Emerging Views of Emergent Strategy

Foundations often turn to consultants for help in designing strategies. Given this, the work of consulting firms – and the approaches they promote through consulting engagements and “thought leadership” pieces – is of great significance to foundations, their grantees and partners, and all those who care about results.

In light of their influence, it’s crucial that those positioning themselves as brokers of wisdom to large foundations are forthright when they recognize they got something wrong. It’s also crucial that they acknowledge when they put forth ideas that originated elsewhere.

One of the firms that has emerged over the past decade or so as a leading provider of strategy consulting help to foundations is FSG Social Impact Advisors, founded by Harvard Business School professor and business guru Michael Porter along with Mark Kramer, who were co-authors of an influential 1999 Harvard Business Review (HBR) article on foundation strategy titled “Philanthropy’s New Agenda: Creating Value.” (Porter and Kramer also served as founding board members of CEP but left our Board in 2004.) That article urges foundations to develop individual institutional strategies that focus on “unique positioning” and “unique activities,” do things “differently from others,” and choose the “best” grantees in the manner of “investment advisors in the business world.”

Many of us have argued, for years, that this approach is too rigid, overly dependent on a corporate analogy, and too single-institution focused. In CEP’s 2009 report, Essentials of Foundation Strategy, we write that “foundation leaders who are strategic continually test the logic underlying existing strategies for achieving their goals.” We also caution that “the idea that a conception of strategy that makes sense in a business context can be directly applied in a philanthropic one” is misguided.

We argue that, while a focus on “unique positioning” makes sense in business, “it has less relevance for philanthropy. Private foundations, after all, do not face a competitive dynamic.” Or, as I put it in this Alliance magazine article, “Whereas in business you want a strategy to be yours alone, a foundation’s strategy will almost surely fail unless it is shared – across many organizations and entities.”

CEP is by no means the only advocate of foundation strategy that has cautioned against the top-down, isolated way strategy is frequently developed and implemented in philanthropy – often with the encouragement and assistance of consulting firms. NCRP Executive Director Aaron Dorfman has been outspoken on this issue, and he and I co-authored an article last year arguing that too many strategies in philanthropy “fail because they are concocted in blissful ignorance of the complexities of the work and the perspectives of those closest to it.”

Perhaps most significant, though, among the voices calling for a more nuanced approach to foundation strategy has been evaluator Patti Patrizi. She has argued eloquently for years for an “emergent” approach to strategy of the kind favored by Henry Mintzberg of McGill University. Mintzberg is generally viewed as Porter’s intellectual adversary when it comes to conceptions of strategy and strategy development.

Strange indeed, then, to see the most recent Stanford Social Innovation Review (SSIR) cover story by Kramer and two of his FSG colleagues, John Kania and Patty Russell, calling for an emergent approach to strategy, but without a sufficiently forthright acknowledgment of the degree to which this breaks from FSG’s own past work (and the counsel it has given to dozens, if not more, of large foundations). Bill Schambra writes this week in the Nonprofit Quarterly, “I only wish, when some of us were arguing fifteen years ago that Kramer and Porter’s ‘Philanthropy’s New Agenda: Creating Value’ was a horrible, terrible, very bad idea, that we could have cited Kania, Kramer, and Russell’s” new article.

Most bizarrely, the SSIR article neglects to cite Patrizi’s extensive writing on this issue, despite her record of published work as well as advocacy with foundations for an emergent approach to strategy (including organizing a very good 2008 conference of foundation leaders and evaluators at the Robert Wood Johnson Foundation that featured Mintzberg). Nor does the article, for what it’s worth, cite CEP’s research on foundation strategy at both private and community foundations.

The article prompted some tough responses from the commenters invited by SSIR to react to the piece. Columbia University Professor Kenneth Prewitt writes that he “winced” as he read it – at the thought that “it had to be written at all.” He notes historic examples of foundations acting in the ways the SSIR authors advocate and suggests that while “it’s OK to call this ‘emergent strategy’ and present it as something new,” it’s unfortunate that the “authors and editors must believe that the obvious nevertheless must be said.” University of Pennsylvania Professor Peter Frumkin, who heads that institution’s Nonprofit Leadership Program, asks, “Who could argue with the core of the argument here, built on the resuscitation of Henry Mintzberg’s ideas from a decade and a half ago?”

