Kaiser: The Discipline to Follow Each Rule

I concluded last week’s message with my personal opinion that a manager of any organization must view its disparate parts as truly being all of one piece. Nothing truly functions in isolation. In the same way, nothing grand (such as saving any entity from the brink of failure) can be achieved by focusing on one or only a few aspects of management. They work best in unison and this perspective, I believe, is shared by Michael Kaiser as reflected in the last of his ten rules gleaned from his 2008 book The Art of the Turnaround.

His Rule No. 10 states: The Organization must have the discipline to follow each of these rules.

We have examined nine rules of management of which Kaiser writes, “There is not one of these rules that can be sacrificed in the pursuit of a turnaround.” And once again we can see that his perspective hinges on the limitations of time in turning a blundering organizational behemoth 180 degrees away from its own destruction. But then, again, you have echoing response that his rules are applicable to all non-profits no matter what their financial status may be. Sound management is just that regardless of the circumstances and my willingness to promote Kaiser’s work is that I find his ten rules to be sound. There’s just one thing; his brinksmanship persuasion gives him an advantage I never enjoyed as a manager.

In our feel good era of management, the preference is for action to be subservient to consensus. Everyone must be heard. Everyone must be heeded, which is how decisions lose their efficacy beneath the perpetual concession to a single common and often  mediocre denominator. But the rules we have examined contain a definite bias towards management tyranny, which desperate board members will yield to when Kaiser plays his trump card; the short span of time in which a remedy must be found. His stentorian advice, which can be easily heard even when confined to the pages of a book, is that “Truly troubled arts organizations do not have the time for consensus building, numerous staff meetings, or focus groups. They require quick, smart action.”

This leaves me envious. My low-key demeanor and appeal to principles rather than obedience to rules is no doubt the cause for my never having attained the scope of authority Kaiser demanded and received in his various roles as executive director. This contrast between us makes it clear – to me at least – that there needs to be one more rule to consider in the art of management, turnaround or no.

My addendum to Kaiser’s ten rules is this: No matter the condition of any entity, how you frame the threats to its existence will determine the scope of power surrendered to you at the outset of your management tenure. Think about it before you sit down to an interview for that coveted executive position. You are engaged in sales, after all, despite the explicit job title advertised and the proof of your value to the organization will be found in the ability to sell yourself as the messianic solution to its impending doom.

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Kaiser: The Board Must Allow Itself to be Restructured

This week we are considering Rule #9 from Michael Kaiser’s 2008 book The Art of the Turnaround. You will find it more meaningful, however, if you think of it as Rule 8-B since the primary focus of his comments about an organization’s board of directors is essentially a further exposition on courting major donors as discussed in last week’s message. There he touched on the limitations of asking others to make those huge, life-saving gifts when the members of the board fail to lead by example, contributing little to an entity’s financial health. Kaiser’s solution is kindly offered, masking a ruthless but potentially potent way to resolve the dilemma of nice people driving the organization to a near death experience.

Rule No 9 states: The board must allow itself to be restructured.

This is the one time I have to say he is being disingenuous in his advice. People accept board seats for various reasons but they remain firmly implanted occupants of those seats for only one, they like the view from the top. So to express Rule #9 as a passive acceptance of being restructured (aka replaced) is a gross misnomer. The best board members, the ones you desperately want to keep, will voluntarily leave once they believe they have done all they can for the benefit of the organization. Everyone else remains entrenched and it takes a very stout prying tool, usually wielded by the executive director, to displace them.

This is not meant to be a cruel maneuver to get rid of people you personally don’t like. But it is needed and you can appreciate its relevance for reviving the financial wellbeing of any organization when you read the advice of someone with the experience of a Michael Kaiser, who says of board governance and its impact on fund raising that “Boards provide a vital underpinning to the fund-raising success of most arts organizations, especially with individual and corporate donors.”

This underpinning consists of influence among one’s peers. The basic assumption is that affluent people attract more of their own kind to participate in a cause they, themselves, enjoy and support. It builds on a fundamental premise in fund raising that people give to people, not the cause for its own sake. The bonus comes in the fact that people give more to the people they know. Therefore if your board of directors is comprised of people with wealth and influence they will be likely to attract others of their own kind, who you as a lowly executive or development director would otherwise never meet.

And now for the application where the board seats are full of those kind people giving little, while the organization drifts towards disaster. Kaiser writes of his experience at the Alvin Ailey dance company, where the average board gift was less than $500 per year for a $1.7million budget: “When we imposed a giving requirement of $10,000 [per year] we lost half of our board members, but we were able to replace them with people who could support the organization in the way that was required. These new board members also introduced new contacts and new energy to the organization. They were not weighed down by pessimism and exhaustion.”

For Kaiser, the pry bar used to extricate people from their entrenched positions as board members was the implementation of a substantial giving requirement, one which more accurately reflected the financial needs of the company. The result is that people chose to leave rather than be accountable to that standard. This act of tough love is what “allowed” Kaiser to restructure his board in keeping with his Rule #9. “We got rid of the dead weight, hired new members, gave a clear orientation, were explicit about our needs, created a workable plan, helped our board members raise funds, and did the marketing and programming that made them excited to participate. The new board members also spurred the senior members to greater involvement.”

