How sustainable is your business or nonprofit? This chart will help

Is your business or nonprofit a zombie or a volcano?

Use this Simple Chart to find out and learn what to do about it.

Zombie or Volcano?

By the end of this article, you’ll be better positioned to answer three crucial strategic questions for your business or nonprofit:

  1. Is my organization sustainable?
  2. How can I realistically assess the situation and avoid confirmation bias?
  3. How can I frame my strategic options so that I make the best decisions?

Just about every small business owner and nonprofit leader I know is incredibly busy. You are so passionate that your work stops feeling like work and becomes a part of you. You love what you do and do what you love. But is there a downside?

As a matter of fact, there is. Leaders can get so caught up in their product, service, or cause that they become blind to the first strategic question: how sustainable is my business or nonprofit? Ignoring or avoiding this question can lead an organization to become a zombie (sleepwalking to failure) or a volcano (suffering catastrophic growth on the way to failure).

A zombie is an organization that is no longer increasing its revenue or expanding its impact. It is merely paying the bills and keeping the lights on until the money runs out. The problem, of course, is the drain of talent and resources entailed by clinging to the status quo. Zombies do not fail fast—they linger.

A volcano, on the other hand, is an organization that grows faster than it can manage. Often, leaders fail to recognize the problem until too late. They get distracted by the euphoria of success and drawn into the chaos that they fail to develop their leaders and systems to handle it. At some point, growth becomes unmanageable. A major crisis or scandal often breaks the organization.  

There are simple and common reasons for these problems.

Confirmation bias is one of them. This refers to the tendency to place excessive weight on data that conforms to our existing beliefs and to discount information that does not. Confirmation bias can help explain why nonprofits cling to causes that too few donors will support, and why businesses fixate on products and services too few customers want to buy.

It gets worse. Those with confirmation bias tend to dig-in their heels when confronted with disconfirming facts and information. Highly-selective data drives their decision-making. Like the sooth-sayers of old, people invested in the status quo may be at higher risk of searching the entrails for hidden messages that everything is fine.

The result: 50 percent of businesses are no longer around after five years and only 28 percent of nonprofits report any financial activity after ten years.

A disciplined look at the big picture may help leaders make better decisions.

This simple quad chart could be useful. The north-south axis depicts profitability: the + direction means revenues exceed expenses. The east-west axis is for impact. The + direction denotes the tangible impact on your cause or mission.  

Is Your Business or Nonprofit a Zombie or a Volcano?

Four strategic directions emerge from this quad chart. The upper right quadrant is the ☺ place. Solid revenues and clear impact give your organization a strong foundation for growth. The danger in this situation is growth beyond your ability to manage it – catastrophic growth.

To avoid that problem, you will need the right team in place and a sound strategy.

Within the upper left space is a situation in which revenues are ahead of expenses, but the actual impact of the product or service is unclear. This is a dangerous position because you may be tempted to hire more staff and commit more resources. If, after some time, you cannot clearly articulate your impact, then revenues are very likely to dwindle. This means layoffs and possible bankruptcy. One of my clients found himself in exactly this situation; saving and repositioning the business was painful but ultimately successful.

A sound strategy in this situation is to maintain your current scope and scale but fix how you measure and explain your impact of the mission or cause.

If that becomes impossible, then merge with another organization. The ideal time to do so is when you can bring substantial resources to bear. This gives you leverage and influence. Too many organizations make this decision too late and have little bargaining power.

The lower right is where many organizations turn into zombies. Your team is making an impact, you believe, but your revenues are insufficient. This may be the result of one or more problems. The way you are measuring and explaining impact, for instance, might not be convincing. Your strategy could be causing you to miss important shifts in the marketplace, or your business plan could be wasting time and resources on activities that are no longer valued.

Again, you have two options. First, try to fix what is impeding your progress. Get a comprehensive and thorough strategy review and organizational assessment to determine if the required changes are feasible. If yes, give yourself a decision-point for knowing when to move to the second strategy option: merge.

If you decide that your organization is unlikely to recover, your best option is to merge.

The lower left quadrant is the place – insufficient resources and impact. Your best option here is to harvest: shut down, learn from the experience, and begin again with something different. Failing fast successfully requires you to measure your revenues and impact from the very beginning and to set a decision-date to establish whether your business is viable.

