GROWTH CHAMPIONS: Why Consistent Growth is So Challenging
In the March-April 2024 issue of Harvard Business Review, Paul Blasé and Paul Leinwand published an article on the challenges of maintaining consistent growth utilizing their expertise as seasoned executives and successful advisors to other executives at PricewaterhouseCoopers (PwC US). Leinwand, additionally, is a coauthor, with Mahadeva Matt Mani, of Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future (Harvard Business Review Press, 2022). The pair have no shortage of knowledge when it comes to organizational leadership, and their article articulates it for the benefit of growth seekers like us.
HBR ARTICLE SUMMARY:
“Growth Champions are defined…as companies with at least five consecutive years of sustained growth year-over-year.”
“Delivering consistent growth is one of the hardest things a company can do. A brilliant idea or product innovation can create a burst of episodic growth, but few companies demonstrate growth year in and year out, especially amid the disruptions and uncertain economy we’ve experienced during the 2020s. Some companies, however, have managed to sustain consistent growth over many years. Research from PwC reveals that the highest-performing companies invest in an integrated growth with system that drives both short-term and long-term growth… Growth Champions are defined by PwC as companies with at least five consecutive years of sustained growth year-over-year.”
A corollary for nonprofits would be the impact of a strategic donor making a series of very generous gifts. Like many foundations and strategic philanthropists, their commitment to a particular project or nonprofit has a definite time limit. They want to be in and out, funding initiatives that raise the organization’s fund development and program effectiveness to a higher level. Certainly, if such an approach was both possible and effective, this condensed timeframe would be ideal. However, without a well-defined system, sustained growth at that new level is difficult to maintain.
As nonprofit leaders, we must recognize the similarities between businesses and our organizations while also being mindful of their key differences. Jim Collins wrote a supplement to the best-selling Good to Great that can be helpful in this endeavor. In the 35-page addition, entitled Good to Great and the Social Sectors, Collins identifies and comments on the challenges that are unique to nonprofits and why business thinking is not the answer. Many of the dynamics of success in business are turned upon their heads in the nonprofit world. The dynamics of making money are often simpler and more straightforward than giving it away, no matter how worthy the cause. It is for this reason that many executives and board members from the business world have a hard time adjusting to nonprofit work. With this consideration, there are still lessons we can learn from strategic thinkers like Paul Blasé and Paul Leinwand. In this article, we will review some of the principles of sustainability, as Blasé and Leinwand outline, in a nonprofit context.
INTEGRATED GROWTH SYSTEM DEFINED
A fundamental principle of system theory is that the sum of all relevant parts working together is far more efficient and productive than the mere combination of the individual parts. The operant factor is “working together.” That’s just as true in microbiology, mechanical engineering, or corporate endeavors as it is in nonprofit organizations. In a nonintegrated system, noted Blasé and Leinwand, “operating models constrain growth when they promote silos around key functions such as marketing, sales, product development, pricing, and customer service.” In the nonprofit world, those functions are usually translated to programming, fundraising, and administration, which often work independently—i.e., the silo effect. How often are fundraising or programming goals based on visionary expansions without consultations and/or sufficient buy-in from all departments? Funding or programing goals are announced rather than negotiated, often based on unrealistic expectations.
The initial building blocks of sustainable growth requires a system with the full support of the CEO.
Blasé and Leinwand went on to identify the first and foremost factor of an integrated growth system: “Full support and ongoing participation of the CEO,” who is often the person instigating the construction of the system, playing a vital role in getting and maintaining company-wide buy-in. The CEO can also inspire real collaboration among executive team members, who are committed to building a system together rather than just focusing on their departments. So, the initial building blocks of sustainable growth requires a system with the full support of the CEO.
THE MASTER CRAFTSMAN
A fully integrated growth system requires a multiple-year journey to build and scale. It’s difficult to build a system if the CEO has a nervous propensity to plot a new course with a new agenda each year. I’ve seen that very thing on several occasions.
William Deming was the master system builder who worked under General Douglas McArthur in post-war Japan. Deming was charged with revitalizing and reinventing the Japanese automobile industry as an industrial hedge against Chinese expansionism. His process was to introduce one element of the system at a time, followed by a considerable time of training and evaluation. These changes took a lot of patience to overcome the language and cultural barriers. Block-by-block, however, he constructed a remarkable system, which was later introduced as Total Quality Management (TQM). Automobiles that were once referred to as “Japanese junk” now consistently lead the industry in terms of quality, reliability, and cost of maintenance. Deming’s often repeated mantra was “trust the system,” even as it was being developed. One of the reasons for the repeated course corrections and unreached potential among nonprofits is their short-term perspectives. The second-most important building block for nonprofits, then, is a long-term perspective.
CONTENT WITH THE STATUS QUO
In the national bestseller, The Advantage: Why Organizational Health Trumps Everything Else In Business, Patrick Lencioni makes the case for evaluating nonprofit institutions in terms of a medical model—that the seminal difference between successful organizations and mediocre ones has little to do with what they know and how smart they are and more to do with how healthy they are. Is there evidence of a cancer that needs to be removed, or has something been fractured? One of the most telling signs there is a medical problem is stunted institutional growth. Growth and the ability to reproduce are characteristics of a healthy patient and a healthy organization. There are several applications that can be attached to this medical metaphor. Growth and reproduction could be measured by new donors, expanded services, or simply a maturing growth system.
One of the reasons long-term growth is so hard for organizations to sustain is that nonprofit leaders and support staff often have settled into a comfort zone and are content with minimal growth or no significant growth at all. After all, one might think, the organization is still making a difference in people’s lives. However, the overall health of the organization begins to decline. It’s like the crack on the wall of the conference room. That crack has been there so long that no one notices it anymore—until, that is, a fresh set of eyes views it. Then the crack becomes the only thing people notice.
At the end of every blog post, I insert the quote: “If we merely aim for the industry standard, then our goal is mediocrity. Emulating the average nonprofit, we are destined to live with all the problems the average nonprofit faces. We suggest you instead aim to be exceptional in your approach to fund development.” Exceptional CEOs understand how and when to challenge their team to higher levels of performance, an easier undertaking when they are working in a growth system with high accountability.
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A fully engaged CEO with a long-term institutional perspective is not a system. It is simply the foundation upon which the elements of an integrated growth system can be constructed and without which nonprofit work is often more hap-hazard than focused. In the next post, I’ll try to outline the essential elements of a highly productive, integrated growth system.
CONCLUSION
Blasé and Leinwand emphasize the critical importance of integrated growth systems in achieving sustained organizational success. While businesses and nonprofits differ in function, foundational principles of leadership and system-building can be adapted across sectors. For nonprofit leaders, the challenge lies in translating these principles into strategies that effectively foster long-term growth amidst unique operational dynamics. Embracing a collaborative approach underpinned by a strong CEO and a commitment to organizational health can help nonprofits exceed industry standards and achieve unprecedented impact in their communities.
Eddie Thompson, Ed.D., FCEP
Founder and CEO
Thompson & Associates
“If we merely aim for the industry standard, then our goal is mediocrity. Emulating the average nonprofit, we are destined to live with all the problems the average nonprofit faces. So, we suggest you aim to be exceptional in your approach to fund development.”
—Eddie Thompson
