Silo Smashing

One of the hallmarks of the forums we hold at the Drucker Institute is that these events bring together executives from all sectors: private, public and nonprofit. And almost without fail, a good many of the participants remark how unusual it is for them to be in mixed company like this.

And so it is that we could easily relate to a recent Harvard Business Review blog post, by Saul Kaplan, titled “Business Models Aren’t Just for Business.”

Kaplan, who has worked in both the corporate world and in government, opens his piece by citing “the different language, behavior, secret handshakes, and views of each other I found across sectors.”

“Xenophobia runs rampant within public, private, non-profit and for-profit silos,” adds Kaplan, the founder of the Business Innovation Factory in Providence, R.I. “Each silo has created its own world completely foreign to inhabitants from other sectors.”

[EXPAND More]But Kaplan asserts that, despite these differences, “the idea that business models are just for business is just wrong. Any organization that wants to be relevant, to deliver value at scale and to sustain itself must clearly articulate and evolve its business model. And if an organization doesn’t have a sustainable business model, its days are numbered.”

He concludes: “Economic prosperity and solutions for our big social system challenges require business model innovation across sectors. All organization leaders must learn how to do R&D for new business models. Non-profit, social enterprise, school and government leaders aren’t exempt. Business models aren’t just for business.”

Peter Drucker had the same basic philosophy (which is precisely why we’re so conscious about having Fortune 500 CEOs brainstorm with social-sector leaders and federal department heads at our events). “For most Americans, the word ‘management’ still means business management,” Drucker wrote in 1990 in a passage that, judging from Kaplan’s post, continues to hold true today. “Indeed, newspaper or television reporters who interview me are always amazed to learn that I’m working with nonprofit institutions.

“‘What can you do for them?’ they ask me. ‘Help them with fundraising?’ And then I answer, ‘No, we work together on their mission, their leadership, their management.’”

Certainly, Drucker noted, nonprofits face unique challenges and have distinct needs. But all in all, non-profits “need to learn how to use management as their tool lest they be overwhelmed by it,” he said.

What do you think? Are the sectors mostly alike–or largely different–in their management needs?