This chart should be a part of every business or nonprofit strategy. It is a constant reminder to determine the compelling impact you are trying to make, measure it, and explain it clearly to your customers or donors. The aim is to create a virtuous cycle: compelling impact results in positive revenues and greater revenues lead to higher impact. When one or both of these elements is flatlining or declining, you need to diagnose the problem quickly and decide whether to improve your organization or close it down.

The Importance of Determination

PODCAST:

The Importance of Determination


Perseverance and Determination

My parents, David and Joanne, and three siblings—Dan, Laura and Mark—all taught me the importance of perseverance and determination, the will to succeed at whatever you put your mind to. We would always challenge one another to be the best that we could be.

Determination helped me endure some terrible experiences.

I learned that I needed to use them to empower me … or else be destroyed by them.

In this podcast you will discover:

1. Ways to surround yourself with the right people, so that you will be challenged to be your best;

2. Ideas on how to emerge stronger from terrible experiences, so that you can empower others;

3. How to use empathy, so that your team can learn and grow in a dynamic situation;

4. Insights on Determination, so that you have a guide for when to stick to your guns and when to make a bold change.

How Did You Start Using Your Talents?

I was a skinny and awkward kid. By the time I got to high school, I was bullied relentlessly by classmates and assaulted by two priests. West Point was a place whereI was exposed to many different opportunities. I decided I was going to do the toughest and most difficult things I could possibly do — like boxing and close quarters combat — because I was never going to go through again what I experienced in high school. And that led to Airborne School and Assault Ranger School—some of the toughest schooling and assignments that the Army had.

The Most Impactful Turning Point?

Some of the best role models and mentors I had were from the history department at West Point and were either infantry or armor officers. Because of their personal example—the way they taught and led and cared for the students in their classes—they truly inspired me to want to be like them when I became an officer in the Army. I decided that I wanted to come back to West Point and teach one day because I aspired to do the same thing for other cadets that these fine men did for me.

The Most Powerful Lesson Learned?

I learned several essential lessons from my parents and siblings: the importance of perseverance and determination along with the will to succeed at whatever you put your mind to. We would always challenge each other to be the best we could be. Another key lesson from a great teacher I had in high school was the value of honoring each person, including myself, and the vital importance of empathy.

Steps to Success from Christopher D. Kolenda, Ph.D.

  1. Use perseverance and determination, along with the will to succeed, to achieve whatever you put your mind to.
  2. Find a group of people where you can challenge each other to be the best you can be.
  3. Honor each person, including yourself.
  4. Learn to be empathetic, to see things from the eyes of others; seek to understand, first, then to be understood.

Listen to Chris’s Entire Podcast

 

Are Battlefield Lessons Useless to Business Leaders?

Are Battlefield Lessons Useless to Business and Nonprofit Leaders?

Dear Business and Nonprofit Leaders,

Your instincts are right: many so-called battlefield lessons are useless for you and your team. Stories of hardship, heroism, and sacrifice might be inspiring, but their practical utility is often minimal. This is because those lessons haven’t been tailored to your organization’s needs.

Those of us offering insights from a military perspective must work harder to understand issues through your lens and present feasible, practical, and implementable ideas. Our failure to customize military leadership lessons to your needs has, understandably, resulted in waning enthusiasm. If the trend continues, the pendulum may complete its swing toward the view that military experience is interesting but irrelevant.

But battlefield lessons are useful to non-military contexts; the right framing just hasn’t been applied to them. Let’s take a few common examples and provide some simple ways to make them more relevant to you.

Staff Rides and Battlefield Tours.

Militaries have long used staff rides as part of leader education; I used them several times in my commands. A group of leaders or students studies a particular battle in advance and then takes a trip to the actual grounds to discuss what happened there, why it happened, and what lessons they can learn. Done correctly, staff rides can have a tremendous impact.

Battlefield tours for business leaders are less useful because they normally devolve into sightseeing. In most cases, the military tour guide explains in great detail what happened at each point in the battle and then challenges the audience to determine how to build agile leaders, good decision-makers, expert planners, and so forth. The absence of context and a clear connection to the audience’s contemporary challenges undermine the business utility of this leader development experience.

What to look for.

