The Last Days of the Superbowl as a Tax-Exempt Fundraiser

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The fact that the NFL is still considered a nonprofit tax-exempt entity is really an embarrassment to Congress and a slap in the face to the genuine charities who are working hard to change the world for the better, including the many sporting organizations that actually serve a higher purpose than primetime ratings. Legislation was introduced in both the Senate (Senator Tom Coburn-R, Oklahoma) and the House (Representative Chaffetz-R, Utah) in the past few months to finally close the loophole that allows the National Football League, the Professional Golf Association, and the National Hockey League, among others, to slip under the tax radar while organizations like the National Basketball Association and Major League Baseball pay.

Cleverly named the Properly Reducing Overexemptions (PRO) Sports Act, the legislation would amend Federal tax code to prohibit professional sports organizations who garner more than $10M in annual revenue to qualify for the 501(c)(6) tax exempt status as industry trade associations and public interest groups.

While some may argue that professional sports enrich our lives and provide a culmination that encourages involvement in lower level sporting leagues and organizations, I'm not sure anyone could suggest that the NFL operates with a mission-first approach. Even their mission statement reeks of a profit-first model:

To present the National Football League and its teams at a level that attracts the broadest audience and makes NFL football the best sports entertainment in the world."

This is not to suggest that the NFL is "bad"; for-profits play an enormous and important role in the economy and in our lives. Americans (including myself) love football. In fact, the Superbowl is the one thing most of us can agree on. Whether it's the wings, commercials, or the intense action of professionally-tuned athletes at their peak, 81% of us said we plan to tune in today.

Major League Baseball apparently renounced their tax exempt status voluntarily in 2007. If you quack like a duck, be loud and proud about being a duck. The Superbowl is not a fundraiser for charity.

Author's Note: This particular piece reflects my personal opinion on this topic and other thoughtful opinions are welcomed. 

Social Impact Bonds are Booming

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Social impact bonds are fairly new funding vehicles for social impact, with the first agreement dating back to 2010; however, the model was first advocated 22 years prior to that by a New Zealand economist in 1988. As with all things funded by the U.S. government, these bonds have a super appealing nickname: Pay for Success Initiatives.

What is a Social Impact Bond?

A social impact bond  brings together private investors and public dollars to solve tough social issues. It's essentially an agreed upon bounty. Ideally, the business-minded investors fund innovative projects that make a substantial dent in an entrenched problem that is costing the government X dollars. In exchange for funding the successful project and reducing their costs, the government entity pays an agreed upon amount, theoretically sharing the cost savings they realized.

In the past few weeks, three new social impact bonds were announced nationwide:

Goldman Sachs, billionaire John Arnold, and other partners just funded the largest social impact bond ever. As of yesterday, these philanthropic investors set the record with a $27M social impact bond aiming to prevent young men in Massachusetts from returning to incarceration. In 7 years, if the project realizes the projected 40% reduction in in incarceration among program participants, then the investment is paid back with 5% annual interest by the Massachusetts' Juvenile Justice Department.

The funding from the investors is split between a large nonprofit, Roca, and a nonprofit advisory firm, Third Sector Capital Partners. Roca will be doing the heavy lifting, working with just under 1,000 young men, ages 17-23, to achieve the desired outcomes.

This begs the question: What makes this any different from direct government funding of nonprofits, which has been going on for decades?

There's a lot of money on the line; therefore there's greater accountability to the outcomes which will theoretically spur increased collaboration and innovation, leading to better outcomes than have been achieved through the government-nonprofit funding model.  In this example, if the initiative fails, both the investors and the nonprofit will suffer, as the nonprofit has agreed to defer $3.3M in fees.

Additionally, the government doesn't have to pay unless the results are achieved, which is a lot more palatable to tax payers who are funding these social programs. In the Goldman deal, Massachusetts stands to save between $1M and $45M; the corresponding "success payments" range from $0 to $27M.

New York State broke new ground just weeks ahead of the Goldman-Massachusetts deal with the first state-led social impact bond with a $13.5M deal, which was also the first-ever to be distributed through a leading wealth management platform, Bank of America Merrill Lynch, to qualified private and institutional investors.

Similar to the Massachusetts bond, the deal targets the ultra-expensive criminal justice system, aiming to expand comprehensive reentry employment services to 2,000 former inmates in NYC and Rochester in an attempt to reduce recidivism and re-incarceration.

On the other side of the country, California also announced a social impact bond this week. The much smaller $2.5M bond is more generalized, aiming to improve social services throughout the state over the next two years by engaging nonprofit and government leaders in an active learning group. The initiative illustrates some hesitancy - hoping to incubate the social impact bond concept through the learning group toward expediting successful future agreements.

Are Social Impact Bonds Smart? 

Critics suggest that because the public funds must be budgeted, regardless of whether the project works, social impact bonds don't actually increase capital for social program, instead displacing it from other programs. Additionally, it's expensive to set up the complex financial and legal mechanisms required to structure such agreements.

It's still too early to tell if any initiatives funded by social impact bonds have or will produce promising (and profitable) results, but many would probably agree that any innovative idea for better social outcomes from public funding is worth a shot when we only pay for real results.

Small donation...MAJOR impact

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It's easy to become so overwhelmed by the enormity of the social problems we care about to become apathetic and do nothing. The amount we have to give seems too small to make any real difference. A mechanism that turns that mentality on its head is gaining increasing popularity across the nation: giving circles.

Giving circles bring everything together to make giving easy, informed, social, and impactful, which is how giving ought to be experienced. By 2007, there were at least 400 giving circles nationwide, engaging more than 12,000 donors, and having given nearly $100 Million.

The basic premise: Small donations collectively fund larger, more impactful gifts decided by members. The magic is in the connections to a community rallying around a cause. A 2009 study of giving circles revealed that members give more, give more strategically, and are more engaged in their communities.

Giving Circles create opportunities to network with people who share your values, learn more about your cause, and become informed on the diverse nonprofits working to create solutions. These organizations are often volunteer-run, ensuring that all, or very nearly all, of your donation goes to your cause.

