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Daily Nuggets: A For Impact Blog

Principles – Ray Dalio

Ray Dalio built Bridgewater into one of the most successful hedge funds in the world. He correctly predicted the 2008 financial crash, and he attributes much of his success to the life lessons he later encoded in the form of Bridgewater Principles. His new book on this subject was just published.

I’ll come back to his book in a minute. But first, I want to talk about the impact these principles have had on The Suddes Group.

After Dalio first published his principles for the public in 2010, I was one of the 3 million people (!!!) who downloaded and devoured them. Inspired by Dalio, I starting writing up Suddes Group’s Principles and first shared them with our team in 2011. TSG Principles have proven to be an effective way to encode and transmit lessons to our team.

Here are a few Suddes Group Principles:

#3. The best knowledge is built (and then owned) by the clients.

We can develop the coolest strategy… or the greatest message… but if it’s not ‘owned’ and internalized by the client, it will not have the full effect. Often, it will not even have a shelf-life!

Facilitating the learning for clients often takes more effort, but it is essential in order for us to have the intended impact.

#10. Do what you need to do for YOU to be able to sell the impact. (I Am Sold Myself)

We’ve developed a lot of systems and frameworks over the years. As much as a team member can and should rely on those ‘encoded lessons,’ each person must take personal responsibility for doing whatever it takes to be SOLD on the program impact (or vision).

We’ve had team members:

  • Sit in an ER for two days to observe the traffic.
  • Travel to rural outposts to see how health evaluation happens in those communities.
  • Dig through aisles of dusty archives to find the perfect ‘historical funding story.’

#19. Never assume a client ‘already knows what he/she is doing (with respect to the scope of work)’. NEVER. (Repeat, a 3rd time, NEVER.)

My greatest mistakes have been when I’ve tried to skip part of our process… when I’ve thought, “He or she knows that already. I’m going to skip over that.”

Don’t assume. Work the process like an airline pilot working a pre-flight checklist.

Back to Principles (the book)….

I’m only half-way into Dalio’s book, but like any book in this format, there are gems and nuggets for the taking; you can choose what resonates most for you. I find the real meat to be in the commentary Dalio provides behind each principle. For instance, he shares this explanation on the distinctions between first-order thinking and second-order thinking:

By recognizing the higher-level consequences nature optimizes for, I’ve come to see that people who overweigh the first-order consequences of their decisions and ignore the effects of second- and subsequent-order consequences rarely reach their goals. This is because first-order consequences often have opposite desirabilities from second-order consequences, resulting in big mistakes in decision-making. For example, the first-order consequences of exercise (pain and time spent) are commonly considered undesirable, while the second-order consequences (better health and more attractive appearance) are desirable. Similarly, food that tastes good is often bad for you and vice versa.

Quite often the first-order consequences are the temptations that cost us what we really want, and sometimes they are the barriers that stand in our way. It’s almost as though nature sorts us by throwing us trick choices that have both types of consequences and penalizing those who make their decisions on the basis of the first-order consequences alone.

By contrast, people who choose what they really want, and avoid the temptations and get over the pains that drive them away from what they really want, are much more likely to have successful lives.

This makes me think of the fear that some people have around fundraising. They are stopped by the ‘first-order thinking,’ instead of continuing to consider the second-order consideration: the impact it will have… the lives saved or changed.

Defining Leadership

Amazon sells over 21,000 books on leadership, and we’ve read a lot of them. When it comes to effective leadership, the famous Supreme Court framing could apply: “We know it when we see it.”

A wonderful philanthropist, veteran business leader, and For Impact friend Bob Werner says it best: “Leaders Lead.”

Here are some themes and definitions we commonly use across all sectors, geographies, and types of organizations:

  • Leadership is about making decisions! This is a top challenge we encounter. One of the most important tasks of leaders is to MAKE DECISIONS. Teams can usually adjust and learn from a wrong decision, but they can’t adjust and learn from INDECISION.
  • Casting the Vision. It could be argued that this is a form of decision-making, but someone (read: ultimately ONE PERSON) needs to set the vision. Too often we see people in leadership positions waiting for the vision to emerge by magic, or by consensus (which–in this case–is also magic).
  • “Lead toward a brighter tomorrow.” I think I picked up this definition from Marcus Buckingham.  But so much of leadership is about setting the STORY and CONTEXT for the organization, team, or project. As humans, we want to feel a sense of progress in what we do. We need leaders to chart that path forward.

