Defining and delivering value
Who decides what's worth making in the private, public, and plural sectors?
“I, he said to us
Am the doubter. I am doubtful whether
The work was well done that devoured your days.
Whether what you said would still have value for anyone if it were less well said.” —Bertolt Brecht, from “The Doubter” (trans. Lee Baxendall)
All organizations, including arts organizations, thrive by delivering value that meets or exceeds their cost. If expenses consistently exceed revenue, organizations run out of money. If the physical, cognitive, emotional, and social costs for the team exceed experienced benefits, organizations run out of people. If the required facilities or materials can’t be maintained and replenished, organizations run out of stuff.
For private (for-profit) organizations, the obvious and essential measure of value and cost is shareholder gain. If those with an ownership stake in the enterprise receive satisfactory financial return, they’ll tend to keep their money in the game (which pays for the people and the stuff).
But for public (government) and plural (nonprofit) organizations, it can be an existential challenge to define both the players and the game. What value, exactly, are you delivering to which people? And who determines the appropriate or acceptable cost?
Public Management professor Mark H. Moore (1995) suggests that any successful public enterprise needs to address these questions by meeting three criteria at once. In short, any public sector strategy must be:
substantively valuable – “in the sense that the organization produces things of value to overseers, clients, and beneficiaries at low cost in terms of money and authority.”
legitimate and politically sustainable - “the enterprise must be able to continually attract both authority and money from the political authorizing environment to which it is ultimately accountable.”
operationally and administratively feasible – “the authorized, valuable activities can actually be accomplished by the existing organization with help from others who can be induced to contribute to the organization’s goal.”
So, while owners determine acceptable value and cost in the private sector, the public sector is shaped by a more complex and layered authorizing environment. According to Moore, this authorizing environment can include political superiors, legislative overseers, as well as the media, public interest groups, and the courts.
But who determines value and cost in the plural sector, the cluster of socially focused initiatives that includes nonprofits? There are no private owners. There are no political superiors or legislative overseers. There’s only a governing board and a shape-shifting ecology of donors, civic and business leaders, artists, team members, volunteers, peer institutions, audiences, and other constituents.
Which means it’s the governing board’s job to define both the players and the game, and then watch the game play out. Governance maven John Carver (2006) called these “ends policies,” which define “the organizational swap with the world.” That is: “What human needs are to be met (in results terms), for whom (outside the operating organization), and at what cost or relative worth.”
While it might sound wonderful to determine the players and the game, it turns out to be one of the core challenges of nonprofit management. First, the feedback system is sprawling and slow, so it’s difficult to know where to look or how to adapt. Second, the ecology is always shifting, and there are often players you didn’t think about that shape the game.
Since about 2010, for example, social media systems have magnified the impact and influence of decentralized social movements. While nonprofits prior to 2010 could reasonably focus on wealth and power as the most important players (not to suggest they should have), the rise of the “like” button and the hashtag created a new force to reckon with.
Facebook moved to a like-button strategy in 2010 (Zara 2019). Black Lives Matter as a movement and a hashtag began in 2013 (Anderson et al 2018). #OscarsSoWhite shook the Academy of Motion Picture Arts and Sciences in 2015 (Ugwu 2020). The global pandemic and social justice reckoning amplified this evolution to an extreme.
Entrepreneur Steve Blank frequently wrote that “No plan survives first contact with customers.” So when you’re planning to deliver value that exceeds cost, it helps to know who is keeping score. In the private sector, the essential metric belongs to the owner/equity holder. In the public sector, the metrics are determined by the authorizing environment of formal and informal constituents. But in the plural sector, the metrics and the measurers come from a complex, interconnected, and ever-changing array.
In reality, nonprofits don’t determine the players and the game, they guess. So the best value strategy may be to get better at guessing. Or, get better at persuading a diverse ecology that your value is worth the cost.
Photo by JJ Jordan on Pexels
Sources
Anderson, Monica, Skye Toor, Lee Rainie, and Aaron Smith. “Activism in the Social Media Age.” Pew Research Center, July 11, 2018.
Carver, John. Boards That Make a Difference: A New Design for Leadership in Nonprofit and Public Organizations. 3rd edition. San Francisco, CA: Jossey-Bass, 2006.
Moore, Mark H. Creating Public Value: Strategic Management in Government. Cambridge, Mass: Harvard University Press, 1995.
Ugwu, Reggie. “The Hashtag That Changed the Oscars: An Oral History.” The New York Times, February 6, 2020, sec. Movies.
Zara, Christopher. “How Facebook’s ‘like’ Button Hijacked Our Attention and Broke the 2010s.” Fast Company, December 18, 2019.
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