You can see now why I suggested at the outset that this week’s lesson is an extension of Kaiser’s Rule #8 and the need to raise sizeable donations in a short period of time (less than three years by his reckoning) in order to save the organization. This link between the two rules reveals a point which most non-profit consultants are averse to so freely and openly state as Kaiser does in his book; a primary function of the directors is to give and get financial capital for the entity they serve. My own board principle (since I am too shy to use the word rule as Kaiser does) is that it is the primary responsibility of directors to fund their decisions. It is easy to sit in a board room and pontificate about what needs to be done, when you will not be the one to break a sweat to insure an idea’s execution or to open up your own pocketbook to pay the expenses for those who do. Pontification is simply a grand way of illustrating the fact that words are cheap. They don’t get the job done. Money speaks more efficiently and effectively and it is the job of the board members to make sure the message is clearly stated.

For the sake of full disclosure, however, my own word of caution based on experience is to remind everyone that board members make up their own rules of engagement. Getting them to approve a minimum giving policy of adequate proportions is no easy task as Kaiser’s brief account might indicate. The complaint I encountered the first time I merely mentioned implementing a standard for every board member making an annual cash gift of any amount was that I was forcing them to “buy” their board seats. How cruel of me to do so. But even that suggestion was effective in making a few more places at the table available to others. One offended board member soon resigned and two more opted not to seek re-election when their terms expired. I was never brazen (or maybe that should be brave) enough to set a minimum dollar limit on an individual’s annual contribution, but you will find this standard to be an understood if not explicitly stated guideline in the most successful non-profits in the country. And Kaiser’s $10K figure is a modest one. The play with the big kids, six figure contributions are the norm.

One more thing: vacancies do not automatically get filled with better qualified people, so it is appropriate for me to close this week’s message with the admonition that you strongly heed the example Kaiser described about what follows saying good-bye to the dead weight plaguing your organization. Evidence of all of his rules can be seen coming together to forge a more perfect union of management, directors, and staff to achieve his goal of great programming marketed well. My own principal is that it is all of one piece. We’ve been discussing each rule independently, but in truth they can only function effectively in unison with one another, as Kaiser will explain with his Rule #10.

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Kaiser: Focus on the Larger Donor

We are working our way through Michael Kaiser’s ten rules comprising The Art of the Turnaround, his 2008 book based on his experiences helping some truly large non-profit arts organizations work through their financially troubling times. I found the book to be a good read for any manager or board member of any non-profit in any condition. His strategy is applicable for both growth and sustainability, so can be beneficial to those who bear the responsibility for leading this type of business entity.

We have arrived at perhaps the most difficult of his rules to implement, the difficulty being in peoples’ aversion to doing what is often described as begging for money. Therefore before I add my thoughts on Kaiser’s rule for this topic, I must first state my own deeply held conviction that fund raising or what we often term as donor development is not about begging. If you go into it with the mindset of being a pauper clutching a beggar’s bowl while mournfully seeking alms, then you will fail.

Donors to a non-profit are similar to an investor in a for-profit business. The only difference is in the type of dividend their respective investments provide them. We are fortunate to live in a society that still values charitable giving as a personally rewarding means to support a diverse collection of cultural events and organizations. So before you launch on any fund raising campaign, make sure you possess the right attitude for doing the work and then make sure that anyone assisting you, such as assembling a campaign committee, is just as equally endowed with the proper perspective for attaining your goal. This is simply one application of that popular business mantra to hire for attitude, train for skill. Having the right attitude about fund raising is the first step in your campaign’s path to success. It also puts you in a better frame of mind for assessing the wisdom behind this week’s message.

Kaiser’s Rule No. 8 says: Fund-Raising must focus on the larger donor, but don’t aim too high.

He writes “In my experience, turnarounds rely far more heavily on increasing fund-raising revenue than they do on increasing ticket sales.” If you read the first message in this series then you know that one of his foundational truths about management of any arts venue is that it must cope with its limited capacity. Ticket revenue cannot generate enough money to pay the bills for major, truly innovative and attractive programs. Fund raising, therefore, is a necessary function for producing sufficient revenue to supplement earned income. Contributions make it possible to do more than a ticket buying audience alone can afford to finance.

Another quote worth considering is Kaiser’s statement that “… turnarounds must take place with energy and speed. It is difficult for any organization to maintain the necessary focus and energy that a turnaround demands for more than three years.” Besides coping with our capacity limitations, Kaiser shows us that time constraints are also an important factor when devising an effective cash flow strategy. The solution for dealing with these combined limitations is to focus on major donors for the most efficient and economic means of securing the much needed cash infusion within the narrow window of opportunity for turning an organization’s prospects 180 degrees away from disaster.

In my own experience I have found that time constraints are just as damming for a financially sound organization as they are for one in trouble. They just take on a different persona resulting in the same solution. There is never enough time to do all that needs to be done in managing a thriving operation. So it is a huge waste of time to focus on small fund raising events (think bake sales), when the financial need cannot be met by hawking pies and cakes by the slice. The smart money is literally to be had by using one’s time to court donors who can make that five, six or even seven figure donation in the same amount of time (and with far less effort) that it takes to turn out a truckload of cobblers, pies, cookies and other confections. Plus you’ll consume far less calories, which is good for your own long-term health.

