Beth Kanter and KD Paine recently published a book, Measuring the Networked Nonprofit: Using Data to Change the World, in which they argue quite compellingly that nonprofits can greatly improve their effectiveness by following the example of many organizations in the for-profit world and adopting a more metrics-minded approach to their activities.
Towards the end of our conversation, I turned things around and asked Beth and KD what they thought for-profits could learn from nonprofits.
They came up with the following three ideas.
1. Break Down the Silos
The larger the organization, the greater the tendency for individual departments to become entities unto themselves with their own leadership, their own goals, and their own way of measuring and evaluating what matters. In the worst case scenarios, such siloed departments not only lose sight of how they could best be sharing information and working together to achieve the overarching company goals but they even lose sight of these company goals altogether.
While silos can form or emerge in larger nonprofits, Paine explained that, in nonprofits, they can come down more quickly once their detrimental effect on organizational effectiveness become clear.
"The thing you see in non-profits," Paine told me, "is that the fact that when you start talking about those silos and point out how bad they are for measurement and how bad they are for results... data sharing starts to happen.
"On the for-profit side," she continued, "it is just really hard because you have marketing in one silo and you've got public relations in another silo and never the twain shall meet and marketing measures one thing and PR measures another thing."
"The sad thing is," she concluded, "if they shared data, the whole organization would improve and everybody would be happier."
It is sad. So break down those silos!
2. Theory of Change
Kanter agreed with Paine and pointed out that, "Once you tear down the silos, then you have the opportunity to actually think about a theory of change."
In the nonprofit world, where an organization's goal is social change, developing interim metrics can be a challenge. For example, if your desired outcome is a world where everyone has access to clean drinking water, that provides you with a clear end-state when you know you have accomplished your goal but it doesn't really describe all the changes that have to occur for that big change to happen.
A "theory of change" can help by connecting the dots between the present and the future, changed world. By breaking the process into steps—if we accomplish this, then that will happen; once we've accomplished that, this next thing will happen, etc.—you come up with a series of interim goals that will help you plan action and measure the "little" results necessary to achieve your "big hairy social change goal."
As I understood Kanter, thinking about a theory of change—asking of your organization, "What can change? And what are the logical steps that can lead up to that change?"—would allow for-profits to tackle two issues. On the one hand, it can help them think through their approach to organizational change and figure out what needs to take place in order to create a better functioning organization over the long haul.
On the other, and perhaps more importantly, it can help for-profits approach their go-to-market strategies with an emphasis on change both at the customer level (What do we need to do to change customer behavior?) and at the market level (What do we need to do to change the marketplace?).
As an example of what that might look like, consider Andrew Davis's concept of "brandscaping" and his observation that Finding Nemo, by driving an interest in clownfish, actually had a measurable impact across the entire personal aquarium industry.
That happened without any planning on the side of Pixar. What kind of changes, Davis asks, could be brought about if pet stores got together and tried to influence their entire market (by creating a children's show, for example)?
3. Have a True Purpose
This last lesson is a bit of a cheat because neither Kanter nor Paine said it, but I believe it is the most obvious thing that distinguishes nonprofits from for-profits. Nonprofits want to "change the world." They want to feed and clothe the poor, find homes for the homeless, end domestic violence, save endangered animal populations, and so on. They may sell t-shirts, put on concerts, buy advertising, solicit donations, etc., to achieve these goals, but these goals are what give meaning and purpose to all their activities.
Most for-profit businesses, by contrast, take as their purpose selling this or that product or service to people. Only in the most rare cases do the acts of identifying prospects, acquiring customers, and collecting revenue serve anything more significant. And yet, as John Jantsch insists in his recent book, The Commitment Engine, finding a purpose is the key to building a thriving business that not only attracts customers and retains employees but also makes a difference in people's lives.
People, at times, crave and covet things. But what people really want from life is a sense of meaning and an acknowledgement of their personal value. When your company has a purpose, and not just a product, it provides that meaning and affirms that value.
What is the purpose of your business?
If you would like to hear my entire conversation with Kanter and Paine, you may listen here or download the mp3 and listen at your convenience.You can also subscribe to the Marketing Smarts podcast in iTunes or via RSS and never miss an episode!