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Peter Drucker's Five Most Important Questions: Enduring Wisdom for Today's Leaders by Peter F Drucker, Frances Hesselbein and Joan Snyder Kuhl
THE impact on society of nonprofit organisations (NPOs), whether they are public organisations or private ones, could be enormous, but it is rarely optimised.
This is “not for lack of effort; most of them work very hard. But for lack of focus, and for lack of tool competence,” wrote the late Peter Drucker, one of the world’s most profound management thinkers. An NPO cannot be run like a business, it is fundamentally different.
“Self-assessment (of the NPO) is the first action required of leadership, the constant resharpening, constant refocusing, never being really satisfied,” Drucker asserts. This book is Drucker’s guide on how to do this NPO self-assessment based on his five questions, with additional, elaborating articles by other management experts.
The first question an NPO must ask itself is: “What is our mission?” Does it need to be refined or redefined? Each of the myriad of NPOs has a very different mission, “but changing lives is always the starting point and ending point”. The mission is the organisation’s reason for being, it is why they do what they do. It is what its people wish to be remembered for.
Drucker recalls asking hospital administrators for the mission of their emergency clinic. The glib reply was: “Our mission is health care.” Too often similarly glib missions are offered. In fact, hospitals do not take care of health, they take care of illness. The function of an emergency room in the US is, in fact, to tell 8 out of 10 people that there is nothing seriously wrong with them. The mission was more accurately redefined as: “To give assurance to the afflicted,” and it was the doctors and nurses that gave assurance. Armed with an accurate mission statement, the translation into action required that “everybody who came in was seen by a qualified person in less than a minute”.
Make your mission statement short and sweet
An effective mission statement is short and sharply focused. It clarifies why the NPO does its work, not the means by which they do it. The mission is there for all to ensure that what they do contributes to the goal of the NPO.
The second of Drucker’s questions for the self-assessment of the organisation is: “Who is our customer?” The “customer” could be the patient, child, couple, pupil, alcoholic, and on. The customer is always the one “who values your service, who wants what you offer, who feels it's important to them”.
NPOs have two types of customers. Their “primary customers” are the people whose lives are changed through the organisation. The “supporting customers” are the volunteers, members, partners, funders, employees, and others who must also be satisfied. For public institutions, the primary customer is usually legislated, the supporting customers are open.
Only by accurately knowing who your various customers are, can you provide the value they require. Only with this clarity can the organisation match the customer’s needs with its strengths, competencies and resources. This is not a question that can be asked only once because customers change demographically, in their primary needs, and numbers. Additionally, there could also be customers you should no longer serve. These changes could have profound implications for your organisation.
The third question Drucker suggest the leaders ask is: “What does the customer value?” This question is to be addressed to both of the NPO's customers, primary and secondary. This matter is “so complicated that it can only be answered by customers themselves”, Drucker points out. It is often very difficult for the NPO to understand that value from the perspective of its customers.
A shelter of the homeless made significant changes when they learned what their primary customers valued. They found that the food and beds were appreciated, but did little to satisfy the deep aspiration not to be homeless. “We need a place of safety from which to rebuild our lives, a place we can at least temporarily call a real home.”
Their offering now allows for longer stays at the shelter, while staff work with individuals to find what a rebuilt life means to them, and what help they need. Users of the shelter can no longer simply arrive hungry; they must make a commitment to address their problems to be allowed to stay there.
The fourth question is: “What are our results?” There is no universal standard for results in an NPO as there is in business - profit. Every organisation must honestly judge whether lives in fact are being changed. Results are as important to NPOs as they are to a business, if for no reason other than that they must show sufficiently outstanding results for their supporting customers to justify offering their resources.
These results need to be measured both qualitatively and quantitatively. Measures must include how well your organisation is using its volunteers, board, staff and others, in addition to the measurement of the improvement to the lives of others. These results will also show whether similar organisations are doing a better job.
The qualitative results are most often very complex and subtle. For example, one centre's mission was to enable people with serious and persistent mental illnesses to recover and, after two or more years of intensive work, to function in the world without feeling they were “incurable”.
This question also addresses the difficult issue of abandoning the long-cherished programme that is not producing. This is far harder than it appears but, says Drucker, “only for a fairly short spell”. Once an underperforming programme is abandoned, the question all will ask is: “Why did it take us so long to make this decision?”
The last question is: “What is our plan?” This will include the issue of planning for the future direction and activities of the NPO. Planning is not an attempt to mastermind the future – “Any attempt to do so is foolish; the future is unpredictable,” says Drucker.
The plan must begin with the mission and end with action steps and a budget. Ownership of the plan is best achieved when it is developed by the people who will carry it out.
This is a simple but necessary exercise that every NPO, public or private, should undertake. This simple format will produce impressive results.
Readability: Light -+--- Serious
Insights: High +---- Low
Practical: High +---- Low
* Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Strategy that Works. Views expressed are his own.
