027: Gil Bonwitt - Scaling up in the Social Sector

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Hello and welcome again to the Scaling Up Business Podcast. I am your host and Gazelle's business coach, Bill Gallagher. We're talking today about scaling up in the social sector. But not to worry if you're not in the social sector. I think you'll learn some interesting things from this. In particular, we're going to focus on the how to use and how to improve cash flow in the social sector and how to bring values to life and leverage your values. We're talking today with Gil Bonwit in Miami, I think. Are you in Miami today?

Yeah. Yep, in Miami.

Beautiful. So Gil's, he's the head of the Gazelle Social initiative. So our bringing scaling up and the Rockefeller habits to the social sector, Gil heads that up as the CEO of that group now and he's a Gazelles business coach. He's used our work now for multiple companies of some size and he's been a longtime member of EO and ypo. We met as a result of his, well, through the Gazelles organization and his long association with Vern and all of that body. So I'm really excited to have Gil on the show today. I think it's going to be we've got some great things to share with you. So hi and welcome, Gil.

Thanks. Looking forward to it. Looking forward to it.

Beautiful. So let's talk first about this initiative. We think of social sector and we think of scaling up and the Rockefeller habits so much in the context of growing businesses. What's your goal here in the social sector?

So that's the interesting thing. I've known Vern since 2000, 2001, early on embraced his tools and some of the incredible resources he brought on board. I think at the time when I met him, I think he had one coach and I think there's over close to 200 now. It enabled me to grow a bunch of companies. And what I learned is that there's some universal principles to building teams, getting them focused, holding them accountable, and making certain that there's enough cash to enable them to do what they need to do to be effective. And it was great that I had these things. I was very fortunate that I could rest on the shoulders of other people who had done work and especially Vern's ability to condense theory and big picture practices into some common things you can execute on. So I'm fortunate that those tools are being implemented in my organizations and people operate my company. And for a little while I've been sitting on boards and I've actually used some of the tools as a board member. And I came to a conclusion. There's all these social sector organizations that could be using these tools to be more effective. And what better gift to give them these tools so that they can increase their capacity versus sitting on the board and stepping in, stepping out and writing a check. You know, the whole principle, if you teach a person to fish, they'll have food forever. You give them fish, they have one meal. So that's where the initiative came through. That's where we came through.

What's the BHAG? Well, I know you've got a BHAG.

Yeah. Our BHAG right now is 500 social sector organizations implementing these tools by actually 2020. We got a very short period of time that we want to reach that.

Getting to 500 in the next three years. That's fantastic. I know I've worked with a couple and continue to look for a handful of them at the time, all the time that we can work with. So I'm super excited to be a part of it, but I feel very much a novice at it at this point about using it in that sector. So I'm looking forward to hearing what you've got to say about it. So talk to us. I guess we should start with cash flow.

Yeah, yeah, we can start with cash.

Flow that's sensitive to most of the social sector particularly. Right. And is very different from, in many cases, very different from for profit companies.

Yeah, it's interesting. It's something that in a for profit company, you know, especially if you're a business owner, you're focused on because you got to be payroll and it's right there in front of you and you're reminded about it all the time and there's enormous amount of focus around it. I think in the social sector, nonprofit because you're so mission based, you forget that without the cash flow, you can't actually have the impact that you're looking for and you can't manage that impact. And as you scale up, you need different degrees of cash and you have these great plans of making things happen and you don't always plan ahead. And sometimes the economy changes or things change and you don't make the adjustments. And one of the things that we have in Gazelles is we have these multiple tools that we can look and measure our gross margins. We can measure when cash is coming in and out. We can measure things like receivables. And most non profits are not thinking about that until it's too late. And then they scream to their donors and say, hey, hey, hey, I need $10,000 tomorrow to meet payroll or I need to make this happen. Otherwise we can't finish that building or we're going to burn the mortgage for the third time in a row. So, you know, it's very important for them to be focused on what we call cash flow and sustainability. Cash flow and sustainability, which in a weird part, sustainability is almost on the strategic part because what is your 5 year, 10 year, your BHAG goal? But most of these nonprofits are just trying to survive through the month or through the year, and they need to be thinking of both.

So how do you apply the tool? What do you do in the environment? What's the exercise look like? Where have you used it so far?

