The Five Most Important Questions You Will Ever Ask About Your Organization | Notes & Review

Posted on May 30, 2013


Peter Drucker. The Five Most Important Questions You Will Ever Ask About Your Organization. Jossey-Bass, 2008. (119 pages)



It is often said that the simple questions are the hardest to answer. … Simple questions can be profound, and answering them requires us to make stark and honest — and sometimes painful — self-assessments. (xi)

This book is designed to be used for organizational strategic self-assessment, not for program assessment or for an individual performance review. (xii-xiii)

The ultimate beneficiaries of this very simple process are the people or customers touched by your organization and by others like you who have made the courageous decision to look within yourselves and your organization, identify strengths and challenges, embrace change, foster innovation, accept and respond to customer feedback, look beyond the organization for trends and opportunities, encourage planned abandonment, and demand measurable results. (xiii)

Self-discovery is an introspective and courageous journey that gives organizations and leaders the energy and courage to grow. (xiv)

Why Self-Assessment?

The ninety million volunteers who work for nonprofit institutions — America’s largest employer — exemplify the American commitment to responsible citizenship in the community. Indeed, nonprofit organizations are central to the quality of life in America and are its most distinguishing feature. (1)

…they need management all the more because they have no conventional bottom line. (1)

We have to have discipline rooted in our mission. We have to manage our limited resources of people and money for maximum effectiveness. And we have to think through very clearly what results are for our organization. (2)

The Five Most Important Questions. You cannot arrive at the right definition of results without significant input from your customers — and please do not get into a debate over that term. In business, a customer is someone you must satisfy. If you don’t, you have no results. And pretty soon you have no business. In a nonprofit organization, whether you call the customer a student, patient, member, participant, volunteer, donor, or anything else, the focus must be on what these individuals and groups value — on satisfying their needs, wants, and aspirations. (3)

The danger is in acting on what you believe satisfies the customer. You will inevitably make wrong assumptions. Leadership should not even try to guess at the answers; it should always go to customers in a systematic quest for those answers. (3)

Planning is Not An Event. It is the continuous process of strengthening what works and abandoning what does not, of making risk-taking decisions with the greatest knowledge of their potential effect, of setting objectives, appraising performance and results through systematic feedback, and making ongoing adjustments as conditions change. (4)

Encourage Constructive Dissent. If you have quick consensus on an important matter, don’t make the decision. Acclamation means nobody has done the homework. (4)

Nonprofit institutions need a healthy atmosphere for dissent if they wish to foster innovation and commitment.

Creating Tomorrow’s Society of Citizens. Self-assessment is the first action requirement of leadership: the constant resharpening, constant refocusing, never being really satisfied. And the time to do this is when you are successful. If you wait until things start to go down, then it’s very difficult. (5-6)

Self-assessment can and should convert good intentions and knowledge into effective action — not next year but tomorrow morning. (6)

Question 1: What Is Our Mission?

  • What are our challenges?

  • What are our opportunities?

  • Does the mission need to be revisited?

A fundamental responsibility of leadership is to make sure that everybody knows the mission, understands it, lives it. (13)

It Should Fit On a T-Shirt. The mission says why you do what you do, not the means by which you do it. (14)

To have an effective mission, you have to work out an exacting match of your opportunities, competence, and commitment. (14)

Make Principled Decisions. Never subordinate the mission in order to get money. If there are opportunities that threaten the integrity of the organization, you must say no. Otherwise, you sell your soul. (15)

The ultimate test is not the beauty of the mission statement. The ultimate test is your performance. (16)

Question 1: What Is Our Mission? (Jim Collins)

…preserve the core, yet stimulate progress. (17)

…the great paradox of change is that the organizations that best adapt to a changing world first and foremost know what should not change; they have a fixed anchor of guiding principles around which they can more easily change everything else. (17)

No matter how much the world changes, people still have a fundamental need to belong to something they can feel proud of. They have a fundamental need for guiding values and sense of purpose that give their life and work meaning. They have a fundamental need for connection to other people, sharing with them the common bond of beliefs and aspirations. (19)

Question 2: Who Is Our Customer?

  • Who is our primary customer?

  • Who are our supporting customers?

  • How will our customers change?

Rather than debate language, I ask, “Who must be satisfied for the organization to achieve results?” (25)

Social sector organizations have two types of customers. The primary customer is the person whose life is changed through your work. … Supporting customers are volunteers, members, partners, funders, referral sources, employees, and others who must be satisfied. (25)

Identify the Primary Customer.

Identifying Supporting Customers.

We look at the projections and understand that by the year 2000, one-third of this country will be members of minority groups. Many people are very apprehensive about the future and what this new racial and ethnic composition will mean. We see it as an unprecedented opportunity to reach all girls with a program that will help them in their growing-up years, which are more difficult than every before. – Frances Hesselbein (national executive director, Girl Scouts, 1976-1990)

Know Your Customers. And there are customers you should stop serving because the organization has filled a need, because people can be better served elsewhere, or because you are not producing results. (28)

Question 2: Who is our Customer? (Philip Kotler)

The purpose of a company is to create a customer…The only profit center is the customer. – Peter Drucker

Nobody can guarantee your job. Only customers can guarantee your job. – Jack Welch

Simply managing data about customers is no substitute for ensuring that the customers are satisfied with their experience of the company.

If you cannot smile, do not open a shop. – Chinese proverb

Question 3: What Does the Customer Value?

