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pyramid to dna

Managing the Non-Profit Organization — Principles and Practices

by Peter Drucker see CARE ® letter — his other books
top of the food-chain

See rlaexp.com initial bread-crumb trail — toward the
end of this page — for a site “overview”

managing the non profit organization

Amazon link: Managing the Nonprofit Organization


See about management

 

See more detailed version of Managing the Non-Profit Organization, but be sure to see the preface and summary on this page. You can copy text from this page and then search for it on the more detailed page.


Related

The Five Most Important Questions You Will Ever Ask About Your Organization

Outspoken About Outcomes for Nonprofits

Good intentions

“Part III: Performance in Service Institutions” in Management, Revised Edition and further down the page

Entrepreneurship in the Public-Service Institution → further down the page

“Citizenship Through the Social Sector” in Post-Capitalist Society

 

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7/12/2016 I’m in the process of adding a few details to the outline below

Contents of Managing the Non-Profit Organization — Principles and Practices

Preface (Important—see below)

bbx NPOs are central to American society and are indeed its most distinguishing feature

bbx NPOs “product” is a changed human being

bbx Need management so they can concentrate on their mission

bbx NPOs — America’s resounding success in the last 40 years

bbx Face very big and different challenges

The mission comes first and your role as a leader

bbx The commitment (of the NPO)

… snip, snip …

The non-profit organization exists to bring about a change in individuals and in society.

The first thing to talk about is what missions work and what missions don't work, and how to define the mission.

For the ultimate test is not the beauty of the mission statement.

The ultimate test is right action.

---XXX---

The most common question asked me by non-profit executives is:

What are the qualities of a leader?

The question seems to assume that leadership is something you can learn in a charm school.

But it also assumes that leadership by itself is enough, that it's an end.

And that's mis-leadership.

The leader who basically focuses on himself or herself is going to mislead.

The three most charismatic leaders in this century inflicted more suffering on the human race than almost any trio in history:

Hitler, Stalin, and Mao.

What matters is not the leader's charisma.

What matters is the leader's mission.

Therefore, the first job of the leader is to think through and define the mission of the institution.

… snip, snip …

Setting Concrete Action Goals

… snip, snip …

One of our most common mistakes is to make the mission statement into a kind of hero sandwich of good intentions.

… snip, snip …

As you add on, you have to abandon.

But you also have to think through which are the few things we can accomplish that will do the most for us, and which are the things that contribute either marginally or are no longer of great significance.

… snip, snip …

So you constantly look at the state-of-the-art.

You look at the opportunities in the community.

… snip, snip …

But the specific objective may change.

Things that were of primary importance may become secondary or even totally irrelevant.

You must watch this constantly, or else very soon you will become a museum piece.

… snip, snip …

The Three "Musts" of a Successful Mission

Look at strength and performance.

Do better what you already do well—if it’s the right thing to do.

The belief that every institution can do everything is just not true.

When you violate the values of an institution, you are likely to do a poor job.

… snip, snip …

Look outside at the opportunities, the needs.

Where can we, with the limited resources we have—and I don’t just mean people and money, but also competence—really make a difference, really set a new standard?

One sets the standard by doing something and doing it well.

You create a new dimension of performance.

… snip, snip …

The next thing to look at is what we really believe in.

A mission is not, in that sense, impersonal.

I have never seen anything being done well unless people were committed.

… snip, snip …

And so one asks first, what are the opportunities, the needs?

Then, do they fit us?

Are we likely to do a decent job?

Are we competent?

Do they match our strengths?

Do we really believe in this?

This is not just true of products, it’s true of services.

---XXX---

So, you need three things: opportunities; competence; and commitment.

Every mission statement, believe me, has to reflect all three or it will fall down on what is its ultimate goal, its ultimate purpose and final test ↓.

It will not mobilize the human resources of the organization for getting the right things done.

bbx Leadership is a foul-weather job

The Problems of Success

Hard Choices

Unexpected Success in Your Own Organization

Population Changes

Changes in Mind-Set and Mentality

The Innovative Strategy

How to Pick a Leader

Your Personal Leadership Role

The Balance Decision

The Don't's of Leadership

bbx Setting new goals — interview with Frances Hesselbein (Girl Scouts)

bbx What the leader owes — interview with Max De Pree (Herman Miller, Inc. & Fuller Theological Seminary)

bbx Summary: The action implications

From mission to performance (effective strategies for marketing, innovation, and fund development)

bbx Converting good intentions into results

bbx Winning strategies

bbx Defining the market — interview with Philip Kotler (Northwestern University)

bbx Building the donor constituency — interview with Dudley Hafner (American Heart Association)

bbx Summary: The action implications

Managing for performance (how to define it; how to measure it)

bbx What is the bottom line when there is no “bottom line”?

bbx Don’t’s and Do’s — The basic rules

bbx The effective decision

bbx How to make the schools accountable — interview with Albert Shanker (American Federation of Teachers)

bbx Summary: the action implications

People and relationships — your staff, your board, your volunteers, your community

bbx People decisions (hire, fire, place, promote, develop, teams, personal effectiveness)

bbx The key relationships

bbx From volunteers to unpaid staff — interview with Father Leo Bartel (Social ministry of the Catholic Diocese)

bbx The effective board — Interview with Dr. David Hubbard (Fuller Theological Seminary)

bbx Summary: The action implications

Developing yourself — as a person, as an executive, as a leader

bbx You are responsible

bbx What do you want to be remembered for?

bbx Non-profits: the second career — interview with Robert Buford (Leadership network & PFD Foundation for Non-Profit Management)

bbx The woman executive in the non-profit institution — interview with Roxanne Spitzer-Lehmann (St. Joseph Health System)

bbx Summary: The action implications (Josh Abrams)

What will you do tomorrow as a result of reading this book? And what will you stop doing?

 

See more detailed version of Managing the Non-Profit Organization

Also see Post-Capitalist Society and The Essential Drucker

 

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Just reading is not enough …

Concepts have to be converted into daily action

book harvesting

 

Harvesting and action thinking are needed

Managing oneself should be the action foundation

You can select and note areas of interest. You can employ what does this mean for me? (illustration) with the PMI, dense reading and dense listening plus thinking broad and thinking detailed with operacy to see where that takes you. The potential effectiveness of our thinking depends on our existing mental landscape → see experts speak. What’s the next effective action?