So I think where we really used it is when I was involved in my kids school, we were going through that, what we call that 2008, 2007 economic meltdown. And the school had grown significantly along the way. It not changed its financial structure. We sat back and we took a look at the tools and we evaluated the receivables, we evaluated what our revenue and our overhead costs are. And we use almost like a power of one. But then we went back and we started to look at the gross margin we had in each one of the classes. And we realized we were opening up too many classes. And what we also realize is that we were giving more financial aid than we could afford to give. This was a parochial school. And obviously we had a collision between the mission and our sustainability. And I think that's one of the challenges that a lot of these organizations have. They have a mission where we have to help, so we better help tomorrow this next person. But they forget that sometimes they might be digging themselves so deep that they might not be around six months from now because they didn't look beyond that. And we basically reorganized all the classes to get the appropriate gross margin so that we could build for the future. And then we also created reserves so that if there ever was a crisis again, we'd have money to survive a crisis of some sort, so we wouldn't have to borrow from the bank. And as a result, I mean, it's scary to think we realized that we had 25% more staff that we needed. And as a consequence of that analysis, fast forward five years later, we had the cash flow to take out financing to build a $10 million athletic facility that otherwise we would never be able to afford, because we have been in that just survive tomorrow mode versus survive five years from now mode.

That's really. That's some compelling movement. How did they take to the use of the tool? What was the experience like in getting those folks to do that work?

You know, listen, I think using those type of tools in that environment is a change of culture. And I think one of the challenges in the social sector is people are so mission oriented, which is why they exist, that they forget that they have to exist beyond the next week or two. And listen, there's nothing like a good crisis to make things happen. So I think we were fortunate in that sense that with what was going on economically in 2008, with the meltdowns and everything that everyone was saying, you got to do something. So that gave us the flag to carry, to make big, big changes. But there was a lot of resistance. And even under those circumstances, it was a close vote on the board side, a very close vote. But I think now people look at that moment, you know, fast forward, you know, eight years later, and they go, oh, my God, thank God we made those decisions. But at the time, you know, it was a challenge.

Totally get that. That. And there's nothing like a good crisis to embrace some changes. It's faster. Funny how it really takes that sometimes for us to do some of the most important, powerful things.

You know, good. You know, what is it? The good is the greatest evil to. Is the evil to great or. You know, that. Jim Collins, you know, when you're.

Good is the enemy of great. Yeah.

Good is enemy of great. Thank you. Yeah. Yeah. People don't. Are willing to change. They think we're doing all right. So.

So let's also talk. It seems like values are kind of a natural thing in the social sector. Talk to us about. And certainly purpose is. Talk to us about what you've done with values and how that's made A difference.

So I'll tell you, one of the great things about working in the social sector is that most people know why they're there. It's very clear that they are. They signed up typically because they want to have an impact. They signed up for that organization because it does something in the area of passion. One of the challenges I've always had with my businesses is try to make it very clear why people are relevant and the impact they're having. And it's hard to do in a business, although I believe it exists in the business. It's just, it's on the part of the leadership to make that connection clearer for people. So it typically, you know, purpose and core value. Poor purpose usually exists. Core values, not as often, although they do exist. You know, the challenge I think most of the social sectors happen have, and it's similar challenge that I think non for profits have is they get excited by the new candy. They see something new and they expand their reach or their market or their customer base. And if their purpose is not very clear, they start pursuing other angles. So we got involved with a community center that had been around 20, 30 years. Everyone felt that they knew what they were doing, but they hadn't recently validated it or gone through the process. We went through that typical exercise of strength, weakness, opportunities, threats, identify people, the core value sheet that they had already existed, have brainstorming. And the one thing that's very unique in the social sector is there's multiple stakeholders. If you're an entrepreneur, you typically own your own business. Maybe you have one or two passive investors, maybe you have a partner that you have to debate about something. But in the social sector, you've got multiple stakeholders. You've got a board, you've got the actual team members or their employees that play stakeholders. Then you have donors. Some donors like to play heavy, some donors don't like to play heavy. So you got to keep them happy. And then you actually have your community that you're involved in that is supporting you. Sometimes supporting you by just getting involved in your activities as volunteers, sometimes supporting you financially or, or just sometime just giving you that reputation that you need to exist in the community. So we had to go through a process of brainstorming of all those organizations, putting together the purpose. And we had one of these long, long mission statement that no one can really put together. And we shortened it to enriching lives by connecting people. And then we went back and validated core values. And when I say we, we as one of the coaches that we Work. One of the coaches, a friend of ours, is the one who went through this process, and, you know, they came back re energized. You know, I've spoken to the executive director, and he said with this Gazelles coach going through this simple process, that they felt reenergized, they had focus, and both the staff and the donors were ready to re engage and make things happen for the next five to ten years. So. So it was a great experience. Very great experience.

