The 5th EFC Summer Academy on Philanthropy: Managing Change in Foundations: Strategic Shifts in a Co

1
The 5th EFC Summer Academy on Philanthropy
Managing Change in Foundations Strategic
Shifts in a Complex Environment

• Workshop
• Learning to Learn from Change
• Chaired by Marta Rey
• Director, Fundación Pedro Barrié de la Maza

Fundación Pedro Barrié de la Maza, Vigo, Spain
2

• Some questions to start with.
• I
• What is change about?
• Can change be managed?
• Is change good or just unavoidable?
• II
• Why is change particularly necessary in
  foundations?
• Who pushes for change in foundations?
• Why is effective communication key to this
  process?
• IIIWhich are the windows of opportunity for
  change in foundations?
• Can foundations learn from change?
• Can foundations learn to create change?

3
What does change stand for in foundations?

• Multiple approaches to change
• Incremental /disruptive or revolutionary
• Change in services/products, processes,
  management styles, behaviours/mindsets
• Reactive / proactive
• Unavoidable / necessary / good
• Change as a coordinated effort that involves
  fundamental transformations to the foundations
  strategy, organizational structures, operating
  systems, capabilities, culture

Organizing for successful change management A
McKinsey Global Survey (2006)
4
Approaches to organized philanthropy change...
slowly

• Shifting Paradigms
• XIXth century charity approach
• mid-XXth century scientific approach
• Late-XXth century to XXIst century venture /
  convenor / creative philanthropy
• From efficiency to effectiveness, from tactics to
  strategy, from charity to social entrepreneuship,
  from grantmaking to impact philanthropy...
• ... But still resistance to business management
  tools (e.g. performance indicators)!

5
Why do we change... slowly?

• Every body continues in its state of rest, or of
  uniform motion in a right line, unless it is
  compelled to change that state by forces
  impressed upon it. (Isaac Newtons 1st Law of
  Motion, Principia Mathematica, 1687)
• Change is as inherent in organizations as
  resistance to change (viscosity), but (working
  hypothesis) resistance to change may be
  particularly intense in foundations. Why?
• Conservative per se in terms of mandate and
  mission
• Conservative per se in terms of asset management
• Governance systems (cooption)
• Relative lack of managerial skills
• Are foundations particularly change-averse?

6
The foundation paradoxTayart de Borms (2005)
Can foundations promote social change in a
fast-changing environment if they do not change
themselves?
7

Highly complex and challenging environment Michael
Porter revisited
A complex pattern of cooperation competition
Public administrations Third sector (NGOs, other
foundations) Business sector and CSR
GLOBALIZATION FORCES
8
Change is not only unavoidable but also useful
for foundations

• One cannot manage change. One can only be ahead
  of it.
• In a period of rapid structural change, the only
  ones who survive are the Change Leaders... A
  change leader sees change as opportunity. A
  change leader looks for change, knows how to find
  the right changes and knows how to make them
  effective both outside the organization and
  inside it.
• (Peter Drucker, Management challenges for the
  21st Century, 1999)
• Pressure from donors and founders for
  accountability, transparency, and managerial
  strategies
• Pressure within a mature market for
  differentiation
• Need to justify the value of foundations to the
  eyes of society

9
In fact... change should be the core competency
of foundations

• Foundations (organized and perpetual
  philanthropy) are valuable to society only if

Their social return, discounted of
administrative and holding costs, and measured
in terms of innovative solutions to general
interest problems
The social return of public sector spending
and individual philanthropy (Godfathers man
to man philanthropy)
gt
10
In fact... change should be the core competency
of foundations

• Maximizing the social return of foundations
  requires
• Innovation (future creation) ? Continuous
  improvement ? Change policies ? Ideas Resources
  (people and )
• Revolution / reform in the concept of
  foundation
• Repositories of assets will gt flexible
  combinations of resources with necessary new
  ideas gt controlled-risk takers for social benefit

11
Competitive advantage of a Foundation
necessary and new ideas
Privileged , patient humble organizations
which balance change and continuity
12
In fact... change should be the core competency
of foundationsDruckers 4 policies to make the
present create the future

• Change policies according to Peter Drucker
• Organized Abandonment
• Organized Improvement
• Exploitation of Sucess
• Systematic creation of change (innovation)

Peter Drucker, The Change Leader, Management
challenges for the 21st Century, 1999
13
Who pushes for change in foundations?

