Nonprofits better learn it quick.
The November 13th, 1950 issue of Time magazine featured two brothers. John and George Hartford, the executives of the retail giant A&P, had provided strong leadership of that business for over seventy years. At the time of the article, A&P was the largest retail business in the world. It was ranked third in the Fortune 500, just behind the government sponsored AT&T and the motor giant GM - pretty impressive for a grocery store.
"I don't know any grocer who wants to stay small. I don't see how any businessman can limit his growth and stay healthy”. – John Hartford.
That year A&P had broken the $3 billion sale mark. That was $1 billion more than their closest competitor. It seemed like this company was “too big to fail.” On their 100 anniversary in 1958, A&P took advantage of its dominance and went public. However, the handwriting was already on the wall. If anyone would have had the courage to look they would have seen a company in trouble. In just two short decades the retail behemoth would be in a free fall toward extinction.
A top executive, who had started as a part-time store clerk in 1938 and work his way up into top leadership, wrote this scathing indictment of the once great company.
“After almost twenty years of steady decline and cutbacks, a debilitating paralysis had overtaken most stores in a growing number of divisions. The systems were visible and similar. These stores had few customers and did little business, but were open long hours. The stores were obviously short of help, shelves were poorly stocked. What carriages were on hand were usually out in the parking lot. Only one of six check stands was operating, with no bagger to help. Advertised sale features were often missing from the shelves. Most times, and particularly at night, no employees were available to assist customers seeking assistance. Cleanliness and courtesy standards, freshness and quality control standards, shelf stocking and checkout standards and store employee morale all deteriorated at the same grinding steady pace.”
We have all seen them; empty shells of large buildings that once held vibrant church congregations who were , at some point in time, making a difference in their communities. Now these buildings are vacant eye sores, crumbling monuments to better days, and the name on the church is just a distant memory even though they are etched in stone.
What always strikes me when I see these abandoned church buildings, or churches now converted to other uses, some of them not very glorifying to God, is the surrounding community. There are still people living there. There is still a need for a church, in fact there is usually a greater need there but it’s gone. It either died or moved away.
There is something profoundly sad about that.
What happened? Nothing that doesn’t happen to every other business, church, parachurch and non-profit. When the times required change they stopped innovating. They stopped changing and you know what they say about change; it is the only constant.
When A&P hit a plateau, as all organizations do, (and you are kidding yourself if you think your organization won’t) they stayed there too long. They did not adapt to new realities. But here is the fascinating part of this story.
A&P had plateaued several times over the years but they always moved on. The last time they hit a plateau was during the Great Depression. The greatest economic crisis in American history brought the death of many healthy enterprises. But rather than act defensively, A&P decided to innovate and adapt to new technology and changing realities. The invention of the automobile, the refrigerator, and interesting enough, the invention of the shopping cart were giving rise to a new retail model called the Super Market.
A&P was smart and they invested in this new concept even though there was a depression going on. That took great courage and strong leadership. Yet, that investment paid big dividends after World War II when prosperity returned. And we know that prosperity didn’t just returned it came back like a flood.
Unfortunately, A&P responded differently to new challenges in the 1950’s. It was their inability or maybe their unwillingness to respond to the new challenges and competition that caused their rapid downfall.
But here is the point. The challenges they faced are the common killers of every sized organizations. And the exterior forces doesn't really matter. It is how they respond to those forces that matters.
So, they should be a good case study for understanding how nonprofits can grow and what causes them to die.
The challenges faced by A&P are the same challenges faced by every sized organization, whether it be for-profit or non-profit, ministry related, or secularly oriented. There are at least three lessons we should glean from their experience. The three lessons are tied to the three challenge faced by A&P and every business and nonprofit at some time or other.
1. Change of Leadership and Change of Goals. After the Hartford brothers died, the new leadership changed the goals. Instead of playing to win they played not to loose. They got cautious and played a defensive game in order not to lose their first place position. The goal changed from winning to not losing. But I believe offense is the best defense and is the only way to win games.
Lesson: Grow or die. Every ministry must prepare and plan to grow or it might as well prepare and plan to die because if you’re not growing you’re dying.
2. New Technology and Changing Culture. The car and refrigerator built A&P but the the invention of the television killed it. Actually the TV isn’t to blame. A&P simply refused to take advantage of this new technology. Their competition did however. Customer demand began changing as a result of television marketing but A&P did not respond. They had built a winning strategy without it and refused to change. They became blinded by their own success.
Lesson: Change or die. Every nonprofit must prepare and plan to change or it might as well prepare and plan to die because if you’re not changing you’re dying.
3. Previous Success and Denial of reality. A&P stubbornly refused to sell the name brand items customers were seeing advertised on their new television sets. They proudly held onto the products and the strategy that had built the company even though the evidence was clear that they were rapidly losing market share. They just tried harder to make their strategy work.