Find programs that focus on learning about you before offering advice. The best ones begin with an assessment that helps you and your leaders see your salient challenges and opportunities. Next, they should coordinate learning objectives and preparation work, such as readings and individual research. On the battlefield or historical site, the emphasis needs to be on linking key lessons to your business challenges.

Boot camps.

For the military, boot camps and other forms of initial entry training are essential parts of transforming civilians into soldiers, sailors, airmen, and marines. These intensive courses last several weeks and are often followed up by additional training before the service members arrive at their first organization. The development of military skills and values are essential for them to be able to function effectively in their first assignment. My initial training as an officer lasted nearly a year. Few businesses and nonprofits, of course, could devote even a fraction of that time for new employee education and training.

Leadership boot camps run by former service members may promise the same transformational results but in record time. Some leadership boot camps promise that a 3-day experience will result in a “quantum leap” in a leader’s performance. You know this is unlikely. Improvement is a long-term process that relies heavily on self-development: leaders sort through a wide array of concepts and ideas to determine what is most meaningful to them and then work on those attributes.

What to look for.

Assess what each workshop and boot camp is offering, and use common sense to determine its likely utility. These kinds of programs can be helpful, but anything that sounds too good to be true probably is. Workshops can play an important role in your team’s development. The best programs customize their workshops to your organization’s particular needs and objectives. Doing these as a team can have a much higher payoff than individual leader’s programs.

The boot camp analogy can be very useful in discussions about culture, too. Boot camps are part of the military’s onboarding process; how your organization onboards new employees is equally essential to sustaining your culture. Programs that help you define your culture, hire talented people who fit, onboard to set them up for success and continue their development on the job are likely to help you achieve high levels of employee engagement. [Did you know, according to Gallup, that nearly 2 of every 3 employees in America reports being unengaged at work?]

Strategic Planning.

“Plans are nothing, planning is everything” World War II Allied Supreme Commander General Dwight D. Eisenhower famously remarked. Good commanders drive their staff to identify possible contingencies, threats, and opportunities, and have branch plans or sequels to address each one of them. The planning process, in
military parlance, is never completed. Commanders often get detailed playbooks that aid decision-making for every permutation a creative staff (the strategic planners) can possibly think of in the time they are given to think. The results are often impressive.

The desire to bring the military-planning process to a business context is understandable. There’s one problem: very few businesses in the world can afford to have highly-skilled people spending all their time making detailed plans about things that will probably never happen. In fact, most businesses and nonprofits outsource their strategic planning. Here’s what you normally get: highly detailed plans that few employees have time to read. There is little to no sense of ownership. Even worse, your situation may be so dynamic that detailed plans soon become irrelevant. It is no wonder then that, according to one estimate, 90 percent of business plans are not executed. They gather dust. This might not be a big problem for the military, but it is for you.

What to look for.

Businesses and nonprofits that want to grow sustainably need both a strategy and a plan. A strategy helps you understand your situation, select a way forward to meet your goals, and manage a dynamic environment—to know when to stay on course and when to change. A plan helps you coordinate the activities of your team to implement your chosen way forward. With the right guidance, the best plans are ones written by your own team. If they have authorship over the plan, they are more likely to own and execute it.

Bottom line: the strategic plan can be counterproductive – a sort of reverse Goldilocks: not quite a strategy, not quite a plan, just plain ignored. Develop a sensible strategy and then put together an implementation plan that your team owns.

Is military experience useless for businesses and nonprofits?

Not at all. In fact, they can become an essential tool for organizations that feel stuck, want to implement change, or are trying to manage unexpected growth. Breakthrough insights, many leaders find, come from looking at your challenges from different points of view. Battlefield lessons can expand your perspective – your mental framework – and enable you to connect ideas from a different context that help your team grow sustainably.

Self-awareness

PODCAST:

Self-Awareness – Where Leadership Begins


Self Awareness

“Know thyself.’ The ancient Greeks were telling themselves and can tell us today, that by knowing ourselves, we get to know our natural inclinations and our natural strengths so that we can put ourselves in a position to succeed. And at the same time have the humility to recognize that others have different inclinations and strengths. By putting together the right combinations of people, that are tied together by a common purpose, that is what leads to the best results.”

Why Is Self-Awareness Important?

“When you know yourself, there are a number of things that awareness empowers you to do. First of all, it empowers you to put the right people around you. I, for instance, need detail people around me, and those are the first people that I seek out. With the right people, you can amplify your strengths or natural inclinations, and you can also cover your blind spots.”

