7 Top Insights Nonprofits Can Borrow from Management Guru Peter Drucker

If you’ve never read management and marketing guru Peter Drucker, you must. I fell in love with him early on in my nonprofit career, and still regularly draw upon his wisdom. It hasn’t aged; he was ahead of his time, and remains a worthy sage for ours.

1. Goals

Perhaps the most important thing I learned from Drucker was you must begin with the “why” question. What is your purpose?

“It is defined by the want the customer satisfies when she buys a product or service.”

You want to think about your purpose both broadly and narrowly. But not so broadly as to only be talking about your category. The fact you’re a human services agency, school, arts organization or environmental charity does not answer the question: “What would happen if you ceased to exist?”

Most founders do not wake up one day with the epiphany “I want to start a nonprofit.” They have more explicit goals related to solving specific problems. “I want to provide homeless people with access to showers.” “I want to offer equine therapy to kids with disabilities.” “I want to find a cure for this degenerative disease my kid has.” And so on.

If a customer has no soap to buy, they can’t get clean. If a homeless person has no shower or toilet available, they can’t get clean. Whether the business is for- or non-profit, the sought-after impact is cleanliness – and all the ways being clean makes people feel, think and behave. Goals that answer the “why” question are focused on impact. People don’t buy what you do; they buy why you do it.

Know your existential why — the meaningful impact you want to make — in order to build a plan to reach that goal.

TAKE-AWAY #1:

A goal worth meeting is one other people share. Find out:

1. 1. What people broadly in your community consider a genuine unmet need. You might pose this question on social media, hold a conference call or YouTube town hall, or simply bring people together at house parties, PTA meetings or congregational get-togethers.
   2. What people already engaged with your organization think about you. You might send them a survey, call them up randomly and pose several questions, or simply ask on a fundraising remit: “What’s one word you would use to describe our organization?” Or “What one program or service do you most value?” Or “What do you wish we did that we don’t do currently?”

For more on starting with the “why,” take a look at this TED talk by Simon Sinek

2. Planning

One of my favorite, most-quoted Druckerisms is:

“The best plan is only good intentions, unless it degenerates into work.”

So true, right?  How often have you, or your leaders, spent hours and hours developing a plan, only to publish it to your website or handbook and never look at it again? Even worse, how many of you have hired expensive consultants and participated in a facilitated strategic planning session – often via board or staff retreat – only to have someone write it all up, put it in a fancy binder, and then continue on with business as usual?

TAKE-AWAY #2:

A plan capable of producing results requires:

1. 1. Commitment of key people…
   2. To work on clearly articulated, unambiguous specific tasks…
   3. With clearly assigned accountability…
   4. Within a specified and reasonable time frame…
   5. To create results capable of being measured.

3. Money

Writing primarily for for-profit businesses, Drucker generally answered the impact-focused “why do you exist?” question with “not to make money.”

I would apply this to the nonprofit sector similarly, but with an addition: “Not to ask donors for money.” Because when you focus on money, rather than the meaningful impact you and donors can create together, you diminish the value you can bring to your supporters – and they to you.

Here’s something related Drucker said:

“No financial man will ever understand business because financial people think a company makes money. A company makes shoes, and no financial man understands that. They think money is real. Shoes are real.”

If you’ve ever felt your executive or finance director only wanted to talk to you about money, rather than the evolutionary, creative process it takes to create an emotional case for philanthropic support… connect and build trust with donors… engage them in meaningful ways in your community… and sell the transformational impact their philanthropic contribution can make, it’s because they only see the world through green-shaded visors. Their lens is of necessity transactional, while yours must of necessity be transformational.

TAKE-AWAY #3:

The real value is impact made by meeting a constituent need, not making money. Ask:

1. 1. What needs do our donors have that we can help them meet?
   2. What impacts do our donors seek? For themselves? For others?
   3. What activities create value for our supporters?

4. Customer Experience

Drucker went so far as to say:

“The purpose of a business is to create and keep a customer.”

You might consider your organization’s purpose to be creating and keeping a donor. At least if you require philanthropic support to exist. Because by creating a donor you are, by extension, demonstrating there are others who perceive the need you are filling to be important enough to merit their investment. If you were to cease to exist, and no one cared, then engaging in the act of fundraising would be fairly pointless – would I not?