 

Concept acquisition → action conversion → click image ↓

harvest

harvest and implement

When we are involved in doing something, it is very difficult
to look outside that involvement — even when our future depends on it.
Additionally, everything eventually outlives its usefulness continue

 

And now for the rest of the story

 

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Preface

Forty years ago, when I first began to work with non-profit institutions, they were generally seen as marginal to an American society dominated by government and big business respectively.

In fact, the non-profits themselves by and large shared this view.

We then believed that government could and should discharge all major social tasks, and that the role of the non-profits, if any, was to supplement governmental programs or to add special flourishes to them.


Today, we know better.

Today, we know that the non-profit institutions are central to American society and are indeed its most distinguishing feature.


We now know that the ability of government to perform social tasks is very limited indeed.

But we also know that the non-profits discharge a much bigger job than taking care of specific needs.

With every second American adult serving as a volunteer in the non-profit sector and spending at least three hours a week in non-profit work, the non-profits are America’s largest “employer.”

But they also exemplify and fulfill the fundamental American commitment to responsible citizenship in the community.

The non-profit sector still represents about the same proportion of America’s gross national product—2 to 3 percent—as it did forty years ago.

But its meaning has changed profoundly.

We now realize that it is central to the quality of life in America, central to citizenship, and indeed carries the values of American society and of the American tradition.


Forty years ago no one talked of “non-profit organizations” or of a “non-profit sector.”

Hospitals saw themselves as hospitals, churches as churches, Boy Scouts and Girl Scouts as Scouts, and so on.

Since then, we have come to use the term “nonprofit” for all these institutions.

It is a negative term and tells us only what these institutions are not.

But at least it shows that we have come to realize that all these institutions, whatever their specific concerns, have something in common.


And we now begin to realize what that “something” is.

It is not that these institutions are “nonprofit,” that is, that they are not businesses.

It is also not that they are “non-governmental.”

It is that they do something very different from either business or government.

Business supplies, either goods or services.

Government controls.

A business has discharged its task when the customer buys the product, pays for it, and is satisfied with it.

Government has discharged its function when its policies are effective.

The “non-profit” institution neither supplies goods or services nor controls.

Its “product” is neither a pair of shoes nor an effective regulation.

Its product is a changed human being.

The non-profit institutions are human-change agents.

Their “product” is a cured patient, a child that learns, a young man or woman grown into a self-respecting adult; a changed human life altogether.


Forty years ago, “management” was a very bad word in nonprofit organizations.

It meant “business” to them, and the one thing they were not was a business.

Indeed, most of them then believed that they did not need anything that might be called “management.”

After all, they did not have a “bottom line.”


For most Americans, the word “management” still means business management.

Indeed, newspaper or television reporters who interview me are always amazed to learn that I am working with non-profit institutions.

“What can you do for them?” they ask me, “Help them with fund-raising?”

And when I answer, “No, we work together on their mission, their leadership, their management,” the reporter usually says, “But that’s business management, isn’t it?”


But the “non-profit” institutions themselves know that they need management all the more because they do not have a conventional “bottom line.”

They know that they need to learn how to use management as their tool lest they be overwhelmed by it.

They know they need management so that they can concentrate on their mission.

Indeed, there is a “management boom” going on among the nonprofit institutions, large and small.

 


 

Yet little that is so far available to the non-profit institutions to help them with their leadership and management has been specifically designed for them.

Most of it was originally developed for the needs of business.

Little of it pays any attention to the distinct characteristics of the non-profits or to their specific central needs:

To their mission, which distinguishes them so sharply from business and government;

to what are “results” in non-profit work;

to the strategies required to market their services and obtain the money they need to do their job;

or to the challenge of introducing innovation and change in institutions that depend on volunteers and therefore cannot command.

Even less do the available materials focus on the specific human and organizational realities of non-profit institutions;

on the very different role that the board plays in the non-profit institution;

on the need to attract volunteers, to develop them, and to manage them for performance;

on relationships with a diversity of constituencies;

on fund-raising and fund development;

or (a very different matter) on the problem of individual burnout, which is so acute in non-profits precisely because the individual commitment to them tends to be so intense.


There is thus a real need among the non-profits for materials that are specifically developed out of their experience and focused on their realities and concerns.

material deleted for brevity

 


 

This book starts out with the realization that the non-profit institution has been America’s resounding success in the last forty years.

In many ways it is the “growth industry” of America, whether we talk

of health-care institutions like the American Heart Association or the American Cancer Society which have given leadership in research on major diseases and in their prevention and treatment;

of community’ services such as the Girl Scouts of the U.S.A. and the Boy Scouts of the U.S.A. which, respectively, are the world’s largest women’s and men’s organizations;

of the fast growing pastoral churches;

of the hospital;

or of the many other non-profit institutions that have emerged as the center of effective social action in a rapidly changing and turbulent America.

The non-profit sector has become America’sCivil Society.”

 


 

Today, however, the non-profits face very big and different challenges.


The first is to convert donors into contributors.

In total amounts, the non-profit organizations in this country collect many times what they did forty years ago when I first worked with them.

But it is still the same share of the gross national product (2-3 percent), and I consider it a national disgrace, indeed a real failure, that the affluent, well-educated young people give proportionately less than their so much poorer blue-collar parents used to give.

If the health of a sector in the economy is judged by its share of the GNP, the non-profits do not look healthy at all.

The share of GNP that goes to leisure has more than doubled in the last forty years; the share that goes to medical care has gone up from 2 percent of the GNP to 11 percent; the share that goes to education, especially to colleges and universities, has tripled.

Yet the share that is being given by the American people to the non-profit, human-change agents has not increased at all.

We know that we can no longer hope to get money from “donors”; they have to become “contributors.”

This I consider to be the first task ahead for non-profit institutions.


It is much more than just getting extra money to do vital work.

Giving is necessary above all so that the non-profits can discharge the one mission they all have in common: to satisfy the need of the American people for self-realization, for living out our ideals, our beliefs, our best opinion of ourselves.

To make contributors out of donors means that the American people can see what they want to see—or should want to see—when each of us looks at himself or herself in the mirror in the morning: someone who as a citizen takes responsibility.

Someone who as a neighbor cares.

