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Eugene Fram Headshot

Can Nonprofits Build on Bill Gates's Business Insights?

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In a recent Wall Street Journal article, Bill Gates shares some of his convictions about what makes or breaks developing businesses. *Based on his vast experience I suggest that many of his insights can serve as models as well as caveats in the nonprofit environment:

Internal Communications - Both in the corporate and nonprofit world the communications focus is typically on external audiences. The obvious message is the organization's product or purpose and is targeted to donors, users, clients, media etc. In both business and nonprofit areas, neglecting to clearly and regularly share information internally can lead to significant damage to an organization. While the board may feel it is "staying on message" communication with staff members can easily rupture. Information can become distorted by word of mouth as it travels through the employee "grapevine." Rumor of possible changes in the nonprofit, as an example, can lead to fear and resistance from staff members and in some cases, loss of top level employees who may seek positions elsewhere

This can be a vexing problem for nonprofit boards since directors are part-time volunteers who only occasionally interact with employees. A comprehensive plan should be in place to demystify the communication, especially in the area of employee engagement. This can be accomplished in a variety of ways. Google, a leader in this area, and others keep their worldwide cache of employees informed about developments by holding regular open video town hall meetings in which employees have an opportunity to pose questions to senior personnel. As the "lifeblood" of the organization, internal communications must be consistently updated and informed.

Anticipating Disruptions - Many nonprofits are experiencing what is referred to as "disruptions" which, in many cases, can change the direction or scope of operations. Their client bases are declining, foundations and governments are closing traditional sources of funding or technology has become so costly that it is no longer viable to maintain quality services.

The harbingers of disruption are usually apparent well in advance of their impacts. Easter Seals, for example, was founded in 1931 to focus on the elimination of polio. It had adequate lead-time to plan changes after the polio vaccine was introduced in the 1950s. The Board acted on the information to move services to providing help to people with developmental disabilities. The organization still flourishes today.

Nonprofit boards need to be proactive in seeking information that might lead to the consideration of organizational changes in their fields. There are a myriad of examples ranging from universities currently faced with decisions regarding the advent of online learning to mental health counseling agencies that are being impacted by advances in new pharmaceutical treatments.

Unlike business organizations, most nonprofit clients do not have a direct relationship with buyers. In the nonprofit environment the organization that pays for the service (i.e. foundation or donor) is separated from client populations that may be aging, disabled, homeless etc. This leads to a potential planning disconnect, "..between what users or constituents need and want and what the buyers think they ought to have."**

The CEO of every nonprofit must have 20/20 field insights, effectively scanning his/her professional environment for unexpected opportunities to grow the organization. These so-called disruptions can have a significant impact on the nonprofit's future.

Mind the Mission but Don't Miss the Opportunities: -The nonprofit bible wisely begins and ends with mission, vision and values. These elements are appropriately drilled into the subconscious of every director and board recruit. Rigid adherence to the stated mission can, however, can blind the organization to growth opportunities to serve new and needy populations. While "mission creep" can stretch resources too thinly, a board strategically must always view the big picture and recognize what new and tangential development might mean to the future of the nonprofit.

Gates refers in his article to the folly of Xerox, which, in its R&D division, developed the first computer mouse. Because the firm apparently regarded itself to be in the copier business rather than the information services business, it did nothing with it!

Bill Gates sees that answers to these challenges are addressed by recruiting the "right" people. "For one thing," he suggests, "there's an essential human factor in every business endeavor." He raises three questions: "Which people are you going to back? Do their roles fit their abilities? Do they have both IQ and EQ to succeed?"

Nonprofit response: Amen!

*William Gates, (2014) "Bill Gates's Favorites Business Book," The Wall Street Journal, July 11th.
**Ruth McCambridge & Lester Solomon (2003) "In, but not of, the Market: The special Challenge of Nonprofit-ness" Nonprofit Quarterly Newswire, March 21st.