Importantly for the nonprofits, a larger grant from a giving circle means more than just funding. They gain valuable exposure to individuals who give through the process of deciding the grant and have the opportunity to gain additional exposure through media coverage.

A Peek Inside:

I recently became a member of the Utah Women's Giving Circle. The concept simply made sense to me, but I never expected the experience to be so informative and meaningful.

This last Tuesday, we came together to vote to distribute $20,000, with a ballot of 12 nonprofit organizations. I am already embedded in the nonprofit sector in Utah, but I was completely unaware of several of the organizations on the list prior to the voting process.

However, the point where the awards were announced was what converted me into a lifetime advocate.

With representatives from the nonprofits present, the excitement and tension in the room was tangible. The response from these nonprofit leaders was an experience I will never forget.

2013 Grantees

These critical organizations in our community didn't have to go begging for these dollars and they didn't have to search out our group and complete a tedious application to receive highly restricted funding. We simply invited them to complete a one-page application and then join us for a party in their honor, where we would vote and award the grants live.

That set the stage for a powerful evening centered around community, rather than competition and scarcity.

The positive swell of excitement and appreciation provided enormous reinforcement as a donor, a thousand times beyond a thank you card following a check. I have no doubt that lifetime donors were created in those interactions. The physical connection to the people who are so passionate about our shared cause left an indelible mark.

Get Involved:

While women's giving circles are the most prevalent and could probably take credit for creating this movement around collective giving, a variety of diverse causes and groups have utilized the concept to make a major impact.

If there isn't a giving circle near you that addresses a cause you care about, you should consider starting one. All you need is a fiscal sponsor so that donations are tax-deductible (your local community foundation is a great option) and a few friends or family members who share your ideals.

It's literally that easy, which is why the giving circle movement is only going to continue to gain momentum.

Learn more via multiple reports and resources, including 10 Basic Steps to Starting a Giving Circle and tools for community foundations and nonprofits interested in hosting giving circles: Regional Associations of Grantmakers' Giving Circles Knowledge Center.

Do you need to switch your pitch?

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We've all heard of pitch competitions in relation to startups. The pressure is intense and these infant business ideas often have a small window to demonstrate their ability to sell their product (and their company) to would-be investors. But the pitch isn't new and it isn't limited to startups. Mission-driven organizations who have mastered the pitch are recruiting more dollars, volunteers, partners, and investors than those who haven't for the very same reasons: You have a small window to sell your cause.

Too often, a pitch looks like this:

 

We tell people what we do or recite our mission statement rather than sharing the impact we have.

The small nonprofit "provides free mental health services to low-income, uninsured adults" instead of "relieving debilitating mental health symptoms for those most at risk and most in need so they can get back to work and take care of their families".

The community foundation "pools donations and expertise through coordinated grants to improve the quality of life of Sunshine City" rather than "catalyzing ideas into action for good to change our neighborhoods, schools, and community for the better".

How much  more compelling is the following pitch?

 

How many mailings did you receive between November 1st and January 1st asking for a donation? Now consider the number of emails, tweets, websites, texts and other forms of media vying for the attention of your would-be donors.

If you don't think your in sales, think again. Mastering persuasive communication skills, especially in sharing your impact with potential donors, board members, or partners, is critical in this digital era.

Let's get the juices flowing with some ideas from Dan Pink, master of motivation and author of Drive and To Sell is Human:

 

Take the next step RIGHT NOW. Share your own fast pitch in the comments.

Book Review: Your Mark on the World

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I have been waiting to review Your Mark on the World for quite awhile. Written by a fellow Utahn, Devin Thorpe, the best part of this review is that you can get this book for free simply by subscribing to the Your Mark on the World blog. Thorpe has an extensive background in finance as past CFO for a corporation with hundreds of millions in revenue, a prior boutique investment bank owner, former investment advisor, and former treasurer for a global company, among other roles. However, what makes him stand out among his peers who have also done well in the financial sector is how he has managed his personal finances.

Devin Thorpe

A few years back, Thorpe left his position as CFO with MonaVie unexpectedly. He turned it into an opportunity to spend a year in China with his spouse, giving back. He simultaneously wrote Your Mark on the World to help others take advantage of the same opportunity to make a difference, in whatever way that calls to them.

Your Mark on the World literally weaves together basic, but comprehensive, personal finance principles that many of us never learn with compelling stories of regular people making an indelible impact on the world. It's both functional and inspirational.

Financial freedom is a topic I am personally passionate about (I write about frugality frequently on my personal blog). Without learning some basic rules about money, especially how to dump debt and save for emergencies, myself and my spouse would never have been able to pursue entrepreneurship, which for me includes having a much larger social impact than with one organization.

I am consistently shocked at how normal conspicuous consumption is in our society. It is inherently addicting and almost socially required to engage in behaviors that jeopardize our financial freedom, including our ability to give back. I know from personal experience with credit cards, leased vehicles, and even a fancy car financed over 30 years on a second mortgage.

Because of the painful, but liberating, effort required to dig out of our own hole, I find resources like Your Mark on the World to be a breath of fresh air in a world that is constantly suffocating our opportunities to experience and do more than work.

I do have to admit though that the stories were by far my favorite aspect of the book. Thorpe went to great lengths to include stories that personally touched his life. They are all deeply intimate portraits of everyday people taking up a cause and literally changing the world for the better.

Ranging from China to Cambodia and from leper colonies to orphans, the incredible impact of just one dedicated person is illustrated so tangibly that one cannot read Your Mark on the World and continue to turn away from the immense possibilities for your own legacy.

Drop by Thorpe's blog right now, subscribe, and take the next steps toward leaving your own personal mark on the world.

What happens when you curate real teams

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There comes a point in your career where the word team causes indigestion. We've all been on a "team" that did absolutely nothing beyond meeting and talking about doing. There was no one to carry out the plans or the team stopped being relevant long ago and no one disbanded it.

