How Revenue Sources Shape the Cultures of For-Profit, Non-Profit, and Government Organizations

Perhaps the single most important part of evaluating an organization’s culture is gaining a clear understanding of the nature, viability, and sustainability of its revenue and funding streams, and the expectations and pressures that are exerted on the organization by customers, competitors, suppliers, regulators, taxpayers, and other forces in the external environment. This article discusses some important ways in which the revenue streams and differing governance structures of for-profit, non-profit, and government organizations powerfully shape and define organizational culture.

When we look beyond an organization’s Internal Revenue Service (IRS) non-profit status as reported on their IRS 990 Form, many of the distinctions between For-Profit and Non-Profit corporations become operationally meaningless. As Peter Drucker states, “The differences between managing a chain of retail stores and managing a Roman Catholic Diocese are amazingly fewer than retail executives or bishops realize. The differences are mainly in the application rather than the principles.” Many of the timeless principles that produce sustained financial and non-financial performance in high-performing For-Profit companies can also be applied to Non-Profit corporations, as described by Collins in his monograph, Good to Great and the Social Sectors. In fact, contrary to the view taught in many business schools, recent studies such as Collins and Porras’ Good to Great have shown that profit and wealth are not the driving force or primary objective of truly visionary For-Profit companies. Rather, For-Profit companies have a larger purpose in life, and this purpose becomes the focal point on the business horizon, guiding every decision they make. Generating revenue becomes a means to an end for truly visionary For-Profit companies, not an end in itself.

The Breckenridge Institute® has identified two kinds of Non-Profit organizations that powerfully shape and define an organization’s culture based on how they generate the majority of their revenue:

  • Type 1 Non-Profits

  • Type 2 Non-Profits

While Type 1 Non-Profits may generate some of their financial resources through endowments, fund-raising, membership dues, and gifts from donors, most of their revenue comes from providing products and services to customers and work performed for funding agencies and grantee organizations; e.g., the results of clinical trials, applied R&D, basic research, or the development of new technologies. Operationally, they function much like their For-Profit counterparts – they have standard business and work processes, proposal writing functions, marketing and sales goals, suppliers, inventory, customers or clients to satisfy, and competitors in both the Non-Profit and For-Profit arenas. Examples of Type 1 Non-Profit organizations include: hospitals, medical clinics, convalescent care facilities, agricultural organizations, retail operations (Goodwill has over 1,900 stores), some contract research organizations, research institutes that do applied R&D, and educational organizations.

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Culture Talk™

Learn what organizational culture is and why it matters by watching Culture Talk™ – an on-line video series that explores key questions about organizational culture and how it powerfully affects day-to-day operations and the bottom-line in your organization.

Culture Talk™ Video Series

For more information on the Breckenridge Institute’s unique approach to improving your organization’s performance and sustainability go to breckenridgeinstitute.com or contact us at info@breckenridgeinstitute.com.

Organizational Impasse Indicator™

Does your organization find it difficult to make key decisions, and once made do they go unimplemented or get reversed? Do projects that seem to have the full support of top managers and key personnel die a slow death and no one knows what happened to them? Does your organization’s culture act like an Invisible Bureaucracy™ that prevents you from getting the results you want? These are some of the signs that your organization has reached an impasse. The Breckenridge Institute’s free Organizational Impasse Indicator™ will show you what this may be costing you in squandered time and energy – hidden costs that don’t appear on Balance Sheets or Budget Statements.

Free Organizational Impasse Indicator™

Just click on the link above, complete the questions in 2-3 minutes, and your free Organizational Impasse Indicator™ report will be sent directly to you. This is the first step to making invisible bureaucracy visible and to moving beyond the organizational impasses that prevent your organization from getting the results it wants.

HBR Editor’s Blog

Every month, the senior editors of the Harvard Business Review (HBR) invite internationally recognized organizational theorists and practitioners to raise issues and answer questions about leadership and management issues on the HBR Editor’s Blog. This month, we provide Pinnacle readers with links to two important and interesting discussions (see below).

Umair Haque, From Social Media to Social Strategy

Rasika Welankiwar, Managing Myself: An Unexpected Culprit

We encourage you to join the conversation on the HBR Editor’s Blog and voice your opinions, commentary, and insights on these and other important topics.

