Stanford Social Innovation Review : Informing and inspiring leaders of social change

SUBSCRIBE | HELP

UP FOR DEBATE: Foundations

Strategic Philanthropy for a Complex World

To solve today's complex social problems, foundations need to shift from the prevailing model of strategic philanthropy that attempts to predict outcomes to an emergent model that better fits the realities of creating social change in a complex world.

Read the responses.
 

(Illustration by Mike McQuade)

The practice of strategic philanthropy has advanced substantially over the past two decades, yet even its most committed theorists and practitioners—we among them—have often been disappointed by the results. We have helped hundreds of funders and nonprofit organizations commit to clear goals, data-driven strategies, heightened accountability, and rigorous evaluations—all core principles of strategic philanthropy that increase the odds of success. And yet, as we have watched funders and their grantees struggle and often fail to reach their ambitious goals, we have repeatedly felt a nagging suspicion that the conventional tools of strategic philanthropy just don’t fit the realities of social change in a complex world. We have now come to the conclusion that if funders are to make greater progress in meeting society’s urgent challenges, they must move beyond today’s rigid and predictive model of strategy to a more nuanced model of emergent strategy that better aligns with the complex nature of social progress.

The more foundations embrace strategic philanthropy, the clearer its limitations become. As practiced today, strategic philanthropy assumes that outcomes arise from a linear chain of causation that can be predicted, attributed, and repeated, even though we know that social change is often unpredictable, multifaceted, and idiosyncratic. It locks funders into a rigid multi-year agenda, although the probability and desirability of achieving any given outcome waxes and wanes over time. Rigorous evaluations attempt to isolate the impact of solitary interventions without effective models of dissemination. And the forced simplicity of logic models often misleads funders to overlook the complex dynamics and interpersonal relationships among numerous nonprofit, for-profit, and government actors that determine real world events.

Despite these shortcomings, strategic philanthropy can be effective for certain types of problems. Complexity theorist David Snowden described the differences among problems that are simple, complicated, or complex. A simple problem can be highly ambitious: Building a hospital is not easy, but it follows a well-understood formula. Given the necessary resources and expertise, one can reliably predict the cost, timeline, and end result with high accuracy. Complicated problems, like developing a vaccine, may take many attempts before a successful formula is developed, but each successive attempt builds on prior knowledge and experience, and once the formula is discovered, it can be repeated with equally predictable results.1

Complex problems, such as improving the health of a particular group of people, are entirely different. These problems are dynamic, nonlinear, and counter-intuitive. They are the result of the interplay between multiple independent factors that influence each other in ever-changing ways. The health of a population is influenced by the availability and quality of health care, but also by economic conditions, social norms, daily diet, inherited traits, familial relationships, weather patterns, and psychological well-being. The interplay of these factors creates a kaleidoscope of causes and effects that can shift the momentum of a system in one direction or another in unpredictable ways. Each intervention is unique, successful programs cannot reliably be repeated with the same results, and learning from past efforts does not necessarily contribute to better future results.

Strategic philanthropy works well for simple and complicated problems, toward which the vast majority of philanthropic funding is directed. Many funders support programs like after-school tutoring and institutions like hospitals, which help alleviate the consequences of complex societal problems in education and health without directly addressing the problems themselves. But strategic philanthropy also emphasizes the need to eradicate the root causes of society’s complex problems without recognizing that a different and more emergent approach is required.

One philanthropic organization that successfully used an emergent approach to tackle a complex social problem is the Rockefeller Foundation. Beginning in 2008, the foundation launched a five-year, $42 million initiative to stimulate greater investment capital that could “improve the lives of poor and vulnerable citizens around the world” through impact investing. At the time, the field of impact investing was small and disorganized. Over the next four years, despite the 2008-2009 worldwide financial meltdown, $6 billion of new investment capital went into impact investments. Three-quarters of this growth could be tied directly to Rockefeller’s efforts, effectively leveraging the foundation’s dollars one hundred to one. The foundation also had significant policy influence on the governments of the United States, United Kingdom, Canada, and Australia. For the first time, international development agencies began to use impact investment as a promising new tool. All told, the Rockefeller Foundation played what one evaluation report called a “decisive role” in activating a global movement that continues to grow even as the foundation shifts its support to newer forms of innovative finance.2

The Rockefeller Foundation accomplished all of this without an initial formal theory of change or logic model that predicted specific outcomes. Instead, the foundation followed an emergent approach, co-creating its initial strategy with dozens of other organizations, strengthening the global ecosystem that determined the outcomes they sought, and continuously modifying its strategy as the staff sensed opportunities to amplify positive developments along the way.

