Leading from the Front: Guest Blog from Ret. Colonel David Sutherland

Memorial Day is just a week away, and while we pause to remember and honor those who have fallen in service to our country, I am also moved by lessons learned from military leaders who have faced the most difficult and high-stakes challenges and crises imaginable.

Ret. Colonel David Sutherland, Chairman of Dixon Center for Military and Veterans Services, an organization that is an essential part of The Fedcap Group, is a leader whose wisdom and insight I value.

I thank Col. Sutherland for his great insight.  And, as always, I welcome your thoughts.

 

LEAD FROM THE FRONT: A LITTLE KNOWLEDGE GOES A LONG WAY

 

Ret. Colonel David Sutherland

Lead from the Front is a philosophy for team-building based on years of real-life experience in the field, culminating in Iraq.   One of the four traits of a leader is knowledge.

Say knowledge and people think “intelligence” and “information.”  True, it does mean that, but the main deliverable of knowledge is structure.  Think about it.  What do people really want to know before they begin a task and while they are completing it?

  1. What am I doing?
  2. Why is it important that I do it?
  3. How is this going to make a difference?
  4. How well am I doing it?

It’s such a simple concept, yet you’d be surprised how many people don’t operate under these principles.  And when leaders do answer these questions?  People will follow them places you couldn’t imagine.

Take Ted, one of the Troop Commanders who served with me in Iraq.  During the initial part of our 15-month deployment, his Troop First Sergeant was killed in action.  The Troops’ next First Sergeant was shot and wounded in action.  Ted himself was engaged directly or within proximity of his convoy by as many as 70 IEDs.  And yet his troop accomplished more than I ever thought possible.  How?  Ted explained every task and didn’t overreact.  His troops understood the job that needed to get done and why they were doing it.  He put structure where it was needed and ensured standards were understood.

General George Patton once said, “Don’t tell someone how to do it, tell them what to do and they’ll surprise you.”

Follow that advice and you’ll have workers who are both competent and confident.

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Leadership is Action, Not Position

Recently, in a conversation during our Leadership Academy, one of our faculty shared the quote from  Donald H. McGannon, who ran Westinghouse Broadcasting Corporation and served as President of the National Urban League,  “Leadership is action, not position.”  This resonated with me.

Countless books have been written about what makes a good leader. Certainly being inspirational,  driven, having a vision, and being a strong communicator are all characteristics of leaders. But for me, at the heart of leadership is the willingness to act.  I believe that the best leaders are those who take in information, distill and analyze it, and then use it to do somethingThe most effective leaders build bridges between knowledge and action and they act quickly when it is required.  They understand that non-action can place the company at risk.  They generate trust because of their willingness to act.  They are not limited by fear or by making a mistake.

These leaders are not defined by their position.  They may have official authority, or they may not. Their leadership is marked by purpose — to improve things, to be better.  Their style is one of candor.  They see issues and they talk about them.   My experience suggests that leaders willing to act have a strong commitment to mission and a disdain for complacency.  They see the value in producing outcomes.   They do not settle.

Leaders garner the respect of their colleagues because they bring with them the integrity and the courage to do the right thing when it matters.

As we continue to build our talent across the agency—we look for people who have a history of acting—of doing something meaningful and with integrity, and who have been able to demonstrate that bridge between knowledge and action.

Relevance, Sustainability, Impact

In 2009, Fedcap adopted a framework that has served us well over the past decade:  Sustainability, Relevance and impact.  These three drivers influence the way we think, plan and implement. They are foundational to the culture of our organization, and they guide how we measure success.

Sustainability: A commitment to long-term financial health.

None of our work is possible if we don’t remain financially healthy. Sustainability requires that we establish our core indicators of corporate health, that we report against those indicators, and we build strategies and accompanying structures to ensure we remain financially healthy.

Sustainability advances our ability to innovate and stay relevant.

Relevance: A commitment to continuous innovation and modernization.

An organization must remain ahead of the curve—understanding the emerging trends in practice, funding and technology and how they impact service design and delivery. We simply cannot do what we have always done. We talk a lot about looking forward in our agency.  What is next…and what comes after that?  These are questions that we explore in detail during our corporate weeks together.

Relevance means that the organization is positioned to thrive regardless of the inevitable twists and turns of the marketplace.

Impact: A commitment to measurable improvements.

Because we are committed to solving (not just serving) problems, we have set bold goals to improve the long-term outcomes for vulnerable populations.  We are doing this by changing our own practice and by working with government and private partners to change how systems design, fund and deliver services.  We measure our success by tracking the national outcomes of these groups, not just those who walk through our door.

We are embedding research into our program models to ensure the efficacy of our program design and then replicating and scaling our evidence-based interventions.

This very precise frame is one that we can apply throughout our companies, programs, and our services. It is simple, and it is direct, and it is the foundation for our structure and for our plans for growth.