Update

• Mark Bodnarczuk’s book, Making Invisible Bureaucracy Visible: A Guide to Assessing and Changing Organizational Culture is available at on-line world-wide at locations like Amazon.com.
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Mark Bodnarczuk has been invited to speak at the Flintco Zero by Design seminar in Albuquerque in April 2010 (see www.flintco.com).

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Mark Bodnarczuk has been invited to speak about his book, The Breckenridge Enneagram at the upcoming European Type Conference in Berlin in May 2010. For details on attending this exciting international conference go to www.typeconference.eu.

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Mark Bodnarczuk has been invited to speak about his book, Making Invisible Bureaucracy Visible at the International Atomic Energy Agency in Vienna in June 2010 (see www.iaea.org).

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For a more complete listing of on-line videos, books, articles, and white papers from the Breckenridge Institute® go to http://www.breckenridgeinstitute.com/our-publications.htm.


Breckenridge Institute®

If you would like information about the Breckenridge Institute’s research activities, portfolio of assessment tools, or consulting services, visit our website at www.breckenridgeinstitute.com. Also visit http://www.linkedin.com/in/markbodnarczuk.

Copyright © Breckenridge Institute® 2010. All Rights Reserved
Underwater Photo: © Annie Crawley, 2010, www.anniecrawley.com

 

Culture Corner

“The ‘climate’ of the group is an artifact of the deep cultural levels, as is the visible behavior of its members.”

Edgar Schein, Organizational Culture and Leadership
Toolbox

The Breckenridge Culture Indicator™ (BCI™)

The new Breckenridge Culture Indicator™ (BCI™) is used to baseline organizational performance and culture and to help define a performance improvement strategy that includes both the “hard” technical side of integrating business systems with the “soft” human side of an organization. Because it can be used to baseline the performance and culture of an entire organization or a work-group, the BCI™ is typically used by top managers, business owners, and middle-managers when they are anticipating or experiencing significant change due to, substantial growth; reorganizations; changes in leadership; change in strategic direction; decline in business performance; mergers and acquisitions; sale or spin-off of business units; or major IT implementations. It can also be used as an effective alternative to 360-degree reviews because it allows you to evaluate a manager’s leadership and management skills, within the context of an organization’s structures, systems, and culture. The BCI™ is now available to qualified users 24X7 anywhere in the world with an Internet connection.

Contact Elin Larson for details on how you can begin using this exciting new tool in your organization or with your clients (970-389-4666 or elin@breckenridgeinstitute.com).
Books and Articles

Roger Martin, The Design of Business

“Innovation is about seeing the world not as it is, but as it could be. It’s about exploring really ‘wicked problems’ whose solutions can’t be found in past experiences or proven data. Contrast this with most companies’ obsessive reliance on efficiency and predictability – and it’s no wonder breakthrough innovations are so rare. But innovation and efficiency don’t have to be at odds. In The Design of Business: Why Design Thinking Is the Next Competitive Advanatge, Roger Martin unveils a new way of thinking that balances the exploration of new knowledge (innovation) with the exploitation of current knowledge (efficiency) to regularly generate breakthroughs and create value for companies. ‘Design thinking’ focuses on accelerating the pace at which knowledge advances from mystery (an unexplained problem), to heuristic (a rule of thumb that guides us toward a solution) to algorithm (a replicable success formula). As knowledge moves through this ‘knowledge funnel,’ productivity grows and costs drop. But design-thinking organizations don’t stop there. They use the efficiencies they generate to constantly tackle new mysteries and explore potential breakthroughs. Based on hands-on consulting work and case studies of companies including Procter & Gamble, Steelcase, Research in Motion, Cirque du Soleil, and others, The Design of Business maps the route followed by successful design thinkers in business, science, and the arts. Colorful stories and practical guidelines illustrate how to:

  • Combine proof-based analytical thinking with possibility-based ‘abductive thinking’
  • Revamp financial planning and reward systems to encourage bold ideas
  • Change structures and processes to move knowledge from one stage to the next
  • Defend design thinking to employees, boards, and investors
  • Develop the key tools of design thinkers: observation, imagination, and configuration
Provocative and convincing, The Design of Business shows how your organization can gain an unbeatable competitive advantage by wondering ‘what could be’ – and making it happen.” The Design of Business is published by Harvard Business Press and is available on Amazon.com.