Emergent strategy does not attempt to oversimplify complex problems, nor does it lead to a “magic bullet” solution that can be scaled up. Instead, it gives rise to constantly evolving solutions that are uniquely suited to the time, place, and participants involved. It helps funders to be more relevant and effective by adapting their activities to ever-changing circumstances and engaging others as partners without the illusion of control. It is messy and challenging, but far more realistic about the role foundations can play in social progress. Before exploring in more detail the emergent approach to strategy, it’s important to first understand why the predictive model so often fails to make progress against complex social problems.

Distinguishing the Simple from the Complex

In 1999, Michael Porter and Mark Kramer (one of this article’s coauthors) published the article “Philanthropy’s New Agenda: Creating Value” in Harvard Business Review, asserting that foundations have the opportunity and the responsibility to create social value beyond the mere purchasing power of their grants. We suggested that they could do so by selecting the best grantees, signaling other funders, improving grantee performance, and advancing knowledge and practice in their fields. We urged foundations to become more strategic by focusing on a clear and limited set of goals, conducting thorough research, framing a hypothesis for how best to approach the problem, and developing an evidence-based process for learning from results. Those recommendations echoed and complemented the core elements of strategic philanthropy espoused by other thought leaders who have before and since contributed to the growing body of knowledge about philanthropic strategy.

In the fifteen years since that article was published, however, our experience working with clients has taught us that although this guidance is helpful in addressing simple and even complicated problems, it is insufficient when tackling complex problems. Our three subsequent articles in Stanford Social Innovation Review—“Leading Boldly,” “Catalytic Philanthropy,” and “Collective Impact”—articulating the need for adaptive leadership, a problem solving approach, and highly structured cross-sector collaborations—were all early attempts to confront the challenges of developing strategy under conditions of complexity.3 Other thinkers, notably organizational learning consultant Patricia Patrizi, have also explored the limitations of strategic philanthropy under conditions of complexity and offered alternative approaches that emphasize adaptive practices.4

Emergent strategy gives rise to constantly evolving solutions that are uniquely suited to the time, place, and participants involved.

Foundations, of course, spend much of their time and financial resources tackling simple or complicated problems, many of which are embedded within larger complex problems. In fact, some of philanthropy’s landmark achievements have come from solving complicated problems through a progression of scientific advances, such as the Aaron Diamond Foundation’s efforts to develop the first successful treatment for AIDS, or the Ford and Rockefeller foundations’ agricultural research that produced the “green revolution,” estimated to have fed more than one billion people. Interventions such as these are triumphs of strategic philanthropy, saving a great many lives and making a substantial difference in the severity or scope of a complex problem such as disease or hunger, even though they fall short of solving the root causes of the complex problem itself.

Many foundations can continue to do a great deal of good by using the traditional tools of strategic philanthropy to address simple and complicated problems. Unfortunately, foundations have rarely been clear on when the line has been crossed from the simple and complicated into the entirely different world of complexity. Funding under-resourced schools is not easy, but it is still a simple challenge, and more resources are likely—although not usually sufficient—to help students succeed. Improving the performance of teachers is a complicated challenge: A teacher’s performance is affected by many variables, and we have no well-established metrics of teacher quality. Given sufficient research into best practices, however, the essential variables and metrics can be identified, understood, and improved.

But when one moves from the goal of training teachers to the goal of improving student achievement across an entire educational system, one has moved squarely from the complicated to the complex. Student achievement is influenced by myriad interdependent factors such as school leadership, economic and family circumstances, peer dynamics, role models, and even nutrition. Single-point interventions may address one or more of these simple or complicated problems, but foundations will inevitably encounter complexity when they attempt to scale up their successes. Scaling up an intervention by spreading the adoption of new practices across a system is an inherently complex challenge. Each school operates in a unique context determined by its resources, history, leadership, social dynamics, and countless other factors that prevent solutions in one school from being repeated reliably in others. This is one reason that funders are frequently able to launch successful interventions, but much more rarely able to scale them up.

The shift from improving teacher quality to improving educational outcomes, or from a single success to systemic change, may seem merely a more inspiring way of framing the foundation’s ambitions. But when foundations take seriously the achievement of their goals and seek to measure their progress, they find that the difference between these two goals is profound, and the conventional approaches to philanthropic strategy and evaluation no longer produce the hoped-for results. The core elements of strategic philanthropy are still useful: Having clear goals, thorough research, a hypothesis for how to approach the problem, and a way of learning from results all increase the odds of success. But the idea that a foundation can intervene in a complex system on the basis of a simplified logic model and reliably expect to achieve its intended outcome creates a false hope that misdirects strategy development and execution.

