America’s struggling economic engine… at least we have one

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I’ve been reading more and more of Umair Haque’s writings on HBR recently – he has some great insights into the state of our economy, and how taking on a more humanistic approach (rather than a quantitative one) is key to reviving our country. His post today, titled, “The Best Investment You Can Make”, discusses the how investing in one’s relationships can lead to greater drive, talent development, creativity, and ultimately a regeneration of our economy. A brief excerpt is here:

But if you were to have the impertinence to invest in what (really) moved you… and if a few other people also invested in their dreams, and then several more followed their lead — well, eventually the economy’s gears might begin to move with a different rhythm. And multiplied, your pattern of investments in your dreams — acting classes, music lessons, lectures, books, seminars, travel, and so on — would begin to set incentives for people doing useful stuff, who were able to help you meaningfully accomplish those dreams. And we’d probably begin to devalue the microbubbles in socially useless stuff (like gold) and dilute oversized managerial rewards.

The same’s doubly true for investing in the people you love: spending your resources to spark their talents or to create meaningful life experiences with them — instead of just buying stuff for them. And the same’s triply true for living a life that matters: if you were to invest in, for example, social businesses, instead of the equity of orthodox corporations, or to choose where to work not just based on the immediate paycheck, but on whether or not the boardroom valued making a difference a tiny bit more than which hedge-fund bots it was enriching this nanosecond, well, the economy’s gears wouldn’t just find a new rhythm — you’d be rebuilding the engine.

In fact, if enough of us made these smarter investments, we might just take a leap past opulence — the furious, desperate, never-ending hyperconsumption of more, bigger, faster, cheaper, nastier — and towards eudaimonia: living meaningfully well, by investing in endlessly powerful, infinitely delicate human potential, instead of mass-made junk, whether paper chits or designer diapers.

I tend to agree with Umair’s assessment – if we invest in building our own capacity and talents, and do the same for those in our community, then that’s ultimately a better path to prosperity than spending one’s time deciding what asset class to invest in.

But I want to point out that although his suggestions are certainly necessary for revitalization, I don’t think they are enough – especially for much poorer parts of the world. In the U.S., we have an economic engine – a struggling one, granted – but an engine that can provide a return on our efforts. But much of the world lacks an engine at all, and they face a far more difficult path. Let me explain.

I don’t have the exact words, but I remember hearing a quote from Bill Clinton that went something like this (I’m paraphrasing): “In America, those that put the effort into education can generally expect a positive outcome from their results. That is, if someone finds a way to graduate from college, a young person can be pretty sure that the achievement will produce a better economic situation for herself. In much of the world, though, there are no assurances of positive outcomes for those that obtain new skills and knowledge. Securing education in Haiti, for example, is much less likely to provide a positive economic return. It is simply unlikely that taking risks to learn new things will be worth it. Since the outcome is so uncertain, people have much less of an incentive to make the sacrifice in the first place.”

What I’m getting is that Americans (and much of the Western world) are in a unique situation, because we are confident that the efforts we put into bettering ourselves and our community will yield an improvement for our well-being. Even though our economic engine is idling, it’s still running. And for as long as that holds true, we’ll always be in a position to improve things if we ever find ourselves struggling again. However, much of the world’s nations don’t have an engine at all, let alone one that’s functioning well. Places like Haiti and Somolia don’t even have the framework to build an engine in the first place. Those countries need to invest in making sure that rewards for education and development are available at all before people there are willing to put forth the effort.

We need to recognize how fortunate we are to live in a part of the world that encourages education and risk-taking – and we need to take advantage of what we have available to us before it is too late. We also need to understand that while Umair’s ideas may work well for the revitalizing the developed world, they aren’t nearly sufficient for unstructured nations that don’t even have a framework for rewarding learning and hard work in the first place.

The full article, which I highly recommend, is available here.

What is the “why” for your work?

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I recently watched TEDx talk about the “golden circle” concept, given by Simon Sinek. The premise behind Simon’s talk is this “people don’t buy what you do, they buy why you do it”. Using the examples of Apple, Martin Luther King Jr., and the Wright Brothers, Simon argues that trying to win others over by simply telling them “what” you do is ineffective. Instead, communicating the “why” – the reason you chose to pursue something in the first place – is much more compelling. Watch the talk below for the full discussion:

TEDTalks Simon Sinek-How great leaders inspire action – Simon Sinek (2009) from Roofcamp on Vimeo.

While Simon’s examples are right on, he missed an important point: it’s not just about demonstrating the “why” as individuals; instead, real achievement only occurs when people with the same “why” are brought together. For example, Apple isn’t just about the vision of Steve Jobs – it’s made up of a whole culture of people with similar reasons for being there; Martin Luther King, Jr., didn’t change civil rights on his own, he had millions of people who shared his beliefs.