Yeah, I can totally hear that. And the movement and the focus of those things, the simplicity of it. Sometimes there's a tendency to just put more things down on the page. And I did an offsite a few years ago with a nonprofit, and as we went through the death by a thousand cuts of their strategy development, every stakeholder wanted to add a word or two to the. The whole thing. And then you ended up with this statement that was just so watered down and so painful. And there was such focus on. Not on alignment and agreement in that way, but there was more a focus on consensus. Right. Let's make sure everybody's happy and everybody agrees. And when I saw it at the end of the day, I just was like, oh, Jesus, guys, we are not. We've sacked the power out of this thing by trying to make sure every little nuance and stuff. And so there was a movement back then to tightening it up and to getting it to something that really popped as a message that everybody could carry forward. And I think it matters, right, to both the donors, the partners, the communities served. It matters to everybody engaged that it helps that pop.

Listen, the thing that powers the social sector is passion. And when you water it down and you try to create consensus, you don't get the passion, because everyone's like, it's close, but it doesn't feel right. So it's very critical to have that passion, because for the donors, it typically is an emotional reason why they write a check for a lot of the professionals. They need that passion to go in there and do what they need to do because they're not always highly compensated compared to the market. So it's very critical to get that alignment and get the community aligned. In this case, I spoke to both the coach and the executive director. The executive director loved it so much, he's asked the coach and myself to present at their national conference to a bunch of other executive directors nationwide on these concepts because he's done planning before. And as we know, the beauty of Gazelles is it's simple. It's something everyone can articulate quickly versus he's used to these 4050 page documents that you put into a closet or into a drawer and you never see again and it doesn't live. And he's already created emojis and he's created diagrams of things to use to recognize people and they're living it versus just saying, hey, this was an exercise that has no value but we have to do it because we have to do it.

You know, as you're speaking I started thinking about oh well this is especially a problem of the social sector, like oh, this tendency to do good and then incorporate all viewpoints and bring everybody together and make sure everybody's heard and embraced and all that versus focus and choose an area to make the biggest impact and then bring the power of that focus and choosing of things not to do and not to incorporate and the narrowing of the message. But then I realized, oh, you know, I've worked with a couple of big public companies and some fairly big mid sized companies and a range of different, different businesses and I started to realize, yeah, they've done some of the same things. I had an experience recently with a large company that went out and sort of neglected to do some of our strategy work, said okay, we'll work with you on execution but we really want to get some high powered guns in here for the strategy work. And so they brought in a big name strategy consultant and they produced a 90 page document that was full of like we're going to do everything for everyone right now.

I mean we know that that doesn't work.

We know it doesn't work.

I mean no one's going to read that again. They probably hand it to some board, the board goes oh my God. And everyone's just, you know, cya, you know, you know here whenever they're asked they can pull out the 90 page document. But for the purpose of a working client to have impact, has no impact, can't work, it just doesn't work. And no one can execute on that many things.

So I think the only time that works is if the 90 pages or the 40 or the whatever it is is support to the one page and the one phrase and the one thing that. So if that just represents the thinking and shows the due diligence in a larger company with financing that demands to demonstrate the thinking that went into something, then more power to it. But if you can't get down to that one phrase, that one strategy, the heart of that, then you've got a problem.

Absolutely. Listen, we're learning this. The beauty of The Internet. The beauty of computers is there's so much information out there. The challenge is as human beings, there's only so much we can absorb and do. And it's important for leadership teams to go through an exercise where they identify those key priorities and get executing versus being mired by so many things that no one really knows what's going on.

Well. And you talk about bringing values to life and I'm struck by. I recently visited a long term Gazelle's client that grew their business from 30 to now approaching 300 employees. And as I walked around that you could see the engagement of the people. You could feel it. You could see it and you could feel it as you walk from department to department. I'm not kidding, I'm not just throwing out a lot of like nice to say words, but. And here's what you could see. It was like kindergarten. And I mean that in the best way possible. I mean that people were just joyfully engaged in things. And the engagement and the display of things like values and the company's focus on priorities and progress on their goals was clearly visible in a crafty kind of a way. There were icons and trophies and tokens and things like that. I watched several huddles as we went around the room. And the engagement, the participation was so very different from the quote unquote professional kinds of environments that we see where everybody's reserved and tactical and political and not really throwing themselves fully into it. The trust isn't there. The debate is strategic and not full and healthy. And then people nod in covert disagreement with things. Right. So they nod and they say, okay, we're going to do that. But in reality they're going to go talk bad about it over coffee and try to undermine it later. These are the kinds of typical things we see in companies and that make comics like Dilbert famous. But. But I looked at this company and they've grown from 30 to now approaching 300. And I think about what you're saying about the nonprofits and it's that focus and it's that bring it to life and bringing values to life, not with some words stuck in the conference room that people ignore but like really brought to life. People engaged in making, competing in craft contests to showcase what a value means and how it represents. And people winning values and awards on a daily, weekly and monthly basis that show that they exemplify them and then participating richly in those rewards.

