Three Ways Non-Profits Can Avoid Catastrophic Success

Got growth?

Catastrophic success occurs when growth outstrips management capacity.

A fantastic rise is followed by a precipitous fall from which most individuals and organizations cannot recover.

This occurs all too often in politics, business, sports, military, non-profits, and other human endeavors.

A combination of Founder’s Syndrome and rapid growth can be toxic, especially for Non-profits.

The tale is sadly familiar.  A small non-profit, often managed by a visionary founder and assisted by a small and very loyal staff, with a highly supportive board of directors, begins making significant impact.  The story goes viral.  Donations pour in. The founder quickly gains celebrity status.

 

The organization continues focusing on mission impact while juggling all the requests for attention, interviews, and speeches. These keep the donations coming and enable the non-profit to serve more people.  Cracks begin to appear, but the management structure does not grow or change.  The Board does not ask hard questions — if it ain’t broke, don’t fix it.  The perfect storm.

The good news story comes crashing down as positive press gives way to scrutiny and, potentially, to zealotry.  Scrutiny invariably uncovers problems; zealotry frames reasonable problems as deliberate malfeasance. The result can be a feeding frenzy of negative hype, spiraling into more and more allegations of real and imagined failings and growing accusations of wrongdoing.

Once major news outlets get a hold of a negative story, the non-profit may be in for a very dark chapter.  Donations dry up, lawsuits emerge, stress leads to declining physical and psychological health of leadership, staff leave a sinking ship. Revenues are spent on armies of lawyers, public relations firms, accountants, and others. Until the lawsuits are resolved, which could take years, the non-profit may not be able to defend itself against the public accusations – however ill-founded or ridiculous some of those are.

Catastrophic success sometimes occurs due to malfeasance, bad ethics, narcissism, or greed.  These are important to expose. In most cases, especially for non-profits, everyone wants to do the right thing and to serve the mission.  The non-profit, however, fails to develop the capacity to manage the growth.

The major losers in all of this are the people the non-profit wants to help. Even if the accusations are unfounded or proven frivolous, the damage is done.  The organization might never recover its reputation and ability to serve its cause.

Non-profits can mitigate the risk of catastrophic success.  Here are three ways.

First, develop an adaptable strategy that is robust to unexpected negative or positive trends.

Most organizational strategies simply assume the status quo will repeat itself or that new efforts will have proportional payoffs.  These are flaws common to businesses, militaries, governments, and non-profits.  They often miss critical signs, which become apparent in hindsight.  They are ill-prepared to deal with out-sized problems or successes, and the vastly different expectations that get created.

A strategy becomes adaptable when it includes plausible alternative futures.  These can be framed based on significant changes (positive and negative) in the mission environment and in organizational capacity.  For each alternative future, the strategy should identify potential indicators, outline likely risks and opportunities, and offer a broadly framed approach for the scenario.

These strategic indicators and their trends over time should be examined and discussed at each Board of Directors meeting. This approach will help to avoid major surprises, while setting the foundations to address unexpected successes or problems.

Muddling through or making-it-up-as-you-go-along heightens the risk of snowballing problems.

Second, “See yourself” and be a learning organization.

We tend to be most unaware of the problems of our own creation.  These can be the most dangerous ones of all.  We like to see ourselves as we wish things to be, not as they truly are — warts and all.

Addressing this starts with leadership.  If the executive director or founder sets the example in providing a venue for honest feedback and willingness to discuss and address his or her own management shortcomings, the rest of organization is likely to follow suit.

Conduct a periodic reviews and assessments.  Use a disinterested party.  Discover your problem areas and risk areas (all organizations have them) before they are revealed or alleged for you.  Develop clear, concrete, steps to address them.

Transparency.  Discuss the results of periodic reviews and what you are doing to address shortcomings. Show donors how funds are collected, invested, committed, and over-watched.  Provide access to your audit reports.  Be first with the truth. These efforts will establish for you a track record of credibility.

Thirddetermine the sustainable capacity of your organization to ensure you have the staff, structures, and capabilities to handle current requirements.  This will also help you to gauge what support could be needed to handle rapid growth in revenue and expectations.

Busy people achieve a lot.  Exhausted people do a lot but achieve far less.  Unforced errors and re-work pile up.

Many non-profits take on far more than they have sustainable capacity to handle.  People do not enter the non-profit world for the money.  They focus on impact and tend to embrace a culture of personal sacrifice for the good of the mission.  The result is that many employees are way over-committed, but maintain the “can-do” attitude.

When growth occurs, requirements and expectations increase, and more-and-more things begin to fall through the cracks. Exhausted people often lack the energy to ask hard questions or think differently about growing problems.

Review actual workload against your priorities.  Should efforts be re-aligned? Have we subtly taken on loads of lower-priority or non-essential work?  If necessary, grow the capacity of your staff – this can mean attracting greater talent, increasing positions, changing structures, and/or leveraging outsourced solutions.

Consider upgrading your outsourcing of special skills such as legal, public relations, accounting, etc. as you grow.  Outside assistance that helped get you started might not no longer be up to the task.  It is generally more cost-effective to get the right outsourcing solutions before a crisis.

Growth often carries the seeds of major problems.  Maintaining an adaptable strategy, seeing yourself thru periodic reviews, and routinely checking your workload against your priorities will help you to manage success effectively.

 

Christopher D. Kolenda is President and CEO of Kolenda Strategic Leadership which helps NonProfits maximize their impact and leadership.  He commanded Paratroopers in combat and served as Senior Advisor to the Department of Defense Senior Leadership and to three Commanders of International Forces (ISAF) over four tours in Afghanistan.  See his two books on applied leadership: Leadership: The Warrior’s Art and The Counterinsurgency Challenge.  Follow me @KSLCEO

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Kolenda Strategic Leadership LLC

Kolenda Strategic Leadership LLC