Tim's Library

This is the 9^th in a series of 12 articles about mistakes I’ve made and lessons I’ve learned building a non-profit foundation since 1997.

Leadership is the most written about subject in business.  I’ve read twenty or more books on it, attended dozens of classes and seminars and read hundreds of articles.

And it’s still not easy for me to put a finger on leadership.

Of all the books, I still recommend “On Becoming a Leader,” by Warren Bennis, written more than twenty years ago.  For classes, I score Collins “Level 5 Leadership” above all others.  And you can find several of my favorite leadership articles in the library on this website.

Lately, I’ve been trying to add my own empirical data to the learning.  Who has led me?  What characteristics did they demonstrate?  What made me want to invest my time and resources in their organizations?

I still think of myself as 40, not 60, so it still surprises me when I realize I have a lot of data to work from:

·         Our foundation has invested in over 100 organizations so far

·         Our non-profit and for-profit lending companies have served over 30 small and large organizations

·         For 17 years I’ve met for a full day each month with 15 other CEO/owners in a peer group called Vistage (formerly TEC).

My summary view is that every business and non-profit can easily trace its success or failure in some manner to leadership.  Effective organizations are people-motivated and aligned by a good leader.

So below, I’ll list the characteristics I’ve most consistently seen in the successful entrepreneurs, CEOs and non-profit organization leaders who I’ve worked with.

1.      Acquisitive…..good leaders I’ve worked with crave learning and strive to acquire more knowledge.   The most effective acquisitive leaders get most of their learning from others who have faced similar situations and issues.  So, great leaders are not necessarily inventors, yet always they are builders of knowledge.

2.      Risk managers…..not risk takers.  The best leaders measure risk and reward dispassionately.  They calculate the “best case-worst case” before acting.  Prominent in their calculation is each decision’s effect on the people they lead.

3.      Realistic……..a consistent leadership vacuum is the avoidance of reality.  All of us face one or more overwhelming issues.  Poor leaders avoid seemingly insurmountable issues.  Good leaders accept them, face them down and try to pull that issue apart piece by piece.  Whether successful in overcoming them or not, these folks are more fun to follow.

4.      Planners…….my first question of anyone we might work with is: “Do you have a written plan?”  The second question is “May I see it and critique it?”  Poor leaders answer “no” to one of these questions.  Good leaders have a clear, written plan.  Great leaders have an open plan, welcoming all who are willing to help make the plan better.  NOTE: Many poor leaders hide behind a voluminous “strategic plan,” knowing that if they can’t fully understand it, no one else will either.  J

5.      Customer focused………..the most consistent quality of a poor leader is one who focuses internally.  “Dilbert” and TV’s “Office” demonstrate my point – strategy makes little sense.  Any organization that focuses, even benevolently, from the inside out do worse than ones who build from outside, in.  All success – profit and non – begins with a customer.  

6.      Numbers driven……the most effective non-profit leaders know that they cannot create, maintain or grow their mission without making the numbers work.  I majored in political science so by definition I hate numbers.  But I’ve learned the hard way that both my social venture and business interests can only be served effectively if I first measure decisions mathematically.

7.      Humble…..the surprise of Collins’ Level 5 leadership theory.  Humble people make the best leaders because we find them easy to follow.  Humble leaders don’t care who gets the credit (in fact they know success has many parents) and so they find it easy to encourage others.  Therein lies their power.

8.      Resourceful………….whether working with plentiful resource or none, great leaders know how to leverage whatever they have.  When it’s a lot, they use what they have wisely.  When little is available, they get resourceful.  The great start-ups I’ve worked with take the approach of “who can we borrow resources from?”

9.      Authentic………..I save this for last because it’s the final litmus test of great leadership, in my view.  It’s been said that “people with great strengths have great weaknesses.”  Authentic leaders recognize their weaknesses as well as their strengths.  They allow people to see both and can openly discuss them.  Who follows a phony?  Other phonies. 

Is there one leader I work with who encompasses all these qualities?  Yes, actually there is more than one.  Maybe I’ll feature them in later articles.  These articles would lend reality for my points by citing real leaders I know and follow.

“Do-gooders” fool themselves just like all business people do.  And those willing to fool themselves and others, consciously or unconsciously, waste time and money.    

