All organizations need a discipline that makes them face up to reality.
All organizations need to know that virtually no program or activity will perform effectively for a long time without modification and redesign. Eventually every activity becomes obsolete. Among organizations that ignore this fact, the worst offender is government. Indeed, the inability to stop doing anything is the central disease of government and a major reason why government today is sick. Hospitals and universities are only a little better than government in getting rid of yesterday.
Businessmen are jest as sentimental about yesterday as bureaucrats. They are just as likely to respond to the failure of a product or program by doubling the effort invest in it. But they are, fortunately, unable to indulge freely in their predilections. They stand under an objective discipline, the discipline of the market. They have an objective outside measurement, profitability. And so they are forced to slough off the unsuccessful and unproductive sooner or later. In other organizations – government, hospitals, the military, and so on-economics is only a restraint.
All organizations must be capable of change. We need concepts and measurements that give to other kinds of organizations what the market test and profitability yardstick give to business. Those tests and yardsticks will be quite different.
Action Point: Make sure your nonprofit organization has rigorous tests and yardsticks to measure performance.