Adapting a fund raising strategy that pursues the big money may strike some as a sellout by catering to the elite in one’s community. But it need not be an exclusive approach to raising money. It does, however, need to be primary. Donation boxes, Give Now buttons on web sites and other less time consuming measures can provide the means for anyone to participate, regardless of the size of the donation. It allows everyone to feel good about helping an organization reach its fund raising goal. But success, in all honesty, generally comes about because of a few people with deep pockets, whose gifts are HUGE.

I would also add that an intelligently designed fund raising strategy needs to be part of a well-developed financial plan that balances all of an entity’s revenue streams with the goal that one source will not be so totally dominant that a significant reduction in supply will cripple the organization. This happens when a non-profit is reliant on a single major donor or on ticket sales to solely finance operations. The guideline I used and recommended to others was to adopt a business plan that diversifies revenue streams over a manageable range of options with the various sources balanced so that one source does not account for more than 30% of an organization’s total annual revenue. Taking an occasional hit in revenue generation is unavoidable. Having a balanced, diversified range of sources mitigates the damage.

This 30% ceiling is a nice guideline but rarely ever achieved, at least not by me. In my most troubled time of non-profit management the pursuit of this balance in revenue, not the attainment, did save us. We had to shut down operations while we rebuilt our facility following a catastrophic flood. Ticket and gift shop sales, which were then our top two sources of earned income, were not available to us during that time. What emerged was our best year ever in donation receipts. It was supplemented by interest earnings, membership dues, grants, insurance proceeds and loans, which not only helped us to survive, but allowed us to be a major employer of local trades, which were suffering during a nationwide economic downturn that added to our already woeful condition. We survived and amazingly helped others do so as well.

One final point that Kaiser makes in his book is to adjust your major donor focus so that you are asking others for the “right-sized” gifts. His method of estimating what size is “right” is based on the average amount given by the members of your board of directors. There is an ethical point behind his suggestion: It is not good business to ask outsiders to do more than what your own members are willing to do in saving your financial butt. I can readily concur with the sentiment, but once again an honest evaluation of most organizations is that if you style your campaign in keeping with the average amount given by your directors, you might as well resort to getting out that beggar’s bowl I mentioned earlier. In my experience most major gifts, and certainly the largest gifts, have come from outsiders, the people who are willing to finance an operation without the need to manage the manager. This last point makes a cursory hint at the larger issue behind board member selection, which will be covered by next week’s rule. Please stay tuned.

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Kaiser: Only One Spokesman with a Positive Message

Recently I recommended to a member of a struggling non-profit board that she read Michael Kaiser’s 2008 book The Art of the Turnaround in order to gain a quick tutorial on devising a viable strategy for helping her organization work through some difficult issues. The last time I saw her I asked if she had procured a copy of the book and was disappointed when she said no. I thought I had given her an easy way to doing something of value for her organization and impress her fellow directors with her insights into non-profit management. It strikes me that maybe I should write my own book with my own list of rules about management, with rule number one being free advice is freely ignored.

Re-reading the book has certainly helped me remain faithful in fulfilling a resolution made at the start of this year to write and post 52 web log messages – one a week – for the first time since my blogging career began in 2005. Sharing Kaiser’s thoughts and then plumping them up with comments based on my own experiences has brought me to the end of August with a perfect record in my message postings, while reminding me that some lessons have been dearly learned over the years. And this week’s message is no exception.

Kaiser’s Rule No. 7 says: There must be only one spokesman and the message must be positive. You can divide that into parts A and B if you like, for having only one person speak for the organization does not insure that their messages will be positive. Even so it is good to think of the two parts as being different sides of the same proverbial coin. For the coin to be of any value you must spend both sides at the same time to secure any transaction.

Near the end of my first year as an executive director of a non-profit I was attending a conference for similarly themed organizations. I knew nobody there, so when I say a stranger told me something rather shocking at that event, the understandable part of my statement is that everyone I talked to during that conference was a stranger to me. The shock was not in having an unknown personage confront me with a rather perplexing comment. The shock was due to what he said about one of my own board members. Actually it was a question asking me, “Why do you have him on your board of directors when all he does is bad mouth your museum?”

Kaiser writes “It is not unusual for artists, board members, staff members and others to talk with the press about the problems facing the organization.” And then he reinforces this point my stating that they “focus solely on the problems.” That may not be totally true. You would like to think that occasionally your people have something positive to say. But my rookie year experience affirmed his point more often than not, with my conference encounter being the most blatant example of how bad news travels fast and far with something of a roundtrip ticket as a colleague’s ill-mannered comments find their way home.

I had often overlooked the negative comments made in my presence as being typical of how members and staff relate to one another behind the scenes of an active operation. Years later, when I had matured as a leader and was not so easily cowed by people who had been involved in the organization longer than me, I invoked Kaiser’s rule as a board approved policy. It had an almost immediate impact when disaster struck in the form of a season ending flood, which closed us down for the duration.

It was my responsibility to feed the media the news about how we were handling the situation and every message was truthful and positive. We were rebuilding and would re-open in time for the start of the next operating season. Coincidentally a major non-profit in our state was also making news. They were coping with claims of fraud and collusion, which made our circumstances appear to be blasé by comparison. We were both getting media attention, but they were getting more airtime and print space, for which I had no complaint. Negative news may garner more attention, but as Kaiser writes, “Negative news coverage discourages your supporters from involving their friends and associates even if they continue their own personal support.” Our positive news may have been page 2 copy, but we gained friends who helped us during our flood recovery efforts to make our operation better than it was before the rains came and washed our complacency downstream. The plus in all of this is that our optimistic attitude and success in literally getting back on track kept their support for many years after.

