Editor's letter

Citation

Randall, R.M. (2005), "Editor's letter", Strategy & Leadership, Vol. 33 No. 2. https://doi.org/10.1108/sl.2005.26133baa.001

Editor's letter

The subject of this special issue – how corporate executives can make a contribution to the leadership and strategic management of nonprofits – may raise a few eyebrows. To some readers it may seem a sideshow to the central mission of this journal – to guide managers who seek the latest and best information on the practice of strategic management. But this special issue grew from my realization that many of the best strategic managers and business school professors spend a lot of their time advising nonprofits.

And with good reason, because one of the smartest perspectives on strategic management posits that the true purpose of a business is to increase stakeholder value, not merely shareholder value. And one of the keys to increasing stakeholder value is having a mission with a commitment to community. As Bill George, the former CEO of Medtronic, Inc. explains, “Contrary to what the advocates of maximizing short-term shareholder value would have us believe, the best-kept secret in business is that mission-driven companies create far more shareholder value than do financially driven firms.” So companies that purposefully invest in their local, national, and world communities (and their customers and employees) are more likely to prosper.

Because making such a commitment is increasingly seen as a “best practice,” effectively supporting nonprofits is becoming part of the job description for leading CEOs and strategic managers. However, it can be a challenge. As the two sectors try to do business with each other, culture clash is almost inevitable. The good news is that the process of cross-fertilization between the two sectors makes them both a lot richer. The business sector can teach what it has learned about being lean, responsive, competitive, and forward thinking. For its turn at show and tell, the nonprofit sector can demonstrate what a commitment to mission means, both personally and professionally.

There’s some not so good news too. After advising hundreds of diverse nonprofits in recent years, McKinsey & Company consultants conclude that business executives’ lack of real understanding of what it takes to guide a nonprofit often undermines the effectiveness of the contribution they are attempting to make and hurts the nonprofit sector’s performance.

To address this problem, this issue offers a special six-article report –“A corporate manager’s guide to taking a leadership role in nonprofits and applying strategic management tools and techniques.” It contains:

1. 1.

   McKinsey’s short guide for corporate executives leading nonprofits;

2. 2.

   M&A in the nonprofit sector: managing merger negotiations and integration;

3. 3.

   the power of visions for nonprofits;

4. 4.

   the strategic value of a shared understanding of costs in nonprofits;

5. 5.

   how nonprofits can develop their earned-revenue potential; and

6. 6.

   how a nonprofit’s scenario planning exercise produced new strategies.

From a strategic manager’s perspective, the nonprofit sector can be an alternate universe – normal accounting systems may not exist, leadership behavior norms are different, and access to financial and talent resources are severely limited. But in the past few years the nonprofit sector has undergone a sea change. To the great surprise of corporate executives who are familiar only with nonprofits that rely on philanthropy, many nonprofits have begun operating earned-income business units or are planning to start them. Nonprofits experimenting with this new challenge now seek sophisticated coaching in strategic management practices such as innovating, developing, and marketing new products and services. And that’s where we, the strategic management community, have something unique to contribute. Happy volunteering.

I urge you to share this issue with nonprofit leaders in your community. Simply e-mail the name and address of your nominated nonprofit leader to Strategy & Leadership’s Managing Editor, Anna Torrance (atorrance@emeraldinsight.com), and she will send them a copy of the journal. Please note that supplies are limited.

Robert M. RandallEditor