 


 

Then there is the second major challenge for the non-profits: to give community and common purpose.

Forty years ago, most Americans already no longer lived in small towns, but they had still grown up in one.

They had grown up in a local community.

It was a compulsory community and could be quite stifling.

Still, it was a community.


Today, the great majority of Americans live in big cities and their suburbs.

They have moved away from their moorings, but they still need a community.

And it is working as unpaid staff for a non-profit institution that gives people a sense of community, gives purpose, gives direction—whether it is work with the local Girl Scout troop, as a volunteer in the hospital, or as the leader of a Bible circle in the local church.

Again and again when I talk to volunteers in non-profits, I ask, “Why are you willing to give all this time when you are already working hard in your paid job?”

And again and again I get the same answer, “Because here I know what I am doing.

Here I contribute.

Here I am a member of a community.”


The non-profits are the American community.

They increasingly give the individual the ability to perform and to achieve.

Precisely because volunteers do not have the satisfaction of a paycheck, they have to get more satisfaction out of their contribution.

They have to be managed — not supervised — as unpaid staff.

But most non-profits still have to learn how to do this.

tblue A clear mission

tblue Careful placement

tblue Continuous learning and teaching

tblue Management by objectives and self-control

tblue High demands but corresponding responsibility and accountability for performance and results

And I hope to show them ↑ how—not by preaching, but by giving successful examples.

 

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Post-Capitalist Society

The need for people to make the future

The return of tribalism

Citizenship through the social sector

 

The social sector in a century of social transformation

 

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Part 5 Summary: Developing yourself — as a person, as an executive, as a leader → The Action Implications

The best way for me to start this summary on self-development is to tell you about the man who first made me aware of what that means as a lifelong process.

He was a Jewish rabbi whom I first met in the early 1950s on a mountain trail.

We became hiking companions for many years because we both spent vacations in the same summer resort and liked hiking.

Joshua Abrams had been in law school when World War II broke out, went into the Navy and was badly wounded.

In fact, he never fully recovered, and the injuries eventually caused his death thirty-five years later.


He went into a seminary when he came out of the service and, when I first met him, he had just begun to build—from scratch—a synagogue and Jewish community center in a major Midwestern city.

Just ten years later it was one of the largest Reformed Jewish synagogues in the country, with four to five thousand members.


So, I was very surprised on a walk one day when he said, “By the way, Peter, I’ve decided to leave the synagogue and start all over again.”

I looked at him, clearly without understanding, and he continued, “I don’t learn anything anymore.”

Knowledge exists only in application

A year later, he told me he had decided to go into youth ministry and take over the chaplainship at a major Midwestern university.

This was about 1964-65.

Joshua explained:

“I’m still young enough so that I understand what troubles the kids and I’m old enough to have experience with most of the things that they are going through.

They’re going to be in trouble.”

Sure enough, the student unrest started not too long afterward and my friend was a tower of strength.

Through the years I’ve met people who say, “I understand you know Josh Abrams?

He saved my life when I was twenty years old and about to destroy myself by going into drugs … or by doing this, that or the other stupid thing.”


Then, around 1973-74, Josh surprised me again during one of our walks:

“I think I’ve done all I can do as a university chaplain.

I’m no longer young enough to be in tune with the kids.

I’ve been thinking about it and have decided that the need now is for a ministry for old people.

That’s where the population growth is.”

He quit the university a year or two later, moved to one of the retirement cities in Arizona, and started all over again building from scratch.

By the time he died, his new community of retired people was three to four thousand strong.

He looked for people who were lonely, who had lost their spouses, who were sick, and he not only brought them spiritual comfort but helped meet their physical needs as well as he could.


Joshua was the first person who explained something to me that I have, in turn, repeated to many, many people:

“You are responsible for allocating your life.

Nobody else will do it for you.”

A road map or trail head

And the pattern of his life makes clear that when we talk of self-development, we mean two things:

developing the person, and

developing the skill, competence, and ability to contribute.

These are two quite different tasks.


Developing yourself begins by serving, by striving toward an idea outside of yourself—not by leading.


sidebar begins ↓

Awareness

How can the individual survive?

Idea seeds here and here

Every single social and global issue of our day is a
business opportunity in disguise — here and here

Aiming high

Willing engagement is necessary

Extreme caution is needed here: see
How To Guarantee Non-Performance
and What Results Should You Expect?: A User's Guide to MBO

Conditions for survival

Drucker and Me

end of previous ↑ sidebar


Leaders are not born, nor are they made—they are self-made.


To do this, a person needs focus.

Michael Kami, our leading authority on business strategy today, draws a square on the blackboard and asks:

“Tell me what to put in there.

Jesus?

Or money?

I can help you develop a strategy for either one, but you have to decide which is the master.”


I do it by asking people what they want to be remembered for — that’s “the beginning of adulthood,” according to St. Augustine.

The answer changes as we mature—as it should.

and with changes in the world

But unless that question is asked, a person works without focus, without direction, and, as a result, does not develop.

 

You start by developing your own strengths, adding skills and putting them to productive work.

Previous link leads to Managing Oneself

There is much a boss can do to contribute to this development.

But no matter how much a boss drives you—or ignores you—ultimately it is the individual’s own responsibility to work on his or her own development.


Developing your strengths does not mean ignoring your weaknesses.

On the contrary, one is always conscious of them.

But one can only overcome weakness by developing strengths.

Don’t take shortcuts.

You don’t have to be a perfectionist but you certainly should refuse to accept your own shoddy work.

Above all, workmanship builds your own self-respect as it builds your own competence.


Next, you work on the TASKS to be done, the opportunities to be explored:

And you start with the task, not with yourself.

Try a page search for “task” on this page and here

Achievement comes from matching need and opportunity on the outside with competence and strength on the inside.

The two have to meet—and the two have to match.


Effective self-development must proceed along two parallel streams.

One is improvement—to do better what you already do reasonably well.

The second is change—to do something different.

Both are essential.

It is a mistake to focus only on change and forget what you already do well.

One works constantly on doing a little better, identifying the little step that will make the next step possible.

But it is equally foolish to focus only on improvement and forget that the time will inevitably come to do something new and quite different.

 

Important for life II

stages-simple-horizons-pict-t

The Individual In Entrepreneurial Society

 

Listening for the signal (examples: 1 and 2) that it is time to change is an essential skill for self-development.