As I have written before in this series my own advice is often expressed as principles rather than rules. But in this one item at least I am just as adamant as Kaiser is and would empathetically state along with him “In every turnaround situation I enter, I have one rule: I am the only one who decides who speaks to the press.”

Even if you are not in a turnaround and not an arts organization, be the spokesperson and keep the message positive. It makes all the difference.

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Kaiser: Marketing Is More Than Brochures and Advertisements

I started this series of expounding on Michael Kaiser’s ten rules for salvaging the fortunes of an arts organization by sharing his opening premise that good programs marketed well are foundational for sustaining a healthy organization. My source is his 2008 book, The Art of the Turnaround, from which I am devoting one message per rule, sharing his thoughts about sound management practices supplemented by my perspective based on my own smaller scale experiences. The topic of marketing has come up before whenever he has demonstrated how one of his first five rules impacts that discipline. But now he is more directly engaged in helping us understand what he means by the employment of good marketing as he expounds on his Rule #6: Marketing is more than brochures and advertisements.

His rule can create something of a “Duh” moment for us if you consider that advertising, of which brochures are merely one component, is itself a subset of the larger concept of marketing. Therefore our response is one of obvious concurrence, since marketing involves various specialties utilized to do more than create effective ads. A comprehensive marketing program helps us to understand our customers and provide them with the products or services that will build their allegiance to our brand. So while Kaiser writes that “If there is one thing I have done to help the troubled organizations I have managed it has been to create a very aggressive and systematic marketing program,” his advice is not quite as expansive as his topic would allow. Instead his focus is on two themes, programmatic and institutional marketing, without clearly delineating a full-blown marketing plan.

When he writes of programmatic marketing his point of reference is “the brochures, advertisements, posters, emails, and so forth that sell tickets” which he then confirms, “must be designed and distributed intelligently and with a goal of reaching a potential buyer.” This is the type of marketing, or at a more basic level the type of advertising, we all do, promoting our events as the major draw for gaining attention and attendance. But Kaiser goes on to state that too few of us engage in institutional marketing, “the marketing of the entire institutional image that gets people excited about supporting the company.”

I remember when Hallmark was not a television channel or even a series of made for TV movies, but a presenter of occasional specials under the marquee title The Hallmark Hall of Fame. During the commercials you would see a few of their seasonal products, but the tag line was about the nature of the company itself, letting us know that we choose their brand of greeting card “When you care enough to send the very best.” Or consider the promise made by an insurance company, which gave us the assurance that “You’re in good hands with Allstate.” Both slogans celebrated the inherent quality of the company and came with the hidden or unstated aspersion that we were not so well off going with the competition.

These statements have nothing to do with a product or service and everything to do with creating an emotional attachment between the company and customer. And that is what Kaiser is after when he points out the fact that too few of us get beyond marketing our projects and programs and miss the opportunity to build trust by promoting who we are instead of relying on what we do as the primary message. But when you have a marketing budget of miniscule proportions, program marketing is about as far as you can go with any hope of generating a significant return, which will cover your operating costs. And in a highly competitive world, differentiation is important and that is done by selling people on the positive and unique attributes of the organization as a whole; a story which seeks to make the company-customer relationship a marriage made in heaven.

My solution is to adopt the Hallmark and Allstate method of adding an institutional tagline to all of your advertisements, wherein one short and magical phrase can carry the full weight of the promise inherent in all that you do. Kaiser seems to support this technique as he states “…creating an institutional marketing plan that includes performances and events that are likely to interest the press and your donor base is achievable by any organization.” The achievement is affordable by combining the two messages, program and institutional promise. What can keep it beyond our reach, however, is the inability to actually come to terms with what that promise is and then stating it in such a pleasingly concise way that it serves to compliment the program message.

With the affirmation that we need both a program and an institutional message, Kaiser goes on to make two other points about his type of marketing strategy. The first is about frequency. He writes, “I believe large organizations should have at least one ‘hit’ a month, not a small mention in a newspaper but a major event or press coverage that impresses donors and prospects about the importance of the organization. Smaller organizations should aim for one hit each quarter.”

You can tell that we are dealing with an arts person since he speaks of his events as “hits” as if they were being charted on some list of America’s Top 40. But the point is understandable. Large organizations, those with a large enough staff to generate the content, should make news of meaningful proportions at least once a month. Most of us will never have that size of staff or even that size of program that we can be newsworthy. So for us little guys the once a quarter rate is manageable. Even then it is a challenge to attain that kind of output and do all the other administrative chores assigned to managers of such smaller organizations. There is no easy answer to managing your workload.

Fortunately we live in a digital age, where we can not only make our own news but publish it as well. We do not have to rely solely on the traditional media outlets to carry the news for us as we remain subject to their pleasure for deciding what will sell air time or print space. Still the weight of generating meaningful content remains in house and can be every bit as demanding as drafting a news release that will capture an editor or producer’s attention. Websites, e-blasts, newsletters (print and digital) and member magazines provide us with the means to tell our story in a cost effective, though time consuming, way. The only drawback is the smaller scope of audience reach when we use our own resources, so don’t abandon drafting that news release despite the loss of sleep you may incur.