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”
– John Quincy Adams

Energy, Not Time, Is Our Most Precious Resource

We’re spending the day working with leaders from a social justice movement. Each leader wears 19 hats (with fundraising being only one of them). Whereas we can ‘teach’ fundraising, we’ve found it’s just as important to put this in the context of working effectively.

To that end, I’m rereading some notes from The Power of Full Engagement. The fundamental message: MANAGE YOUR ENERGY, NOT YOUR TIME.

  • Energy, not time, is the fundamental currency of high performance.”
  • “Every one of our thoughts, emotions, and behaviors has an energy consequence, for better or worse.” <--- Think about that! Our THOUGHTS drive our most precious resource! This insight is what leads to author Jim Loehr's next book: The Power of Story.
  • “Performance, health, and happiness are grounded in the skillful management of energy.”
  • “The number of hours in a day is fixed, but the quantity and quality of energy available to us is not.”
  • “The more we take responsibility for the energy we bring to the world, the more empowered and productive we become. The more we blame others or external circumstances, the more negative and compromised our energy is likely to be.”
  • “Leaders are the stewards of organizational energy–in companies, organizations and even in families.”
  • “To be fully engaged, we must be physically energized, emotionally connected, mentally focused and spiritually aligned with a purpose beyond our immediate self-interest.”

A Different Way to Think about ‘Just Ask’

Just Ask.

This is a core tenet of the For Impact message.

If you don’t ask, you don’t get.
People can’t GUESS what you need.

When we share this message people tend to process it in one of two ways:

Most of a room will see it for clarity and simplicity.

“Oh, it can be that simple.”

“Now that I think about it, that $25,000 we received was because we asked for $25,000.”

A second part of the room will see it as slightly aggressive.

For the second group, I would offer this reframe. Don’t think about this as ‘asking aggressively,’ think about engaging your prospect around your impact in such a compelling way that she asks, “How can I help?”

This CAN happen on a first visit.

(Or, at a minimum, you should aim to make it happen by a second visit. Read: People Cultivate Because They Can’t Communicate)

And if you’re asked that question, you need to have a clear answer! That answer needs to be more than a superficial next move. It needs to address exactly what it will take to make the impact happen (in terms of resources, connections, or funding).

Storytelling – The Basis for Human Progress.

I was turned on to Yuval Noah Harari’s Sapiens: A Brief History of Humankind after reading a book review from Bill Gates. (I won’t try to ‘one-up’ a book summary by Bill Gates, so just read his.)

Harari walks through the rise of the homo sapien and argues that a ‘cognitive revolution’ is what allowed our species to really win out over other species.

Specifically, it was the ability to develop and transfer abstract concepts (Note: Harari calls these abstract concepts: fiction and story). Without an abstract concept, we would not have the concept of religion… or the rule of law. Without these abstract moral codes, our rival species did not assemble or cooperate in large groups. It required the idea of ‘something greater’ to develop cohesion and community in groups greater than about 150 individuals.

How did Homo sapiens manage to cross this critical threshold, eventually founding cities comprising tens of thousands of inhabitants and empires ruling hundreds of millions? The secret was probably the appearance of fiction. Large numbers of strangers can cooperate successfully by believing in common myths.

Any large-scale human cooperation – whether a modern state, a medieval church, an ancient city or an archaic tribe – is rooted in common myths that exist only in people’s collective imagination. Churches are rooted in common religious myths. Two Catholics who have never met can nevertheless go together on crusade or pool funds to build a hospital because they both believe that God was incarnated in human flesh and allowed Himself to be crucified to redeem our sins. States are rooted in common national myths. Two Serbs who have never met might risk their lives to save one another because both believe in the existence of the Serbian nation, the Serbian homeland and the Serbian flag. Judicial systems are rooted in common legal myths. Two lawyers who have never met can nevertheless combine efforts to defend a complete stranger because they both believe in the existence of laws, justice, human rights – and the money paid out in fees.

Yet none of these things exists outside the stories that people invent and tell one another. There are no gods in the universe, no nations, no money, no human rights, no laws, and no justice outside the common imagination of human beings.