We've been on teams that got momentum (and therefore noticed by leadership), only to have the team's resources cannibalized and diverted to additional projects.

Then there's the dreadful committee, thrown together on a whim, without any real authority, and consisting of already overworked employees.

Whether you are developing your board, an executive team, or a project team, diversity reigns. This includes diversity in capacity. Without conscious curation of compatible personalities and balanced skill sets, leadership breaks down from within, never getting the chance to fulfill the collective goals of the group.

I've witnessed multiple nonprofit directors salivate over a potential board member from a behemoth law firm or bank. They don't consider that these high-level professionals often sit on multiple boards, have honed their skills at saying no when assignments or donation requests go around, and may never have time to show up to a meeting.

Similarly, I've watched as new executives are promoted into leadership teams based on their ability to do the day-to-day work only for chaos to ensue because their personality and style steps on the toes of the established team they must work within.

Project teams are one of the most obvious examples of terrible team dynamics. We assign the already swamped department head to oversee and add in her direct reports.

How many committees, boards, or teams have you sat on? How many have truly engaged you in action rather than just sitting?

Let's build our teams to get stuff done:

  1. Establish a list of priority outcomes for the team.
  2. Identify the critical skills and resources necessary to produce those outcomes efficiently.
  3. Begin identifying the people who have those resources AND the capacity to bring them to the table. Mix it up. Cross-functional teams create better results and companies that take advantage of energy and talent lower down stimulate employee engagement, problem solving, and intelligent succession routes.
  4. Once you have a list of ideal recruits, identify each person's personality and typical group role.
  5. Create a final team line-up with one dominant leader, at least two task-oriented doers, and at least one wise person who has a knack for setting the tone, managing dominant personalities, and drawing out the observant personalities.
  6. Finally, invite these players to your team specifically to fill those roles in a way that brings out their unique contributions. Don't leave your hopes and expectations to chance, but also provide space for them to share how they think they might best support the goals.

Ask your wise person to set the tone. Ask your type-A personality to record results and track progress (forces them to listen). Ask your doers to be implementation leads. When the team first meets, introduce the people AND the primary resource you hope they can offer to the team.

By using this method we:

  • Create ownership by allowing team members to opt-in;
  • Guide contributions to fill the actual needs;
  • Prevent the doers from becoming martyrs by appreciating their skills and ability;
  • Remove the guilt from the advisors who don't have the time or skills to implement; and
  • Produce momentum and engagement, leading to outcomes.

The bottom line: If you can't commit to at least rushing through these steps prior to creating a "team", don't do it at all. People are a valuable and limited resource, especially volunteers. Don't waste such opportunities haphazardly.

Have a horrid team experience? What was the problem? Conversely, what created the magic within the teams that brought out the best in you? 

Nonprofit piety won't change the world

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Why do we get involved in a cause? 88% of us give to charity each year. A quarter of us actually go out and volunteer our time. 10% of us have chosen to work for a nonprofit. We want to change the world for the better.

Perhaps you think about your involvement in a more humble way. You're connected to a cause because you want to do "a little good". You hope to have a small part in improving air quality or feeding the hungry in your home town.

But the deeper drive is that the reality we are faced with, whether it be kids having asthma attacks at recess or a decorated veteran going without a meal, is intolerable. So intolerable that we are willing to take action, even if just through a $10 donation or spending an hour serving soup one evening a month.

It is unbearably frustrating that more than 16 million American children go without something as basic as adequate food while Apple releases unimaginable innovations in technology and Facebook made it possible to share our latest meal with strangers in real-time a decade ago. How have we not solved these basic social problems by now? 

Uncharitable author, Dan Pallotta, sheds light on the root problem; the giant wall that stands in the way of world-changing solutions.

It's us.

It's an entire belief system rooted in the "ethics" of charity and reinforced by decades of indoctrination around how nonprofits should operate. Take 15 minutes and watch Pallotta's paradigm-shifting, eye-opening TED talk:

Intrigued? Pallotta recently spoke to the Utah Nonprofits Association in depth. It's an hour that will change how you donate, where you volunteer, and why. If you then share it with a few people you care about, maybe we can truly empower our nonprofit organizations to begin changing the world.

Our biggest problems don't need a bandaid. They need ground-shaking, innovative solutions that require risk, experimentation, and failure. But, we've been trained to look for reverent organizations who simply transform 90% of our donations into direct relief. Instead, we need to look for organizations that will multiply our donations into a force for change that makes more than a dent in today's suffering while also trying new approaches to prevent tomorrow's.

Follow Pallotta's efforts to change the way we think about charity on Twitter: @charitydefense

Thank you to Lauren at the Community Foundation of Utah for forwarding the UNA video (the second it was available)!

New opportunities for cause collaboration

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Non-profit organizations grew out of early social welfare roots. People driven primarily by moral beliefs fed the poor, took care of the sick, and took in orphans. These groups became more specialized and structured and eventually the non-profit organization was born from legal tax classifications. The mission was the seed and still comes first. Conversely, business is rooted in the ability to make a profit; to earn a living by providing goods and services to customers. There was even a possibility of striking it rich with the next big idea. The financial bottom line was the seed and is still the common metric by which all businesses are measured by.

Despite very different roots, business and mission have always shared a symbiotic relationship. Mission-driven organizations create desirable communities, providing medical care and hospitals, animal welfare and clean-up services, safety nets and religion. Ultimately, non-profits lay the foundation for a dependable workforce for employers.  Businesses in turn provide financial support, in-kind donations, and leadership for non-profit governing boards.

Over the years the boundaries between business and mission have blurred. Businesses have increasingly integrated sustainability into their models and more and more non-profits are being managed by experienced business leaders. More recently, the intermingling has spurred hybrids, creating for-profit organizations with a mission.

Social enterprises have been cropping up for years, but have only recently become recognized in their ability to apply business strategies to tackle social and environmental challenges in just the past few years. The low-profit limited liability corporation, or "L3C", was first created out of Vermont legislation in 2008. Nine states has since adopted similar legislation, allowing business with a purpose to take advantage of flexible LLC laws while also qualifying for "program-related investments" from private foundations.