Kaiser’s other point about his marketing strategy employs the cliché less is more. It is about intentionally limiting the capacity of an event in order to cater to a specific clientele, those by invitation only elite experiences, where “…you can create great awareness among very potent people with private events….” I have found such occasions to be extremely lucrative, easier to manage and more likely to sustain a lasting relationship with people who can make life easier for you as you meet or exceed their personal expectations. To some this may reek of selling one’s soul to the devil. But if you are managing any entity, which needs a major infusion of cash for its survival, then dancing with such affluent demons can be quite exhilarating as well as profitable. Just think of it as your own version of dancing with the stars, however fallen they might be.

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Kaiser: Extend Your Programming Planning Cycle

Of all the things Michael Kaiser advises through his ten rules for the successful management of an arts organization, Rule #5: Extend Your Programming Planning Calendar is the one where I must hang my head in shame as an utter failure. Not because I never managed an arts organization (since I have been claiming throughout this series that his rules can be applied to all non-profit organizations). It is just that I was never able to impose this kind of discipline on the organizations where I had the responsibility (not to be equated with the authority) to do so.

Kaiser wrote in his 2008 book The Art of the Turnaround “Many organizations plan only one to two years ahead. Those in need of a turnaround even less because it seems foolhardy to plan far ahead when the future seems so uncertain. Their fears prevent them from enjoying some strategic advantages of long-term planning.” He then goes on to state that his planning calendar covered a five-year period, which is fairly typical for those who are strong advocates of strategic or long-term planning.

My best strategic planning efforts did achieve a five-year plan on paper, which means in theory. Keeping the staff on track to implement the plan was manageable, but keeping the board on track in fulfilling their duties, not so much. The folks who occupy the executive seats at the big kids’ table have short attention spans. Their terms as directors or trustees may not conveniently overlap an entire planning cycle, so they are not as interested in the things that will occur after their departure. And the board chair, who runs the meetings, may not be inclined to stay on point by requiring discussions and decisions to relate directly to the current year’s portion of the plan, let alone the entire five-year cycle. The result is a seminal divide between board and staff members as their respective perspectives on all operations, and not just the programming, are fundamentally different – maybe even diametrically opposed.

For those who persevere against this type of indolent opposition, he cites a few key benefits, which stem from putting forth the effort up front to make the subsequent days less intimidating. “You can ensure that the artists you want to work with are available. You are far more likely to raise the funding required for a large project. You are far more likely to get important advance press. You are far more likely to negotiate a successful tour.” Okay, so not all of us are concerned about going on tour. But the unifying factor in his list of benefits is the unstated dynamic of simply having more time to do the things which make your program possible.

Kaiser uses this insight to stress two aspects of a manager’s role in the art of the turnaround, donor cultivation and the development of exciting, newsworthy programs. What the five-year planning cycle did to help with his donor cultivation was to give him options to present to any donor prospect. He writes, “I never go to a prospect meeting with fewer than ten projects in mind.” And let me stress the phrase “in mind.” What you want to avoid is dumping your entire shopping list on your hapless prospect, hoping they will make your day by choosing at least one item from the list. Your best tactic is to keep the list to yourself as you listen to your prospect’s interest. Once you get to know them, which is a key step in the cultivation process, you can then present one (and only one) of your projects or programs to them, which most closely matches what you have patiently learned to be true about what they find of greatest value in their charitable thinking. It improves your chances of receiving a yes response when they know you care about them. Caring about you and your mission becomes an intuitive reflex for them as a relationship develops, which hopefully blossoms into a long-term friendship for you and your organization.

The benefit of the five-year planning cycle to the creation of newsworthy programming is internal. As Kaiser states, “Long-tern planning gives artists and administrators time to work together without the pressure that short-term planning imposes.” And my guess, based on his writing, is that this is the work that Kaiser found most enjoyable. Administrators are not often perceived as being creative types. Rather we are the bean counters of management lore, who can only think of how to restrict the excesses of our artistic counterparts. But while we do not dance, sing, paint or act we do enjoy sharing ideas and seeing them brought to life by those who have the talent to do what we can only envision.

In my own resume are achievements in which I take great pride, being able to boast (however modestly) that I have been an executive producer of a music CD, impresario of an annual music festival, creator of an art gallery, producer/director/scriptwriter of television and radio commercials, and art director for the design of promotional materials. Fulfillment of my ideas, however, was mostly in the hands of others with the talent and expertise I lacked for making dreams come true. So when Kaiser writes, ““I focus on projects that seem exciting and worthy of press attention and funding,” I can honestly say that I know the feeling behind the statement. Not only is it an example of good leadership qualities, but a hint at the exhilaration that can come from being part of the creative process.

Finally let me note that in this last quote Kaiser refers to his programs being “worthy of press attention.” This brings us back to where we began with this series in which he stressed the need for good programs and good marketing. Although he does not directly state it while expounding on his Rule #5, long-term planning allows time to develop a rich and viable marketing plan just as it does for the programs to be designed and for raising the necessary funding to make it all happen. My one regret is that I cannot conclude this message by saying I did that. Rather when you have to meet all of the same needs with less turnaround time, you find yourself subsisting in a hand to mouth attempt of survival. Good things can be achieved but at a greater cost, which entails the type of emotional investment that results in burnout and early retirement. And that means dreams left unfulfilled.