What Are the Key Lessons?

1. Through self-awareness, you get to know your natural inclinations and natural strengths so that you can put yourself in a position to succeed.

2. Put your top talent in positions that best suit their inclinations and they are going to make the biggest impact on the business.

3. Surround yourself with the right people and you can amplify your strengths, your natural inclinations, and you can also cover your blind spots.

4. When hiring someone, more important than their skills are how they fit within the company culture. You can teach people skills, but what you can’t train is culture.

Listen to Chris’s Entire Podcast

bullying in the workplace

Respect: It’s time to talk at work about bullying and assault

Respect

I am overwhelmed by the positive feedback to my story about being bullied by peers and sexually assaulted by priests as a teenager.

Several women shared their own harrowing and heartbreaking memories. A number of men came forward, too. Some shared their realities of being violated by people in positions of power or authority, others by peers and teammates.

My list is full of extraordinary leaders – veterans, diplomats, scholars, caregivers, advocates, reporters, humanitarians, nonprofit and business leaders, moms and dads, sons and daughters –  too many of whom had experiences like I did. If you would like to hear me talk in more depth about my personal experience, listen to episode 712 of Don Hutcheson’s Discover Your Talent podcast.

Those who responded with their own stories discussed the inner struggles they faced. They told of the triggers that brought forward the searing memories (the Penn State Sandusky scandal was one of mine) and the helpful and unhelpful ways they tried to deal with them. Each one of them found solace in writing things out.  

I was struck, particularly, by just how pervasive and underreported the abuse has been.

Leaders need to have the emotional courage to address bullying and sexual assault. This means doing something more meaningful and impactful than issuing policy letters and having people undergo sensitivity training. Addressing sexual harassment, according to one study, is the #1 workplace trend for 2017.

It means walking the talk. While this does not require sharing personal anguish, leaders need to convey clearly and personally their commitment to respect.

Here are some practical ways to do that:

  • Start a professional reading program that includes articles or books that address these issues. First of all, employees and supervisors overwhelmingly note that such programs, if done authentically and consistently, are 1) valuable to their professional development; 2) make them more effective at work; and 3) show that the organization cares about them. Second, reading the experiences of others can give people safe ways of thinking about and discussing sensitive topics, and also help increase empathy.
  • Hire people who will advance your culture of respect. It’s safe to assume that everyone is going to be nice during an interview. Few people are likely to list as references people they bullied. But did you notice how the candidate treated the janitor? Did the candidate pick up towels on the bathroom floor or leave them? How people treat others, especially those who the person believes can do nothing for them professionally, speaks volumes. How an individual demonstrates care (or lack thereof) for common areas is also telling.
  • Zero-tolerance for bullies and bigots. We have zero tolerance policies for problems like corruption, lying, stealing, malpractice, and malfeasance. Expand that to include disrespect. Employers who look the other way often find that the price of tolerating a bully or bigot was too high.

Our short video on leadership principles Trustworthiness, Respect, and Stewardship provides a good gateway into the discussion.

Good character is developed over time through habituation—the traits that make us who we are come from habits we’ve acquired. The same is true for bad character. Leaders need to take a stand early on by calling out bad behavior and preventing that from becoming the norm.

Moreover, by shining a light on issues like bullying and assault, leaders can create a culture within which individuals feel empowered to report abuse and potential predators know the severe consequences they will face if they hurt others.

 

RESPECT:
No one should have to learn perseverance from being assaulted or bullied

Chris Kolenda and Jeh Johnson

Respect

Respect is the conviction, reflected in action, that each person is equal and deserves to be treated with dignity. People may differ in their capabilities, limitations, experiences, and contributions, but no person is more or less worthy than another.

Many Americans were transfixed by the searing testimonies of Dr. Christine Blasey Ford and Judge Brett Kavanaugh on September 27. Politics aside, I hope we can agree that no one should be subjected to sexual assault, bullying, or other predatory or indecent behavior.

I was a scrawny, awkward, and shy high schooler. I was bullied relentlessly and was sexually assaulted by two priests. I vowed that I would never let that happen again. Much of my professional life has been subconsciously driven by this need to empower myself and protect others.