  • What do we believe our primary and supporting customers value?

  • What knowledge do we need to gain from our customers?

  • How will I participate in gaining this knowledge?

The question, What do customers value? — what satisfies their needs, wants, and aspirations — is so complicated that it can only be answered by customers themselves. And the first rule is that there are no irrational customers. (39)

Leadership should not even try to guess at the answers but should always go to the customers in a systematic quest for those answers. (39)

Understand Your Assumptions. Then you can compare these beliefs with what customers actually are saying, find the differences, and go on to assess your results. (40)

Listen to Your Customers.

Question 3: What Does the Customer Value? (Jim Kouzes)

Every exemplary leaders do is about creating value for their customers. (43)

Clearly customers value an organization that seeks their feedback and that is capable of solving their problems and meeting their needs. …customers value a leader and a team who have the ability to listen and the courage to challenge the “business-as-usual” environment, all in service of the yearnings of the customer. (46)

Question 4: What Are Our Results?

  • How do we define results?

  • Are we successful?

  • How should we define results?

  • What must we strengthen or abandon?

The results of social sector organizations are always measured outside the organization in changed lives and changed conditions — in people’s behavior, circumstances, health, hopes, and above all, in their competence and capacity. To further the mission, each nonprofit needs to determine what should be appraised and judged, then concentrate resources for results. (51)

Look at Short-Term Accomplishments and Long-Term Change.

Qualitative and Quantitative Measures. Qualitative measures address the depth and breadth of change within its particular context. … Quantitative measures use definitive standards. (53)

Assess What Must be Strengthened or Abandoned. To abandon anything is always bitterly resisted. People in any organization are always attached to the obsolete — the things that should have worked but did not, the things that once were productive and no longer are. (54)

Leadership is Accountable. There are times to face the fact that the organization as a whole is not performing — that there are weak results everywhere and little prospect of improving. (55)

The mission defines the scope of your responsibility. Leadership is accountable to determine what must be appraised and judged, to protect the organization from squandering resources, and to ensure meaningful results. (55)

Question 4: What Are Our Results? (Judith Rodin)

If results are our goal, they must also be our test. What endures from the work of nonprofits is not how hard we try or how clever we may be or even how much we care. Hard work is indispensable to success, of course, in this as in any other field; intelligence is prized in our sector as in all others involving intellectual endeavor; and caring is what has drawn the best people into this line of work. But ultimately what is remembered is how we have been able to improve lives. (59)

Question 5: What Is Our Plan?

  • Should the mission be changed?

  • What are our goals?

…planning is not masterminding the future. Any attempt to do so is foolish; the future is unpredictable. (65)

Planning does not substitute facts for judgment nor science for leadership. (66)

Goals Are Few, Overarching, and Approved by the Board.

One prays for miracles but works for results. – St. Augustine

Objectives Are Measurable, Concrete, and the Responsibility of Management.

Five Elements of Effective Plans.

Abandonment: The first decision is whether to abandon what does not work, what has never worked. (68)

Concentration: Concentration is building on success, strengthening what does work. (68)

Innovation: …the diversity that stirs the imagination. (69)

Risk taking: If you are too conservative, you miss the opportunity. If you commit too much too fast, there may not be a long run to worry about. (69)

Analysis: Before making the final decision, you study a weak but essential performance area, a challenge on the horizon, the opportunity just beginning to take shape. (70)

Build Understanding and Ownership. The plan begins with a mission. It ends with action steps and a budget. (70)

Never Really Be Satisfied. True self-assessment is never finished. Leadership requires constant resharpening, refocusing, never really being satisfied. I encourage you especially to keep asking the question, What do we want to be remembered for? (71)

Question 5: What Is Our Plan? (V. Kasturi Rangan)

Planning is the process of translating the organization’s strategic or mission goals to a set of actionable programs, and tracing the path of how those within the organization would meet the goals. In a nutshell, strategy formulation is an exercise in setting goals for the organization and developing a model of how achieving the goals would advance the strategic purpose of the organization. A plan, by contrast, is the action agenda that is aimed at reaching the goal. The biggest mistake organizations make about a “plan” is to cast it in stone as a tactical document, much like a construction drawing with all details filled in for perfect implementation. (73)

Planning is not masterminding the future. Any attempt to do so is foolish; the future is unpredictable – Peter Drucker

Transformational Leadership (Frances Hesselbein)

I have found that organizations usually pass eight milestones to reach their destination: a relevant, viable, effective organization.

1. Scan the environment. Flying on assumptions can be fatal. (78)

2. Revisit the mission. …one’s mission does not define how one operates, but simply why. (79)

3. Ban the hierarchy. Transformation requires moving people out of their organizational boxes into flexible, fluid management systems. (79)

4. Challenge the gospel. There should be no sacred cows… (80)

5. Employ the power of language. Max De Pree…spoke about workers needing “a covenant, not a contract.” Such powerful aspirations — and the language to go with them — are essential to guide an organization into transformation. (80)

6. Disperse leadership across the organization. Leadership is a responsibility shared by all members of the organization. (80)

7. Lead from the front, don’t push from the rear.

8. Assess performance.

— VIA —

This will be a relatively quick read resulting in an amazingly long journey of self-assessment, worth every stop along the way to address and answer key and critical questions of yourself and your organization. I recommend this to ALL my friends and colleagues working in the social sector.