So plan ahead and make great, not just good, things happen to excite your career while bringing the same to the audience you serve.

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Kaiser: Focus on Today and Tomorrow, Not Yesterday

This week’s message concerns Rule #4 taken from Michael Kaiser’s 2008 book, The Art of the Turnaround. So far we have learned that in the type of white-knuckle situation of saving an established organization from financial purgatory there must be 1) one leader, who 2) has a plan for turning around the organization’s fortunes, which 3) does not rely solely or even primarily on cutting costs. And now we see with Rule #4, which is today’s title, that a viable leader knows to focus on today and tomorrow, not yesterday.

This is a real challenge for any new manager arriving on the scene of a struggling organization, for no matter how well prepared you are with plans for going forward, the demands to rectify past wrongs can prove to be overwhelming. It seems to be human nature to obsess over the injustices of the past. And if you are not prepared to bring restitution to the supposedly injured parties, then you are inviting an innate opposition to your own strategy, no matter how well conceived it might be.

My management mantra for this phenomenon is that “Every problem has a name.” Of course, you might say that it is cash flow, poor programming, worse marketing, etc., etc.  But my point is that every problem is often identified by the name of the person who is the apparent cause of the problem. Jack did. John did. Jeff did, etc., etc., etc., from which the finger pointing becomes one of the most prolific achievements of the organization. And part of your challenge is dealing with the expectation that to solve the problem you must get rid of the person as well. This is part of the human drama we politely call the “politics” of the organization. And the pols can definitely kill any initiative you bring as part of your stellar resume.

Kaiser’s friendlier take on his rule is that the demand to address current cash flow needs can redirect your efforts away from addressing longer-term solutions. This has been labeled by others as the tyranny of the urgent and it presents a dilemma of which every manager needs to be aware. But my own counsel is that you will find a greater difficulty in dealing with the short-term, often vengeful thinking of the people who occupy key positions in the organization than you will with the red ink of your bank balance.

One well-intended explanation I received from a board member about the intransigence of his fellow directors came when I was managing a historic preservation organization. His point of view was that the leadership of this type of group dwells on the past by default, meaning solutions can only be implemented as they were once done in the deep, dark past represented by the organization’s mission statement. My revisionist attitude was that this obsession was not as chronologically extensive as his estimate, although pathologically it was just the same. Instead my opinion was that people wanted the organization to remain as it was in recent memory, as it was when they joined or first became involved since, to their way of thinking, the operations were so much better then. This type of management by nostalgia puts any new leader on the spot to maintain things “the way they were” under the misguided delusion that the people who ran the show then (although now deceased or too decrepit to be of any use) were so much better than the people one must tolerate now. But worshipping at the altar of the dearly departed can be detrimental to the chronic need for innovation in order to grow.

A corollary to this type of thinking is the “We tried that and it doesn’t work” syndrome. The strategy you wish to employ may be perfectly sound but the one’s in opposition to it can remember their own attempt to implement something similar but found they were incapable of making it happen due to the lack of knowledge, training, mentoring or a sheer overabundance of stupidity. In my careless and more badass moments I have simply restated the complaint by saying “You mean you tried it and you failed”, with the emphasis strategically placed on the word you all three times in that brief sentence. I found it extremely frustrating when forced to deal with these people, who preferred to waste their time arguing over the true color of the yellow brick road rather than taking the first step towards seeing the wonderful wizard at the road’s end.

Despite this personal re-direct of Kaiser’s Rule #4, I do agree with his assessment that “… the true turnaround artist possesses the discipline to carve out time each week to focus on artistic programming, board development, donor and press cultivation, and other activities that will make future years easier.” He could add that a one-year pocket calendar doesn’t make it when trying to forge a long-term strategy for these administrative activities. And that is where we will pick up next week when we consider our mentor’s Rule #5 concerning a manger’s perception about time.

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Kaiser: You Cannot Save Your Way to Health

It is common in a struggling organization of any kind to cut costs in the midst of financial struggles. The logic seems impeccable. If you don’t spend, the savings will mount and create a more stable situation. In reality this is part of a dream theory whereby the implementation of a cash no-flow strategy will keep the organization solvent until some unfavorable economic conditions right themselves for the better. They never do. The solution is dependent on choices made by either management or the board of directors. And that brings us to Michael Kaiser’s Rule No. 3 in his Art of the Turnaround for a non-profit entity:

“You cannot save your way to health.”

He notes that it is common for a board of directors to cut costs as step number one in dodging the bullet of an economic downturn in an organization’s fortunes. Their assumption is that the problem obviously stems from too much pork in management’s operating expenses. The solution, therefore, is to cut out the fat. This may entail firing seemingly inept managers, which has the added appeal of reducing the largest expense item on any profit and loss statement, which is personnel costs. But it also does immeasurable damage to morale, which can have a crippling domino effect concerning the organization’s programming and its ability to generate revenue.