The benefit corporation, or "B-corp", was born in 2010 when Maryland first passed legislation recognizing this pairing of business with community impact. Unlike traditional business, benefit corporations have a formal purpose to have a "material positive impact" on society and the environment. Their hands are not tied to make decisions that deliver the greatest financial return for the shareholder. As of this writing, 19 states have passed B-corp legislation.

These new models represent giant steps toward solving pressing social challenges...if we work together. Because regardless of how smart, creative or passionate any one of us is, together we create synergy that takes advantage of diverse strengths, expertise, and experience.

Share your best practices. Start a think tank on a shared goal. Reach out to potential partners. Invite new, crazy ideas. Just don't stick your head in the sand and plow forward with the ways you've always done things, or conversely blaze what you think is a brand new trail based out of entrepreneurial ego. Cause collaboration and innovation has never been more accessible or fruitful.

Why your mission needs business partners

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The first resource to be released through this blog is a guide to Partnering for Multiplied Impact. There are a variety of topics that could have been tackled instead (and are coming up), including empowering a change leadership team, grassroots problem solving, creating a strategic 5-year vision, and much more. This initial guide focuses on non-profit and business partnerships for a reason:

For most mission-driven organizations, a strong business partner has the potential to multiply impact faster than nearly anything else.

Just a few of the potential benefits business partnerships can bring to your mission:

  • Access to expensive expertise targeted to your gaps, such as advertising, architecture, or digital marketing
  • Political leverage through the biggest voice in the community
  • Loyal advocates and arms-length lobbying resources
  • Vetted and dedicated board and committee members
  • A volunteer workforce
  • Increased exposure and publicity
  • A positive reputation as being an efficient and high impact organization
  • Accountability to long-term goals and results-oriented outcomes
  • Improved effectiveness and organizational capacity
  • Creative ideas and opportunities
  • Increased donations and grants

It's time to get a competitive edge on your cause. If you haven't considered strategic partnerships or wrote them off as too much work with too little returns, take a peek at the new Partnering for Multiplied Impact guide and see if you can't stir up some inspiration and ideas for win-win opportunities waiting in your community.

In what ways have you already partnered with  businesses? What has been the impact for your cause?

Happy New Year! Let's Change the World

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I am so excited to launch the Impact Ignition blog and hope you will enjoy the coming content. Whether you're mission-driven or just here for the universal content around innovation, collaboration and leadership, welcome! The Impact Ignition blog will curate content to help non-profits and other mission-driven organizations become more savvy; to streamline their operations, develop strategic partnerships, and innovate to multiply their impact. It will also include resources, such as training, networking, and funding opportunities.

Subscribers can choose to receive all of the content or to have the non-profit content left out. If you migrated from the other blog, you have only been subscribed to the universal content (unless I know you personally and knew you'd want it all). You can always adjust your preferences at the bottom of any of the emails.

Take a peek at the new blog and let me know what you think. Better yet, it's the perfect time to share some of your expertise via a guest blog post. Why not hit the ground running in the new year by helping mission-driven organizations become better, stronger, and more adaptable?

Thank you for joining me here. I look forward to the community we are creating that will change the world for the better. What's your cause for 2014?

Root Cause Analysis: The 5 Whys

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I love memorable and easy to implement tools for problem solving. After all, solving problems is at least half of what leaders spend their time doing. Mine as well make it simple. Root cause analysis sounds uber complex and it can be. There are a variety of methods and tools out there that take hours upon hours to complete. Sometimes that's necessary, but I'm a fan of trying the simplest solution first and then escalating the complexity if the problem continues to rear it's ugly head.

The 5 Whys is nothing new, it's part of the Six Sigma process and became well-known from it's use with Toyota Production System in the 70's. I was just recently reminded of it from a good friend, Kim Barber. Kim is an adjunct professor with the University of Utah's School of Business and a wealth of practical information. In fact, that's what she teaches: putting management theory into practice.

Quick & Dirty Root Cause Analysis: An Example of The 5 Whys in Practice

Problem: Phone calls and emails aren't returned in a timely fashion or at all. Instituting a "Return all communications within 24 hours" rule has been ineffective in changing the trend.

1. Why? Quick interviews with the worst offenders reveal that they "just don't have time."

2. Why? They indicate that they have too much paperwork that they are behind on.

3. Why? Pushing the question, it becomes apparent that these staff are always behind, making paperwork more time-consuming since they have to go searching for the old information.

4. Why? Their supervisors nag about the deadlines, but never actually enforce them with any interventions or consequences.

5. Why? Addressing the identified issue with supervisors reveals that they don't feel comfortable enforcing the deadlines that they themselves don't keep. This is the way deadlines have always worked; ie. this is a problem embedded in the culture.

Without peeling the onion back five layers, the folks interested in solving the problem with returned phone calls would have been left with supervisors blaming their staff on the surface, but enabling the behavior through their own lack of commitment. The root cause of poor role modeling was able to be impacted directly, trickling down to the staff members.

Sometimes what appears to be the problem in the surface is only a symptom. More often than not in my experience. Try the 5 Whys for yourself next time you encounter a problem in your organization.

Sunk Costs: Let the Project Sink

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We'd all like to believe that we make decisions based on the best possible future trajectory given all of the available information at hand. But it's pretty common to pour more and more resources into a dead end rather than admit defeat. If you're a really thoughtful decision maker, that may be the case when you first approach a change. However, even the best leaders struggle to re-evaluate mid-course and accept the fact that we're clearly going under.

Part of it is an essential bit of entrepreneurial optimism and part of it is a fear of loss, which is apparently genetically encoded from our ancestors: those who were risk aversive were more likely to survive to parenthood and pass on the predisposition.

But we don't live in the time of saber tooth tigers and groin cloths anymore. No revolutionary success ever got off the ground based on the risk calculation and many certainly would toss in the towel when the inevitable waves washed over the sides of the little boat. That being said, there comes a point when sinking is inevitable and it's time to switch gears and try a different boat.

