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Wednesday, May 4, 2011
That Dirty Little Word
By Kate Sphar, Senior Consultant, Dewey & Kaye
It starts with an F. No, not that one. The other one. The one that is practically unmentionable in nonprofit and philanthropic circles – Failure.
I've been thinking a lot about the concept of failure lately. Working with numerous organizations that are looking for a means to sustainability, the question often arises: If we merge, does that mean we failed? What if we choose to dissolve? What does that say about us?
Recently, I worked with a client to explore the potential for a merger. We researched numerous organizations and found a prospective partner with mission alignment, financial stability and a great deal of interest in partnering with my client. We entered into discussions between the two agencies, and within a few weeks discovered a number of key factors that were prohibitive to the merger. Discussions were discontinued, and although the client was gratified at having engaged in the exploration and due diligence, the question remained. Did we fail?
Why? What makes us so risk-averse, so uncomfortable with uncertainty? Generally, risk-taking has always been taboo in the nonprofit sector, most likely because our agencies are "owned" by our communities, and we feel that we must be responsible with the investment (financial and otherwise) that the community makes in us. But often, that aversion to risk may deter us from progress and innovation.
Recently, there has been a spate of articles exploring the concept of failure and what it means to both for-profit and nonprofit business. The Harvard Business Review dedicated an entire issue to the concept in April 2011. In March, the Nonprofit Quarterly published an article called Foundations Embrace Failure: Real Lessons Learned. A big part of the debate is whether we feign tolerance for failure to appear entrepreneurial or whether we are actually learning real, impactful lessons from our failures.
From a consultant's perspective, mergers and partnerships are the most complicated and risk-fraught processes that we take on. Although in recent years there has been a focus on mergers and partnerships as a salve for the stresses on nonprofits, the process certainly isn't for the faint of heart. Numerous factors – finances, legal issues, organizational culture and mutual trust, to name a few – can get in the way of achieving an alliance. On day one of negotiations, there is no way we can assure stakeholders that a collaboration or merger is going to be successful. That being said, I would most likely advise an organization to take the risk and enter into negotiation if it potentially means greater long-term stability and mission impact.
This is not to say that we should not try to mitigate risk when possible. That is the whole reason we conduct our due diligence when exploring a merger or making some other kind of risky decision. But avoiding uncertainty and risk altogether will leave us paralyzed, not safe.
We are awfully quick to label our efforts a failure if they don't achieve the results we envisioned when we started. Yet, rather than assuming guilt or placing blame, the better option is to learn from our failures. Often, we find a better path, one that engenders learning and growth, on the second or third try. Even if the result feels catastrophic, there are still meaningful opportunities to learn and apply lessons in the future – ask the thousands of serial entrepreneurs in this country. If we successfully manage expectations of what is "supposed to happen," and are willing to take the leap, we leave ourselves open to greater opportunity. The end result may not look traditional, or like what we thought. It may not leave our organizations with the same structure as they began or happen within the timeline we set out. But if we are open to exploration and risk, and ultimately the concept of failure, we may achieve even greater impact than we ever expected.
Kate Sphar's work with Dewey & Kaye focuses on nonprofit financial sustainability, organizational planning, restructuring, and collaboration. Contact Kate at ksphar@deweykaye.com.
Dewey & Kaye