Inherent in this customer (or donor) orientation is that your work becomes a matchmaking endeavor. Once you’re explicit about the values you want to enact, you can match those values with people who share them.

TAKE-AWAY #4:

You have a dual purpose:

1. 1. Defining your essential mission, vision and values, and
   2. Identifying and nurturing donors who care about that particular mission, vision and values.

5. Social Purpose

Drucker believed in dual purposes as well.

“The absence of a basic social purpose for industrial society constitutes the core of our problem.”

Businesses, said Drucker, have an economic bottom line, but also a social one.  Your nonprofit should have this too. Your job is not simply to make your programs and services operate for the benefit of the people you first organized around serving. It’s also to offer value to the people who make those operations possible – your staff, volunteers and donors. In this way, your work becomes hugely more impactful, offering meaning, purpose and hope to all with whom you engage.

To begin, you must understand what your many constituents define as value.  Service is at the heart of this. Interestingly, Drucker saw the best businesses as embracing a service philosophy. In fact, he was among the first to write about corporate social responsibility.

“It is not enough for business to do well. It must also do good.”

TAKE-AWAY #5:

Defining an organizational purpose that goes beyond program service delivery and encompasses broader social goals requires:

1. 1. Asking staff what they believe
   2. Engaging volunteers and donors to ascertain why they invest with you.
   3. Inquiring supporters about their highest values.
   4. Defining ways you enact the values your constituents most cherish.

6. Siloes

Drucker abhorred siloes. As do I.

“Every decision has two elements: (1) what you would ideally like to do, and (2) what you are actually able to do.” 

When marketing, fundraising, finance and programs are all seen as isolated functions, the organization operates like the proverbial elephant being observed by blind men. Humans have a tendency to claim absolute truth based on their limited, subjective experience as they ignore other people’s limited, subjective experiences which may be equally true. The real world is at the intersection of all these experiences.

Yet many talented nonprofit leaders find the doing what they know should be done impossible because of resistance from the very people who should support their efforts and objectives.

TAKE-AWAY #6:

Tear down siloes in your organization to reduce conflict and increase collaboration:

1. 1. Close communication gaps by setting up regular meetings with folks in other departments.
   2. Reward cooperative behavior by specifically acknowledging it both privately and publicly.
   3. Encourage innovation to increase efficiencies and effectiveness—and pull down turfdoms.
   4. Find opportunities for cross-departmental initiatives by inviting peers from other areas of the organization to visit your team meetings, and offering to visit theirs as well, especially when working on mutually beneficial efforts.
   5. Hold retreats to build camaraderie.
   6. Create a culture of philanthropy to help everyone understand their biggest responsibility—to create and keep the customers (aka volunteers and donors) who make reaching your existential goal possible.

7. Working Smart

Perhaps one of the most famous of all Druckerisms is the following:

“Management is doing things right; leadership is doing the right things.”

Whatever you do, don’t simply do work by checklist. Sure, checklist transactions offer a sense of accomplishment, but it’s generally fleeting. Was it really the most important thing to do?

Simply sending out a retread of last year’s appeal, or thank you letter, or annual report may not be the most effective way to accomplish your objectives. The same holds true for hosting that annual event that was once broadly popular, but now is beloved by only a small handful of board and former board members. That’s what I call “resting on your laurels syndrome,” and it both kills innovation and inexorably drains spirits. You really want to be smart about how you use your limited time and resources.

TAKE-AWAY #7:

Contrast transactional work with transformative progress; let this inform the things you choose to do (and not do).

1. 1. Progress means moving towardsa desired outcome. When you arrive, you feel good, because you’ve achieved something meaningful.
   2. Doing the same old thing can get you stuck – or even move you backwards. Don’t sit still when you hear “Well, that’s the way we’ve always done it.”

Final Thoughts

Drucker believed business existed to serve, to respect, and to make the world better. Ask yourself if the way you’re working is meeting that definition – for your clients, your staff, your volunteers, your donors and the larger community.

Carefully consider the things you do that are meeting the moment, and the things that do not. Adjust accordingly when you develop your next plan.

“There is nothing so useless as doing efficiently that which should not be done at all.”

— Peter Drucker

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Image: Three San Francisco Hearts. Benefit for SF General Hospital Foundation.