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the talk: A founder discusses sustainability and permanence
March 21, 2007
One of the most
difficult challenges facing entrepreneurial, innovative leaders
who found organizations—whether business or nonprofit—is knowing
when it’s time to move to broader-based ownership so the organization
becomes independent and capable of sustaining its long-term impact.
Sooner or later these founders face a day when the organization
they helped birth is no longer theirs alone.
To be sure, founders
can be successful in the business world by remaining small, family-run
operations and/or continuing as a privately held company. But for
those who seek to grow their impact and need outside capital (hence
investors) to do so, the chance for the founder to continue long
term is relatively low. In many cases, when a venture capital or
private equity firm makes the first investment in an established,
founder-led organization, it is not unusual to set the expectation
that the founder will likely yield to new leadership within 18 to
24 months! And then, they watch their organization reinvented about
every two years thereafter to respond to changing times, needs,
and opportunities. The successes of Bill Gates, Steve Jobs, and
Jim Goodnight are more the exception than the rule.
The hard truth
is that many organizations grow beyond the capabilities of their
founders and need more and different types of leadership, skills,
and broader mission ownership to succeed. This realization—that
this time, the needed change falls on your doorstep—is a tough punch
to the gut for a founder. I lived it during my commercial career.
And I happily embrace it (again) in my nonprofit career.
Partners is now at this stage. It must move beyond a founder-based
organization and institutionalize itself and its work to multiply
its impact on and value to the nonprofits in which it invests, the
children they serve, and the region and field overall. We were honest
about this change. We planned for it. We’ve struggled with it and
made some missteps along the way. And now, we’re acting on it. Working
hand-in-hand with the Board and management, I am enthusiastic and
supportive of the changes we are taking to move VPP toward being
an institutionalized resource and asset for our region and the field.
Last month, we
took major steps in this direction, when the Board established the
new role of President and Chief Executive Officer and then elected
Carol Thompson Cole as VPP’s first President and CEO. I will remain
as Chairman, continuing to be active but in a non-executive role.
These are just several of a series of actions underway to help navigate
my fellow co-founders, Governor Mark Warner and business and civic
leader Raul Fernandez, have played important roles, I have been
the most intimately involved in characterizing and defining VPP’s
work and approach. As far back as 2002, we began discussing how
to move beyond the founder-centric organization to broader-based
leadership and mission ownership. But change proved too difficult
that early. Instead, we found ourselves continuously "retooling"
our organization. As new team members came onboard, their various
experiences caused us to change even more.
We correctly focused
on building our organization, learning how to implement our investment
approach better, and, most important, making investments and working
with our nonprofit partners. But there was a cost as I did not give
the attention needed to developing and engaging the Board. Fortunately,
Carol, as Managing Partner, and others were assuming larger roles,
learning what it really took to deliver our investment approach,
and gaining the critical experience essential for the moves we are
making now. Despite this less-than-systematic evolution, we stayed
focused on our mission and continued to make progress because of
the talent in the organization and the quality and talent within
the nonprofit partners in which we invested.
Late in 2005,
we held our first facilitated session of the Board to restart the
discussion of leadership transition, strengthening our organization,
and understanding how and when we could move to true Board governance.
The session demonstrated we were still very much founder-centric
and that we needed to move beyond that if VPP were to have the long-term
impact we desired. Yet even pondering these new possibilities created
uneasiness. Could Carol and I navigate this change? Would people
incorrectly assume I was stepping back or leaving? Was the team
ready for this change?
Triggers of transition
changes, however, took on a seriousness in the fall of 2006, when
it was clear (initially to me and later to other key stakeholders)
that we weren’t getting where we needed to be for the next stage
fast enough and I risked being the impediment to VPP’s long-term
progress. Part of this realization was grounded in the simple fact
that I live in a different city and was constrained by the number
of days I could be present physically in the National Capital Region.
As much as I work remotely over the Net, management and capital
raising require proximity. And, part of it was a function of living
up to our side of serving our investment partnerships. Although
it was what we needed to do, it also kept us from thinking about
and planning for our own future. But, other factors also indicated
the time was right for change, including:
- A leader of
Carol’s competence and potential must be given the opportunity
to fully realize her potential—for herself, for VPP, and for all
those the organization serves.
- As much as
I valued and benefited from our Board, I did not set up the opportunities
to effectively engage them. Through no fault of its own, by the
start of 2006, the Board—an excellent group of leaders—had been
quietly anesthetized by my methodical nature. As one astute member
of the Board recalled, "I would get this Board book that
was as buttoned down as much as anyone could imagine, the issues
were stated, the answers proposed, and the plans to get there
meticulously laid out. It was thorough and the track record of
the team good. So I would come to the Board meeting to listen—and
- Although less
involved in VPP’s day-to-day operations ,I remained the driving
force behind the overall near-term strategy and most of our communications,
research, and capital raising efforts, leaving little time or
perspective for "big picture" thinking or promoting
our mission and approach. And, worse yet, too often Carol had
to counter members of the team basing their actions more on "what
would Mario want?" than on what was needed and necessary.
- In capital
raising, it became eminently clear that we needed additional individuals
engaging prospective donors about our work. For the initial VPP
fund, dollars came in relatively easily, thanks to friends in
the region and a different economic climate. For our second stage—though
I have played a lead role in helping raise the commitments—it
soon became obvious that more people had to build relationships
and engage both present and future investors.