What frame do you use for your planning and implementation?

As always, I welcome your thoughts.

The Emerging Role of Community-based Agencies in the Managed Care Environment

The term managed care or managed healthcare is used in the United States to describe a group of activities ostensibly intended to reduce the cost of providing for profit health care and providing health insurance while improving the quality of that care (“managed care techniques”).  It has become the essentially exclusive system of delivering and receiving American health care since its implementation in the early 1980s.  Over the past thirty years managed care has continued evolve.  According to the trade association America’s Health Insurance Plans, 90 percent of insured Americans are now enrolled in plans with some form of managed care.  While state government have mostly “carved out” vulnerable populations from managed care arrangements, 26 states have contracts with managed care organizations to manage long-term care services for the elderly and individuals with disabilities.

Today, as part of a national trend, this is changing.  States are slowly starting to move vulnerable populations such as children and adults with disabilities and individuals with mental health issues, into managed care systems. This far-reaching change has significant implications.  Managed Care companies are been reaching out to the traditional providers of care to these populations, creating partnerships that will, I believe change the provider landscape.

As the Fedcap Group is immersed in preparation for these changes, we are also advocating for the way that they unfold.   The populations that will be moved into managed care arrangement often face social barriers and have chronic, complex conditions. Effective care coordination is imperative to meet the needs of these individuals and requires strong relationships between medical providers, insurance companies, social service agencies, and individuals and families.

Further, we are interested in exploring the social determinants of health, which research suggests are the “secret sauce” of truly improving population health, patient experience, and the cost of care. These social determinants include such things as:

  • Availability of resources to meet daily needs (food, transportation, housing);
  • Access to affordable education;
  • Access to job training and employment opportunities;
  • Availability of community-based resources;
  • Social supports; and
  • Socioeconomic conditions (concentrated poverty and the stress that accompanies it).

Comprehensive solutions are needed as vulnerable populations shift  to managed care. With a person-centered focus, state-of-the-art technology, expertise in helping people access benefits, and data to quantify our intervention and prove our impact, we look forward to being part of that solution.

Organizational Risk Management

Last week, I examined essential inquiry around assessing Strategic Risk Management in a complex nonprofit. It’s equally important for senior leadership to assess and establish a protocol for managing day-to-day Organizational Risk Management. Successful organizational risk management requires its own set of analysis as described below.

1. Do we have an integrated, firm-wide, risk management process?

Effective risk management is achieved through comprehensive risk reporting, governance policies and limits, escalation procedures, action triggers, and dynamic and integrated firm-wide processes.  As a pre-requisite to all of these issues, nonprofits must possess an analytical system capable of properly identifying, measuring, and aggregating all risks across the enterprise.

Equally importantly, an appropriate, “risk mindset” must be adopted throughout the organization. The goal should be that every employee feels they are a risk manager and are responsible to manage the risks that occur on their jobs every day. Once this mindset is in place, risk exposures and the risk analysis of key business initiatives must be routinely and intentionally discussed. Senior Management must also ensure that relevant risk measures are among the key metrics monitored by program managers on a daily basis. Finally, senior management must ensure that risk issues are handled proactively, and communications across program units are open and effective. Red flags to be watched and immediately addressed include 1) excuses that specific risks do not lend themselves to quantitative measurement, 2) that certain risks are the “nature of the business” and therefore should not be monitored or managed, and 3) phrases like “don’t worry,” “this is a low probability event,” or “local managers have it all under control,” need to be stricken from the organization’s vocabulary.  Instituting a rigorous firm-wide risk process also ensures that directors do not start questioning senior managers about risks that the corporation has undertaken only after it is too late.

 

2. Are professionals at all levels empowered and expected to manage risk?

 For the risk management of a large, complex nonprofit to be effective, it must be built not only into every part of the decision-making process, but also every into control mechanism throughout the organization. Common risk management language must be established throughout the organization, along with clearly delegated responsibilities for managing risk at all levels. Finally, leadership and risk management structures must be correctly aligned with the not-for-profit’s business model, and the right balance established between competing priorities and constituencies.

 

3. Do we have an appropriate risk management culture?

There are specific signs that we are on the right track, and that risk management has become part and parcel of a nonprofit’s DNA.  First, leadership must assume the ultimate responsibility for risk oversight responsibility, clear measures of success, using well-understood metrics for risk appetite, and risk limits.

Risk training and awareness programs must also be in place throughout an organization, with senior line managers and risk professionals responsible for formal postmortems of major mistakes. Senior management ensure that management incentives encourage responsible and value-added risk taking, and emphasize the importance of embedded risk management processes in the organization’s decision-making and communications.