Listen to my full podcast interview

For the most part, this drive has been meaningful, productive, and impactful. The Army was a place I could thrive. I learned how to protect myself. I took on the toughest demands. Sometimes, as a sophomore at West Point, I was a jerk. I said and did plenty of dumb things. But I learned there that bringing the best out in people does not come from berating them; it comes from good leadership.

Being a good leader begins with being trustworthy and respectful. Only when a leader acts on those values will people be willing to follow.

Life lesson

A leader can be tough and have high standards without being a jerk.

People can sense respect, or lack of it, right away. Among the best examples in my life are former Homeland Security Secretary Jeh Johnson (pictured above), West Exec Co-Founder Michèle Flournoy, and General Stanley McChrystal. Each of these leaders gives their undivided attention to the people they speak with. In years of interactions, I’ve never seen them multi-task while talking with someone – no checking phones, reading papers or whispering to aides.

This act of focused attention subtly conveys that they value the other person.

Sexual harassment, misogyny, racism, bigotry, and the like are anathema to a culture of respect. They lead to a toxic work environment. Such treatment can have devastating effects on people. Think about the worst leaders you have ever known. Yes, we remember the awful ones for the rest of our lives. There is a good chance that these were people who treated you and others disrespectfully.

The workplace effects can be highly damaging, too. Uber lost roughly $30 billion in valuation after reports of sexual harassment, bullying, and other problems became public. Oxfam’s reputation and donor support took major hits when allegations of sexual misconduct surfaced.

Too often, leaders rationalize abusive leadership as necessary to get results. These examples show the flaws in that thinking. It’s like taking drugs that may boost some aspects of performance but ultimately kill you.

Lack of respect leads to high rates of employee disengagement and turnover. According to Gallup, roughly 67 percent of employees surveyed reported being unengaged at work. That means two out of every three employees is physically present but not contributing to the mission and vision.

Turnover leads to greater costs in hiring and training new employees. The revolving door impedes momentum and impact.

Action points

Put away the smartphone and give your employees, clients, and others your undivided attention.

When hiring, look for cues that communicate whether the candidate treats people respectfully. You can train skills but not character.

Get toxic leaders out of your organization. Some may get you short-term results, but they are likely to hurt your team and organization in the long-term.

RADICAL COURAGE

“To be a better leader, never be the bearer of bad news” was the advice a senior executive in a large financial management firm had given to my colleague – who has been a dear friend for many years and a fellow veteran. My friend related the story to me in a WTF sort-of-manner. It grated against the most basic elements of leadership. He was counseled to forget about courage.

Unpacking what the senior executive said, we realized that his advice was perfectly sound for someone whose primary aim was climbing the corporate latter: make no waves, avoid being seen as a threat, have other people do the dirty work. Remove your spine. But as leadership advice, it was appalling.

Courage is the backbone of sound leadership. It is the virtue, according to the ancient Greeks and Romans, that allows all other virtues to exist.

How does this apply to business and nonprofit leaders? Courage enables leaders to set an example by:

  • Sharing hardships with employees so they respect you as caring and in touch
  • Doing what is morally and ethically right so you build trust in your employees and customers
  • Facing situations of high anxiety and trepidation so you create faith and confidence that you will tackle tough challenges
  • Demonstrating sound judgment in a dynamic marketplace so you can seize opportunities and manage unforeseen threats.

Leaders who set an example in these ways have what we call Radical Courage. Radical Courage is the integration of four types of courage: physical, moral, emotional, and intellectual. The descriptor “Radical” expresses an idea both basic and profound – leaders require multiple forms of courage.

We commonly think of courage in the physical sense: a soldier facing the enemy on the battlefield or a firefighter charging into a burning building to rescue a child. For most leaders, the need for physical courage takes on less dramatic but no less important aspects.

Imagine leaders who surround themselves with luxury and work in an environment far more comfortable than their employees. They are more likely to be seen as distant, detached, and out-of-touch. Leaders who require employees to work with shoddy materials in an unsafe or unhealthy work environment will probably find significant resentment.

Leaders who share hardships with their employees are more likely to be considered genuine and authentic. They are less likely to tolerate huge disparities or an unhealthy, unsafe work environment. Ray Lambert, a World War Two veteran and founder of Lambert Electric, told me that he insisted on being on-site when his employees were working late or with a new client or on a high-risk job. He wanted to make sure they had the materials, support, and conditions needed to do their jobs to the right standard and safely. He retained a highly loyal workforce and a group of clients. That veteran-owned business thrived for over 40 years until he sold it upon retirement.