Individuals don’t just need to convince outsiders of their “why”, they have to align their internal team first. When this happens, sending a message to the world about the “why” of your organization should become far easier. And it goes without saying that a team built of people with the same reasons for being there will be far more powerful than a fragmented one!

What is your experience like – does the team you work with share the same “why”? How does understanding your “why” make a difference in your own work?

Sometimes it’s the little things

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Apple held it’s Worldwide Developer’s Conference yesterday, in which it announced a slew of new features for its operating systems and cloud-based services. Why am I mentioning this here? Outside of being a huge Apple geek, I think there are lessons to be learned from Apple’s consistent message of delivering quality in all of its products.

Jobs on stage yesterday. Courtesy CNET.

Often, Apple uses these conferences to introduce game-changers like the iPhone, the iPad, or the App Store. These were killer initiatives that, on their own, made huge waves. Everyone wants a piece of the action with these showpieces – the press wants to write about them, consumers want to go out and buy them, and Apple will later want to talk about how much money each has made.

But the announcements yesterday were mostly “little things”. On their own, most don’t amount to much. So what if it’s slightly easier for me to Tweet my photos, or marginally quicker for me to organize windows on my desktop? No one’s going to line up outside the Apple store for a new laptop just because they learned that calendar management is more streamlined.

So why does Apple to spend so much time developing and talking about these minor improvements, then?

By showing that it’s maniacally focused on the minute details of its products, Apple sends a strong message that it’s devoted to quality in everything it makes. If Apple has devoted hours to the perfection of the scroll bar, how much more effort have they given to the design of an entire laptop?  By strongly associating itself with quality, Apple doesn’t have to work hard to “sell” a new product when it’s introduced. Consumers already assume that it will be top-notch, since they’ve seen this in everything else the company has developed.

Essentially, Apple is selling products before they are ever introduced, not after the fact. What a great strategy.

Regardless of what sector or industry an organization is operating in, there is a lesson to be learned here. Products and features that are introduced should always reinforce what the organization is about. Is your company all about saving customers money? Then save them money through everything you offer them. Is it about reinforcing connections among friends? Then make sure that every aspect of your offering is built around social. You get the idea.

Many organizations try to do too much. But in doing so, they send a confusing message about who they are and what they offer. Apple has done this well, and they’ve got the profits and the customer base to show for it. To get the full benefit of understanding Apple’s focus, watch the keynote from yesterday here.

How does non-profit reporting compare to journalism?

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How do the standards and established in journalism compare to the donor experience in the non-profit sector? As a whole, I think the non-profit sector falls short, and needs a better set of solutions as a result. Here’s why:

When you read a news article in The New York Times, you’ll likely have no trouble in believing that what you read is true. Why is this the case? I can think of  three main reasons:

1. Standards exist to help ensure journalistic integrity. According to the Society of Professional Journalists, journalists should “seek truth and report it, minimize harm, act independently, and be accountable”. The very nature of journalism demands that it be seen as a credible source of information. Without these standards, “journalism” is no different from tabloids.

2. It is in a journalist’s best interest to adhere to these standards, at least in the long-term. Readers assume that what is printed is true, accurate, and generally unbiased. If these expectations aren’t met, then readers are likely to turn to another source for information. Furthermore, journalism publications often receive accolades for bringing attention to issues and events that were not covered elsewhere, another enticement to seek the truth.

3. The free flow of information helps enforce objectivity. This, combined with the fact that there are often multiple independent parties documenting events, means that it is very difficult to offer a misleading account and convince others that it’s true. Usually, journalists can’t get away with providing false information; someone else will point out the truth sooner or later, and it doesn’t take long for that to occur.

This isn’t to say that journalism can’t be deceptive. It can. Censorship, state-controlled media, conflicts of interest, and a lack of cultural perspective can all lead to inaccurate or incomplete information. Journalists have to sell their information to stay in business, too, and that can cause friction. But generally speaking, people (in the United States, at least) generally trust that what journalists publish is correct.

Now, let’s compare the checks and balances from the journalism realm to the non-profit space. How does each one hold up?:

1. Do standards exist for reporting the outcomes of a non-profit’s work? No. That’s why Greg Mortenson and the Central Asia Institute came under so much criticism: they mislead donors in accounting for the number of schools they claimed to have built. Yes, non-profits have to provide some financial metrics on how much of donor’s money is used for fundraising and overhead. However, donor’s generally aren’t given much insight into outcomes metrics - how money is used on the ground.

2. Is it in a non-profit’s best interest to adopt journalistic standards? Sometimes, but not always. Of course, donors expect non-profits to be honest and forthcoming. But does that mean a non-profit will always inform donors when a program fails? Might a non-profit be tempted to over-simplify, dramatize, or exaggerate a problem in order to boost donations? There can be a conflict between a want to report an objective, accurate account of an organization’s programs and the desire to maximize fundraising.

