If there’s one thing that directors of nonprofit boards can agree on, it’s that it can be very difficult to agree on things. Finding solutions to the challenges facing not-for-profit organizations at the board level is not easy. To be more effective, boards need to start reframing the questions they ask of themselves and their purpose to ensure the organization is moving in a more long-term, sustainable direction.
This is according to Bill Ryan, a research fellow at the Hauser Center for Nonprofit Organizations at Harvard University and director of the Nonprofit Governance Accountability Project. In a presentation called “Governance as Leadership: Key Concepts” he delivered at PricewaterhouseCoopers’ Toronto office in October 2008, Mr. Ryan pointed out that good governance is not just about doing work better; it’s about ensuring your organization does better work.
To provide better accountability and performance, Mr. Ryan said that nonprofit boards need three mental maps for good governance – fiduciary, strategic and generative. The first two modes are fairly familiar to most board members: Fiduciary is all about the stewardship of tangible assets, the overseeing of operations, ensuring appropriate use of resources and ensuring legal compliance and fiscal accountability; the strategic mode is about setting priorities for your organization, developing and improving various strategies, and then monitoring their performance.
The generative mode, by contrast, is a larger, more cognitive process that involves looking outside the usual framework of overall operations and getting at the heart of an organization’s raison d’etre and purpose. Generative thinking is about deciding on what to decide, probing assumptions about the organization, and identifying the underlying values that should be driving strategy and tactics.
According to Mr. Ryan, it’s in this generative mode that board members tend to spend the least amount of time, and yet that’s where real governance truly happens. Boards do not exist to manage a charity or nonprofit group, he said; instead, they are there to supplement management expertise by asking a different set of questions.
He illustrated this with the example of a world-renowned museum of fine arts in Boston that looked to lend 21 Monet paintings to a casino in Las Vegas. In a fiduciary mode, the board deliberated on various financial issues involved in this deal and how the plan would help meet their fundraising targets. The strategic mode focused on execution – how to get the paintings from Boston to Las Vegas safely, how long they would stay at the casino, how they should be displayed, etc. But the first (and bigger) questions the museum’s board should have asked were: Does it even make sense that we lend these masterworks to a Vegas casino? How does doing so reflect on us, on our image and mandate? And what impact might this strategy have on our long-term reputation and ability to raise funds in the future?
“Boards do tend to engage in this kind of thinking – but only after the organization is halfway through an approved strategy,” said Mr. Ryan. “And by then, of course, it’s too late.”
The generative mode is vital because it helps a board to better see the “gorilla in the room”, to better understand the paradigm shifts that can impact an organization’s success over the long haul. Generative thinking is critical to looking at fixed data and situations in a more subjective, retrospective way. This in turn allows boards to go beyond simple problem solving and begin, as Mr. Ryan called it, “problem framing.”
He used the example of policing in big cities. The old paradigm said that the exclusive job of a cop was to get to the scene of a crime and apprehend a perpetrator – and the more crime you had, the more police you needed. But when this framework proved to be less-than-effective, police departments needed a new mindset. Soon they reframed the problem to include ‘community policing’, which said that a cop’s job was not just intervening at the scene of a crime, but also helping residents create conditions of safety in their communities to start with.
Getting your board into the mindset for generative thinking is not easy – especially when board members are used to acting in strictly fiduciary or strategic modes – but Mr. Ryan provided several helpful hits. To carve out generative space, he recommended incorporating the following tactics into your board meetings:
The generative mode is vital to the long-term success of any nonprofit board. It helps organizations identify their biggest challenges as well as their most rewarding work. Most of all, it ensures that boards are staying ever-cognizant of their true purpose and incorporating that into every key decision that they make.