As difficult as it is to make progress against complex social problems, foundations are far better suited to do so than are other institutions because they operate on a long time horizon, insulated from financial and political pressures. Yet for many foundation leaders and board members, dealing with complexity is alarming. In our experience, most foundations that address complex problems go to great lengths to avoid attempting to understand or account for this complexity in their work. Their behavior is entirely understandable. The responsibility of stewarding philanthropic funds leads to a natural desire for defined time horizons and predictable outcomes that can be evaluated and attributed directly to the funder’s intervention. Foundations that limit their ambitions to simple or complicated aspects of complex challenges will be able to operate within these constraints.

Foundations that seek to address complex problems directly, however, need a new set of tools. They also need leadership with a tolerance for uncertainty and the determination to pursue their objective for long periods of time, through many apparent advances and setbacks.

From Predictive to Emergent Strategy

To address the uncertainty of complex problems, the field of philanthropy needs to shift from a predictive model of philanthropic strategy to an emergent model that better fits the complexity of social change. McGill University management professor Henry Mintzberg was one of the first to capture the dynamic of an intended strategy bumping up against complex realities, triggering a further evolution in strategy. Mintzberg called this “emergent strategy.”5 (See “How Emergent Strategy Works” below.)

Emergent strategy accepts that a realized strategy emerges over time as the initial intentions collide with, and accommodate to, a changing reality. The term “emergent” implies that an organization is learning what works in practice. Organizations that are intentional in examining how their strategy plays out in the context of surrounding events will learn what parts of their intended strategy went unrealized, what parts are deliberate, and what parts were emergent—the result of both their actions and the actions of others—that lead to a newly realized strategy. And this newly realized strategy will continue to evolve, incorporating aspects of both deliberate and emergent strategy.

Emergence is where rigor and flexibility meet, as it inherently challenges strategic organizations to be both rigorous and flexible. Emergent strategy still requires that a clear strategic intent guide the funder’s actions, but it acknowledges that specific outcomes cannot be predicted. Emergent strategic philanthropists will continually strive to react to changing circumstances, so flexible and textured frameworks such as system maps must replace the linear and one-dimensional logic model as the primary means of clarifying strategy. Emergent strategy also requires a constant process of “sensing” the environment to ensure that resources are applied where opportunities are greatest. Sensing also enables a more intuitive understanding of how various parts of the system are changing in relationship to one another in response to unanticipated interventions and exogenous events.

Emergent strategy accommodates three core principles of complexity theory that must inform the next evolution of strategic philanthropy: co-creating strategy, working positive and negative attractors, and improving system fitness.

All actors, including funders, are participants in the system they seek to change. The behavior of one organization affects all others; therefore strategies must be co-created and must co-evolve among multiple organizations rather than be developed separately.

Although complex systems do not follow predictable patterns, sources of energy or convergence within the system, known as attractors, can be observed and influenced. Funders can amplify positive attractors that move the system toward their goals or dampen negative attractors that move the system away from the desired goals.

In complex systems, one-time solutions often have limited value because they cannot be counted on to spread or produce repeatable results. Instead, increasing the fitness of the system as a whole—improving the knowledge, effectiveness, and resilience of all participants, not only grantees, but other organizations including the foundation itself—is a much more powerful way to support sustainable change. Increasing fitness enables solutions to arise from anywhere in the system to meet the circumstances of the moment.

Such a model of emergent strategy and the principles of complexity science may sound hopelessly beyond the reach of strategic philanthropy today. Yet we are already seeing a number of foundations shift from predictive to emergent strategy as they seek to address complex problems. In the sections that follow, we’ll examine how three foundations are exploring the frontiers of emergent strategy through co-creation, working the attractors, and improving system fitness.

Co-creating Strategy

Complex problems and their solutions are influenced not just by grantees, but by the behavior of many different nonprofit, for-profit, and governmental actors as each entity pursues its own strategy. No funder has the resources to compel all other participants to follow its preferred strategy. This is why strategy must be co-created and co-evolve among multiple organizations, rather than be shaped independently.

Strategy must be co-created and co-evolve among multiple organizations, rather than be shaped independently.

The Rockefeller Foundation’s effort to develop the field of impact investing provides a good example of how a foundation co-creates a strategy. From the beginning the Rockefeller Foundation worked closely with dozens of field leaders outside the foundation. Antony Bugg-Levine, the program officer who led the effort, began by convening the field’s leaders at the Rockefeller Foundation’s Bellagio conference center in 2007, where the term “impact investing” was first coined and where the recommendation was made to undertake the initiative. A second convening in 2008 collectively generated the strategic framework that guided the foundation and its allies in building the field.6 Not only did this co-creation of strategy enable the foundation to develop a more robust strategy for itself, it influenced the strategies of the other organizations as well, showing them many opportunities to benefit from and support each other’s efforts.

