.
What attracts people to an organization are high standards, because high standards create self-respect and pride.
Most leaders I’ve seen were neither born nor made. They were self-made. We need far too many leaders to depend only on the naturals. It’s that willingness to make yourself competent in the task that’s needed to create leaders.
The Balance Decision— One of the key tasks of the leader is to balance up the long range and the short range, the big picture and the pesky little details…the balance between concentrating resources on one goal and enough diversification.
The even more critical balance, and the toughest to handle, is between being too cautious and being rash….timing— and this is always of the essence.
I’ve seen more institutions damaged by too much caution than by rashness, though I’ve seen both…know your degenerative tendency and try to counteract it
…the balance decision between opportunity and risk. One looks at the decision: Is it reversible? And what kind of risk is it? The one asks: Is it a risk we can afford? Or the trickiest of them all, the risk we can’t afford not to take…The balance decisions are what we need non-profit leaders for, whether they are paid or volunteer.
The Don't’s of Leadership— Effective leaders have to spend a little time on making themselves understood.
Don’t be afraid of strengths in your organization…you run far less risk of having pople around you want to push you out than you risk by being served by mediocrity.
Don't hog the credit.
Don’t knock your subordinates. A leader has responsibility to his subordinates, to his associates.
Keep your eye on the task, not on yourself. The task matters, and you are a servant.
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