- And, finally,
VPP is going through its next generation of growth, and these
were important steps to prepare us for what lies ahead.
Time to walk
we were, facing the same kind of issues that we discuss with our
nonprofit investment partners about making bold organizational and
management actions—get the right people "on the bus,"
strengthen leadership and management, ensure an informed and engaged
Board—all aimed at making their organizations highly effective in
what they do to improve the lives of children and youth. I was espousing
these changes in columns and other writings, but, ironically, we
weren’t practicing what we were preaching. The time had come to
walk the talk ourselves.
So how are we
"walking our talk?" What specific things is VPP doing?
Far and away,
the most important action we have taken was to establish the office
of President and Chief Executive Officer and elect Carol to this
role. I will continue to be an active Chairman, serving as an advisor
and sounding board to Carol, helping shape long-term strategic direction,
providing Board stewardship and leadership, and being a key resource
to raise capital and support our general communications. I look
forward to this leadership role with the Board, with more and more
of my time going to advancing the use of our investment approach
more broadly and sharing what VPP is learning and doing through
writing, speaking engagements, and media activities. If my past
experience holds true, the unpredictable will happen to trigger
Members of our
Board have stepped forward in a number of ways and are empowered,
engaged and energized. Over the last six months VPP’s Executive
Committee we have worked to map out a leadership and organization
The Board itself
is moving from a Chair-driven Board to a Committee-based leadership
Board. A formal committee structure was approved in February. And,
we will activate an Audit Committee this fall and add several new
Board members in the next few months.
We believe we
had built one of the most experienced teams of its type in the country,
but we also knew VPP had to become even better. And, to build on
what has already been done, plans are underway to add to and strengthen
VPP’s team of investment professionals.
The sum of these
changes will help institutionalize VPP, making it a stronger organization.
And as we fully implement and assimilate these changes, VPP will
be "walking the talk" in terms of its own organizational
growth, development, and institutionalization, which will be critical
to its long-term impact and application to other regions. Last,
but certainly not least, we will increase our capital raising efforts
for VPP’s next stage and already have an exciting campaign mapped
out for the next 12 to 18 months.
A template for others
may be other organizations considering this same type of transition.
While there is no pro forma template and our journey was marked
by its own share of missteps, some of our lessons include:
that emotion and logic may battle. Understand that change is tough,
disruptive, and uncomfortable, but then remember why you’re in
this field in the first place. Just as I’ve implored others, actions
should be based on how well they will help an organization achieve
its mission. And, this applies especially to the role of founder.
Put aside egos. The founder and Board need to find the way in
which the founder will best benefit the organization’s mission—that
may mean no longer running the day-to-day operations, or, in some
cases, even separating somewhat to give others the room to step
up to their new roles.
- Respect and
use the Board’s expertise. Even with my less than perfect level
of Board engagement (and thanks to their patience with me), I
have always seen the VPP Board as a rich resource that aligns
and supports VPP and its leadership. They worked with us closely
on multiple iterations of this process. Make sure the Board or,
at least, your Executive Committee is engaged and working with
you to navigate your changes.
- Seek input
and counsel from key stakeholders. Our transition was an orchestrated
process that benefited greatly from trusted advisors in addition
to the Executive Committee. Be ready to hear feedback that will
be uncomfortable and push you out of your comfort zone—if you’re
not getting this kind of hard push-back, then you’re either asking
the wrong people, the wrong questions, or not hearing what they’re
trying to tell you.
- Talk with
others who made similar changes and gain the benefit of what they
learned and experienced—especially what they would have done differently.
- Get "the
right people on the bus" and allow time for them to learn
about the organization, the model, etc., before "knighting"
them into executive roles. Finding the right combination of skills
and experience took us a long time, yet doing so greatly increases
the likelihood of success and may well be the most important legacy
a founder can establish. And, just when you think everything is
in place, you’ll realize one more way to get better. Recognize
that this is a never-ending quest, and that’s the way it should
- Execute effectively
what is announced. Plans and well-drawn org charts are just that—nothing
more than scribbling on paper. The proof is always in the implementation
and follow-up, not the press release and talking points. It’s
tempting to get caught up in the planning of transitions and let
the "real" work be taken off course. In the end, it’s
all about execution.
taking these steps proactively; this transition to institutionalization
was not forced or the result of catastrophe. It was simply a matter
of timing with the requisite pieces in place to allow VPP to prepare
for its next stage of growth, development, and impact, never forgetting
that children and youth are the primary reason for our work. We
are blessed with a talented and engaged team, Board, advisors, and
the remarkable leaders of our nonprofit investment partners and
the time is now.
transition from founder-centric to institutional is hard work, a
long process, and a formidable task for founders and their Boards
and staff. Yet, it is a challenge founders and Boards must at some
point confront and, hopefully, embrace. Thought through and executed
well, this change can benefit founders, make their organizations
better, and have greater impact for those they serve. I look forward
to the continued journey with VPP and wish you the best in yours.
About the Author
Morino is the founder and chairman of Venture Philanthropy Partners,
whose mission is to concentrate investments of money, expertise,
and personal contacts to improve the lives of children and youth
of low-income families in the National Capital Region. They do so
by helping effective community leaders build strong nonprofit institutions
and by cultivating an engaged donor community to generate funding
and influence in support of these institutions and of social change.
He can be reached at firstname.lastname@example.org
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