It can be hard to tell whether it's fear or optimism that drives us to purchase deck chairs for the sun-soaked beach that certainly lies ahead while our feet and fellow travelers get soggy, but developing the awareness and distance to call it quits when you've passed the point of no return is critical if leading the next boat, or an armada, is in your future.

In order to combat our tendency to believe we are the leadership-embodiment of Leo Dicaprio at the front of an unsinkable ship, the business world came up with the term sunk costs.

What's a sunk cost? 

It's the money, time, and other resources that are lying at the bottom of the ocean, completely unrecoverable. The Titanic has broken in half and no amount of money or effort is going to put it back together and deliver the passengers to America.

You have a few options here: 

  1. You can pretend that the Titanic is unsinkable. More time, money, and adjustments will certainly fix the problem.
  2. You can watch the ship sink in abject horror and sob violently over your losses.
  3. You can face forward, learn from the mistakes, and cut your future losses as early as possible. No use crying over sunken ships.

An everyday example: 

You purchase non-refundable tickets to a major concert for over $200. You dye your hair blue and make the 30 minute drive to the arena. 15 minutes into the show, your absolutely miserable. Turns out this particular band only sounds good synthesized on the radio and the lip syncing that you can clearly see from the front row seats you paid handsomely for is appalling.

What do you do?

The irrational part of us says, "I paid $200! I drove all the way here! I dyed my hair blue!" So, you stay and get angrier with each mutilated song.

If you're feeling particularly rational, you say, "I am not enjoying this at all and I think I would rather leave now, grab a pizza, and catch up on Big Bang Theory." So, you go and have a wonderfully funny evening.

Irrational decisions aren't a huge deal on this scale, but organizations buy much more expensive "concert tickets". In fact, the sunk cost fallacy is nicknamed the "Concorde fallacy" after the $6 BILLION (in today's dollars) dumped by the British and French into the development of the Concorde aviation project for many years after it was crystal clear that the venture would never produce a return. Just the year-to-year operating costs AFTER the Concorde was developed ran in the red.

Are there any projects that you or your organization are currently pursuing that are already waterlogged? How would you know?

The Most Valuable and Neglected Leadership Tool

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This isn't just a leadership tool, it's a basic personal development cornerstone. Without it, you are completely handicapped. With it, you can capitalize on your strengths and mitigate your weaknesses. However, it is time-intensive and must be purposefully engaged; therefore, it is often neglected.

Reflection.

Let's face it, unless you have an unbelievably amazing staff or you're a lazy leader, there is very little free time at the top. There is always more to do. The corner office might have a great view, but it likely doesn't get appreciated by the frenzied executive who spends the majority of their waking hours in that space.

My first three years as a leader are a blur. The pace was grueling and exciting. When I left my job, life went from 100 mph to 0. It was only then that I began to truly reflect on my experiences in leadership, the lessons I learned the hard way, and the larger impact I could have had if I just stepped away for a few minutes to refine my approach.

It's difficult to make time to do nothing when there is so much to do.

Productive reflection truly requires the absence of productivity. It's about time and space to simply absorb, digest, and consider our experiences.

Given the right environment, both mentally and physically, reflection leads to clarity and creativity. We gain a broader understanding of what we are doing and how we are doing it. Most importantly, we become acutely aware of our internal barriers to success and this insight can drive breakthrough change.

One of my brilliant clients reminded me of the classic tool, the Johari Window:

Johari Window - Great Leaders Take Time to Reflect | Leadership & Lifestyle by Emily Capito, LCSW, MBA

We get moving so quickly as leaders that we often shutter all but the known, public self. We don't make the time and space for reflecting on who we are as a person and as a leader.

Much of what we hide from public view can and should be integrated back in, producing a whole and genuine person that others can trust and follow.

Much of what we are currently blind to is readily accessible if we take the time to consider how others interact with us, how we respond to stress, and how our stakeholders view our actions.

This level of perspective is game changing. 

Imagine the value of consistently engaging in your own proactive 360 degree assessment; refining your ability to observe and apply the feedback that others are constantly providing you about your personal strengths, weaknesses, opportunities, and threats.

You may have moved into leadership because you're goal-oriented and driven, but you won't succeed as a leader if you continue to apply yourself solely to production without the aid of adequate reflection.

This goes for most challenges, including marriage, parenting, friendship, or starting a business.

By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest."                                                                                       - Confucius

Take 15 minutes today, away from work and email and people, and allow yourself to put the pieces of the puzzle together in order to connect with the bigger picture.

Ignite Your Intrapreneurs Into an Innovation Engine

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Many organizations, especially non-profits, are lacking an innovation engine - the capability to identify and invest in long-term strategic opportunities that produce growth.

Identify Your Intrapreneurs:

A recent article on the Harvard Business Review Blog Network (Recognize Intrapreneurs Before They Leave) and another from Forbes contributor David Williams (The 4 Essential Traits of Intrapreneurs) help to identify this unique and often neglected species of employee through 6 traits:

1. Their primary motivation is influence and freedom, not money.

2. They're future-oriented and passionate about learning.

3. They "greenhouse" ideas - carefully tending to seeds until they have a strong plan.

4. They engage in "visual thinking" - formulating a series of solutions from the initial spark.

5. They are able to "pivot" - balking momentum in favor of better direction.

6. They're confident, but humble with high self-awareness and sense of purpose.

Interestingly, the authors of the HBR post suggest:

In a firm with 5,000 employees, we’ve found, there are at least 250 natural innovators; of these at least 25 are great intrapreneurs who can build the next business for your firm."

That means that only 5% of your workforce are natural innovators and one half a percent are great intrapreneurs.

If you don't have thousands of employees, you may be looking for a needle in a haystack, which makes it all the more important that you intentionally prepare for and nurture these hidden gems, taking advantage of their entrepreneurial combination of talents.

