"Your job as a leader is to tap into the power of that higher purpose—and you can’t do it by retreating to the analytical. If you want to lead, have the courage to do it from the heart." -by Philippe Mora (@philippemora)
San Francisco, 03/06/14 - I have discussed in my posts about #workinprogress that past a certain size, industrial-age organizations a transform themselves into a sanctuary for incompetent political types abusing softer souls ready to give up control for security. As we are transitioning away from the industrial-era, it's pyramid-like organizational structures and the security-control model, it is refreshing to see early success in organizations that have chosen that path. For instance, the American Red Cross has been known for being more about spending donation money to cover ever rising administrative costs, which were mostly due to the bloating of an organization filled with incompetent, yet politically savvy types. By leading from the heart, and reducing the company's staff and useless perk, the new Red Cross Leadership has applied a playbook that was pioneered in the 90s by IBM's Lou Gertner, adapting it to a non-profit structure - successfully.
When an executive comes from the private sector to a nonprofit, the usual understanding is that he or she is there to inject some business discipline. When I arrived at the American Red Cross, there were certainly problems to be tackled. The books were closed on FY08 just six days after I started, with a $209 million operating deficit. The organization had been running deficits for some years, borrowing just to provide working capital, and we were more than $600 million in debt. Frankly, we were not very good at fundraising. Yes, we had a terrific brand—the second best-known in the world—but even that needed refreshing.
It didn’t take very much business savvy to see the way forward—we had to simplify the organizational structure. The American Red Cross has two parts: humanitarian services and blood services. It was on the humanitarian side that the organization was unwieldy. Its 720 independent chapters all had their own payroll systems, financial audits, websites, and IT departments. The redundancy was enormous—and on top of that, our messaging was at cross-purposes. With so many websites, we were knocking one another out of search results.
My team and I came up with what we thought was a logical restructuring and took it to the board, confident that the directors would declare it a no-brainer. But it wasn’t that simple. Some of them predicted a mutiny. The plan had enough support to pass, but because of the passion in the room, I took it off the table.
We decided it was time to change our process. We made it inclusive by bringing together 50 of our chapter executives to collaborate on a solution. Then we made it radically inclusive by sending the resulting plan out to the entire organization—more than 30,000 employees and hundreds of thousands of volunteers. We got thousands of responses and made many changes for the better.
And somewhere along the line, the process changed me. At the make-or-break meeting to put the final plan in front of the chapters, I found myself delivering a deeply emotional talk. I pointed to recent disasters, described how local chapters had responded, and implored the group to save the Red Cross. Earlier in my career, I would have considered that kind of speech sappy. But in that room I saw people’s skepticism change to belief. Did my leadership team and I show any special rhetorical brilliance? No—we proved we’d been listening, and our amazing Red Crossers, who care so deeply about our humanitarian mission, were willing to accept some difficult changes to save this American treasure.
We’re 10% smaller than we were when we started this journey, having made tough choices that included conducting layoffs, withholding merit increases, and suspending 401(k) matches. But having consolidated our back-office systems, we’re better at fulfilling our mission. Ninety-one cents of every dollar we raise directly supports those we serve.
And now I look back on my career in the private sector and realize how I should have been leading all along. Nonprofits don’t have a monopoly on meaning. When I was with AT&T, we didn’t just provide long-distance telecommunications—we connected people to information they needed and people they loved. At Fidelity Investments we didn’t just manage money—we helped people fulfill their dreams for college or retirement.
Your job as a leader is to tap into the power of that higher purpose—and you can’t do it by retreating to the analytical. If you want to lead, have the courage to do it from the heart.
[Read More Here > Thank You HBR 03.14]