Change when you are successful—not when you’re in trouble.

Look carefully at your daily work, your daily tasks, and ask:

Would I go into this today knowing what I know today?

Am I producing results or just relaxing in a comfortable routine, spending effort on something that no longer produces results?”


Self-development becomes self-renewal when you walk a different path, become aware of a different horizon, move toward a different destination.

This is a time when outside help, a mentor, can provide useful help.

The more achievement-minded and successful you are, the more likely you are to be immersed in the task at hand, immersed, above all, in the urgent.

A wise outsider who knows what you are trying to do, who has often been doing similar things, is the one who can ask you:

“Does it still make sense?

Are you still getting the most out of yourself?”


The means for self-development are not obscure.

Many achievers have discovered that teaching is one of the most successful tools.

The teacher usually learns far more than the student.

Not everybody is in a situation where the opportunity to teach opens up, nor is everyone good at teaching or enjoying it.

But everyone has an associated opportunity—the opportunity to help develop others.

Everyone who has sat down with subordinates or associates in an honest effort to improve their performance and results understands what a potent tool the process is for self-development.


Probably the best of the nuts and bolts of self-development is the practice of keeping score on yourself.

It’s also the best lesson in humility, as I can tell you from personal experience.

It is always painful for me to see how great the gap is between what I should have done and what I did do.

But, slowly, I improve—both in setting goals and in achieving results.

Keeping score helps me focus my efforts in areas where I have impact and to slough off projects where nothing is happening, where I’m wasting not only my own resources but also those of my clients or students.

 

 

Self-development is neither a philosophy nor good intentions.

Self-renewal is not a warm glow.

Both are action.

You become a bigger person, yes; but, most of all, you become a more effective and committed person.

self-development

Larger view

So, I conclude by asking you to ask yourself, what will you do tomorrow as a result of reading this book?

And what will you stop doing?

 

The chapters on “You are responsible” and “What do you want to be remembered for” — above — contain useful action areas. You can search for those phrases here

 

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Further exploration

 

radar_limited-pict-t-400

Fortune favors the prepared ↑ ↓ mind” continue

The memo — navigating unimagined futures

Take responsibility for your career

A Century of Social Transformation

Landmarks of Tomorrow

Men of high effectiveness are conspicuous by their absence in executive jobs

Drucker: My life as a knowledge worker

Ten Principles for Life II

The Wisdom of Peter Drucker

The World is Full of Options

What Makes An Effective Executive?

The second half of your life

What executives should remember

Peter Drucker On Leadership

The big, big picture

Exploring beyond yesterday(S)

Career work plan development a work in process

 

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Managing Service Institutions in the Society of Organizations

From Chapter 12 of Management, Revised Edition

Management Revised Edition    Management Cases Revised Edition

Amazon Links: Management Rev Ed and Management Cases, Revised Edition

Business enterprise is only one of the institutions of modern society, and business managers are by no means our only managers.

Service institutions are equally institutions and, therefore, equally in need of management.

Some of the most familiar of these institutions are government agencies, the armed services, schools, colleges, universities, research laboratories, hospitals and other health-care institutions, unions, professional practices such as the large law firm, and professional, industry, and trade associations.

They all have people who are paid for doing the management job, even though they may be called administrators, commanders, directors, or executives, rather than managers.


The Multi-Institutional Society

Public-service institutions are supported by the economic surplus produced by economic activity.

They are social overhead.

The growth of the public service institution in the twentieth and twenty-first centuries is the best testimonial to the success of business in discharging its economic task—producing economic surplus.


Yet, unlike the early nineteenth-century university, the service institutions are not a luxury or an ornament.

They are essentials of a modern society.

They have to perform if society and business are to function.

These service institutions are the main expense of a modern society.

Approximately half of the gross national product of the United States (and of most of the other developed countries) is spent on public-service institutions.

Every citizen in the developed, industrialized, urbanized societies depends for survival on the performance of the public-service institutions.

These institutions also embody the values of developed societies.

Education, health care, knowledge, and mobility—not just more food, clothing, and shelter—are the fruits of our society's increased economic capacities and productivity.


Yet the evidence for performance in the service institutions is not impressive, let alone overwhelming.

Colleges, hospitals, and universities have grown larger than an earlier generation would have dreamed possible.

Their budgets have grown even faster.

Yet everywhere they are in crisis.

A generation or two ago their performance was taken for granted.

Today they are attacked on all sides for lack of performance.

Services that the nineteenth century managed successfully with little apparent effort—the postal service, for instance, or the railroads—are today deep in the red and require enormous subsidies.

National and local government agencies are constantly being reorganized for efficiency.

Yet in every country citizens complain loudly of growing bureaucracy in government.

What they mean is that the government agency is being run more for the convenience of its employees than for contribution and performance.

This is mismanagement.

Are Service Institutions Managed?

The service institutions themselves have become "management conscious."

Increasingly they turn to business to learn management.

In all service institutions, manager development, management by objectives, and many other concepts and tools of business management are now common.


This is a healthy sign, but it does not mean that the service institutions understand the problems of managing themselves.

It only means that they begin to realize that at present they are not being managed.

But Are They Manageable?

There is another and very different response to the performance crisis of the service institutions.

A growing number of critics have come to the conclusion that service institutions are inherently unmanageable and incapable of performance.

Some go so far as to suggest that they should, therefore, be dissolved.

But there is not the slightest evidence that today's society is willing to do without the contributions the service institutions provide.

The people who most vocally attack the shortcomings of the hospitals want more and better health care.

Those who criticize public schools want better, not less, education.

The voters bitterest about government bureaucracy vote for more government programs.


We have no choice but to learn to manage the public-service institutions for performance.


And they can be managed for performance.

 

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Managing Public-Service Institutions For Performance

Different classes of service institutions need different structures.

But all of them need first to impose on themselves discipline of the kind imposed by leaders of the institutions in the examples in the previous chapters.

This work involves
attention-directing and
mental patterns

They need to define "what our business is and what it should be."

See "The Theory of the Business" in chapter 8 of Management, Revised Edition and The Five Most Important Questions You Will Ever Ask About Your Organization (converts intentions into action)

They need to bring alternative definitions into the open and consider them carefully.

They should perhaps even work out some balance between the different and conflicting definitions of mission (as did the presidents of the emerging American universities—see later in this chapter).