The truth is that most non-profits already operate on what we term shoestring budgets. We pride ourselves on doing more for less, so cuts in any aspect of our operations are always detrimental and too often prove to be fatal. My own view of why cutting costs is the first step, aka knee-jerk reaction, of any board is that it is the easiest remedy to impose. The real solution is much harder to implement as it is outside the realm of expertise of most directors. It is easy to issue edicts about turning off lights, turning down the heat in winter or the air conditioning in summer in search of elusive cost savings. But as Kaiser writes, “Revenue is the problem with most arts organizations, not cost.”

Once again we must understand that Kaiser is writing based on his experience working almost exclusively with performing arts organizations. But this principal remains the same for all non-profits. I have worked for three different museums, a family counseling and youth residential therapy program, and a nationally known student ministry and all of them have had this in common: The art of raising sufficient working capital is a talent which few staff and most board members are not willing to master.

Competent general managers in small organizations or program managers and development directors in larger ones, which can afford to be staffed with specialists, are priceless and hard to come by in the highly competitive marketplace where non-profits abound. But people with this type of economic insight and proficiency should be sought and cultivated as seriously as any major donor prospect. Whether they are on the board of directors or occupy staff positions is less important than the point that they are present in some performance capacity. They know as Kaiser knows that “Organizations focused simply on reducing costs will continue to get smaller and smaller and will never create the economic engine that is required for long-term stability and growth.”

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Kaiser: The Leader Must Have a Plan

I am using the teachings of Michael Kaiser, author of the 2008 book The Art of the Turnaround, to reflect on my own career experiences and offer some advice to any reader of this web log about the art of non-profit management. There is some lamenting as I write this, however, since advice of any value comes from those who have made mistakes and lived to tell the tale. I have made more than my fair share of mistakes and am still here, which leaves me with this opportunity to have my say, whatever its value.

Last week we saw that Kaiser’s Rule Number 1in his list of ten rules for an effective turnaround is that some one individual must lead the effort. I agree, but would simply extend this to mean that one person must always hold the top leadership role in any organization, whether it is confronting something as drastic as a major turnaround or seeking to enhance an already stable position. On the desk of that one leader is where the proverbial buck stops long enough to get parsed into its most important uses. And this cannot be decided by committee with its many faceted claims to every dollar.

This week’s message concerns Kaiser’s Rule Number 2: The leader must have a plan.

Anyone moving into a leadership role of an existing organization will likely find that all of the requisite documents exist; mission, vision and value statements, strategic plans, annual plans and budgets. If yes, then two questions must be immediately answered. Are they being used? And, more importantly, are they worth using? In a turnaround situation the likely answer to both questions is no. Otherwise, a person of Kaiser’s caliber would not be needed. A decisive first step may therefore require a quick surgical strike to remove the dead tissue from a still thriving organism in order to assure its longevity. Otherwise you are simply there to collect a check for supervising the post mortem.

A good leader knows in advance what is needed for creating a healthy organization. He or she will arrive on the scene with the basics already in mind, a generic plan that will be fine-tuned over time. And in the case of a much needed turnaround, you can’t wait for the type of formalities to take place such as a formal strategic planning process. Implementing the much needed changes becomes a matter of doing a quick audit, matching one’s pre-existing checklist of desired behaviors to the actual performance of the entity. Step one, therefore, is to take an inventory of the organization’s resources; its human capital, financial structure, materials, location, operating systems and the external business environment.

This is a hands-on preliminary step that will assist in the strategic planning process, which will take place at a later date. Initially it is a leader/manager’s premiere tool for determining first-hand the organization’s capacity for performance and for change. It is an activity you must be seen doing in order to convey an unspoken message to all about the importance you place on them and the work they do to advance the mission. With this information, you can then proceed in designing or refining the program as needed.

For some management advisors the initial refinements must involve changes in personnel. This is Jim Collins’ “First Who” principle. In his 2001 book Good to Great he used the metaphor of getting the right people on the bus and the wrong people off before addressing any other aspect of business operations. For those of us in the non-profit arena, who have managed member-driven organizations, personnel changes are extremely difficult to make. Members form an elite group from which you, as paid staff, are forever excluded. And they thrive on self-preservation. It transforms “First Who” into “Eventually Who” if you can last long enough by winning their hearts and minds through other achievements. For me, this took the form of bringing in more money than they ever thought possible. My strategy for blatantly chasing such filthy lucre involved three steps: create diverse sources of revenue so that no one source accounted for more than 30% of the organization’s total annual income, make charitable contributions the largest of these sources since earned income is more costly to generate and is limited by an organization’s capacity in space and manpower, and focus your marketing on women. They control the purse strings.

All other aspects of a business’ operations are fair game for making changes. But the ancient axiom of first things first is important to your scheme of implementation, for while speed may seem to be a necessity from your point of view, you will find that expediency and diplomacy are often in conflict. Shock and awe tactics can lead to the early shock of being invited to leave the premises to the delighted awe of those intransigent souls adept at waving good-bye to you and any prospects for success.

Kaiser sums up his generic plan in four words: Good art, well marketed. His plan for creating the kind of excitement that leads to increased ticket sales and donations is in the production of quality programming. And this must be supplemented by intelligent marketing; campaigns which understand the best audience segment to target with its advertisements. His confidence, and proven track record, is in great ideas promoted early and often to the right people. Ironically this is antithetical to the general approach troubled organizations take, which tend to cut their marketing budgets and reduce programming options. The unintended result is that they also cut their ability to generate revenue.