Nurture an Innovation Engine:

As a former intrapreneur who became fed up with bureaucracy and jumped ship, here's what kept me loyal for years and what would have kept me around longer had it been done better:

  • Foster a culture of grassroots best practices, even if you have a long way to go. Intrapreneurs want to be on a winning team. If you involve your frontlines in steering toward a better direction, your natural innovators will come out of the woodwork.
  • Recognize intrapreneurial qualities and connect your innovators with a mentor. Intrapreneurs question the status quo, which often isn't rewarded in management meetings at lower levels. Connect them with a mentor who can support their ideas and refine their approach to change leadership.
  • Recruit several intrapreneurs onto your executive leadership team. Without change leadership, your executive meeting is all talk with depressing status updates.
  • Intrapreneurs in leadership positions are prone to burn out. Support these executives with enough authority and a team so that they can effectively tackle strategic initiatives with success. This is your innovation engine.
  • Channel your innovation engine's ideas into an ambitious goal and gift it back to them. Big projects that will have a big impact are bright, shiny objects to intrapreneurs. I was always excited to be part of the process of strategic innovation.
  • Create a safe environment for experimentation and revisions. Too many leadership teams try to change on demand, doling out deadlines and metrics to their innovators, which in turn deters creativity and the ability to change course when needed.
  • Lead with integrity. Nothing kills loyalty quicker than deception and loyalty is a cultural pre-requisite for the change that your innovation engine needs to initiate. Adhere to strict values and take swift action to remove negative influences in your culture before they drive your talent out.

The concept of entrepreneurial employees isn't necessarily new, but it's gaining more attention because it's easier and more rewarding than ever before to leave your 9-to-5 and start your own business. Your best intrapreneurs are an online form and a quick website away from complete autonomy.

That being said, people are social creatures who want to be part of something bigger than themselves. By creating and nurturing an innovation engine, your organization will gain enormous competitive advantage over time. Plus, you will likely keep your intrapreneurs from going rogue longer and attract a steady flow of new ones to fill those big shoes.

What do you think? 

Don't be a Tupperware Leader

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One of my favorite books on leadership is EntreLeadership by Dave Ramsey, probably because I lean toward the entrepreneurial side of the continuum. The lesson that has stuck with me in the years since reading the book was that as a leader, I am the ceiling. To give fair credit, Ramsey takes this concept from John Maxwell's The 21 Irrefutable Laws of Leadership. Maxwell calls it the "Law of the Lid", as in the lid on your organization.

As leaders, we are both our organization's solutions and our organization's problems. Hopefully with more tally marks on the solutions side. Our strengths become our organization's strengths. Our weaknesses = the organization's weaknesses.

This is a fact of life. None of us are perfect.

That being said, if we fail to take a good, hard look in the mirror every so often to become increasingly aware of our weaknesses and act to mitigate them, our organization will run up against that lid sooner rather than later.

This is critical whether you are a project leader, department manager, or the CEO. So, how do we mitigate our tendency to micromanage, our inability to lead an effective meeting, or any other personal shortcoming?

  1. At the very least, acknowledge the deficit. Don't pretend it doesn't exist.
  2. Build your team purposefully to fill in your gaps. Don't clone yourself or you will simply magnify your own flaws.
  3. Focus on applying your strengths first, then work to improve your weaknesses where appropriate.

Opposites attract in marriage for a reason. I am great with managing the little details. My spouse is great at keeping perspective. This naturally creates conflict, but it also creates balance.

This is how a fine tuned leadership team works. Diverse strengths lift the lid a little higher, allowing the organization to reach greater heights.

This is also why filling in the gaps with natural talent is #2 on the list. It's faster, more efficient, and more reliable to bring established assets to the table than to try to course-correct your shortcomings.

You may never be the best meeting facilitator, but you should observe your empowered replacement to continuously grow and adapt because you also never know when the recruited talent could call in sick or walk away.

Bottom Line: Don't be vacuum-packed tupperware. With awareness, purposeful team development, and personal development, you should continuously push the lid for your organization.

How have you mitigated your leadership weaknesses?

Purpose over Perfection

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As we reviewed in the last leadership post, many early leaders and even entrenched leaders struggle to transition from performance to leadership. But we can spot a good idea when presented with one and most will accept the fact that we need to get out of the office and build influence if we're ever going to succeed at this whole organizational change business. This is about the time we are blindsided with terrible results despite following through on all that soft, squishy advice, which of course reinforces our original beliefs that we need to control the world from our ivory tower office in order to get things done.

Why does this happen?

Early leaders are frequently promoted because we are so productive. We are efficiency maniacs. It's all about tasks, quantity, and accuracy.

Leadership Fail: The Better, Quicker Mission Statement

When I was promoted into a leadership position, our entire senior leadership had turned over, leaving some pretty early leaders in charge of the hen house. We turned to the vision and mission statements for direction only to find that they were 30 years old and were pretty terrible to begin with. I believe our original missions statement was around 43 words with nearly half being adjectives.

As I mentioned, early leaders are excited people and we do spot good ideas. I was gung-ho about developing the best mission statement on the planet and immediately researched best practices. When we finally tackled the beast at an executive retreat, I was so relieved that we were taking this critical step forward.

I logically understood that the mission statement can and should be a powerful tool for creating unity, guiding critical strategic decisions, and acting as a rudder for the organization. I genuinely accepted that buy-in to the new mission statement was as or more critical than the words chosen.

So how did I behave in the retreat? Like a micro-manager.

I had already spent weeks researching and honing the perfect mission statement. It was beautiful, concise, and memorable. Then all my peers had to start sticking their crazy opinions in there, mucking up the water. Luckily our retreat facilitator was inclusive and had managed a few over-eager red personalities in his time.

Leaders must tame their overriding need for perfection in exchange for the greater purpose. 

The perfect mission statement, developed by mission experts (I'm sure they must exist), will never be internalized as well as the cruddy version with seven commas created by the people who carry out your mission.

One of those extra adjectives was suggested by Jim from accounting and he takes ownership of the mission with pride.

