I often get asked the question about the
WHY in for-profit organizations versus not-for-profit organizations. So before I
answer the question, let me just take a little aside. I hate the term
“not-for-profit”‘ I hate the idea that an organization and a group of people are
defining their purpose based on what they’re not. We have to stand for
something, not against things. The reality is “not-for-profit” is a tax
delineation and that’s why we use the term. And not-for-profits absolutely have an idea of profit except it’s defined differently.
In a for-profit organization, profit is defined in money.
In a not-for-profit organization, profit is defined by whatever you’re trying to
accomplish. So for example, if your objective is to rescue kittens out of trees,
then you better be profitable. You better be risking more kittens out of trees
this month then you were last month. Let’s call them “for impact” organizations.
So we have for-profit organizations and we have for impact organizations.
Ok, now back to the question. The WHY is different and, sometimes,
how do we compare the WHYs of for-profit versus for impact organizations –
here’s generally what I’ve seen. For impact organizations are pretty good
at articulating their WHY. Where they’re weak is in their HOWs,
the structures in which they use to advance their cause. I mean definitions, as we’ve just discussed,
is one of them. For profit organizations tend to be really good at HOW
and pretty weak in WHY. In other words, they’re really good at process,
they’re really good at operations, but the sense of higher purpose and higher cause
seems to be lacking. So what both organizations can learn to do is
learn from each other. In other words, for impact organizations can learn to
bolster operations from for-profit, and for-profit could learn a little bit
about working towards a higher cause from for impact organizations.
They should look the same. Remember, it’s the definition, it’s just the
metric that is different. But the organization should feel the same to work there.
In other words, we should feel like we’re part of something bigger than ourselves
and it should be a well-oiled machine, and we should have good metrics
to help us feel like we’re moving the ball down the playing field. Back to the for impact organizations. Because there were poor metrics and
because they do not define themselves as for impact, unfortunately the metric becomes
too much about money and raising money and less about understanding
how far we’re moving the ball down the field with whatever we’re trying to accomplish.
So there we go.