Introduction
In his 1989 article “What Business Can Learn from Nonprofits,” published in Harvard Business Review, Peter F. Drucker discusses how nonprofits can serve as models for business organizations. The author shares his insights on how nonprofits focus on mission, innovation, and effectiveness, which allows them to flourish. By exploring these elements, Drucker draws a parallel between nonprofit organizations and other businesses that struggle to adapt to changing environments and remain competitive, allowing the author to offer valuable lessons. Therefore, despite nonprofit organizations being viewed as inferior to corporations, they are more efficient in terms of management and prospering than their for-profit counterparts.
The Value of Nonprofit Missions
The first main section of the article discusses the importance of the mission. According to the author, unlike many corporate CEOs, NGOs do not focus their strategies on money or place it at the center of their operations (Drucker, 1989). In contrast to for-profit organizations, NGOs prioritize purpose, which makes them take action and outline the precise tactics required to achieve critical objectives. For example, the Girl Scouts encourage young girls to grow into skilled, self-assured young women who respect others and themselves (Drucker, 1989). As a result, by having a mission-driven approach, organizations can stay focused on their values and attract other individuals, such as volunteers.
The Role of Organizational Effectiveness
Another essential section in the article emphasizes the importance of effectiveness. A functioning board, still a rarity in business, is now present in many NGOs (Drucker, 1989). Moreover, non-profit organizations have a CEO whose performance is thoroughly examined by the board annually, along with a board whose performance is evaluated regularly (Drucker, 1989). The NGOs can determine whether the organization’s vision, mission, and values are upheld through such an approach. Having stakeholders, such as the board and the CEO, who are fully engaged in the process and contribute to the organization’s growth is crucial for success.
The Vitality of Agency Efficiency
The final section of the article is dedicated to the importance of efficiency. The most crucial change in nonprofit organizations is the steady transition of the volunteer from a sincerely-meaning enthusiast to a skilled, competent, uncompensated member (Drucker, 1989). For example, compared to fifteen years ago, the Catholic diocese in the Midwest has less than half as many priests and nuns (Drucker, 1989). However, it has significantly increased its initiatives, in certain instances more than tripling them, such as supporting the homeless and drug addicts (Drucker, 1989). Therefore, it is crucial to emphasize staff training and fulfilling their potential, which will increase their value. In other words, quality should be chosen over quantity since more employees do not equal success.
Conclusion
Hence, despite being perceived as inferior to businesses, nonprofit organizations outperform their for-profit counterparts in terms of management effectiveness and financial success. NGOs prioritize their goals, which motivates them to act and lay out the precise strategies needed to accomplish crucial goals. Stakeholders who are fully engaged in the process and contribute to the expansion of the company, including the CEO and the board, are also necessary for success. Focusing on employee training and maximizing their potential, which will raise their worth, cannot be overstated.
Reference
Drucker, P. F. (1989). What business can learn from nonprofits. Harvard Business Review. Web.