The strategy continued to co-evolve for the life of the initiative. Thirty different organizations served as core allies of the foundation, creating a densely networked web of interlocking and overlapping relationships through their boards, committees, and memberships. These core allies, and an additional 70 organizations that also championed the effort, included both grantees and non-grantees from all sectors: for-profit and nonprofit investment funds; nonprofit organizations and associations; research institutions, universities, and consulting firms; other private funders; financial intermediaries and institutions; international development organizations; government agencies; and even the US Federal Reserve.

The Rockefeller Foundation’s program staff spent much more time working with this network of organizations than it did directly making grants. They also engaged fully as participants within the system by promoting impact investing through conference presentations, private meetings, and media interviews. In addition, the foundation recognized the need to create a legacy organization—the Global Impact Investing Network—to continue the work of informing, mobilizing, and coordinating the field as the foundation’s own role receded. Bugg-Levine has continued to play a leading role, moving from the foundation to run the Nonprofit Finance Fund and co-authoring a book on impact investing.

The Rockefeller Foundation also gained unexpected benefits from fully embracing its role as a participant in the broader coalition by forging connections with major development agencies, government agencies, and other foundations around the world to which it can now turn for support for its other initiatives. The foundation was, without doubt, the moving force that caused the field to blossom, and yet it did so as just one participant among many interdependent organizations in co-creating a shared strategy and reaching common goals.

Working the Attractors

Complex systems are not predictable, but they do exhibit patterns of momentum. By paying close attention we can identify when energy within the system is moving in a specific direction toward what, in system dynamics, is called an attractor. In social systems attractors can be people, ideas, resources, or events that lead the system to move toward or away from the funder’s goal. These attractors cannot necessarily be predicted or replicated, but funders and other change agents who seek to influence a complex system can sense the emergence of these attractors and take action to amplify or dampen their effects in order to increase the likelihood that the system will shift toward their desired outcome.

Funders who have engaged in policy advocacy understand this concept well. One cannot reliably predict whether a given intervention will produce the desired policy change, but one can sense ever-changing sources of positive or negative energy in the political environment that create opportunities for timely leverage. This concept of sensing and leveraging opportunities, without any certainty about the outcome, is at the core of emergent strategy.

The Rockefeller Foundation’s shift to emergent strategy follows a similar course from predictable interventions to sensing and amplifying momentum within the system. When Judith Rodin became president of the Rockefeller Foundation, she realized that the approach to strategic philanthropy that had served the foundation well for its first century no longer fit modern realities. In her words, “Our value-add as a foundation is very different from 75 years ago. Then we were filling a void, and we had to put our own labs in the field, do the basic science, the delivery, and the whole value chain in order to construct a solution. Today, the foundation’s resources are most useful in rewiring connections between existing players within activities that are already under way...taking advantage of changes that are already in motion.”


BUILDING RELATIONAL TRUST

An often overlooked element in improving system fitness is attending to the human interactions and relational dynamics at the heart of a complex system’s ability to evolve and adapt. The predictive model of strategic philanthropy frequently assumes that rational solutions offering better outcomes will automatically be embraced across the system. The health of relationships between organizations and individuals in the system is often the missing link in explaining why programs and interventions ultimately succeed or fail. This often holds true for simple and complicated problems, but it is a far more influential factor under conditions of complexity.

Anthony Bryk, now president of the Carnegie Foundation for the Advancement of Teaching, spent ten years working at the Consortium on Chicago Schools Research examining the changing quality of relational dynamics in 400 Chicago elementary schools. This work led Bryk and his colleagues to create a metric called “relational trust” to categorize the social exchanges among students, teachers, parents, and school principals.

They discovered that the myriad social exchanges that make up daily life in a school community fuse into distinct social patterns that can generate significant organization-wide outcomes. Collective decision-making with broad teacher buy-in, for example, occurs more readily in schools with strong relational trust. In contrast, the absence of trust can provoke sustained controversy around even such simple problems as the arrangements for a kindergarten graduation ceremony. Strong relational trust also makes it more likely that reform initiatives will be diffused across the school. Ultimately, Bryk and colleagues found that the level of relational trust was a more powerful discriminator between improving and non-improving schools than other dimensions such as curriculum design or new teaching practices. Schools with improving levels of relational trust recorded increases in student learning of 8 percent in reading and 20 percent in math over a five-year period.