• Change takes a lot of work (efforts, time, money,
  uncertainty) and should also take a lot of
  passion
• You got big dreams? You want fame? Well fame
  costs and right heres where you start paying. In
  sweat.
• (Lydia Grant/Debbie Allen welcoming students to
  the NY City High School for the Performing Arts
  in the 1st chapter of the Fame TV series)
• Change requires leaders at all levels of the
  organization
• I have nothing to offer but blood, toil, tears
  and sweat
• (Winston Churchill, Speech in the House of
  Commons, 13th May, 1940)

14
Who pushes for change in foundations?

• Senior managers must communicate a clear and
  compelling message about change Why do we need
  it? Where are we going? How can we get there?
  What do you win with it?
• Everybody in the foundation must share a will to
  change motivation, reward and recognition
  systems and modeling are key
• Everybody in the foundation must have the skills
  to change training is key
• No mandatory top-down change is sustainable
  vencer y convencer

The McKinsey Quarterly surveys and articles
15
The key for change effective communication

• Minimum understanding / agreement on the point
  for change in required to change both mind-sets
  and behaviours
• Fosters the will and the capacity to change it
  raises expectations and mobilizes organizational
  energy
• Acts upon the formal organization but
  particularly at an informal level emotions are
  key
• Helps balance change and continuity
• Good old Watson! You are the one fixed point in
  a changing age
• (Arthur Conan Doyle, His Last Bow, 1917)

16
Some personal conclusions about change processes

• Statu quo foundations, even if they are
  successful, are condemned to a sweet death /
  death by consumption be aware of success!
• Crisis is not equivalent to change difference
  between knowing youre not on the right way and
  knowing where youre going
• A clear vision is key change for the sake of
  change is both exhausting and useless

17
Some personal conclusions about change processes

• Crisis can be the window of opportunity for
  change as it facilitates abandonment, but the
  momentum for abandonment is a very short one be
  tough!
• Being engaged in the virtuous circle of strategy
  (mission gt goals gt planification gt
  implementation gt evaluation gt learning
  organization) helps a lot
• The fear of failure paralizes change mistakes
  are a useful source for learning

18
Some personal conclusions about change processes

• Achieving a changemaker foundation (controlled
  risk-taker for social benefit) may require
• Outsourcing all activities that are not core
  business and/or do not add value systems
  support, data processing, administrative flows,
  etc.
• Outsourcing expertise for limited terms and
  substituting in-house experts by all-purpose
  project managers energized by a missionary
  board/senior manager
• Streamlining the organization chart
• Killing the sense of exclusive ownership of staff
  over their areas of responsibility to substitute
  it by ownership over the whole organizations
  performance
• Excelling at the art of saying no and expiry
  yes !

19
Learning to live with change

• Too much emphasis on organizational consistency
  is useless we can only learn to live with change
  if we learn to live with paradox
• Too much consistency is as bad for the mind as
  it is for the body. Consistency is contrary to
  nature, contrary to life. The only completely
  consistent people are the dead (Aldous Huxley,
  Do What You Will, 1929)
• Managing a change process is difficult, but ...
  laying the grounds for sustained change for
  healthy long-term performance is exhausting!
• The final test of a leader is that he leaves
  behind him in other men the conviction and the
  will to carry on (Walter Lippmann, in New York
  Herald Tribune, 14th April 1945)

20
To open up debate...

• There may be here supporters of a cynical
  approach to managing change in foundations...
• If we want things to stay as they are, things
  will have to change (Giuseppe di Lampedusa, The
  Leopard, 1957)
• There may be here supporters of a naïve approach
  to managing change in foundations...
• Between us and excellence, the gods have placed
  the sweat of our brows (Hesiod, Works and Days
  I, c. 700 BC)

21
To open up debate...

• But all of us should be aware that trying to
  manage change is always preferable to being
  managed by change...
• All conservatism is based upon the idea that if
  you leave things alone you leave them as they
  are. But you do not. If you leave a thing alone
  you leave it to a torrent of change (G. K.
  Chesterton, Orthodoxy, 1908)