For me, Kaiser’s mantra is supported by the sage wisdom of the late, great management guru Peter F. Drucker. His advice for creating a customer, which he termed the only true purpose of any business, was in two basic functions, innovation and marketing. Kaiser has simply applied the concept of innovation to his programming, the art of the organizations he led. Innovation is certainly important to all other aspects of business operations, but the product or service must take pride of place in a manager’s plans for leading any business to financial growth and stability.

“In the end,” Kaiser writes, “the plan must focus on creating a self-sustaining organization.” So here is my own final admonition for any leader of any organization. It might seem to be a bit premature when discussing the art of the turnaround, where all the focus is on resuscitation. But having a succession plan is an integral part of sustainability. Every leader, whether in a temporary turnaround role or one of long-term duration, must be viewed as expendable if only because he or she is mortal. Therefore no plan is complete without knowing how to make any future leadership transition as seamless as possible. What one must ask and honestly answer is what happens when I, like Elvis, leave the building?

It is one thing to build a strong organization which thrives when you are there to superintend the operations. But that is still short-term thinking. Preparing the way for a specific someone to follow is paramount to an organization’s surviving the demise of an effective leader. A viable organization needs to be able to confidently attend the funeral and shed its tears for the deceased and not for itself.

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Kaiser: Someone Must Lead

I am in the process of channeling Michael Kaiser, considered to be the go to guy when in need of resuscitating a moribund arts organization. His record of success, as portrayed in his 2008 book The Art of the Turnaround, is surety for many of us in the broader field of non-profit management that there is hope for the similarly struggling entities we have managed even when they do not yield any sign of being an artistic endeavor. The principles by which we govern remain the same.

Kaiser, however, is a little more adamant than me. My principles are his rules and we are working our way through the ten he describes in his book, rule number one being the title for this week’s message. The best way to illustrate why this is a rule for Kaiser is to divide the word someone into its component parts, some and one. This puts the emphasis on leadership being the responsibility of one individual, not a committee or board, which only a few (or some) can fulfill.

Someone must lead seems like a no-brainer, but that is a grave assumption. Most organizations that are in deep doo-doo cannot decide on who that one person is to be. So it is common for any manager taking on the challenge of reviving an organization’s prospects to find themselves trying to tame a multi-headed beast.

What I found in trying to fulfill this role is that an organization in trouble is not leaderless. It is literally dying due to a glut of leaders with competing ideas. The mission statement becomes fragmented into ever diminishing concepts identified by the pet projects directors and staff champion. Resources are therefore allocated on the basis of individualistic will power with internecine warfare the most conspicuous theme at any meeting.

Each member of the board of directors and generally each program, project or department head assumes that the problem, if they can agree that there is one, is the fault of everyone else. Any new manager determined to hit the ground running in order to rescue the imperiled organization hits a stone wall instead. Change encounters the NIMBY mindset at every level as people fear for their positions of power, however modest, should it be discovered that they have more form than substance; a thin veneer of title and perks disguising an innovative wasteland.

Someone must lead requires the implementation of a truce before consensus can be reached about who that one person will be. But even then there is the peril of choosing the least objectionable person to occupy the principal leadership role in the hopes that they will do the least amount of damage to the existing structure. Life goes on but under the delusion that the first turnaround requirement has been met since the turn has actually gone 360 degrees, bringing the organization essentially back to its failing starting point. What is missing is meeting the challenge of finding a qualified leader from the few who are both capable and available to decisively limit the turn to doing a180. This is what I call the some factor of Kaiser’s first rule.

When directors can agree to select one person to lead their struggling organization towards a path of new found prosperity, they find that this superlative person really does need to be someone special. Their knowledge and skills must transcend a vast array of functions if they are to guide board, staff and volunteers in doing the right things in the right way at the right time. As Kaiser reveals in his book:

“This person must have a single unified vision for the organization, have the courage to make difficult decisions in the face of controversy, possess strong negotiating skills, respect all parties including artists, work incredibly hard, and have an obsessive focus on solving the problems. This person must also understand marketing, fund-raising, and financial management. It is a hard job description to meet but the job cannot be divided among many people.”

He failed to mention “must walk on water” as the catch-all phrase at the bottom of the qualifications list. But if this sounds too good to be true, he is correct in assembling this wish list of capabilities. A good manager for a tough situation is a generalist, capable of managing the specialists, who devise and implement the tactics required for the turnaround.

My entry into non-profit management came by way of being an accountant, who stumbled into accepting a general manager’s position for the sole purpose of helping a struggling organization put its fiscal house in order. By the time I retired some thirty-plus years later I had performed or supervised every task mentioned in Kaiser’s list and a whole lot more. Whether or not I was “respectful of all parties” during those years, as he suggests, is open to debate.

My one regret as I survey my career is that I did not train for this work. Non-profit management was not a degreed program when I was in college. And if it had been I doubt I would have selected it as my major. But what I found in being the accidental NPO manager is that, despite the difficulties of being forced-fed,  more politely known as learning by doing, I enjoyed my work and can only wish that I had brought better knowledge and skills to the positions I occupied instead of gaining them after the fact. It would have benefited each organization more and might have helped me to ultimately master the stellar and essential knack of walking on water.

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