Moral courage, on the other hand, is the willingness to uphold moral and ethical standards despite pressure to do otherwise. Business and nonprofit leaders can face these challenges in areas such as finance, accounting, and reporting. Leaders should also beware of creating an environment that places employees in a position that encourages moral or ethical compromise.

Volkswagen’s “no failure” culture, under which almost no employee mistakes were tolerated, reportedly led to practices that undermined honest communication and accountability. For instance, Volkswagen managers discovered that their diesel engines were producing emissions above standards. Rather than report and fix the problem (and face potential consequences), managers instead installed devices designed to fool emissions tests. Senior leaders allegedly covered up these actions in an effort to avoid public embarrassment and the cost of recalling and fixing the engines. The decision by Volkswagen managers to falsify emissions test results, and by the leadership to cover up the cheating, are failures of moral courage.

Two other forms of courage that are less well-known are emotional and intellectual. Emotional courage is the willingness to face high anxiety situations without being cold-hearted or carried away by anger, rage, elation, etc. In 2014, Mary Barra, the first female CEO of a major American automobile company, showed emotional courage in facing public outcry and congressional scrutiny over GM’s faulty ignition switches. Barra not only came forward to acknowledge the responsibility personally, but she also took proactive actions to turn the crisis into an opportunity for major organizational reform.

Intellectual courage is the foundation of good judgment. It is a balance between the strength of conviction and flexibility. Leaders who lean too far toward conviction can become obstinate, bull-headed, and impervious to feedback. So many warning signs about Uber’s toxic culture and questionable practices were ignored by former CEO Travis Kalanick and the Board of Directors, leading to a major crash for a company that had achieved the highest valuation of any start-up in history. Excessive flexibility, on the other hand, can create indecisiveness (losing the courage to act) or hyperactivity – over-reacting to every conflicting or contradictory data point.

Each element of courage is a balance between extremes and a willingness to face some form of danger or harm. Radical Courage is the integration of all four. Imagine a hashtag. Each line represents one of the four forms of courage. Radical courage is the space in the center.

Radical Courage

How can leaders improve each element of courage? Let’s return to the ancient Greeks and Romans. They believe that virtue is a habit – the sum total of our daily choices of right and wrong. Therefore, leaders build radical courage through daily practice. Ask yourself these questions:

  • Am I sharing the hardships and challenges of my employees?
  • Do my decisions uphold our values and code of ethics?
  • Do my expectations promote greater candor or incentives to hide the truth?
  • Am I willing to be the bearer of, or face up to, bad news?
  • How do I know when to change my mind or alter a plan?

Radical courage is a pivotal distinction between a leader and a corporate climber. Leading with Radical Courage increases your trustworthiness in the eyes of your employees and customers; it guides you when you have to face tough decisions or confront difficult truths; it helps you determine when to stick to your plan and when to change it. These qualities are essential for leaders who want their small businesses or nonprofits to grow sustainably in a competitive, dynamic market.

How veteran organizations can compete and win

GUTS: How Veteran-led Organizations can Compete and Win

 

GUTS, perseverance, bouncing back, enduring hardship – these are concepts familiar to veterans. They are useful in combat. How about in the business and nonprofit worlds?

Veteran-led businesses and nonprofits can face an uphill battle.

Veteran-led businesses and nonprofits can face an uphill battle. Digital technology has expanded the scale and scope of competitive interaction in the marketplace. A single Google search reveals ratings and reviews that can make or break small organizations. Digital technology has enabled giants such as Amazon, Wal-Mart, and others to compete in places where small companies used to dominate. After so many recent nonprofit scandals, donors are likewise favoring big nonprofits with long track records. This intense competition is placing enormous pressure on small business and nonprofit leaders.

Many post-9/11 veterans start a new business or nonprofit because they want to make a difference. Business entrepreneurs imagine products or services that will improve the lives of others. Social and political entrepreneurs rally others to a cause or mission they believe will make America and the world a better place.