Another word was revised slightly by Alice from customer service who has the statement pinned up in her cubicle and can recite it from memory.

Perfect will always be less effective in producing change than the flawed version created by the people who must act on that change.

There's a time and a place for well-researched accuracy. Unfortunately for most leaders, those opportunities to design perfect products are few and far between once you're in charge. Successful leadership is measured by positive teams, positive customers, and positive balance sheets, not the sometimes ugly methods or vehicles that lead to those outcomes.

How could you better appropriate your efforts to produce better leadership outcomes rather than solo perfection?

4 Activities to Scale Your Impact as a Leader

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As we reviewed in the prior post, The Single Biggest Mistake Type-A Leaders Make, leaders are often very effective producers on their own. However, once you make the move into a leadership position, you're impact needs to scale. In fact, if you can generate results beyond your solo efforts early, your move to leadership will happen sooner and more smoothly. I would also add that this topic is easily adapted to entrepreneurs and startup leaders. Employees need the same types of interactions as your tribe, although the vehicles will be different.

1) Build influence.

First things first, you need influence within your relationships in the organization. Your influence factor is your ability to have an impact on the behavior of others. With your new title comes some perceived and real power and therefore some built-in influence.

However, new leaders often rely too heavily on this surface influence to get things done and are surprised when the outcomes are lackluster.

To foster a deeper level of influence with your colleagues you need create trust, buy-in, and engagement. These three elements could each generate a hefty book, but the basics always hold true:

  • TRUST: Be honest and transparent. Don't play office politics. Never gossip. Bring concerns up directly and early. Follow through on what you say. Admit to your mistakes. Be accessible and visible.
  • BUY-IN: Relate. Ask for feedback. Share experiences. Reserve your veto for emergencies only. Demonstrate commitment. Know the front lines. Learn spouses' and kids' names.
  • ENGAGEMENT: Interact often. Be positive. Nurture confidence. Invite perspective. Maintain an open line of communication. Ask questions. Listen. Appreciate.

2) Focus on a few priority projects.

Nothing is more deflating than the inability to complete assigned tasks, except maybe the inability to complete exciting voluntary tasks. Your impact will wane dramatically if you spread everyone too thin or take on so much that you overwhelm your teams.

Recognize that your level of impact on each project is inversely correlated with the number of projects you attempt to lead. Take time upfront, especially as a new leader, to intimately understand the strengths, weaknesses, opportunities, and threats facing your organization. An intimate understanding means that you grasp both the 10,000 foot view and get your hands dirty on the front lines.

3) Invite a variety of talent to your teams. 

No matter how much you try not to, there will inevitably be a handful of trusted direct reports and colleagues who you want to involve in every project. Unless you want to lose those assets, don't do it.

Formal teams, such as the executive team or the finance team, should not be the go-to team structure. Their views are biased based on what they have in common and any decisions that impact "others" will fall flat.

Regardless of whether your project campaigns are occurring simultaneously or years apart, always recruit fresh talent. While having one status meeting and managing only a few personalities is easier in the short term, each project's outcomes are further diluted by the number of repeat players. Like yours, their time, energy, creativity, and focus is limited.

Plus, if you are going to create greater and greater impact, you are going to need to consistently source new leaders and engagement from all levels of the organization. Project teams are excellent staging grounds.

4) Continuously source and meld ideas.

You may believe you have the perfect solution, but its not only highly unlikely, it's also a surefire way to kill your influence factor, which means that implementation will inevitably fail.

Always ask for ideas. Whether you're holding a focus group or having lunch with a colleague and regardless of what phase a project is in, ask for perspective and genuinely emphasize the value of their opinion.

As you meld ideas together or act on advice, give credit where credit is due and be sure to include everyone in the celebrating milestones, even if their advice fell flat.

Ultimately, these activities become your full-time job as a leader. They build on one another and generate highly impactful and sustainable results. With greater impact comes greater confidence and momentum to tackle the next priority.

The Single Biggest Mistake Type-A Leaders Make

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Highly productive Type-A's often rise to the ranks of leadership, whether we are prepared to scale our impact or not (usually not). Generally the first stop after the promotion is the new office, which is for the most part where we will spend nearly all of our time in the coming months, with the exception of mandatory meetings. This represents the single biggest mistake that is almost universal among new, traditionally Type-A leaders: blissfully productive solitude, known to the rest of the team as: rogue isolation.

Refining details, whipping up spreadsheets, and checking off tasks is the bee's knees for us folks. That's how we ended up with a promotion in the first place, which simply further reinforced that we should continue our proven formula for results.

We can create, create, create. Whether it's a full-color and scale-accurate plan for better utilization of office space or the most neat and grammatically correct meeting minutes you've ever seen, if left to our own devices this is what we do.

Unfortunately, the "Office Inventory Enhanced Utilization Framework" with companion forms for checking out 3-hole-punches and tracking copy paper usage isn't exactly the priority. In fact, it's a massive distraction from anything that matters.

Rule #1: 90% of the time that you spend alone in front of a screen is working against your organization's mission. 

While I will concede that some leadership roles are much more project-oriented than people-oriented, such as a CFO or CMO, I would still venture that if you are a typical "red" personality, you are likely wasting a massive number of hours alone.

So, when you find yourself slightly high from reformatting the employee manual, you must brutally remind yourself that you are failing in your role, shut off your computer, and go be with the human beings right outside your door.

"Leadership" is a pretty direct term. You are leading...someone or many someones somewhere. Even if your someones aren't employees, they exist in some other format and you are supposed to bring them along.

This does not happen by sitting alone with technology. I promise, I've tried. It occurs through relationship capital, which as we know is culled through trust, rapport, transparency, and excitement. If I trust you and the vision is palpable and exciting, I will follow you, write up reports for you, and participate in your overly rigid meetings.

One of the best exercises I attempted (several times) in my leadership role was to spend an entire day without isolating distraction. No phone calls, emails, word processing, number crunching, budget reviewing, or folder reorganizing from 9 AM to 5 PM.