How do I know?

I’ve done it – repeatedly.

It was only after I got a headache that I stopped beating my head against the wall of non-leadership.

Peace. 

Tim McCarthy

Author’s Note: This is the 7th in a series of 12 articles I’m writing on mistakes and learning in building our foundation since 1997.

Last month, I wrote about the foundation’s mistakes in enabling the charities we supported in our fledgling years. Called “Roots and Wings” I described how we shifted from investing increasingly more each year into our non-profit partners to a strategy of “moving in, and moving out” over a five year period.

This month, as a follow up, it seems appropriate to speak of how we have learned to measure impact.

In a word: Leverage.

In our early efforts, we measured our impact on the organizations we served by keeping track of the amount of money and time we put in. Our intent was to build the organization’s staffing and financial commitments.

Simply put, building an organization is no measure. Instead of adding impact, we added people and grants. Our early days were focused on operations. In 2009, we decided to target the ratio of operations-to-grants and found, dollar for dollar, we invested almost 2:1 in administration versus grants!

So we decided to target a 1:1 ratio for our ops/grants ratio and today, only two years later, we’ve achieved our first milestone. In 2012 we plan to continue our progress with a 1:2 ratio. The chart below summarizes the point:

Leverage to me means “return on investment.” In the case of measuring ops money over grant money, it was fairly easy. We no longer have lots of people and office space to make grants.

Our next task is tougher. In fact, the two most difficult words in social change are “impact and scale.”

Ultimately we’d like to see leverage of $5 returned for each $1 we invest. Although it will never be fully scientific, we believe it to be a noble goal. And while we’re just getting started on our overall measurement system, Revenue University provides a good example of what we’re after now.

Revenue U. is a pilot with a few partners we are starting in the first quarter of 2012. BVU: The Center for Nonprofit Excellence and Nancy Osgood of The Osgood Group have attracted 11 major organizations who serve the poor of Northeast Ohio to take a three month course in building revenue streams. Identifying and building revenue streams is work we've done consistently over the years since it's a universally needed element to building and maintaining a great mission. But we have only been able to do this work one organization at a time.

Enter RevU@BVU.

Here’s how it works:

1. Organizations will take a retrospective look at their own revenue mix.

2. They will learn how to develop ideas that leverage their organization’s assets.

3. They will create a customized set of evaluation criteria to determine which revenue stream best serves their organization’s mission and financial needs.

4. Organizations will leave with a set of next steps toward monetizing their idea.

So, now 11 organizations will receive in three months what usually takes us even longer to provide just one organization.

That’s leverage. And here’s the kicker.

We intend to enlist the graduates in a network where they will report quarterly on progress and plans in the programs developed so they can continue to build more revenue over time. Perhaps this will someday build into a network of organizations who serve the poor who can count on ongoing revenue building training.

It would certainly be easier to just review proposals and donate money, as most foundations do.

But in our foundation, we are seeking impact and change through leverage and scale.

Therefore, we’re learning that “you can’t change what you can’t measure.”

Peace,

Tim McCarthy

Author’s note: This is the sixth article in a series of 12 describing mistakes I’ve made in building a foundation.  My hope is that they are helpful to you in your own philanthropic efforts.

Roots and Wings. My Mom loved this phrase and used it to encourage my brothers and sisters about how we raised our children.  She asked that we give them each roots of our example and teaching while being careful to also give them wings when it came time for them to fly.

This thought came back to me when considering how to describe a major mistake our foundation made as we learned to “serve those who serve the poor.”  And since our manner of service is to engage, rather than to just provide money, we soon realized the nonprofits we assist became like our children: easy to fall in love with and enable, but difficult to empower. More...

One of my favorite cousins, Mike Murphy, teases bartenders by saying “I’m searching for the second best martini in America.”

When they take the bait, they ask, “Why the second best; why not ask for the best?”

To which he responds, “Because if I find the best, then my search is over.  What fun is that?”

If you’ve read this column before, you know how much I value planning.

My ad agency mentor Jim Johnson taught me that “if you don’t know where you’re going, any road will get you there” early on so carefully researched written plans precede any venture.   And I continue to stress the case for written planning with every organization I work with.

