Three decades ago, for example, few spoke of “nonprofit management” because “management” was thought to be a practice reserved for the corporate world. These days, most every major nonprofit is focused on how well its operations are being run.

In the late 1980s and early ’90s, the idea of applying assessments of effectiveness, or “metrics,” to nonprofit work struck skeptics as impossible. Now, such measures are central to the sector. During that earlier time, thinkers spoke of how nonprofits needed to learn from effective corporations. Today, thanks in large part to Drucker, corporate executives have come to realize how much they can learn from effective nonprofits.

The Drucker Prize, an annual $100,000 award for innovation in the nonprofit sphere, has likewise come a long way. (This year’s winner was just announced: It’s myAgro, which offers a mobile layaway system that helps move smallholder farmers out of poverty.)

In 1991, when The Drucker Prize—then called the Peter F. Drucker Award for Nonprofit Innovation—was established, the aim was to “find the innovators, whether small or large; to recognize and celebrate their example; and to inspire others.”

Today, all of that is still true. But in 2016, the prize was transformed into something else, as well: a powerful teaching tool for nonprofit leaders.

“Attention is so scarce, and we noticed that we were inadvertently commanding all this attention from nonprofits during the application process for the prize,” says Zachary First, the Drucker Institute’s executive director. “So we realized there might be something we could do with that attention that would be valuable.”

A plan emerged: Keep nonprofits interested in vying for the prize in pursuit of the $100,000. But turn the application itself into a platform where they could learn much more about Drucker’s principles, along with insights from some of today’s top management minds.

As First came to describe it, the money would be like a Trojan Horse—in this case packed with knowledge.

In phase one, applicants read and watch short videos about Drucker’s core principles of innovation. They’re then asked to explain how a program that they’ve developed meets Drucker’s definition of innovation—“change that creates a new dimension of performance”—and how it is making a real difference in the lives of those being served. This year, 509 nonprofits completed this first part of the application.

In phase two, 50 semifinalists continue their learning through more Drucker readings, as well as videos featuring leading management scholars and executives sharing their expertise. Among those offering lessons have been Harvard’s Dick Chait on “Generative Board Governance,” Bridgespan’s Matt Plummer and Taz Hussein on “Demand-Driven Innovation,” IDEO.org’s Jocelyn Wyatt on “Customer-Centered Design,” author Jim Collins on “Change and Continuity,” the Skoll Foundation’s Sally Osberg on “The Vital Importance of Challenging Assumptions” and the University of Toronto’s Roger Martin on “Integrative Thinking.”

At this point, the application shifts away from asking nonprofit leaders to extol their own work and, instead, prompts them to articulate something that they’ve just learned from Drucker or one of the other experts. They then must spell out how they’d apply this new idea at their organization—and what they expect the results to be.

Redoing the Drucker award in this manner had its risks. The new steps might introduce too much complexity to the process. Organizations might resent the extra hoops or consider the work to be a waste of time. In turn, application or completion rates might plummet. Those at the Institute worried that—to quote Drucker himself—one might find that “what seemed like a good idea has turned into a waste of people, time and money.”

Of particular concern was round two. For this, nonprofit leaders—senior executives in a decision-making role, not just grant-writers—are asked to invest several hours of their time going through the videos and written materials, and carefully considering their answers.

For those at the Institute, the initial hope was that the dropout rate would be modest—no more than 30%. In other words, getting 35 to 40 of the 50 semifinalists to complete the learning modules and finish the application would represent success.

But something unexpected happened. During the first year of the revamped Drucker Prize, 50 out of 50 leaders filled out the entire thing. The dropout rate was zero. And that completion rate has held up in 2017 and 2018, with 98 of 100 semifinalists during those two years making it all the way through the application.

“We were shocked—and delightfully so,” says Laura Roach, the Drucker Institute’s director of philanthropy and nonprofit engagement.

Nonprofit executives, it turns out, were quick to recognize the benefits of the hard work they were being asked to do. “We thought that they might only value the cash that came with the prize,” Roach recounts. “But many have said they value the tools just as much.”

Take We Care Solar, a nonprofit that provides solar power to health facilities in areas without reliable electricity. “The application process itself was a very educational and demanding experience,” says Laura Stachel, executive director of We Care Solar, the 2017 Drucker Prize winner. “It crystallized our thinking in a number of areas.”

Specifically, says Stachel, the process spurred We Care Solar to make changes to its board procedures and also to look for ways to make its solar electric kits easier to use and distribute.

Others have similarly found their thinking sharpened. “The application process helped us realize that what seemed like three distinct ideas”—succession planning, systematized innovation and turning challenges into opportunities—“were highly connected,” says Kevin Washington, president and CEO of the YMCA of the USA, which became a Top 10 finalist this year thanks to a community health program that helps people to manage type 2 diabetes. “The entire application process allowed us to pause, reflect and assess our future opportunities.”

Especially gratifying to those at the Drucker Institute are stories of organizations that have been inspired to make bold moves thanks to what they’ve learned while completing The Drucker Prize.

One such organization is OneJustice, a nonprofit devoted to making legal services more easily available to low-income Californians. OneJustice went through the application twice, becoming a Top 10 finalist in 2017.

“We learned in the first year and solidified in the second year that to do innovation in a sustainable way, we had to create an infrastructure to support it rather than wait for bolts of lightning,” says Julia Wilson, the CEO. “In the second year, we were looking at others that are doing this well and realizing that they had entire departments that were focused on innovation as a practice across the entire organization.”

After considering the resources and priorities of OneJustice, Wilson, with the blessing of her board, hired a senior manager of innovation and learning. Essential elements in Drucker’s management thinking, such as continuous improvement and “planned abandonment,” have now become staples in the work of OneJustice.

Naturally, the money and the honor matter. And organizations that don’t make it as a Top 10 finalist, to say nothing of achieving first place, can feel disappointed, especially after all the work that’s involved. Yet even those that fall short have positive things to say about the experience.

The nonprofit One Heart World-Wide, which aims to reduce neonatal and maternal mortality in childbirth, was a semifinalist this year. Its founder and president, Arlene Samen, says she wishes the organization had reached the Top 10, but she still found the learning modules enlightening, particularly one on using succession planning as an opportunity for innovation.

“I had tried to do a lot of research myself about successful succession planning and models that work and don’t work,” she says. “And there’s not a ton of literature out there on the style of succession planning that Peter Drucker writes about.”

For the team at the Drucker Institute, reworking the prize and getting good results has been satisfying, in no small part, because it has meant that the social sector’s most recognized award for innovation has undergone a successful innovation of its own.

“We feel this ever-present burden to practice what we preach,” says First, “because we’re always at risk of asking more of people than we ask of ourselves.”

In the end, electing to make a big change at any organization can be perilous, and all of us are tempted to avoid these situations. “I’m a physician, not someone who’s a nonprofit or for-profit professional,” says Stachel of We Care Solar. “Just about everything that I do in the nonprofit realm is out of my comfort zone.”

In short, innovative leadership takes nerve. In just a few years, The Drucker Prize has helped scores of nonprofit executives steel themselves and walk toward the uneasiness.

“There’s too much emphasis these days on being smart and not nearly enough on being courageous,” says First. “Intelligence is a requirement, but pretty quickly you need more. Our aim with The Drucker Prize is to help people to be courageous in the right ways, to grant them permission to do what they know they need to do.”

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