The 5th EFC Summer Academy on Philanthropy

³Managing Change in Foundations: Strategic Shifts in a Complex Environment´

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

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? III Which are the windows of opportunity for change in foundations? Can foundations learn from change? Can foundations learn to create change?

behaviours/mindsets ‡Reactive / proactive ‡Unavoidable / necessary / good Change as a coordinated effort that involves fundamental transformations to the foundation¶s strategy. processes. management styles. capabilities. organizational structures. culture Organizing for successful change management: A McKinsey Global Survey (2006) . operating systems.What does change stand for in foundations? Multiple approaches to change ‡Incremental /disruptive or revolutionary ‡Change in services/products.

. from tactics to strategy.. But still resistance to business management tools (e. from grantmaking to impact philanthropy. from charity to social entrepreneuship.g. . performance indicators)! .... 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.Approaches to organized philanthropy change..

Why do we change.´ (Isaac Newton¶s 1st Law of Motion.. slowly? ³Every body continues in its state of rest. 1687) Change is as inherent in organizations as resistance to change (viscosity). or of uniform motion in a right line. unless it is compelled to change that state by forces impressed upon it. 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? . but (working hypothesis) resistance to change may be particularly intense in foundations. Principia Mathematica..

The foundation paradox Tayart de Borms (2005) Conservative. self-perpetuating orgs. With a social change mission In a high-risk environment Can foundations promote social change in a fastchanging environment if they do not change themselves? .

other foundations) Business sector and CSR Mass media Donors Foundations Legal and tax environment Competitors Customers and grantees Suppliers GLOBALIZATION FORCES .Highly complex and challenging environment Michael Porter revisited A complex pattern of cooperation & competition Public opinion Partners Public administrations Third sector (NGO¶s.

´ ³In a period of rapid structural change. 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.Change is not only unavoidable but also useful for foundations ³One cannot manage change. 1999) ‡ Pressure from donors and founders for accountability. and managerial strategies ‡ Pressure within a mature market for differentiation ‡ Need to justify the value of foundations to the eyes of society .. Management challenges for the 21st Century. transparency. A change leader sees change as opportunity..´ (Peter Drucker. the only ones who survive are the Change Leaders. One can only be ahead of it.

. discounted of administrative and holding costs. change should be the core competency of foundations Foundations (organized and perpetual philanthropy) are valuable to society only if: Their social return.In fact.. and measured in terms of innovative solutions to general interest problems > The social return of public sector spending and individual philanthropy (Godfather¶s ³man to man´ philanthropy) .

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 ¼)  Revolution / reform in the concept of ³foundation´: Repositories of assets & will => flexible combinations of resources with necessary & new ideas => controlled-risk takers for social benefit ...In fact.

patient & humble organizations which balance change and continuity .Competitive advantage of a Foundation endowment to support its activities necessary and new ideas independent decision making private nature long-term vision Privileged .

Organized Improvement 3. ³The Change Leader´.In fact.Systematic creation of change (innovation) Peter Drucker. Management challenges for the 21st Century. 1999 .Organized Abandonment 2. change should be the core competency of foundations Drucker¶s 4 policies to make the present create the future Change policies according to Peter Drucker: 1.Exploitation of Sucess 4...

In sweat.Who pushes for change in foundations? ‡Change takes a lot of work (efforts. tears and sweat´ (Winston Churchill. money. Speech in the House of Commons. time. uncertainty) and should also take a lot of passion ³You got big dreams? You want fame? Well fame costs and right here¶s where you start paying. 1940) .´ (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 ³I have nothing to offer but blood. 13th May. toil.

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 .

1917) . Fosters the will and the capacity to change: it raises expectations and mobilizes organizational energy 3. Acts upon the formal organization but particularly at an informal level: emotions are key 4. Helps balance change and continuity ³Good old Watson! You are the one fixed point in a changing age´ (Arthur Conan Doyle. His Last Bow. Minimum understanding / agreement on the point for change in required to change both mind-sets and behaviours 2.The key for change: effective communication 1.

are condemned to a sweet death / death by consumption: be aware of success! ‡ Crisis is not equivalent to change: difference between knowing you¶re not on the right way and knowing where you¶re going ‡ A clear vision is key: change for the sake of change is both exhausting and useless . even if they are successful.Some personal conclusions about change processes ‡ Statu quo foundations.

but the momentum for abandonment is a very short one: be tough! ‡ Being engaged in the virtuous circle of strategy (mission => goals => planification => implementation => evaluation => learning organization) helps a lot ‡ The fear of failure paralizes change: mistakes are a useful source for learning .Some personal conclusions about change processes ‡ Crisis can be the window of opportunity for change as it facilitates abandonment.

data processing. administrative flows.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. ‡Outsourcing expertise for limited terms and substituting inhouse 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 organization¶s performance ‡Excelling at the art of saying ³no´ and ³expiry yes´ ! . etc.

Do What You Will. The only completely consistent people are the dead´ (Aldous Huxley. in New York Herald Tribune. 14th April 1945) .. but . Consistency is contrary to nature.. 1929) ‡ Managing a change process is difficult. laying the grounds for sustained change for healthy long-term performance is exhausting! ³The final test of a leader is that he leaves behind him in other men the conviction and the will to carry on´ (Walter Lippmann. contrary to life.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 ³Too much consistency is as bad for the mind as it is for the body.

. There may be here supporters of a cynical approach to managing change in foundations.. 700 BC) . 1957) There may be here supporters of a naïve approach to managing change in foundations..... the gods have placed the sweat of our brows´ (Hesiod. ³Between us and excellence. ³If we want things to stay as they are. c. Works and Days I. things will have to change´ (Giuseppe di Lampedusa.To open up debate. The Leopard.

. K. But you do not. If you leave a thing alone you leave it to a torrent of change´ (G. But all of us should be aware that trying to manage change is always preferable to being managed by change. ³All conservatism is based upon the idea that if you leave things alone you leave them as they are. 1908) ... Orthodoxy. Chesterton..To open up debate.

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