After a successful career as a software entrepreneur and business leader, Northeast Ohio native Mario Morino founded the Morino Institute in 1994 to encourage innovation and entrepreneurship, promote a more effective philanthropy, and explore the impact of the Internet on society. Over the next few years, as the dot-com boom morphed into a bubble, Morino emerged as a forceful spokesperson for a more business-centric approach to philanthropy and in 2000 co-founded Venture Philanthropy Partners (VPP) as a vehicle to concentrate investments on improving the lives of children of low-income families in the National Capital Region.
That was also the year the dot-com boom went bust and the venture philanthropy meme lost its hold on the public imagination. Looking back on those years, Morino today says he regrets "the corporate-sounding jargon I bandied about. I spoke often of the value of being 'business-like' and the need for results. People who didn't know me saw me as a brash, arrogant interloper. I offended far too many wonderful nonprofit leaders who had dedicated their lives to making a difference for others."
In the decade that followed, VPP established itself as a leading practitioner of the "high-engagement" model of philanthropy, and Morino became more convinced than ever that nonprofits' ability to collect information about the impact of their work and use that information to drive continuous improvement in their programs and results — what he calls "managing to outcomes" — was a critical element in the social change equation. So convinced, in fact, that he wrote and (in 2011) published Leap of Reason: Managing to Outcomes In an Era of Scarcity, a monograph "intended for leaders...who know in their bones that they want and need better information in order to fulfill the mission that compelled them to dedicate their lives to serving others."
PND chatted with Morino recently about the book, performance measurement (and its costs) in a nonprofit context, and the importance of leadership in shaping a performance culture.
Philanthropy News Digest: The subtitle of your monograph is "Managing to Outcomes in an Era of Scarcity." In a world awash in information, data, processing power, and other blessings of the digital economy, what is it we don't have enough of?
Mario Morino: That's a great question. My view is that even in a world awash in information, nonprofit leaders generally don't have the benefit of the right information. By the same token, most don't have the supporting culture or encouragement to put the right information to good use in managing their mission and operations.
To be sure, more public and private funders are demanding information from nonprofits, and nonprofits are dutifully complying. But in many cases, the data that funders demand are not all that useful to nonprofit executives for managing their performance and charting the strategic direction of their organizations. In fact, when you dig into the details of the information requirements, you see that too often the data are not even that valuable for the funders who request them, except for allowing these funders to check some "accountability" boxes.
As we said in the book, in the name of "accountability," we funders are foisting unfunded, often simplistic, self-serving mandates on our grantees — rather than helping them define, create, and use the information they need to be disciplined managers. I strongly urge funders not to foist lots of unfunded "compliance" requirements on nonprofits. Instead, we want funders to help their grantees identify and collect the information that's most valuable for nonprofit leaders themselves for determining how well their organizations are doing and how they can keep getting better at meeting the needs of those they serve.
PND: What's driving the increased focus on outcomes measurement in the social sector? And what makes you sure the movement isn't a consultant-driven fad that will fade in popularity as the economy improves?
MM: I believe there are many forces that are distorting and, frankly, dumbing down the dialogue on outcomes. And, fortunately, there are emerging forces driving the dialogue on outcomes in positive directions. On the positive side, we're fortunate that a few foundations like Edna McConnell Clark are demonstrating that a focus on outcomes is key to achieving a real, lasting impact in their chosen issue areas. And there are some very good consultants and thought leaders in the mix, including Bridgespan, McKinsey, Monitor, Public/Private Ventures, and the Center for Effective Philanthropy. I also see some remarkable early-adopter nonprofit executives contributing in important ways to the dialogue by showing what's possible.
The increased focus on data and outcomes is not a fad. Based on my forty-plus years in the for-profit and nonprofit sectors, I am absolutely convinced that organizations in any sector need good information to make good decisions. Leaders often have good intuition. But the top leaders in any sector want to augment their intentions and intuition with the best data they can get their hands on. They can't sleep at night when they don't know whether they're on course to achieve the results they seek. They're obsessed with finding ways to do better for those they serve.
Over time, the nonprofit leaders who do manage to get their hands on good data and integrate information-based inquiry into their cultures are going to achieve more for those they serve. We don't yet have data to prove this in the nonprofit sector. But there is a growing body of literature on the link between good information and good results in the for-profit sector. Eventually, I believe we'll have similar evidence for the nonprofit sector.
But there's no guarantee the adoption of outcomes-based management in the social sector will get to where it needs to be unless there is a sea change in the mindset of nonprofit leaders and the funders who support them. The shame is that if that sea change doesn't come to pass, those who will pay the price are those whom nonprofits exist to serve.
PND: You argue in the monograph that all organizations should strive to nurture a performance culture. How do you define that term, and does it mean different things depending on what sector one is talking about?
MM: My definition is really straightforward. I mean simply that the organization should have the mindset to do what it does as well as it possibly can and continually seek to do even better. And that definition is identical across sectors.