With such a risk culture in place, silos will be broken down, open communication will be encouraged, and risk successes will be publicized and imitated. And when this happens, employees will make better decisions, keep their not-for-profit out of harm’s way, and reduce potential legal liabilities and reputational risks.

What is your protocol for both strategic and organizational risk? As always, I welcome your comments.

Risk Management

In the past few decades, the business landscape for the larger, more complex, nonprofits that provide social services has changed dramatically.

In addition, the integration of social values within for-profit companies has further blurred the line between for-profit and nonprofit organizations, resulting in greater competition in the social services sector.

Equally as important, there has been a major philosophical shift away from contracts that pay for services rendered, and toward contracts that pay based on achieved goals, outcomes, or measurable impact. If, for example, your agency was once paid to provide job training skills, it is now more likely to be paid based on how many clients in your program actually secure employment. Thus, the need to achieve measurable objectives—whether those objectives are commercial or social—is now as much a requirement for nonprofit as it has long been for for-profit organizations. This, in turn, has exponentially increased not only the day-to-day risks of not-for-profits, but in some cases threatened their very survival.

As a result, senior management of nonprofits is faced with a somewhat new and daunting challenge—i.e., the need to create an infrastructure capable of synthesizing vast amounts of information, connecting the dots across myriad of programs, and simultaneously integrating business strategy, goals, and risk management. The failure to do so—at least historically—was usually due to a pervasive fear-based approach that was primarily backward-looking and focused on flat financial metrics and ratios. As a result, hidden risks were often left uncovered, problems that kept organizations from achieving their goals were not anticipated, and risk mitigation strategies, if any, were ineffective. Risk management, in fact, whether adapted to for-profit or not-for-profit enterprises, requires a forward-looking approach—one that is integrated with business strategies and goals to achieve measurable results in a continually changing environment.

Therefore, the new risk paradigm for nonprofits forces management to consider two separate aspects of risk management—the first strategic, and the second organizational. Succeeding in the former requires thinking about risks throughout the organization.  Succeeding in the latter entails the creation of a risk-centric culture, both empowering management and employees to effectively deal with risk and demanding that they execute enterprise-wide initiatives related to those risks.

Turning first to Strategic Risks, management must begin with a short inquiry:

 

1. Do we fully understand our risk exposures?

Senior managers need to ensure that all risks facing the enterprise have been properly identified and measured, beginning at the business unit level where program managers intimately familiar with their individual landscapes can adopt an appropriate risk management framework and establish an ongoing risk-based dialogue with the senior management. Together they can then discuss current and emerging risks in detail, establish risk limits, and put specific action triggers into place.

From there, it is critical to establish an enterprise-wide view of risk. Once defined, the strategic implications must be contrasted with resource adequacy and availability, leading to a clear understanding of how risk can and ought to be managed.

Given the complexity of the modern world, senior management must also regularly devote time to discussing the so-called unknown unknowns—events and risks beyond the scope of traditional discovery processes and systems. For example, an acknowledged but unknowable unknown in a not-for-profit might involve apolitical or philosophical change in the way state and local governments view their funding, emerging business models, or changes in the competitive environment (including for-profit service providers).

 

2. Are our risk exposures appropriate to our objectives, our appetite for risk, our resource levels, and our desire for long-term sustainability?

In addition to proper risk identification and measurement, senior management must establish an explicit link between risk, resources, and strategy. To avoid surprises and ensure that a not-for-profit does not respond to pressures through blind risk and leverage, the organization’s risk appetite must be fully aligned with funding and service targets. Senior management must fully understand and approve the amount of risk required to achieve the organization’s stated objectives and goals.

 

3. Is our organization adequately dynamic from the viewpoint of risk management?

The lack of organizational dynamism—a company’s ability to detect coming crises and environmental changes, understand their potential impact, and develop the agility to react in a timely fashion—was a common feature of for-profit companies that failed during the recent financial crisis, and not-for-profit companies whose traditional approach no longer worked in the post-crisis environment.

Senior management can and should play an important role in ensuring that a company is well-prepared to withstand volatility, crises, disruptive technologies, and the changes in the market, and in its competitors. An integrated risk management framework, early warning systems, and comprehensive contingency plans must be continually reviewed by senior management and the board of directors and included in all strategic discussions.

4. How do risk and uncertainty factor into our strategic decisions?

Strategic decisions—again, in the public as well as the private sectors—have often been focused on business and customer strategies, new product development, and pursuit of market share, with risk management remaining an afterthought—that is, a sort of police function used to check on safety and soundness only after strategic and investment decisions had already been made. To remedy this after-the-fact approach, the role of risk in a not-for-profit’s business model must be continually reevaluated by senior management, thus making risk management an input into strategic decisions and governance.

Continually asking fundamental questions in rigorous yet practical ways vastly improves the effectiveness of senior management, helping them steer their not-for-profits through the ever more difficult conditions of the modern global environment.