People easily understand that ‘primitives’ cement their social order by believing in ghosts and spirits, and gathering each full moon to dance together around the campfire. What we fail to appreciate is that our modern institutions function on exactly the same basis. Take for example the world of business corporations. Modern business-people and lawyers are, in fact, powerful sorcerers. The principal difference between them and tribal shamans is that modern lawyers tell far stranger tales.

Here is the very powerful insight that sticks with me. Harari writes:

Telling effective stories is not easy. The difficulty lies not in telling the story, but in convincing everyone else to believe it. Much of history revolves around this question: how does one convince millions of people to believe particular stories about gods, or nations, or limited liability companies? Yet when it succeeds, it gives Sapiens immense power, because it enables millions of strangers to cooperate and work towards common goals.

Innovators, leaders, and fundraisers are storytellers. We develop NEW stories. We’ve evolved to do this! And… “Telling effective stories is not easy. The difficulty lies not in telling the story, but in convincing everyone else to believe it.”

The task in front of us is not easy, yet — just as it always has — all progress of humanity depends upon it.

Audacious Philanthropy

Read the feature article in this month’s Harvard Business Review: Audacious Philanthropy. Lessons from 15 World-Changing Initiatives.

The Movements: The Anti-Apartheid Movement – Aravind Eye Hospital – Car Seats – CPR Training – The Fair Food Program – Hospice Care – Marriage Equality – Motorcycle Helmets in Vietnam – The National School Lunch Program – 911 Emergency Services – Oral Rehydration Solution – Polio Eradication – Public Libraries – Sesame Street – Tobacco Control.

It’s a ‘must read’ for social innovators, funders, and movement leaders!!!

Executive Summary:
Research revealed five elements that together constitute a framework for philanthropists pursuing large-scale, swing-for-the-fences change. Successful efforts:

  1. Build a shared understanding of the problem and its ecosystem
  2. Set “winnable milestones” and hone a compelling message
  3. Design approaches that will work at massive scale
  4. Drive (rather than assume) demand
  5. Embrace course corrections

The article walks through dozens of illustrations and case studies — and it’s in these individualized narratives that we find true gold. Here is one vignette about the power of reframing to advance the LGBTQ rights movement:

“Supportive philanthropists financed polling and focus groups to help movement leaders understand how to reframe the core message. The research revealed that many voters perceived the movement as driven primarily by same-sex couples’ desire for the government benefits and rights conferred by marriage—and they did not find that a gripping rationale. This insight was pivotal: The movement refocused its communications strategy on equality of love and commitment, arguing that “love is love”—a message that struck a chord. Victories piled up, culminating in the 2015 Supreme Court ruling that legalized same-sex marriage throughout the United States. And although limited in scope, the push for marriage equality advanced the broader LGBTQ rights agenda in ways that might not otherwise have been possible or that would have taken much longer.”

Using Brain Science to Engage Prospects

Humans seek order. In a very primitive sense, we’ve evolved to recognize faces (the ‘whole’) over features (the ‘parts’). In a cognitive sense, we learn new things by associating them with existing concepts in our brain… so all communication and learning is a mapping exercise inside our brains.

Gestalt theory emerges from these scientific underpinnings.

Think about a time when someone explained something new to you. In particular, think about a time when this explanation was coming from a subject matter expert — a real geek! Think about what it was like to catch — and comprehend — all the jargon coming at you! You likely felt overwhelmed. You likely missed concepts because you were devoting mental resources to sorting out one or two ideas in particular.

This is gestalt in action: Gestalt explains that feeling of WORKING to understand the other person. You were working to create order in YOUR mind.

Let’s contrast this with the presenter’s perspective. Everything is in perfect order for the speaker! She is explaining the concept as it makes sense in her head.

Great sales and effective 1:1 communication begins with the ‘order’ (or mental skeleton) as it ALREADY exists in the prospect’s head!