They must derive clear objectives and goals from their definition of function and mission.

They then must set priorities that enable them to select targets, to set standards of accomplishment and performance—that is, to define the minimum acceptable results, to set deadlines, to go to work on results, and to make someone accountable for results.

They must define measurements of performance—customer-satisfaction measurements for the performance of Medicare services, or the number of households supplied with electric power (a quantity much easier to measure).

They must use these measurements to feed back on their efforts.

That is, they must build self-control by results into their system.

Finally, they need an organized review of objectives and results, to weed out those objectives that no longer serve a purpose or have proven unattainable.

They need to identify unsatisfactory performance and activities that are outdated or unproductive, or both.

And they need a mechanism for dropping such activities rather than wasting money and human energies where the results are poor.


The last requirement may be the most important one.

Without a market test, the service institution lacks the built-in discipline that forces a business eventually to abandon yesterday—or else go bankrupt.

Assessing and abandoning low-performance activities in service institutions, outside and inside business, would be the most painful but also the most beneficial improvement.


As the examples have shown, no success is "forever."

Yet it is even more difficult to abandon yesterday's success than it is to reappraise a failure.

A once-successful project gains an air of success that outlasts the project's real usefulness and disguises its failings.

In a service institution particularly, yesterday's success becomes "policy," "virtue," "conviction," if not holy writ.

The institution must impose on itself the discipline of thinking through its mission, its objectives, and its priorities, and of building in feedback control from results and performance on policies, priorities, and action.

Otherwise, it will gradually become less and less effective.

We are in such a welfare mess today in the United States largely because the welfare program of the 1930s was such a success.

We could not abandon it and, instead, misapplied it to the radically different problem of the inner-city poor.

To make service institutions perform, it should by now be clear, does not require great leaders.

It requires a system.

The essentials of this system are not too different from the essentials of performance in a business enterprise, but the application will be quite different.

The service institutions are not businesses; performance means something quite different in them.

The applications of the essentials differ greatly for different service institutions.

As our later examples will show, there are at least three different kinds of service institutions—institutions that are not paid for performance and results, but for efforts and programs.

 


 

bbx How to guarantee non-performance

bbx Management by Objectives — a user’s guide

 

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Entrepreneurship in the Public-Service Institution

From Chapter 16 of Management, Revised Edition

Management Revised Edition    Management Cases Revised Edition

Public-service institutions—such as government agencies, labor unions, churches, universities and schools, hospitals, community and charitable organizations, professional and trade associations, and the like—need to be entrepreneurial and innovative fully as much as any business does.

Indeed, they may need it more.

The rapid changes in today’s society, technology, and economy are simultaneously an even greater threat to them and an even greater opportunity.


Yet public-service institutions find it far more difficult to innovate than does even the most “bureaucratic” company.

The “existing” seems to be even more of an obstacle for them.

To be sure, every service institution likes to get bigger.

In the absence of a profit test, size is the one criterion of success for a service institution, and growth a goal in itself.

And then, of course, there is always so much more that needs to be done.

But stopping what has “always been done” and doing something new are equally anathema to service institutions, or at least excruciatingly painful to them.


Most innovations in public-service institutions are imposed on them either by outsiders or by catastrophe.

The modern university, for instance, was created by a total outsider, the Prussian diplomat Wilhelm von Humboldt.

He founded the University of Berlin in 1809, when the traditional university of the seventeenth and eighteenth century had been all but completely destroyed by the French Revolution and the Napoleonic wars.

Sixty years later, the modern American university came into being, when the country’s traditional colleges and universities were dying and could no longer attract students.


Similarly, all basic innovations in the military in the twentieth century, whether in structure or in strategy, have followed on ignominious malfunction or crushing defeat:

the reorganization of the American army and of its strategy by a New York lawyer, Elihu Root, Teddy Roosevelt’s secretary of war, after its disgraceful performance in the Spanish-American War;

the reorganization, a few years later, of the British army and its strategy by Secretary of War Lord Haldane, another civilian, after the equally disgraceful performance of the British in the Boer War; and

the rethinking of the German army’s structure and strategy after the defeat of World War I.


And in government, one of the greatest examples of innovative thinking in recent political history, America’s New Deal of 1933-1936, was triggered by a Depression so severe as to almost unravel the country’s social fabric.


Critics of bureaucracy blame the resistance of public-service institutions to entrepreneurship and innovation on “timid bureaucrats,” on time-servers who “have never met a payroll,” or on “power-hungry politicians.”

It is a very old litany—in fact, it was already hoary when Machiavelli chanted it almost 500 years ago.

The only thing that changes is who intones it.

At the beginning of the twentieth century, it was the slogan of the so-called liberals and now it is the slogan of the so-called neoconservatives.

Alas, things are not that simple, and “better people” that perennial panacea of reformists—is a mirage.

The most entrepreneurial, innovative people behave like the worst time-serving bureaucrat or power-hungry politician six months after they have taken over the management of a public-service institution, particularly if it is a government agency.


The forces that impede entrepreneurship and innovation in a public-service institution are inherent in it, integral to it, inseparable from it.

The best proof of this are the internal staff services in businesses, which are, in effect, the “public-service institutions” within business corporations.

These are typically headed by people who have come out of operations and have proven their capacity to perform in competitive markets.

And yet, the internal staff services are not notorious as innovators.

They are good at building empires—and they always want to do more of the same.

They resist abandoning anything they are doing.

But they rarely innovate once they have been established.

There are three main reasons why the existing enterprise presents so much more of an obstacle to innovation in the public-service institution than it does in the typical business enterprise.

First, the public-service institution is based on a “budget” rather than on being paid out of its results.

It is paid for its efforts and out of funds somebody else has earned, whether the taxpayer, the donors of a charitable organization, or the company for which a human resource department or the marketing services staff work.

The more efforts the public-service institution engages in, the greater its budget will be.


And “success” in the public-service institution is defined by getting a larger budget rather than obtaining results.

Any attempt to slough off activities and efforts, therefore, diminishes the public-service institution.

It causes it to lose stature and prestige.

Failure cannot be acknowledged.

Worse still, the fact that an objective has been attained cannot be admitted.

A service institution is dependent on a multitude of constituents.

