Leading from Zero for Nonprofit Organizations

David Coffaro

These early days of the new decade are the perfect point to consider practicing the concept of Leading from Zero.  Perhaps a more familiar strategy is Zero Based Budgeting – the approach where each new budget cycle starts from a baseline of zero assumed recurring expenses.

No incremental expense increase over the prior period. Every dollar invested for existing or new activities stands on its own, justified in the current time period, not the past. The objective of Zero Based Budgeting is to assure manager accountability for expenses and the activities they fund to create value for the organization.

Leading from Zero is grounded in a similar principle. Every organization – nonprofit or for profit – starts its day from a base of zero. Zero customers. Zero donors. Zero employees. Zero volunteers. Zero revenue. Leaders must influence their organizations and earn relevance with customers, employees, volunteers, donors and other stakeholders daily. Organizations have no entitlement to customers, employees, volunteers, donors or revenue. They recognize that these stakeholders have free will and will only engage with an organization if its mission is relevant, its value proposition is clear and it continually delivers on both the mission and value proposition. Contracts exist, but in the long run, all agents (vendors, contractors, suppliers) are free agents.

Leading from Zero assumes:

  • Competition for the most valuable resources – human, intellectual, physical, economic, non-economic – is strong and will remain so into the foreseeable future
  • Barriers to entry in most sectors are malleable or nonexistent, therefore the potential for new competitors is high
  • Competitive advantages are temporary at best
  • Pricing and cost pressure are constant, coupled with an expectation of continually providing more to stakeholders

These assumptions place leaders in a position that requires a new paradigm for how they view their roles and further their organizations. This paradigm says that an organization must:

  • Differentiate itself as a resource development exemplar
  • Practice self-initiated disruption
  • Exhibit an obsession for continually adding greater value
  • Consistently demonstrate efficiency gains in operations

Each of these pillars represent ongoing processes, not one-time events or special projects. A Leading from Zero mindset informs the organization that effective execution of these processes earns relevance with all stakeholders daily. Failure to re-earn relevance over time opens an organization to suboptimal access to the best resources, weakness relative to competition, and poor economic performance. 

Leading from Zero actions you can take now:

2. Define Cultural Values in Advance of Partnership – In the movie, Ford stressed the importance of a team victory while Shelby was portrayed valuing rugged individualism. These two approaches represent different cultural values.

  1. Identify one resource area to focus upon for developing a differentiation strategy. If you chose the human resource arena, you might begin with developing an employee value proposition which authentically answers the question “why work at this organization”. This is particularly important in the nonprofit and social sectors, where alignment with the mission attracts talent to an organization. With the statement drafted, strategy work may include review of employee development resources, career pathing tools, position descriptions and recruiting practices to assure alignment with the spirit of the value proposition. The goal – Take a first step in the process of differentiating your organization as a resource development exemplar.
  2. Identify one opportunity for self-disruption. Look for candidates by examining processes, products and your stakeholder engagement approach for a candid assessment of elevated exposure to external competitive threats. The goal – Take a first step in the process of proactively identifying and addressing vulnerabilities in processes, products or stakeholder engagement approach.   
  3. Identify one upgrade or enhancement you can offer customers this year. A prerequisite for this action is understanding where beneficiary needs are shifting in order to preemptively address demand. The goal – Take a first step in the process of creating greater value for your beneficiaries by assuring you will meet their future needs.

These actions are a starting point in operationalizing the Leading from Zero paradigm. The benefit to your organization is earning greater relevance from the perspective of your customers, employees and other stakeholders.    

Author: David Coffaro, Executive Coaches of Orange County, www.ECofOC.org