Walking the Talk: From Founder-centric to Institutionalized Organizatio
by Mario Morino, Co-founder of VPP
One of the most difficult challenges facing entrepreneurial, innovative leaders who found organizations—whether business or nonprofit—is knowing when it’s time to move to broader-based ownership so the organization becomes independent and capable of sustaining its long-term impact. Sooner or later these founders face a day when the organization they helped birth is no longer theirs alone.
To be sure, founders can be successful in the business world by remaining small, family-run operations and/or continuing as a privately held company. But for those who seek to grow their impact and need outside capital (hence investors) to do so, the chance for the founder to continue long term is relatively low. In many cases, when a venture capital or private equity firm makes the first investment in an established, founder-led organization, it is not unusual to set the expectation that the founder will likely yield to new leadership within 18 to 24 months! And then, they watch their organization reinvented about every two years thereafter to respond to changing times, needs, and opportunities. The successes of Bill Gates, Steve Jobs, and Jim Goodnight are more the exception than the rule.
The hard truth is that many organizations grow beyond the capabilities of their founders and need more and different types of leadership, skills, and broader mission ownership to succeed. This realization—that this time, the needed change falls on your doorstep—is a tough punch to the gut for a founder. I lived it during my commercial career. And I happily embrace it (again) in my nonprofit career.
Venture Philanthropy Partners is now at this stage. It must move beyond a founder-based organization and institutionalize itself and its work to multiply its impact on and value to the nonprofits in which it invests, the children they serve, and the region and field overall. We were honest about this change. We planned for it. We’ve struggled with it and made some missteps along the way. And now, we’re acting on it. Working hand-in-hand with the Board and management, I am enthusiastic and supportive of the changes we are taking to move VPP toward being an institutionalized resource and asset for our region and the field.
On February 21, we took major steps in this direction, when the Board established the new role of President and Chief Executive Officer and then elected Carol Thompson Cole as VPP’s first President and CEO. I will remain as Chairman, continuing to be active but in a non-executive role. These are just several of a series of actions underway to help navigate this transition.
Early False Starts
Although my fellow co-founders, Governor Mark Warner and business and civic leader Raul Fernandez, have played important roles, I have been the most intimately involved in characterizing and defining VPP’s work and approach. As far back as 2002, we began discussing how to move beyond the founder-centric organization to broader-based leadership and mission ownership. But change proved too difficult that early. Instead, we found ourselves continuously “retooling” our organization. As new team members came onboard, their various experiences caused us to change even more.
We correctly focused on building our organization, learning how to implement our investment approach better, and, most important, making investments and working with our nonprofit partners. But there was a cost as I did not give the attention needed to developing and engaging the Board. Fortunately, Carol, as Managing Partner, and others were assuming larger roles, learning what it really took to deliver our investment approach, and gaining the critical experience essential for the moves we are making now. Despite this less-than-systematic evolution, we stayed focused on our mission and continued to make progress because of the talent in the organization and the quality and talent within the nonprofit partners in which we invested.
Late in 2005, we held our first facilitated session of the Board to restart the discussion of leadership transition, strengthening our organization, and understanding how and when we could move to true Board governance. The session demonstrated we were still very much founder-centric and that we needed to move beyond that if VPP were to have the long-term impact we desired. Yet even pondering these new possibilities created uneasiness. Could Carol and I navigate this change? Would people incorrectly assume I was stepping back or leaving? Was the team ready for this change?
Triggers of Transition
These changes, however, took on a seriousness in the fall of 2006, when it was clear (initially to me and later to other key stakeholders) that we weren’t getting where we needed to be for the next stage fast enough and I risked being the impediment to VPP’s long-term progress. Part of this realization was grounded in the simple fact that I live in a different city and was constrained by the number of days I could be present physically in the National Capital Region. As much as I work remotely over the Net, management and capital raising require proximity. And, part of it was a function of living up to our side of serving our investment partnerships. Although it was what we needed to do, it also kept us from thinking about and planning for our own future. But, other factors also indicated the time was right for change, including:
Time to Walk the Talk
Here we were, facing the same kind of issues that we discuss with our nonprofit investment partners about making bold organizational and management actions—get the right people “on the bus,” strengthen leadership and management, ensure an informed and engaged Board—all aimed at making their organizations highly effective in what they do to improve the lives of children and youth. I was espousing these changes in columns and other writings, but, ironically, we weren’t practicing what we were preaching. The time had come to walk the talk ourselves.