Once you have a product or service

Once you have a product or service that others want to buy or a cause that others want to support, you have made a critical first step. That’s not enough to grow sustainably. Roughly half of small companies are out of business within the first five years. Only 28 percent of nonprofits created in 2005 still report financial activity 10 years later. At the heart of these problems tend to be failures in Leadership, Culture, and Strategy.

Nearly half the leaders in America are considered to be incompetent. Nearly 70% of Americans, according to a Gallup, report being unengaged at work. One slacker or jerk reportedly can reduce performance in a group by 30 percent. McKinsey, a consulting firm, says that most business executives are not satisfied with their strategic planning processes. Of those organizations with a strategy, an estimated 90 percent fail to execute them successfully.

Look at Jawbone. They were once the leaders in Bluetooth-enabled music devices. Then they shifted emphasis to personal fitness devices. This strategic decision brought about the failure of the company. Toys-R-Us, the world’s largest seller of toys, likewise succumbed to poor strategy. Uber, once the highest valued start-up in history, went to the brink of collapse due to poor leadership and a toxic culture. Oxfam International’s recent problems stem from bad leadership and culture problems, too. All of these organizations have or had great products and causes. Their failures resulted from issues in Leadership, Culture, and/or Strategy.

How to achieve lasting success?

How to achieve lasting success? Decades of personal experience and over 20,000 hours of research and writing suggest that organizations grow sustainably when they get right with 3 BIG things: Leadership, Culture, and Strategy. Organizations that are failing have major problems in one or more of these three areas. In a dynamic marketplace, it is not good enough to get these elements right once – organizations must keep them on track.

Lead with GUTS

To make all this simple, memorable, and meaningful for small business and nonprofit leaders, we use the term GUTS to describe what organizations need to succeed.

GUTS has a three-fold meaning:
• A synonym for Radical Courage – practicing the four main types of courage leaders need: physical, moral, emotional, and intellectual.
• A metaphor for your Core — management, values, and systems – i.e., the guts of your organization.
• A memory aid: Greatness (your goal) = U (you as a leader) x T (teams in the thriving culture) x S (strategy to compete and win).

Small businesses and nonprofits that get the 3 BIG things right have a decided advantage in a competitive marketplace. Solid leadership keeps the company agile and creates believers among employees and customers. A healthy organizational culture improves employee engagement and reduces turnover. A winning strategy enables organizations to determine how to best focus their efforts and succeed. Together, they create an organization that is able to fend off serious threats, seize fleeting opportunities, and grow sustainably.

Motivated Reasoning: is it undermining your business?

Motivated Reasoning: is it undermining your business?

The New America Foundation’s recent challenges with alleged research conflicts of interest should motivate all think tanks and research organizations to take a hard look at themselves.

Businesses are at high risk of this problem, too. Confirmation bias results in leaders over-emphasizing the importance of information that aligns with their pre-existing beliefs while discounting disconfirming evidence.

How well does your organization “see itself” and understand the potential perverse incentives for “motivated reasoning”?

How often does your organization have an independent assessment of your levels of risk for this problem?

Intellectual courage among think tank leaders is growing in importance as corporate donors and foreign governments increasingly provide funding for research. Think tanks have become reliant on such funding for survival.

This, in turn, can create incentives for “motivated reasoning” — conclusions designed to advance donor interests. These expectations are more often implicit than explicit.

Think tanks can be very opaque about their funding, so it is difficult to tell how closely their reports align with donor interests.

An independent audit is a great way to understand the potential scale of this problem and to take steps to address it.

Failure to “see themselves” places even the best organizations at high risk of a blindside or major credibility melt-down.

Radical Courage: How Leaders Maintain the Balance to Win

Digital technology intensifies competition for small businesses and nonprofits. This, in turn, places extraordinary demands on leaders and teams.

Sadly, many leaders fail under the pressure. We see the news stories every day, from Uber to United to Oxfam — the list goes on. These are only the most visible examples.

What do leaders need to thrive in the digital age? Radical Courage.

Radical Courage is the integration of the four main types of courage: physical, moral, emotional, and intellectual. I use the descriptor “Radical” to express an idea both basic and profound — leaders require multiple forms of courage.

“Courage,” Winston Churchill argued, “is rightly esteemed the first of human qualities because it has been said, it is the quality which guarantees all others.”