3. Is there a free flow of information, with multiple parties tracking events? Not always, as a non-profit might be the only entity reporting on its work. As such, donors may only end up with a single source of information about the programs they’ve supported. It’s extremely difficult to provide a dispassionate evaluation of oneself, so donors have to read a non-profit’s reports with a grain of salt. The exceptions occur when journalists choose to cover a non-profit’s work or when a non-profit chooses to bring in a third-party evaluator.

So what does all this mean? Should we avoid giving to non-profits because their reporting doesn’t often meet journalistic standards? Does it mean that they are no more trustworthy than the “tabloids” from the grocery checkout? How can a donor tell which non-profits are worth supporting? What should donors actually expect from non-profits they support?

These are questions I’ll attempt to answer specifically in later posts, but the short answer is this: despite the challenges in reporting on the outcomes of a non-profit’s work, there are many, many organizations worthy of one’s support.  Some of them do a great job of keeping donors informed; for others, this remains a challenge. Years from now, non-profits that strive towards journalistic standards will do much to ensure they thrive. Meanwhile, non-profits that fail to provide good accounts of their work will see donors turn to other outlets. Fortunately, though, the better the sector can do of raising the bar for transparency and accountability, the more people will feel comfortable giving. So let’s demand that the charities we support tell us more about the work they’re doing – in the long run, it will be good for everyone.

What are some non-profits that do an exceptionally good job of providing transparency and accountability? What are some of the best ways non-profits can better meet the needs of donors who want to learn more about where their money goes?

An old-school journalist

5 reasons why a top attorney is worth it

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Are you working on a new concept for a business, product, or organization?  If you’re in the nascent stages, spending your precious resources on legal advice is probably the last thing on your mind. You may be tempted to scrimp by finding a “cheap” attorney, but think twice. There’s a reason the best attorneys charge what they do – they can often provide you with direction and insight that less savvy lawyers simply can’t offer. Not sure if the premium is worth the price? Here’s 5 things a great attorney one will do, but an average one might not:

  1. Help you see problems before they arise. If you’re trying to innovate, you need someone who can think strategically, not just provide you with boilerplate advice.
  2. Save you time. A top lawyer will cut through the BS and help you focus on what needs to be addressed. This leaves you more time to focus on your product.
  3. Get deals done. Faster. Hit a roadblock with a potential partner? He will be your advocate in helping move the discussion to a successful conclusion.
  4. Create better solutions. Instead of simply providing standard services for a fee, she’ll partner with you in developing innovative solutions to tough problems.
  5. Cost less than you think. Great attorneys will help your reduce the work you require of them, not increase it. And if they’re really excited about your idea, they may be willing to accept a reduced fee or deferred payment. It never hurts to ask.
Legal work is rarely cheap. But that doesn’t mean that you should simply look for the lowest rate you can find. If you’re trying to be innovative, especially when it comes to creating a unique legal structure or new types of business relationships, my guess is that you’ll find it’s money well spent.

Why don’t donors stay online?

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I had the chance to read through Blackbaud’s 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report yesterday. (I’ll never know why people insist on such long titles for their publications.) The report provides some great insights into donor behavior, specifically in comparing offline and online donors. I was struck by how many donors switch from online to offline giving. In fact, after three years, as much as 40% of donors who began donating to a charity online had switched exclusively to offline giving (to the same charity). Donors that moved away from offline giving primarily chose to give through direct mail. Furthermore, donors that started their relationship by giving offline rarely switched over to online giving. Here’s one of their charts that illustrates the idea:

via Blackbaud: "Distribution of 2010 Renewal Gifts by Channel"

I thought the opposite would be true; offline giving takes so much more time – wouldn’t donors stay with a channel that required less effort? And wouldn’t donors who’d started off by mailing their checks gladly switch to an easier method once they learned of its availability? This is like buying all your clothes online, then deciding to start phoning in your orders one day. Or worse, faxing them. Who would do that?

I tried to come up some reasons for this, but I’m stumped. The report doesn’t offer any. Personally, I’m more likely to throw away any “junk mail” I get, and am more likely to read an email message. And since I hardly write checks anymore, by the time I find my checkbook I could have been done with the whole process online.

My takeaway is this: if this many people are switching to offline giving, then the online giving experience isn’t everything that it should be. It seems like the Internet giving experience is like online retail in the mid-90′s: maybe people just “aren’t sure” about online giving, so they mail in a check “just to be safe”. But online donation should be a great experience, not a mediocre one. There are so many ways to make online giving FAR more compelling for donors, but I haven’t seen this done well very often. So perhaps the online giving space is ripe for improvement. In the meantime, I can only cringe at how much money is being wasted on envelopes and stamps.

If you’d like to read the report, it’s available here. I highly recommend it.

What do you think – why are so many donors switching to offline donations? Is it in a non-profit’s interest to keep them online? If so, what are some of the best ways to do that?