In a business that sells its products on the market, one constituent, the consumer, eventually overrides all the others.

A business needs only a very small share of a small market to be successful.

Then it can satisfy the other constituents, whether they are shareholders, workers, the community, and so on.

But precisely because public-service institutions—and that includes the staff activities within a business corporation—have no “results” out of which they are being paid, any constituent, no matter how marginal, has, in effect, a veto power.

A public-service institution has to satisfy everyone; certainly, it cannot afford to alienate anyone.


The moment a service institution starts an activity, it acquires a “constituency,” which then refuses to have the program abolished or even significantly modified.

But anything new is always controversial.

This means that it is opposed by existing constituencies without having formed, as yet, a constituency of its own to support it.

The most important reason, however, is that public-service institutions exist, after all, to “do good.”

This means that they tend to see their mission as a moral absolute rather than as economic and subject to a cost-benefit calculus.

Economics always seeks a different allocation of the same resources to obtain a higher yield.

Everything economic is therefore relative.

In the public-service institution, there is no such thing as a higher yield.

If one is “doing good,” then there is no “better.”


Indeed, failure to attain objectives in the quest for a “good” only means that efforts need to be redoubled.

The forces of evil must be far more powerful than expected and need to be fought even harder.


For thousands of years the preachers of all sorts of religions have held forth against the “sins of the flesh.”

Their success has been limited to say the least.

But this is no argument as far as the preachers are concerned.

It does not persuade them to devote their considerable talents to pursuits in which results may be more easily attainable.

On the contrary, it only proves that their efforts need to be redoubled.

Avoiding the “sins of the flesh” is clearly a “moral good,” and thus an absolute, which does not admit to any cost-benefit calculation.


Few public-service institutions define their objectives in such absolute terms.

But even company human resource departments and manufacturing service staffs tend to see their mission as “doing good,” and therefore as being moral and absolute instead of being economic and relative.


This means that public-service institutions are out to maximize rather than to optimize.

“Our mission will not be completed,” asserts the head of the Crusade Against Hunger, “as long as there is one child on the earth going to bed hungry.”

If he were to say, “Our mission will be completed if the largest possible number of children that can be reached through existing distribution channels get enough to eat not to be stunted,” he would be booted out of office.

But if the goal is maximization, it can never be attained.

Indeed, the closer one comes to attaining one’s objective, the more efforts are called for.

For, once optimization has been reached (perhaps between 75 and 80 percent of theoretical maximum), additional costs go up exponentially while additional results fall off exponentially.

The closer a public-service institution comes to attaining its objectives, therefore, the more frustrated it will be and the harder it will work on what it is already doing.


It will, however, behave exactly the same way the less it achieves.

Whether it succeeds or fails, the demand to innovate and to do something else will be resented as an attack on its basic commitment, on the very reason for its existence, and on its beliefs and values.

The Need to Innovate

Why is innovation in the public-service institution so important?

Why can we not leave existing public-service institutions the way they are and depend on new institutions for the innovations we need in the public-service sector, as historically we have always done?


The answer is that public-service institutions have become too important in developed countries, and too big.

The public-service sector, both the governmental one and the nongovernmental but not-for-profit one, has grown faster during the twentieth century than the private sector—maybe three to five times as fast.

The growth has been especially fast since World War II.


To some extent, this growth has been excessive.

Wherever public-service activities can be converted into profit-making enterprises, they should be so converted.

This applies to not only the kind of municipal services the city of Lincoln, Nebraska, now privatizes.

The move from nonprofit to profit has already gone very far in the American hospital.

It may become a stampede in professional and graduate education.

To subsidize the highest earners in developed society—the holders of advanced professional degrees—can hardly be justified.


A central economic problem of developed societies is capital formation.

We therefore can ill afford to have activities conducted as “nonprofit”—that is, as activities that devour capital rather than form it—if they can be organized as activities that form capital, as activities that make a profit.


But the great bulk of the activities that are being discharged in and by public-service institutions will still remain public-service activities, and will neither disappear nor be transformed.

Consequently, they have to be made producing and productive.

Public-service institutions will have to learn to be innovators, to manage themselves entrepreneurially.

To achieve this, public-service institutions will have to learn to look upon social, technological, economic, and demographic shifts as opportunities in a period of rapid change in all these areas.


Otherwise, they will become obstacles.

Such public-service institutions will increasingly become unable to discharge their mission as they adhere to programs and projects that cannot work in a changed environment, and yet they will not be able or willing to abandon the missions they can no longer discharge.

Increasingly, they will come to look the way the feudal barons came to look after they had lost all social function around 1300:

as parasites, functionless, with nothing left but the power to obstruct and to exploit.

They will become self-righteous while increasingly losing their legitimacy.

Clearly, this is already happening to the apparently most powerful among them, the labor union.

Yet a society in rapid change, with new challenges, new requirements and opportunities, needs public-service institutions.


The public school in the United States exemplifies both the opportunities and the dangers.

Unless it takes the lead in innovation, it is unlikely to survive, except as a school for the minorities in the slums as parents of middle- and high-income families send their children to private and parochial schools.


For the first time in its history, the United States faces the threat of a class structure in education in which all but the very poor remain outside of the public school system—at least in the cities and suburbs where most of the population lives.

And this will squarely be the fault of the public school itself, because what is needed to reform the public school is already known.


Many other public-service institutions face a similar situation.

The knowledge is there.

The need to innovate is clear.

They now have to learn how to build entrepreneurship and innovation into their own system.

Otherwise, they will find themselves superseded by outsiders who will create competing entrepreneurial public-service institutions and so render the existing ones obsolete.


The late nineteenth century and early twentieth century was a period of tremendous creativity and innovation in the public-service field.

Social innovation during the seventy-five years until the 1930s was surely as much alive, as productive, and as rapid as technological innovation, if not more so.

But in these periods the innovation took the form of creating new public-service institutions.

The need for social innovation may be even greater now, but it will very largely have to be social innovation within the existing public-service institution.

To build entrepreneurial management into the existing public-service institution may thus be the foremost political task of this generation.

 

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Managing the Non-Profit Organization → Part one Summary: The Action Implications

We hear a great deal these days about leadership, and it’s high time we did.

But, actually, mission comes first.

Non-profit institutions exist for the sake of their mission.

They exist to make a difference in society and in the life of the individual.