Without a plan, you’ve no basis to allocate your resources and no way to measure your progress.

But I’ve learned there is a higher platform than planning.  Let’s call it “searching.”

Our foundation has worked with great planners and great doers these last fourteen years.  The “best of the best” are searchers.

William Easterly’s seminal book, “The White Man’s Burden” (reviewed February, 2009) led me to appreciate this term. More...

A lyric in one of my favorite Avett Brothers songs (featured in Tim’s Library – Songs - April, 2010) states:

                  "When you run, make sure you run, to something not away from”

It’s a lesson I’ve had to remember many times in my life.

The first that I recall was quitting cigarettes.  Like most smokers, I’d quit several times unsuccessfully.  But this time I convinced myself that instead of “stopping”, I would start running which I’d done as a kid.  The result was simple – every time I ran, it made it harder to think about smoking again. 

And I had a positive goal; first 500 yards, a week or two later a mile, until over a year or so I’d ramped up to 2-4 miles every other day which I did for 23 years.  (My knees gave out, now I bike.)

“Run to – not away from” has come up again over these last four years as we’ve continued to build The Business of Good to a more scalable level. 

In 2007, our foundation had been around and helpful in serving those who serve the poor but we suddenly had more money to invest in our mission.

My first thought was to build a non-profit business center – bricks and mortar; a place where non-profits who served the poor could pay reduced rent and enjoy shared services to decrease their operating expenses. 

As is my custom from a career in marketing, we first did the research and found this idea has been done many times around the country.  In fact, there is a national non-profit business center network started by the famous Tides Foundation in San Francisco. 

So for more than a year, we met with interested non-profits and developed strategic plans, drawings…..we even hired full time people and bid on a building to rehab.  Eighteen months into our work, we’d spent tens of thousands of dollars.  In the end we found that “serving those who serve the poor” was More...

Author’s Note:  This is the 4^th in a series of 12 articles meant to share my trials and my errors in starting up and building The Business of Good.  They are intended to help anyone who pursues a noble cause.

The three greatest lies are:

1.     I’m a people person.  No, really, I am.

2.     I’ll do anything it takes to start my own business, and

3.     I’m dedicated to serving others.

The first time Lie #1 mattered was when I started to hire people.  I learned to ask a follow up question to those who said they were a people person.

I learned to say, “Good, we need people-persons here.  What’s the funniest thing that ever happened to you?”  Of course, few applicants could think of anything funny to say and some didn’t say anything. 

Why did I test for humor?  Since most problems are people-related, I’ve seen humor come in pretty handy in solving them, especially during times of stress.

One time a woman said, “Well, my Mom still doesn’t think this is funny but one day she was giving me a hard time when we were riding in the car and when we stopped at a red light, I fell over into her lap and laid my hand on the horn.  She pulled my hair, tried to pry my hand off the horn but couldn’t do a thing.  Everyone at the intersection was mad since it appeared my Mom was honking at them for no reason.” More...

Authors Note:  This is the third in a series of 12 articles I’m writing to share my experience, often “what not to do”, from building our foundation over the last 14 years.

About two years after selling my for-profit business and turning my primary focus to serving those who serve the poor through this foundation, I was a nervous wreck.  Daily I wrestled with the complex organization I’d created using my winnings from business. 

One day my financial manager looked at me and said, “Wasn’t this supposed to be fun?”

Now and then I take our work very seriously.  But his question made me realize I’d forgotten a very important lesson I’d learned in business.  That is, that any work can be accomplished more effectively and more joyfully as More...

Author’s note: This is the second in a series of articles regarding the mistakes I’ve made in developing our foundation over these first 14 years.  A friend recently sent me a book titled, “Success Always Begins With Failure”.   I love that title and hope that my failures shared will give you some tips for your own giving journey. More...

This is my first article for our new website. I intend to dedicate most of my first year of writing for the site to sharing what I’ve learned as I grow in service to others.

Sharing my experience supports our #1 goal with this website, which is to convince other like-minded people that serving others is doable and can be very fulfilling. More...

Engaged philanthropy is a never ending journey of learning how best to make a positive impact in the organizations we serve.  I have learned some important lessons along the way. More...