Instead of presenting your ‘frame,’ or concept, start by asking questions. Then, build your presentation on the prospect’s EXISTING mental skeleton. This has several effects:

  • It increases the amount of information EFFECTIVELY communicated. EVERY PIECE of information coming in has a category, or a place, in the prospect’s mind. Rather than making the prospect ‘work for order.’
  • Drawing on more neuroscience, it actually bypasses the fight-or-flight region of the brain. Think about your first impulse when a department store representative walks up to ask, “Can I help you?” For most people, our most immediate impulse is defensive!We can bypass the fight-or-flight (defensive) center when we are continually responding to a prospect’s concept.
  • You use words that make sense! This other mode of engagement requires us to LISTEN. Not only are we building on the prospect’s mental skeleton, but he is also sharing with us the key WORDS (concepts) that resonate.

In our boot camps, we do an exercise to illustrate gestalt and these learning points. We ask attendees to find a partner and — in two minutes’ time — communicate ONLY what is needed for the prospect to understand the organization in such a way that it could be communicated to someone else.

Most people are pressured by the ‘two-minute’ constraint. They start puking information. You can watch the room and see the prospects’ eyes glaze over. Prospects are overwhelmed with the information coming at them.

We then ask each partner to start over. In the second instance, we instruct the sales person to start the two minutes with an open-ended question… and then to follow-up with at least five more questions during the two minutes.

The exercise is used to show that you can actually communicate MORE by asking questions, and then responding…. by building your message on top of the prospect’s EXISTING mental skeleton.

Here is the example I use to illustrate this point. I communicate what it is that we do at The Suddes Group/For Impact.

(You have an advantage in READING these words. Imagine LISTENING to them.)

Scenario 1: The Suddes Group provides fundraising help. Unlike a lot of consultants, we also focus on organizational development and team development. We focus on the storytelling, the team, AND the funding implementation. We’ll do whatever it takes to help you move the ideas into funding. Often, this means we go on visits WITH you. We have a sales process, a funding road map, and a relationship-based funding model….

Twenty seconds into my ‘spiel’, I’ve lost the room.

Scenario 2: (I pick ONE person — Lisa — and engage in a dialogue.)
Me: Lisa, what is your greatest funding challenge?
Lisa: Trying to figure out what to say to get people to give the money.
Me: Is it that you don’t know HOW to ask? Or that you don’t have a succinct message for the organization?
Lisa: I think we’re pretty succinct in our message. In fact, we’re GREAT storytellers. And, I think we have prospects, we just don’t seem to be able to convert any of them to big gifts.
Me: Do you feel like you have a reliable process to follow?
Lisa: Actually… no… maybe that’s it. Now that you ask the question, there are practices we probably don’t know about to make the ask easier. And then I would say we lack the confidence to ask.
Me (communicating WHAT we do in response form). Lisa, this is what we do. We help teams with those two obstacles. We help them figure out what to say, and how to ask, AND we help them build a process so that they can do this again and again.

The goal of the exercise is to communicate what you do in a way that the other person could communicate with others. In the first scenario, I was forcing the prospect to mentally categorize all sorts of new concepts – most of which weren’t interesting or relevant to the prospect. In the second scenario, we were successful by building questions and then building relevant associations for the prospect.

In 1:1 engagements, you can COMMUNICATE more effectively by asking questions, and then by RESPONDING with relevant concepts.

The Rise of Automation. Man’s Search for Meaning(ful) Work.

15% of The Suddes Group’s focus is in the form of coaching emerging social entrepreneurs. In that area, I will remember 2017 as the year we saw the rise of automation-for-social-impact. We’re encountering dozens of artificial intelligence start-ups for social good. It’s eerie. All of a sudden we’ve crossed some threshold where this ‘automation stuff’ is a commodity.

At the same time, the business conversations around meaning, purpose, and work are exploding. So we can SEE a future where there will be fewer jobs, AND we’re collectively searching for more meaning in the jobs we have.

This is what makes an article from America Magazine about meaningful work so timely. “Can Catholic Social Teaching Help Solve the Labor Crisis?” – August 21, 2017. (America is a bi-weekly Jesuit Catholic publication.)

I’ve shared this article dozens of times in the past two weeks. It captures the collision of these concepts. It also provides a moral argument for meaningful work.

In summary, the article walks through three big discussions:

  • Due to automation, jobs will continue to disappear.
  • Meaningful work is our purpose and inherent to human dignity.
  • We have a responsibility to do more than ‘make-work-jobs.’ We must think about how to create meaningful work. Work that “has a meaningful contribution to the common good.”