They exist for the sake of their mission, and this must never be forgotten.

The first task of the leader is to make sure that everybody sees the mission, hears’ it, lives it.

If you lose sight of your mission, you begin to stumble and it shows very, very fast.

And yet, mission needs to be thought through, needs to be changed.


The basic rationale for the organization may be there for a very long time.

As long as the human race is around, we’ll be miserable sinners.

And as long as the human race is around, we will have sick people who need to be taken care of.

We know that no matter how well a society does, there will be alcoholics, there will be people in trouble with drugs, there will be people who need the Salvation Army to bring compassion to them and a little help, and an attempt to rehabilitate them, and children will have to learn and go to school.

Boys and girls, as they grow up, will need scouting and experiences that form their character, that give them a role model, that give them direction and employ them intelligently so that they learn something.


We will have to look at the mission again and again to think through whether it needs to be refocused because demographics change, because we should abandon something that produces no results and eats up resources, because we have accomplished an objective.

A good example is the school that is largely in crisis because it has achieved its original objective of getting every kind of child to go to school and stay there for years, and now we have to think through what we really do expect of the school.

And this will be, in many ways, quite different from what the schoolmasters through the ages were striving for when nine out of ten kids never had the opportunity of organized schooling.

Therefore, it is vitally important to start out from the outside.

The organization that starts out from the inside and then tries to find places to put its resources is going to fritter itself away.

Above all, it’s going to focus on yesterday.

One looks to the outside for opportunity, for a need.


At the same time, the mission is always long-range.

It needs short-range efforts and very often short-range results.

And yet it starts out with a long-range objective.

There is a wonderful sentence in one of the sermons of that great poet and religious philosopher of the seventeenth century, John Donne: “Never start with tomorrow to reach eternity.

Eternity is not being reached by small steps.”

So we start always with the long range, and then we feed back and say, What do we do today?


“Do” is the critical word.

And that’s the difference between what so often passes for planning in American business and what the Japanese do.

It’s not that they are better planners.

It is that they start out by saying, Where should we be ten years hence?

And we start by saying, What should be the bottom line for the quarter—which contrary to what most people in the United States believe, is higher in Japan than it is in American business, precisely because they start with the long range and feed back.

As did all the companies in this country that have succeeded in staying viable, producing results for long the term.

We have had some amazingly successful long-term companies—the Bell Telephone System, for fifty or sixty years; Sears, Roebuck for sixty years; General Motors, until recently.

They all started out with a very clear long-range concept.

Sears said: Our business is to be the informed and responsible buyer for the American family.

And then one feeds back, and that may lead to very short-term moves—to Sears going into diamonds, for instance, right after World War II when the GIs came back and got married.

But one always starts out with the long term.

This is particularly important for non-profit institutions, precisely because they do not have an immediate bottom line, but also because they are there to serve.


But action is always short term.

So one always has to ask: Is this action step leading us toward our basic long-range goal, or is it going to sidetrack us, going to divert us, going to make us lose sight of what we are here to do?

This is the first question.


But also we need to be result-driven.

We need to ask, Do we get adequate results for our efforts?

Is this their best allocation?

Yes, need is always a reason, but by itself it is not enough.

There also have to be results.

There also has to be something to point at and say, We have not worked in vain.

So we are always looking at programs and projects with the question, Do they produce the right results?

The leader’s job is to make sure the right results are being achieved, the right things are being done.


One has the responsibility to allocate resources, particularly of course in organizations that depend heavily on volunteers, and heavily on donors.

Leadership is accountable for results.

And leadership always asks, Are we really faithful stewards of the talents entrusted to us?

The talents, the gifts of people—the talents, the gifts of money.

Leadership is doing.

It isn’t just thinking great thoughts; it isn’t just charisma; it isn’t play-acting.

It is doing.

And the first imperative of doing is to revise the mission, to refocus it, and to build and organize, and then abandon.

It is asking ourselves whether, knowing what we now know, we would go into this again.

Would we stress it?

Would we pour more resources in, or would we taper off?

That is the first action command for any mission.


It is also the one way of keeping an organization lean and hungry and capable of doing new things.

An old medical proverb says that the body can only take in the new if it eliminates the waste products.

This is therefore the first action requirement: the constant resharpening, the constant refocusing, never really being satisfied.

And the time to do this is when you are successful.

If you wait until things have already started to go down, then it’s very difficult.

It is not impossible to turn around a declining institution, but an ounce of prevention is very much better than a ton of cure in the turnaround situation.


The next thing to do is to think through priorities.

That’s easy to say.

But to act on it is hard because it always involves abandoning things that look very attractive, that people both inside and outside the organization are pushing for.

But if you don’t concentrate your institution’s resources, you are not going to get results.

This may be the ultimate test of leadership: the ability to think through the priority decision and to make it stick.


Leadership is also example.

The leader is visible; he stands for the organization.

He may be totally anonymous the moment he leaves that office and steps into his car to drive home.

But inside the organization, he or she is very visible, and this isn’t just true of the small and local one, it is just as true of the big, national, or worldwide one.

Leaders set examples.

The leaders have to live up to the expectations regarding their behavior.

No matter that the rest of the organization doesn’t do it; the leader represents not only what we are, but, above all, what we know we should be.


So it is a very good rule when you do anything as a leader, to ask yourself, Is that what I want to see tomorrow morning when I look into the mirror?

Is that the kind of person I want to see as my leader?

And if you follow that rule, you will avoid the mistakes that again and again destroy leaders: sexual looseness in an organization that preaches sexual rectitude, petty cheating, all the stupid things we do.

Maybe the individual does them; well, that’s his or her business.

But a leader is not a private person; a leader represents.

And then ask yourself, as a leader, what do I do to set standards in the organization?

What do I do to enable the organization to tackle new challenges, to seize new opportunities, to innovate?

What do I do?

Not what does the organization do?

Take action responsibility.

What are my own first priorities, and what are the organization’s first priorities, what should they be?

These are the action agenda.

These are the things that must be done.


You may think, that’s fine for the CEO, but I’m only a volunteer putting in three hours a week, being a den mother or arranging flowers at a patient’s bedside.

You are a leader.

The exciting thing, the new thing, is that we are creating a society of citizens in the old sense of people who actively work, rather than just passively vote and pay taxes.

