Part IV – Measuring Success The Buffett Way

This is the fourth and final entry in a series designed to question how development professionals (and others such as CEOs and Boards) should evaluate development effectiveness.

If Warren Buffett were to assess the effectiveness of our development programs, what measures might he use?

Below is my final answer to this question.  My first answer was Donor Retention Percentage, my second answer was Unrestricted Gift Margin, and my third answer was Face-to-Face Solicitation Effectiveness.

Answer #4:  Managerial Competence. Buffett looks for businesses which “avoid the institutional imperative.”  The institutional imperative is the notion that organizations will make stupid decisions based not on rational decision-making but based typically on one of the following four reasons:

  1. “We’ve always done it this way;”
  2. “We have the budget, so let’s do it;”
  3. “This is a pet initiative of the boss;”
  4. “Our competitors are doing it.”

In many development shops I believe answers similar to #1 and #2 are far too often provided.  Think with me for a moment:  If you are honest about your shop, can’t you think of at least one major process, event, direct mail letter, etc., that is regularly done because of answer #1?    Similarly, how many times have you heard a staff member say, “we need to go ahead and spend that money since it is in the budget?”

Buffett suggest that when decisions are being made based on a rational, thoughtful process, you avoid the “institutional imperative.”  I agree with him which is why I work with my clients to develop a Planful Culture – to set aside considerable time (at least three full days each year) to conduct development planning.

It is during such planning periods that goals, objectives, and strategies can be discussed and questioned.  I have found that when clients establish a Planful Culture, people can more readily come to agreement that major development activities, events, or initiatives which are no longer effective can be substantially changed or even discontinued.   But try making such a change mid-year and watch the heels dig in to keep the event or activity.  The difference?  When you conduct thoughtful, rational planning people have the time to inform, understand, and ultimately adjust to the fact that change is the right approach.  When you attempt a change on the fly without a buy-in process, the natural approach is to be skeptical and, in many instances, unsupportive.

So, if your Board or CEO were to ask you today, could you say that you successfully avoid the “institutional imperative?”  And, if not, when does the Planful Culture begin?


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