But I’d suggest that, sadly, the case for a less top-down view of strategy does need to be made – and perhaps nowhere more than inside the walls of FSG and other consulting firms that devise strategies for foundations without adequate attention to the knowledge and perspectives of grantees, intended beneficiaries, and other stakeholders. That’s why I’ve been appreciative of the more nuanced approach to strategy Patrizi has taken.

Indeed, the similarities between FSG’s SSIR piece and two Foundation Review articles – one from 2011, titled Beyond the Veneer of Strategic Philanthropy, and one from 2013, titled Eyes Wide Open: Learning as Strategy Under Conditions of Complexity and Uncertainty – by Patrizi and her colleagues are remarkable (verging on alarming).

Kania, Kramer, and Russell write that,  “we have now come to the conclusion that if funders are to make greater progress in meeting society’s urgent challenges, they must move beyond today’s rigid and predictive model of strategy to a more nuanced model of emergent strategy that better aligns with the complex nature of social progress.” They note that “complex problems” are the “result of the interplay between multiple factors that influence each other in ever-changing ways.”

In their 2013 Foundation Review article, published almost a year prior to the SSIR FSG piece, Patrizi and her colleagues make an almost identical argument: “Foundations engage in many large and extraordinarily difficult and complex problems. … Yet in the face of the often mind-boggling complexity of this work, foundations have tended to remain above the fray. … They have downplayed the complexity of their work and in many cases ignored the uncertainties surrounding their strategic enterprises….The failure to learn during strategy is a serious problem.”

In their 2011 article, Patrizi and Elizabeth Heid Thompson describe the awareness of many foundation staff  “that any intervention supported by a foundation inevitably occurs in the context of many other such interventions, and that effects imagined during planning are likely to be very different in practice. … [yet] many foundations still approach planning as though the work they do is predictable.”

In their SSIR article, Kania, Kramer, and Russell articulate a very different view on the role of the foundation than the call for “uniqueness” made in the 1999 Porter and Kramer HBR article. “All actors, including funders, are participants in the system they seek to change. The behavior of one organization affects all others; therefore strategies must be co-created and must co-evolve among multiple organizations rather than be developed separately.”

This, too, is an argument that echoes to a remarkable degree the case we at CEP have made as well as Patrizi’s writing. “We … believe foundations need a core set of partners in strategy development, negotiation, and debate – partners who have the experience and knowledge necessary for successful implementation and who can productively challenge foundation assumptions,” write Patrizi and Thompson in the 2011 Foundation Review article.

The parallels between the FSG authors’ piece and Patrizi’s earlier writings do not end there, but the excerpts above provide a sampling of the similarities. Unfortunately, the appropriation of others’ ideas without attribution is part of a pattern that has been repeated over time by FSG. For example, this California Management Review critique of Kramer and Porter’s HBR article on corporations “creating shared value” documents the unoriginality of that concept, which another critic equates to “intellectual piracy.” Similar concerns have been raised about other concepts promoted by FSG as if new.

Why does this matter?

I think it matters because, as I said at the top of this post, those of us who care about the effectiveness of philanthropy need to be forthright when we get it wrong, so that both practitioners and researchers can understand and learn. In addition, to the extent that our work builds on the work of others, we need to acknowledge it – both because it is simply the right thing to do and because, again, our audiences can then better understand the applicable history and context.

Look, I am sure FSG has offered very useful consulting services to its clients. And, of course, people make mistakes. If the approach to strategy it has advocated over the years – and helped foundations to carry out – is flawed, what should FSG do? It can’t exactly issue a “recall” of its past work in the manner of an auto manufacturer (although Schambra rightly suggests this is an apt analogy), but it could own up more clearly. This would help clear up the confusion of those who are trying to reconcile what are now opposing frameworks promoted by the same firm.

And if, (re-)reading Patrizi’s work, Kania, Kramer, and Russell come to believe that they should have cited it, they could correct that mistake, too, by acknowledging it.

Regardless, I am glad to see more widespread appreciation for the complexity of foundation strategy, because I believe that with that heightened awareness will come a better chance of success in addressing our most vexing societal challenges.

That, at least, is something to celebrate!

Phil Buchanan is President of CEP and a regular columnist in the Chronicle of Philanthropy. His last CEP Blog post discussed increasing public critique of foundations.  You can find him on Twitter @PhilCEP.

developing strategy, effective philanthropy, foundation effectiveness, foundation strategy
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