Exactly. I mean that. Listen, my experience both in the for profit and the nonprofit world is that the ping pong tables, the big dinners, you know, those. Those are things that don't create best places to work. It's when everyone is aligned and everyone's on the same page that you can see the pure joy, because then it's not faked. You're not being intimidated, you're not being peer pressured. It's real, it's in the person. And that's. I think that's the power of Gazelles is that by keeping it simple and focused, we could focus on the key things that are going to have the impact, which is some strategy that is simple, that everyone can embrace accountability. So everyone feels like they're making an impact in the organization. Teamwork, working with the people. So everyone's collaborative and everyone feels like they're being listened to. But at the end of the day, when the decision's made, we all row in the same direction. And then the day making sure you have the resources to support that strategy, because if you don't, it creates reactive, reactive tactics that enable, just torpedo all that work that you did on the first three. So that's identical. In the social sector, there's some nuances, which is things like governance, where you have more stakeholders, or the fact that you have to do fundraising, which is really part of your revenue versus just part of your capital raising. Those are key nuances. But other than that, people are people. They don't change. You know, they like to know what they're doing, they like to feel like they're doing it well. They like to be told exactly what's going on and it's transparent and they don't want surprises that, you know, can't make payroll tomorrow or there's not enough cash to support what they're trying to do. And so to me, that's why I think converting these tools into a social sector, which is an endeavor by the entire ecosystem, we have great coaches working on it. We have Vern working on it, Keith Kopp, we have Gazelles Growth Institute is something that. Where the gazelles community can really give back exponentially. So for me, it's powerful and very exciting.

Nice. So what's next? Where do we go from here? How are you growing towards the 500 impacted? Where are we at now? Give us an idea of next and next steps and things like that.

So I think what we were first trying to do is, you know, there's a lot of different directions that we could go with Gazelle's social initiative. And we decided that the first area of focus would be around the coaches. I think the best Experience. And I think this is the same thing for. For the. For profits. And I think you agree this bill is. It's not enough just to have the content. I think it's important to have a coach who can mentor you, kind of give you direction, influence you, and in a subtle way, hold you accountable by facilitating your meetings, your quarterly meetings, your rhythms. So we've been working with the coaches and over the past year and a half, we've been modifying the social sector content. We have a couple versions, I think we're on Rev 3 already of those versions. And we ran our first social sector workshop in July where we had a bunch of social sector clients come in Portland and we trained our first group of coaches in July and look to train another group in February with the hope that through the coaches we can have the greatest impact on our organization. So we're still in that period. What we found out is about 40% of the coaches are already working with the social sector, which is a pretty large number, which we were surprised. I don't know if we were surprised or not surprised, but we were pleasantly happy to see that. And I think in the next survey of the coach, which is we're going to try directly to identify how many clients they already have. You know, our guess is, is, you know, there's probably already about 50 to 60, maybe 100 clients that are being served, maybe more. But our goal is to get to that, you know, 500 plus. And we think we can do that if we can bring on some social sector coaches who just do social sector and then coaches like you who say, hey, you know something, I can work with this client. It makes sense. They're a learner, they want to grow, they want feedback, and I can help them. So I think it's a combination of both types of coaches.

Well, you know, we've worked with a couple of social sector clients and we certainly would like to do more. And I think that one of our things that I haven't told you yet is that we'd like to host and partner on creating one the of those workshops. And so hopefully a couple of the other coaches in the Bay Area would like to do. I know we have a lot of passionate people in the social sector in the San Francisco Bay Area, so I think it'd be great to have some of that. We also have a pretty good history of social venture type work here, so I think the visibility and the interest of that ought to be really good. So I don't have a date for that yet, but I look Forward to.

That would be awesome. Our goal is to do six of those next year in 17. Oh good. Just to try to get this. So that would be great.

Well, we ought to be able to.

Do one, so hopefully we can get you engaged. And listen, Verne Harnish is totally behind this. He'd like 10% of all the attendees at his conference be from the social sector. He himself believes in that and is passionate about it. It's just finding the right way to make it all happen. It's they say, right?

Yes, yes, totally. All right, well, so this is some great stuff. More info. Any resources or links you want us to share with people?

Well, listen, going to the gazelles.com website, you can find there some worksheets, some growth tools, there's a section called Social Sector, there's the regular growth tools and obviously there's in different languages and then there's one there in the social sector. And very shortly under gazelles.com we're going to be setting up a tab for Gazelle Social Initiatives and we'll be posting new information there also, so that's probably the best place to start.

Okay, we'll include those links in the show notes as well and we'll keep our folks posted on the workshop when we have one here and we'll link to the other workshops as they're available and share those out to our social platform in our newsletter.

Well, I appreciate all the support inviting me to be on this podcast and the support you've shown from day one for the social sector. It's very much appreciated. So thank you so much.

Awesome. Thanks for being on the show with us today, Gil.

Thank you.

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