So how are we “walking our talk?” What specific things is VPP doing?
Since September, Carol, our Executive Committee, our trusted advisors, and I have focused on the necessary changes.
Far and away, the most important action we have taken was to establish the office of President and Chief Executive Officer and elect Carol to this role, effective March 1 (see story below).
I will continue to be an active Chairman, serving as an advisor and sounding board to Carol, helping shape long-term strategic direction, providing Board stewardship and leadership, and being a key resource to raise capital and support our general communications. I look forward to this leadership role with the Board, with more and more of my time going to advancing the use of our investment approach more broadly and sharing what VPP is learning and doing through writing, speaking engagements, and media activities. If my past experience holds true, the unpredictable will happen to trigger new opportunities.
Members of our Board have stepped forward in a number of ways and are empowered, engaged and energized. Over the last six months VPP’s Executive Committee—Jack Davies, Charito Kruvant, Billy Shore, Les Silverman, and Ken Slaughter—along with our Board advisors—Bob Boisture, Rich McDonnell, Lynn Taliento, and Bob Templin—have worked with Carol and me to map out a leadership and organization transition plan that will be presented for Board approval at our annual meeting on March 21.
The Board itself is moving from a Chair-driven Board to a Committee-based leadership Board. A formal committee structure was approved in February. Jack, Les, and Artis Hampshire-Cowan have stepped forward to take leadership roles to chair the Development, Organizational Development and Compensation, and Governance Committees respectively. While Jack has played lead roles with VPP from the beginning, he has made a huge commitment to our capital campaign since September. Les has been working side-by-side with Carol to map out the new organization. And, we will activate an Audit Committee this fall and add several new Board members in the next few months, with a further expansion by the end of 2007.
VPP has, among its other accomplishments over the last seven years, assembled a substantial team of seasoned professionals in its organization and Board. In fact, we believe we had built one of the most experienced teams of its type in the country, but we also knew we had to become even better. The team is now headed by a recognized and highly respected leader who has devoted her career to public and social sector causes. And, to build on what has already been done, plans are underway to add to and strengthen VPP’s team of investment professionals. VPP will name a new partner in the very near term and plans to recruit yet another partner plus an additional resource to support investment activity. Additionally, Carol has taken important steps to formalize and strengthen VPP’s operational management team, naming VPP Partner and CFO Eleanor Rutland to the role of VPP’s Chief Operating Officer; Stephen Whisnant to Vice President, Development and Investor Relations; and Victoria Vrana to Vice President, Communications and Assessment.
The sum of these changes—putting VPP’s execution in Carol’s capable and experienced hands, adding to and building the team around her leadership strengths, expanding and engaging the Board, and enabling me to focus on messaging and actions to better showcase our work and influence broader change and field building—will help institutionalize VPP, making it a stronger organization. And as we fully implement and assimilate these changes, VPP will be “walking the talk” in terms of its own organizational growth, development, and institutionalization, which will be critical to its long-term impact and application to other regions.
Last, but certainly not least, we will increase our capital raising efforts for VPP’s next stage and already have an exciting campaign mapped out for the next 12 to 18 months.
A Template for Others
There may be other organizations considering this same type of transition. While there is no pro forma template and our journey was marked by its own share of missteps, some of our lessons include:
We are taking these steps proactively; this transition to institutionalization was not forced or the result of catastrophe. It was simply a matter of timing with the requisite pieces in place to allow VPP to prepare for its next stage of growth, development, and impact, never forgetting that children and youth are the primary reason for our work. We are blessed with a talented and engaged team, Board, advisors, and the remarkable leaders of our nonprofit investment partners and the time is now.
Certainly, the transition from founder-centric to institutional is hard work, a long process, and a formidable task for founders and their Boards and staff. Yet, it is a challenge founders and Boards must at some point confront and, hopefully, embrace. Thought through and executed well, this change can benefit founders, make their organizations better, and have greater impact for those they serve. I look forward to the continued journey with VPP and wish you the best in yours.