A review of ‘Effective Capacity Building in Non-Profit Organizations’

 

In this post I would summarize the main points of this week’s assigned readings and apply it to my venture.

The reading, ‘Effective Capacity Building in Non-Profit Organizations’ talks about building capacity and its importance in any venture and especially non-profit ventures. Since my venture is a social venture, there are many pointers one I could incorporate into my organization, especially at a stage where I am setting down processes and administrative structures.

The authors argue that most non-profits tend to focus on the goal and the means to achieve it rather than building up an effective capacity. This could be due to the fact that most donors want to see tangible results – the so called “brick and mortar” effect. This is also helped because the link between building capacity and increased social impact is not seen very clearly. However the authors quote many examples to back their claim that building capacity is essential for a successful non-profit. The authors propose a capacity framework

• Aspirations: Purpose and Objectives
• Strategy: Means to achieve the aspirations
• Organizational Skills: Planning, Resource Management, Performance measurement and networking capabilities.
• Human Resources: Staff and volunteers.
• Systems and Infrastructure: Physical infrastructure, processes and technological assets.
• Organizational Structure: How the company is organized.
• Culture: The thread that binds the company together. Behavior, Norms and Practices.

So how would I adopt these 7 principles into my firm?

Aspirations: We addressed aspirations last week, where we had a detailed look at mission, vision and goals.

Strategy: Having defined the mission, vision and goal very clearly, I how have to decide how does my venture go about achieving them. Keeping in mind that I want to maximize social impact (of lighting people’s life), the main strategy of the venture must revolve around networking with villagers and setting up distribution channels. To do this I propose to divide my venture into business segments by geographical regions within the state of Karnataka. I would propose an initial division by the number of districts in the state and assign one team per district. This gives a total of 30 working teams. Each of this team is assigned the specific goal of maximizing the sale of Solar Lamps. A half-yearly performance review is done to evaluate the progress of each of these teams. Monthly team meetings are held to motivate, correct and discuss strategies/ share learning’s. It is important in this exercise to underline the fact that performance is NOT evaluated based just on the number of lamp sales (because the teams might find a way to sell it to a wholesale market which would defeat the purpose of the organization). Performance would be measured based on the number of households who have been provided light and the reach of the team into previously un-explored areas.

Organizational skills: This point overlaps with the previous point to some extent. But one fact that must be underlined is that the importance of creating local networks. This is the key to my ventures survival. And this cannot happen without every member sharing the vision of my company. The real question is how does one ensure that this happens? This is where, linking the performance of each team to the ability to establish sales in previously unexplored areas becomes even more important. However I am yet to develop a quantifiable, measurable indicator to do this.

Human Resource: The key to my business. Human resource must be local to the districts they are from. There is no way a person from the urban background can relate to rural problems (and vice-versa). This makes it very important to assign the right people to the right locations. Secondly, motivation is something that must be kept high. A news letter can publish comments/feedback from satisfied customers and this can be directly attributed to the teams. There must be a general “feeling” in the organization that the organization is run by the teams and not by the CEO. A flat working structure must be maintained. Another possibility is the fact that I (the CEO) spends 2 days each month with one team, doing what they do, to motivate the staff and better understand the problems they face. I have found, in my previous large organization, that there is a clear disconnect between the policies of the higher management and the actual ground realities. This causes a HUGE loss in motivation among colleagues. The common complaint is, “What do those guys, sitting in the boardroom know about what’s out there”? This attitude must be avoided at all costs.

Success must be celebrated together and so must failures. Responsibility must be shared for both among every single individual.

Systems and Infrastructure: Being a social venture with a small capital, this is the point where we could go wrong. In order to minimize costs, it can so happen that we do not pay the infrastructure as much importance as the other fields. But this is the ground reality and this is a constraint.. Having said that, any infrastructure that is seen to contribute to the social impact cannot be denied. Transportation to each of the teams, good housing in the rural areas, need to be set up. This also means setting up branches in each of the districts, which I had not previously factored into my economic calculations. This now means that there is a correction in my estimates. With regards to systems, I believe I have addressed the processes involved in timely reporting and the general method of flow of information between the teams and the management (I dislike this word, but use it more in the context of “Central Node”).

Organizational Structure: I have addressed this in each of the above points.

Culture:  The crucial aspect of my organization. I have addressed this before, but I reiterate that it is imperative that my organization tries to give a feeling of a flat structure. This is a good way to keep motivation high. At no point must any of the colleagues feel that they are being coerced to do things. Work must be out of mutual respect to each other.

Having addressed each of the above 7 points, I notice that there is a lot of flux between each of the above areas. Is this okay? Or is it important to maintain the clear distinction between each of the 7 areas. What do you think?

I tried to also adopt the ‘McKinsey Capacity Assessment Grid’ to my firm. I would refrain from posting the results here, as the post would run into pages. However the general observation is that the venture ranks between 1 and 2 for most of the categories.

As the venture development stage progresses, I cannot but think of the complexities involved in setting up a venture. I had always thought it to be easy, requiring only motivation. But now, the readings, the classes and the exercises have given me a good foundation to incorporate strategies that I need for my venture. That is, after all, the value of education.