Ancient Greek philosopher Aristotle described virtues such as courage as the mean between extremes. This golden mean, he argued, exists between excess and deficiency. In the case of courage, it is a mean between recklessness and cowardice

The U.S. Army identifies two types of courage: physical and moral. Physical courage means doing one’s duty despite fear of death or harm. Bravery on the battlefield, for instance, is a necessity for soldiers. Without it, units and armies could collapse when engaged with the enemy.

Many small businesses and nonprofits are engaged in tough and demanding work, too. Some operate in dangerous situations. A leader’s willingness to share hardship and difficulty — to set the example — is an important aspect of physical courage.

Moral courage, on the other hand, means to stand up for what is morally and/or ethically right despite pressure to do otherwise. Such pressure can come from leaders or peers; it can also come from wanting to avoid responsibility for mistakes or errors. Moral courage within an organization’s leadership is essential for building internal trust. It also builds public trust in the organization.

The decision by some Volkswagen managers to falsify emissions test results, compounded by senior executive decisions to cover up the cheating, are examples of poor moral courage. Small business and nonprofit leaders face these kinds of challenges all the time, particularly over accounting, regulations, and reports. Leaders must set the right example here, as well.

The third strand of courage is emotional. In Aristotelian terms, emotional courage can be seen as a mean between the extremes of cold-heartedness and excessive passion. Maintaining a balance between ignoring or avoiding emotionally difficult situations and being carried away by them is important for leaders.

Leaders may face emotionally challenging situations with customers, colleagues, or the public that create high levels of anxiety and trepidation. Such situations carry the risk of professional harm or damage to the business if not handled right. Leaders with emotional courage tackle these high anxiety situations rather than pawning them off on others.

A powerful example of emotional courage comes from my former executive officer in Afghanistan, Major Chris Doneski. An explosion during a July 2007 firefight killed a beloved officer, Captain Tom Bostick. The blast inflicted horrific damage. When Tom’s remains were evacuated to the field hospital at our main base, Chris Doneski was the senior leader on site. Someone needed to identify Tom’s remains for the doctor’s report. Chris could have directed a junior officer or senior noncommissioned officer to perform the gruesome task. Chris knew that he needed to do it himself. He will never unsee what he saw that day.

Intellectual courage is the final type — and the least understood. The U.S. Army fails to include intellectual courage in its concept of courage. The U.S. Marine Corps, however, describes “mental” courage as the ability “to make tough decisions under stress and pressure.”

This is an important addition, but the definition is not necessarily helpful. How does a leader know if the decision in a tough situation is the right one? How do leaders know when to stick to their guns and when to make changes?

Intellectual courage is the willingness to make sound decisions in an uncertain and complex situation when the best choice is not obvious.

Like other virtues, intellectual courage is a balance. This balance can take on many dimensions. The one depicted on the picture below is a balance between strength of conviction one side and open-mindedness on the other.

Intellectual courage

Think about it. If a leader is imbalanced on strength of conviction, they can become obstinate, bull-headed, and believe in their own propaganda — hubris, the ancient Greeks said, precedes a fall.

On the other hand, leaders can become so open-minded and flexible that they lose the courage to act in the face of uncertainty and complexity. Others create hyperactivity by reacting to every conflicting or contradictory point. Both problems can be fatal.

Another balance is between decisiveness and deliberation. Impulsive leaders make decisions on instinct and insufficient information, which can lead organization in the wrong direction very rapidly.

Excessively deliberative leaders, on the other hand, delay decision-making by constantly seeking more data and analysis — even if more information is not needed for the decision. This process goes on until the bad and less bad options become obvious. The leader decides for the less bad and brags about making the right choice. The incessant deliberating, however, has resulted in many lost opportunities to shape more positive outcomes.

Sustaining balance between these kinds of extremes is the foundation of good judgment. Such balance does not come naturally to most people, so it must be developed and nurtured.

Radical Courage is the integration of these four types of courage. Imagine a hashtag. It has two vertical lines and two horizontal lines. Each line represents a type of courage: physical, moral, emotional, and intellectual. Radical Courage occupies the space in the center.

Radical Courage

This depiction is more useful than the intersection of four lines. That description implies an unrealistic and inflexible point of perfect balance.

Leaders often grapple with situations requiring more than one aspect of courage. The center space of the hashtag allows for movement, for judgment, and for finding different points of balance.

Leaders who can do this move from good to great.