 

Next week we will explore Organizational Risk.

As always I look forward to your comments

Pathways Out of Poverty

The United States is considered one of the richest nations in the world, yet we rank below 16 developing countries in terms of poverty. Only four other countries rank below the U.S.

As of 2018, 42.6 million Americans were living in poverty. Of those, 13.4 million are children—nearly the total populations of New York City and Los Angeles combined.

The consequences for children born in and living in poverty do not disappear as they age. The impact of their poverty extends beyond their immediate family and seeps into every sector of the community, from education to service and product business to government and charitable entities.

Children who are poor are hungry. They have problems with memory and concentration. Their sleep patterns can be disrupted. Their brain development can be stalled or stagnated. They are more susceptible to illness. They are more prone to anxiety, depression, and withdrawal. They tend to behavioral issues, which may well have consequences in the classroom and in the community. As they grow up, these consequences take their toll on society as these children default to crime, substance use, or other mental illness based on inadequate means from birth.

At The Fedcap Group, we know that education and employment are the pathway out of poverty. Every one of the top-tier companies that are part of The Fedcap Group are building and delivering tactical, practical, and precise innovations to improve economic well-being.

  • We are creating aspirational environments within educational settings—encouraging children of all abilities to dream big dreams and then helping them succeed.
  • We are providing the tools, information and the supports so that youth transitioning from foster care can enter college and helping them graduate.
  • We are providing training and building networks of healthy support so that individuals in prison re-entering society have the skills and supports to succeed.
  • We are creating job opportunities in the community for those with intellectual and developmental disabilities.
  • We are assisting those with mental illness and substance use disorders in their recovery and participation in the workforce.
  • We are assisting individuals over age 55 to re-enter the workforce.

We are working hard to solve—not serve—the problem of poverty. 

Ultimately, the goal is to create a healthier society, where children and adults of all abilities thrive.  This is the work we do every day.

How might your business or social enterprise join our mission in creating a truly better world?

As always, I welcome your thoughts.

Creating a Sustainable Future: The Power of Impact Investing

Last Tuesday, The Fedcap Group convened our bi-annual Solution Series: Socially Responsible Investing: The Moral Case for Impact Investing.   Socially Responsible Investing (SRI), is an investment strategy which seeks to consider both financial return and social/environmental good to bring about a positive change. SRI has potential in mitigating the toughest issues challenging the world today, including climate change, access to health care, and poverty.

Today, more than one out of every four dollars under management in the United States is invested in socially responsible investments. The number in the U.S. alone amounts to $12 trillion dollars.

Our panelists last week included Christina L Alfandary, Managing Director of ESG (Environmental, Social, and Governance) and Sustainable Investments at GAMCO Investors, Inc.; Robert Brown, Senior Partner and Founder of Atlas Impact Partners; and Martin Whittaker, CEO of JUST Capital. While each of our guests had a different lens on the topic, they had in common the clear precept that socially responsible investing is good for business, must keep growing as a concept and as a reality, and must be a catalyzing mechanism for ensuring the future of our planet and our society.

As the Fedcap Group refines its work in the area of Economic Development, establishing Community Development Financial Institutions as vehicles for helping individuals with barriers establish their own small business and contribute to the economy of their community, the concept of SRI is of great interest.  There is tremendous potential for investors to partner with non profits like The Fedcap Group to impact the economic well-being of people in impoverished communities.

Our Solution Series is intended to tackle topics of importance to business in the 21st century, to generate discussions on issues that require thoughtful solutions.

If you would like to watch our Solution Series on Socially Responsible Investing, you can view it by clicking here.

 

Enjoy!

Why We Must Challenge Assumptions to Solve Tough Problems

At The Fedcap Group, we are in the business of solving tough problems—not just serving them.

As we work to solve problems, we spend a significant amount of time ensuring that we are clear about the actual problem we are trying to solve and we question our own assumptions about the problem, the people we are serving and the solution.

A critical component of these conversations is examining the service pathway, seeking to understand where along the pathway we might intervene to change the outcomes.  Where would a different and precise intervention make a measurable difference?  What about the current design of service systems is actually contributing to the problem?  For example, how might we change our service delivery for children with disabilities that would impact long term outcomes such as college attendance and graduation, employment, self-sufficiency?

Also incorporated into our culture, are deliberate conversations around our own assumptions, biases, and judgments that are informing our approach to problem solving. This transparency is imperative if we are to be successful.  For example, what assumptions about the capacity of people with intellectual or developmental disabilities led us to believe that sheltered workshops instead of competitive, community- based employ was the best solution?

Being transparent and inviting our biases to the table means we clear them out and we can work together to find not just an answer, but the right answer to solve, not just serve the problem.

What assumptions do you have the might get in the way of finding the best answer?

As always, I welcome your thoughts.