In the book, I shared a concrete example from my for-profit days that I hope is not too self-serving. Despite my shortcomings as a manager when I ran a software company, I worked very hard to nurture a performance culture. Factoring in that I might be engaging in slightly revisionist history, I believe that the people in the company really cared about what they did and how they did it. They cared about our customers and each other — so much so that these relationships often grew into close friendships anchored in mutual respect. People worked hard not because I decreed they should but because they wanted to do their work very well; they wanted to experience the exhilaration of excellence. When we made mistakes, our openness allowed us to quickly admit and rectify them. It was inherent in the culture that we would respond this way.
I see these exact same hallmarks in several great nonprofits I have supported and visited over the past few years. In these organizations, people are highly motivated by their work. They have taken big risks and undertaken hard, painstaking work to build human and technology systems to help them get better at what they do. And they don't see "mission" and "metrics" as mutually exclusive!
PND: How important is individual leadership in the performance culture equation? And what are the most important qualities a nonprofit leader must possess in order to succeed in today's environment?
MM: It's essential! A performance culture never develops without leaders investing themselves deeply and taking big, bold risks.
In all the nonprofits that I regard as the top performers, leaders have taken on the challenge of nurturing a performance culture not because it's "important," not because it's a trend or a good marketing tool, and not because a funder or investor said they had to. They did it because they had an introspective moment when they realized that what they were doing wasn't working well enough and they needed to do more.
For example, in the early 1990s, Youth Villages CEO Pat Lawler kept hearing through the grapevine about young people who seemed to be on a good path after discharge from YV's residential treatment facilities and yet had ended up in prison or in other forms of crisis. This prompted him to start collecting more information to find out what was really happening to those kids. The results were disappointing.
Instead of hiding the bad news from stakeholders, Pat and his team openly acknowledged the shortcomings and then spent several tough years reengineering the entire program model. Today, data collection is part of the DNA of the entire organization. YV tracks its clients' outcomes six, twelve, and twenty-four months after discharge, feeding continual improvements into the program model. When you talk to Pat and his team, you see that they are not fixated on data and measurement per se. To them it's simply a precondition for knowing if their long hours are paying off for the young people they serve — and for learning how they can keep getting better over time. Pat and his leadership team have built a true performance culture — one that is the envy of nonprofit and for-profits alike!
As for the most important qualities leaders must possess in this environment, I would submit the following five: a passionate, unyielding desire to do the most you can for those you serve; the confidence to ask hard, even painful, questions about how your organization can do more and at a lower cost; the commitment, staying power, and talent to lead difficult change processes; the clarity and courage to get the "right people on the bus, in the right seats" — even if that means making difficult personnel decisions; and a willingness to model — that is, live — the behavior you want others to practice.
PND: Who should bear the costs of an increased focus on outcomes measurement?
MM: Managing to outcomes should be a essential part of how nonprofits function and thus covered by their revenue sources, akin to how nonprofits fund their development functions or their budgetary/cost accounting.
But for this to happen, funders have to accept the necessity of providing resources to cover operational, not just project, expenses. Instead of just pushing nonprofits for "more information on results," funders should be willing to support what it takes for nonprofit leaders actually to produce those results. And that includes investing in outcomes management, a term I prefer over "outcomes measurement."
If funders really want their grantees to produce results, they must provide much more than project support and more than $5,000 or $10,000 "capacity-building" grants. Serious, results-oriented funders make multiyear investments so that nonprofit leaders can develop the talent, cultivate a performance culture, and build the human processes and technology systems for managing to outcomes. At a minimum, funders should support efforts to help nonprofits build the capacity and culture for tracking the outcomes of those served, undertake at least basic analysis of this information, and identify how they can use the information to improve their programs over time. For my money, these investments have a tremendous return on investment.
But let me also say that every nonprofit organization that has successfully made the "leap of reason" has put a lot of skin in the game. Nonprofit executives who have made the leap have invested a lot of human, relationship, and sometimes financial capital in the process. They often dip into reserves, raise special "innovation funds," and/or re-purpose existing dollars. They always invest a lot of their own time and effort. Organizational transformation like this cannot simply be outsourced or done on the cheap.
PND: What advice would you give executive directors and nonprofit board members who may have thought about adopting more of an outcome-focused mindset but just don't know how to get the ball rolling?
MM: I'm happy to answer the question, but I don't want anyone to think that managing to outcomes can be accomplished quickly with a simple, ten-step process. Managing to outcomes is a quantum leap for most organizations and involves significant culture change. It's not about implementing a cookie-cutter set of best practices.
That said, I would encourage people to look at the "Ideas Into Action" section of the book, which begins on page sixty-three and can be downloaded with the rest of the book at LeapofReason.org. That section provides a set of questions that boards and leadership teams should ask themselves to gauge their readiness and capacity for doing the hard work of making significant culture change.
In closing let me make an emphatic plea: You're not going to "get it" just by reading the book. We hope the book will give you some ideas. But, ultimately, you have to make the highly personal decision — in some cases akin to a conversion — that you want and need to do this. You have want to serve better, be better, and function better yourself and as an organization. Like the great leaders I've met who have done this, you have to want — in a compelling way — to make a more material, lasting difference for those you serve. It's a choice!
-- Mitch Nauffts