We are not doing it in business.

There is a lot of talk of participative management; but there is not much reality to it, and in many ways, there never will be.

The pressures are perhaps too great.

In a country like ours, with almost 250 million people, even a small town has 50,000 inhabitants, and there is not very much a, citizen can actually do.

We could not, even in the smallest town, meaningfully revive the New England town meeting of two hundred years ago, when that New England town had one hundred twenty people or so.


But we are doing exactly this in the non-profit, the service institution, where increasingly there are only leaders.

These are people who are paid and people who are not paid.

In a church there are a very small number of people who are ordained, but one thousand people who work and do major tasks for the church who are not ordained, never will be, never get a penny.

In the Girl Scouts of the U.S.A., there are one hundred volunteers for every paid staff member, and each is doing a responsible task.

We are creating tomorrow’s society of citizens through the non-profit service institution.

And in that society, everybody is a leader, everybody is responsible, everybody acts.

Everybody focuses himself or herself.

Everybody raises the vision, the competence, and the performance of his or her organization.

Therefore, mission and leadership are not just things to read about, to listen to.

They are things to do something about.

Things that you can, and should, convert from good intentions and from knowledge into effective action, not next year, but tomorrow morning.

 

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… Amazon: Managing the Nonprofit Organization



 

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The following ↓ is a condensed strategic brainscape that can be explored and modified to fit a user’s needs

 

The concepts and links below ↓ are …

major foundations ↓ for future directed decisionS

aimed at navigating

a world constantly moving toward unimagined futureS

history-of-the-world-in-two-hours-03-pict-600

YouTube: The History of the World in Two Hours
— beginning with the industrial revolution ↑ ↓

radar_limited-pict-no-reflect-400

We can only work on the thingS on our mental radar at a point in time

About time The future that has already happened

radar-differences-pict-400

The economic and social health of our world
depends on
our capacity to navigate unimagined futureS
(and not be prisoners of the past)

The assumption that tomorrow is going to be
an extrapolation of yesterday sabotages the future — an
organization’s, a community’s and a nation’s future.

The future is unpredictable and that means
it ain’t going to be like today
(which was designed yesterday)

The capacity to navigate is governed by what’s between our ears ↓

 

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When we are involved in doing something ↑

it is extremely difficult to navigate

and very easy to become a prisoner of the past.

We need to maintain a pre-thought ↓

systematic approach to work and work approach

Click on either side of the image below to see a larger view

Harvest to action

Harvesting and implementing Work

based on reality

the non-linearity of time and events

and the unpredictability of the future

with its unimagined natureS. ↓ ↑

(It’s just a matter of time before we can’t get to the future
from where we are presently
)

larger view

foundations-and-opportunities-2016-pict-400

Intelligence and behavior ↑ ↓ ← Niccolò Machiavelli ↑ ↓

Political ecologists believe that the traditional disciplines define fairly narrow and limited tools rather than meaningful and self-contained areas of knowledge, action, and eventscontinue

❡ ❡ ❡

Foundational ↑ Books → The Lessons of History — unfolding realities (the need for a political and social theory and toward a theory of organizations) ::: The Essential Drucker — your horizons? ::: Textbook of Wisdom — conceptual vision and imagination tools ::: The Daily Drucker — conceptual breadth ::: Management Cases (Revised Edition) see chapter titles for examples of “named” situations …

foundational-books-cropped-pict-600

What do these ideas, concepts, horizons mean for me? continue

 

Exploration paths → The memo they don’t want you to see ::: Peter Drucker — top of the food chain ::: Work life foundations (links to Managing Oneself) ::: A century of social transformation ::: Post-capitalist executive ::: Allocating your life ::: What executives should remember ::: What makes an effective executive? ::: Innovation ::: Drucker’s “Time” and “Toward tomorrowS” books ::: Concepts (a WIP) ::: Site map a.k.a. brainscape, thoughtscape, timescape

 

Just reading ↑ is not enough, harvesting and action thinking are neededcontinue

Information ↑ is not enough, thinking ↓ is neededfirst then next

thinking-principles-taskcard-400

Larger view of thinking principles ↑ Text version ↑ :::
Always be constructiveWhat additional thinking is needed?

 

Initially and absolutely needed: the willingness and capacity to
regularly look outside of current mental involvements continue

 

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Peter Drucker: Conceptual Resources

The Über Mentor

A political / social ecologist
a different way of seeing and thinking about
the big picture
— lead to his top-of-the-food-chain reputation

drucker business week

about Management (a shock to the system)

 

“I am not a ‘theoretician’; through my consulting practice I am in daily touch with the concrete opportunities and problems of a fairly large number of institutions, foremost among them businesses but also hospitals, government agencies and public-service institutions such as museums and universities.

And I am working with such institutions on several continents: North America, including Canada and Mexico; Latin America; Europe; Japan and South East Asia.” — PFD

 

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List of his books

 

Large combined outline of Drucker’s books — useful for topic searching.

 

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High tech is living in the nineteenth century,
the pre-management world.
They believe that people pay for technology.
They have a romance with technology.
But people don't pay for technology:
they pay for what they get out of technology.” —
The Frontiers of Management

TLN Keywords: tlnkwdruckerbook

 

“The greatest danger in times of turbulence is not turbulence; it is to act with yesterday’s logic”. — Peter Drucker


The shift from manual workers who do as they are being told — either by the task or by the boss — to knowledge workers who have to manage themselves ↓ profoundly challenges social structure

Managing Oneself is a REVOLUTION in human affairs.” … “It also requires an almost 180-degree change in the knowledge workers’ thoughts and actions from what most of us—even of the younger generation—still take for granted as the way to think and the way to act.” …

… “Managing Oneself is based on the very opposite realities: Workers are likely to outlive organizations (and therefore, employers can’t be depended on for designing your life), and the knowledge worker has mobility.” ← in a context

 

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These pages are attention directing tools for navigating a world moving toward unimagined futures.

It’s up to you to figure out what to harvest and calendarize
working something out in time (1915, 1940, 1970 … 2040 … the outer limit of your concern)nobody is going to do it for you.

It may be a step forward to actively reject something (rather than just passively ignoring) and then figure out a coping plan for what you’ve rejected.

Your future is between your ears and our future is between our collective ears — it can’t be otherwise. A site exploration starting point

 

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