The void was filled with critical circles of people: direct reports, key stakeholders, frontline team members, superiors, peers, community contacts, customers, and volunteers.

Critical is also a pretty straight forward term. Your fate lies in your relationships with these people. It only makes sense then to step away from the keyboard, stop volunteering for non-critical solo projects, and begin investing in the human beings that will determine whether you're a leadership asset or just a Peter who was overpromoted.

Unfortunately, most companies won't take the risk of un-promoting you, so it's sink or swim time.

4 Type-A Networking Mistakes

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My perspective on networking when I was working a salaried 9-to-5 was likely similar to most folks:

  • I don't have time.
  • I am doing just fine on my own.
  • What's the benefit to me?

When my career took a sudden and unexpected turn and I left said job, I realized my mistake with heavy regret. The understanding of what genuine networking consists of and where I had failed came in waves.

1. I quietly shined in the background.

I missed hundreds of relationship opportunities where I shined, but didn't connect. I rarely introduced myself to the key players in my industry or shared what I was working on. I sat at the table, listened, and performed quietly within my organization. I invested in my boss's approval and the relationships contained within a single company because I didn't plan on leaving and immaturely believed I could get things done best on my own. When I did network, I did so on behalf of my company, never connecting as an individual.

2. I saw networking as rubbing shoulders at events.

I held a naive view of networking as scheduled events where I could introduce myself to new people. This created so many barriers to genuine relationships. First, I didn't "have time" to attend events like this. Second, when I did prioritize an event, I didn't know how to take advantage of introductions. I told them what I did, they told me what they did, we swapped business cards. Once in awhile a relationship would form because the stars aligned at the right time with their needs and mine, but it was always a short-lived surface connection that died off when our mutual interests went in different directions.

3. I was self-centered and opportunities looked like work.

I was genuinely very busy at my job (due to hoarding the work in exchange for control). So, when I came across opportunities to volunteer, advise, or otherwise share space with other professionals, I saw them as tasks that simply added to my overwhelming to-do list. Why should I share my expertise with others? Why should I volunteer my time when my time is in such short supply? I certainly never went looking for this additional "work", let alone responded appropriately when it came looking for me. I stubbornly figured challenges out on my own to the extent that when I reached out to an organization with a successful model for a project I was leading, I was motivated to do so because it would look good on funding requests.

4. I thought well-connected people were born that way. 

To me, the popular saying, "it's all who you know" was said sarcastically under your breath after congratulating a snob on their unearned promotion. Their wealthy, well-connected parents obviously pulled strings with their golf buddies to get little Johnny that CEO title at 22. While this may be true at times, nepotism is totally separate from networking. I failed to realize that I too could "know people" and move to the top of the list for exciting opportunities, even after discovering that if I hired someone I knew, I always got better results. Hello, McFly?

I was fortunate that after I dumped a ridiculous amount of career nesting crap into the back of my car, an unsolicited introduction resulted in a wake-up call to the importance of relationships. One connection introduced me to another, who introduced me to another, resulting in the privilege of learning from a strategic relationship master.

This one relationship has led to at least a dozen high-powered connections and already several opportunities that have rounded out my skills and increased my value in the marketplace. Much beyond that, I got to reverse my past mistakes and begin investing in relationships the right way, which will lead to immeasurable benefits going forward.

I look back and wish I had found a way to benefit that original link who made the first unsolicited introduction, because the series of connections that she kicked off have added exponential value to my life and career.

Relationships are a little magical. You never, absolutely never, know where one will lead.

So, shine openly and beyond the walls of your office, invest in everyone you come in contact with all the time (even if it's just a quick compliment), appreciate opportunities to volunteer yourself as gifts, and remember that anyone can grow their network into an all access pass by generously listening and competently adding value.

The Keys to Superconnecting

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Nothing happens without people and unbelievable feats occur when a tribe pools their resources. Successfully building and navigating relationships is key to achieving extraordinary goals, both personally and in business. If you missed Judy Robinett's webinar on building relationships to build business on Thursday, you missed out on some gems. Robinett has spent years breaking down what she does naturally into a proven formula that anyone can use to build valuable relationships.

The steps are deceptively simple, but just like adding yeast to a few basic ingredients transforms them into a much greater result, Robinett's recipe for relationships will multiply your outcomes.

Confront your Fears

What's holding you back from starting those critical first conversations? Your assumptions are almost guaranteed to be wrong.

  • Shy? You don't need to be a gregarious extrovert, you simply need to engage. Focus on the other person.
  • Stranger Danger: The distance between a stranger and a friend or a mentor can be crossed with genuine conversation.
  • Lacking a Harvard degree in a room of brilliant people? No pedigree or silver spoon is required. Your experiences give you unique knowledge.

Four Prerequisites

You don't need a pedigree or a huge personality, but you must develop these areas in order to develop strong relationships:

  1. Become an amazing listener. Remember the details. Ask thoughtful questions. Start with a goal of learning about them, rather than trying to find commonality. This will come naturally.
  2. Be genuine. Like bloodhounds, there is a sensation that creates distance when you encounter someone who is  hiding something. Be you, regardless of whether you feel insecure.
  3. Don't rush it. Robinett compares networking to dating. You need to work up to the ask and then court for a period of time. The first conversation is not the time to ask for more than advice.
  4. Be value-driven. Be passionate about these cornerstones that guide your life. Integrity, accountability, and empathy will attract the right people to you.

Three Golden Questions

Don't try to make them yours right off. Try them out just as they are and experience the magic:

  1. How can I help you?
  2. What other ideas do you have for me?
  3. Who else do  you know that I should talk to?

Nurturing relationships is a marathon, not a series of sprints or hurdles. Your focus needs to be on quality, not quantity. Target the right groups and focus in on a few key people rather than trying to get your business card into the hands of every person present.

Attempting success alone places a very real ceiling on your potential. The people that are available to you hold the keys to connections, information, money, and opportunity. What do you have to lose?

Learn more about Judy here: www.judyrobinett.com

Follow her on Twitter: @judyrobinett