Lesson: Adapt or Die. Every organization must prepare and plan to change or it might as well prepare and plan to die because if you’re not changing you’re dying.
Simple right? Yes, but very hard to do. I know that sounds like an oxymoron but that really is what causes most business, nonprofits and even churches to die. It sounds simple to change but try doing that at a church. Growing sounds simple but trying doing that at a nonprofit. It is much easy to do in a business but considering our example, it can also be hard to do there as well.
It was an odd twist of fate that plagued A&P. They survived the challenges of poverty in the 1930’s but succumbed to the challenges of prosperity in the 1950’s. These lessons should not be overlooked by nonprofits and churches.
Just because an organization doesn’t make a profit on the services it provides doesn’t mean it is immune to the same realities faced by businesses. Nonprofits, and a church is a type of nonprofit, have a life-cycle just like any commercial enterprise. It is also rare for a non-profit to live past 100 years, in fact, most do not live past fifty years. They similarly plateau, decline, and die at rates as fast as or even faster than business.
An organization like A&P is motivated by profit. The bottom line usually forces a business to adapt rapidly to new realities. The non-profit does not have that same incentive. It is easier for the leadership of a nonprofit to deny that the ground is moving out from under them. And, without the external forces of competition, nonprofits can become much too comfortable. But their mission should be what always drives them forward.
Nonprofits easily become fascinated by their own history and enamoured by their own success. They become committed to the model that brought them success, and resist any attempt to change. They can easily fall into a pattern of “stability” rather than take risks. Nonprofits are often overcome by the temptation to serve their own self-interest rather that the mission they were sacrificially founded to accomplish. When they do, they start down the slipping slope to insignificance. And that is followed eventually by death.
They must grow or die. They must change or die. They must adapt or die.
Here is the rub. This is why organizations have a difficult time doing those three things - people. Businesses, nonprofits, civic groups, churches are all made of of people and people typically do not like to change. I believe there are three primary reasons why they don’t.
First, change is a matter of confronting reality. People don’t live in reality. Not really. They live in an illusion. They live in the story they tell themselves about reality. That story is usually motivated by pride, blinded by history, and filled with anxiety about the future. The thing about illusions though, they can exist for only a period of time for reality will always win.
Second, changes is a matter for confronting one of people's deepest fears - change.
Creatures of habit avoid it. Lovers of routine hate it. Protectors of tradition fear it. Second only to the fear of failure is the fear of change. If you listen very carefully, however, to the concerns of those who fear change you will understand that there is a deeper issue. Go past the complaints, the rationalizations, and the irrational conclusions they make about some pending change and you will discover their real fear is the fear of loss.
The fear of change is really the fear of loss. People might intellectually accept the need for change but emotionally they fight it. People usually get stuck in their hearts not their heads and that is where the change must take place.
Those of us calling and working for change must be patient and try to understand those who fight our efforts. We must remember it is a heart issue. Arguments appealing to logic can only go so far. We must find ways to connect to their hearts and we must find ways to address the loss they fear.
And that brings us to the third reason people and organizations don’t change - lack of leadership. As we have already demonstrated. The fear of change can paralyze, even kill, a business or organization. Effective leadership therefore, requires anticipating change, adapting to the rhythm and flow of the particular change, and structuring the organization in ways that allow the inevitable change to be a benefit rather than harm to it.
True leadership is about getting out in front of change, to lead it rather than being led by it. This means, of course, that mistakes are going to happen because the leader is always in unknown and risky territory. But it is there, in the precarious terrain of change, that fortunes are made and futures are secured.
Leadership naturally requires some risk-taking. Nonprofits max out their mission, not by taking a defensive posture - by cowering down and stubbornly gripping on to tradition - but rather by embracing an open and offensive attitude. Businesses gain more market share, grow, and expand their territory by taking risk. Caution is good. Timing is valuable. But taking a risk can pay rich dividends. It can, however, also take huge tolls.
A good leader understands this, accepts this, and plans for this. A strong leader anticipates change and plans for the inherent risks that comes with change. But a visionary leader creates the change every other leader must respond to. The visionary leader takes the ultimate risk. History has shown that there are as many, if not more, leadership failures as there are leadership successes.
If it were easy, if success was guaranteed, then there would be no need for leaders. Anyone could do it. And in truth, anyone can. But they don’t. Only leaders lead. Only leaders are willing to take the chance, embrace the risk, and accept the outcome.
The renowned patriot and revolutionary thinker Patrick Henry captures the requirement for all leaders when it comes to pending change. In his famous “give me liberty or give me death” speech he said, “…the battle sir is not to the wise alone but to the vigilant, the active, the brave.”