Selected highlights:

  • “The United States in this century has seen the most severe falloff in employment rates since before World War II.”
  • “For most working Americans, foreigners are not the main competition–machines are the ones gunning for jobs.”
  • “One study in 2013 found that 47 percent of Americans were at high risk of losing their jobs to automation in the foreseeable future.”
  • “Human beings were made for work…. the United States’s poor and marginalized yearn to be full participants in their own societies. As Catholics, with our rich body of social teachings, we need to stay engaged in the conversation, helping people find work that is meaningful. Of course that means encouraging job growth. But we may also need to reject some of the quickest and most obvious solutions to the employment problem, in the interests of realizing an economy built around service and the common good.”
  • “St. John Paul II reminds us that work is ‘a fundamental dimension of human existence on earth.’ In Genesis, God commands Adam and Eve to work, and responding to that command is our way of answering the divine call to ‘multiply and subdue the Earth.'”
  • “Work derives its objective significance from its meaningful contribution to the common good… this is a magical ingredient that can convert even a dreary task into something ennobling, humanizing and salutary for our souls.”
  • “Stimulating new markets is much more difficult than generating make-work jobs, but the former is much better if we want people to spend their lives engaged in meaningful activities… for those who truly need material assistance, it is better to subsidize directly than to distort the labor market.”

Key Funding Points for Social Entrepreneurs

I’ve been spending a lot of time ‘in-the-field’ the past few weeks coaching some remarkable social entrepreneurs from Mulago, StartingBloc, and (nonprofit graduates of) TechStars.

Here are simple reminders we come back to with almost every social entrepreneur.

  • 97/3. Especially as it relates to start-up / scale-up capital, 97 percent of your funding is going to come from 3 percent of your ‘list’. This is about a few key prospects (not kickstarter, or 1000 requests).
  • Own your 30,000′ Message. Social entrepreneurs tend to geek-out on WHAT they do. You know WAYYY too much. Focus on the WHY… the ‘TOWARD WHAT END’, or you’ll lose me!
  • Have an ask. Create SALES TOOLS. Social entrepreneurs create a lot of plans, materials, etc. Show me what you’re going to use to help you get ‘numbers on the table’.
  • JUST ASK. You don’t have time for extended courtship; neither does your funder.

    If this feels too DIRECT, think about it in this way: Your goal is to get the prospect to ask, “How can I help?” And then you need to have an answer. I challenge you to get them to ask this in the first meeting!

  • (At this stage) You are the Chief Sales Officer. If you don’t like fundraising you’re going to hate managing a fundraiser even more.

    Don’t hire a director of development. Instead, hire someone to take things off your plate.

  • Believe in yourself. Don’t pitch a hypothesis. Pitch a vision.

Engagement Tool Template for Social Entrepreneurs

I’m north of San Francisco this week spending time as a Mulago Foundation Faculty Member with the 2017 Mulago Foundation Rainer Arnhold Fellows.

I feel really lucky to have any association with this group. Hats off to Mulago for (literally) traveling the world in search of the most promising entrepreneurs. They’ve done a terrific job. Please take a moment to read about these amazing social entrepreneurs and the work they’re doing to end extreme poverty!

I’m helping each social entrepreneur craft his or her message and ‘ask.’ Here is the Social Entrepreneur Engagement Tool Template I’m using. (see: What is an Engagement Tool?) Our Altitude Framework guides how to process these components.

At 30,000′ (for social entrepreneurs) it’s powerful and simple to communicate the PROBLEM and then the SOLUTION. (Most entrepreneurs actually end up at 14,000′, geeking out about the platform, biz model, or the theory-of-change…)

Funders (or indeed ANYBODY else) are engaged FIRST and FULLY at the WHY level.

From here, notice the template has two versions (front/back). The funding presentation goal at 14,000′ is to help a funder understand WHAT you do and WHERE the money goes. In other words, what’s the RATIONALE for funds? What will be the IMPACT that will be achieved?

The coaching goal at 14,000′ is to help the entrepreneur SIMPLIFY the WHAT… and then communicate the resulting (and quantifiable) IMPACT.

Finally, at 3′, there are two ways to think about working toward the ASK.

Again, most entrepreneurs default to working on the model (at 14,000′). This framework helps them to communicate FIRST at the WHY level. Then it SIMPLIFIES the WHAT. And, CLARIFIES the ASK.