Relational dynamics are one of the primary reasons that interventions in complex social systems are so unpredictable. They explain why building system fitness can accelerate the spread of evidence-informed solutions to meet specific situational needs.


The process of capitalizing on “changes that are already in motion” is one way of describing the amplification of positive attractors. For the Rockefeller Foundation, spotting these attractors required the foundation to develop a variety of sensing mechanisms closer to the ground. Says Rodin: “We created a search unit with a ‘searchlight’ function that funds developing world institutions and entities with more nuanced and textured perspectives from which we can learn.” It was sensing mechanisms like these that first showed the growing momentum and potential of impact investing, and throughout the life of the initiative continued to guide the foundation on how to amplify positive shifts and dampen negative ones.

Although the Rockefeller impact investing initiative did not have a formal theory of change, the consensus of the Bellagio convening produced agreement on four desired outcomes that served as a flexible guiding framework throughout the five-year effort: catalyzing collective action platforms, developing industry infrastructure, supporting the scaling of intermediaries, and in later years, contributing to research, advocacy, and policy change. The flexibility of these objectives gave direction to the foundation’s efforts but left room to adapt to changing circumstances as the situation required.

Although these intended outcomes remained in place throughout, Rockefeller’s resources shifted dramatically over the four-year life of the initiative. In the first two years, the foundation focused 70 percent of its funding on scaling up the leading intermediaries, such as Acumen. As organizations previously on the periphery of the initiative began to be more aware of impact investing, the program team put greater emphasis on research that could attract new players, collective action platforms that could provide new ways for other organizations to become involved, and advocacy efforts that had more chances of succeeding. In fact, the foundation shifted 75 percent of its funding to those areas in the final three years. Similarly, the initial focus on institutional investors as a logical way to achieve scale gave way to a focus on high-net-worth families that seemed more open to experimenting with impact investments.

By 2010, the program staff realized that public policy change was an essential component of the strategy that had been initially overlooked. Both the Obama administration in the United States and the Blair and Cameron governments in the United Kingdom were open to policy change because of the financial crisis and were ideologically aligned with the impact investing approach. Recognizing this as a new attractor that could be amplified, the program staff shifted resources and formed an Impact Investing Policy Committee, which ultimately led to more than $2 billion of government funding. This opportunity could not have been anticipated during the very different political and economic situation that existed when the initiative began, but the foundation achieved substantial impact by sensing opportunities to amplify or dampen attractors within the system as it adapted its approach over time.

Improving System Fitness

Emergent strategy focuses on strengthening the systems and relationships that can generate solutions, rather than on constructing the solutions themselves. The ability of a system to adapt and ultimately reach its goals depends on the overall “fitness” of the entire system.7 As circumstances change over time, the system must continually evolve. Its success depends not on any single configuration, but on its fitness to adapt to the changing circumstances and the end goal. Many things make up a system’s overall fitness, including shared visions of success within and across sectors that enable mutually reinforcing innovation, positive relationships between organizations and individuals that enable effective practices to spread, regular communication, and the resilience of players within the system in adapting their practice to changing conditions. System fitness also includes the degree of alignment and relational trust among participants, which can accelerate the adoption of new ideas. (See “Building Relational Trust” above.)

A good example of what improving system fitness looks like in practice is illustrated by the way that former New York City Mayor Michael Bloomberg used his office and his foundation to address the problem of climate change. Beyond funding specific interventions in New York City, he focused on developing system fitness among his peers, the mayors of major cities around the world.


HOW TO MOVE TO AN EMERGENT MODEL

Most foundations that shift from a predictive to an emergent model will need to complement this shift with changes in how they create strategy, structure their organization, evaluate impact, and develop leadership and culture. Below, we suggest some likely evolutions in each of these areas.

Strategy-setting frameworks and processes | Today’s strategy-setting activities often fail to incorporate the dynamic nature of complex systems, miss the interdependence of players affecting an issue, and underappreciate the human dynamics that accelerate or impede change. No one decision-making framework can capture all the dynamics of a complex system. Nevertheless, greater use of systems maps, stakeholder network analysis, cultural frames, and story-telling frames such as scenario planning—combined with an orientation to hypothesis testing and prototyping (via methodologies such as human centered design)—can provide more useful frameworks for strategic decision-making that addresses complex problems.

Organizational structures and systems | The command and control governance structures that exist in many foundations today cannot be used to implement an emergent strategy. In their place one needs to create more flexible accountability structures that allow staff to take the initiative as conditions demand. This means that boards must continue to set goals and budgets but step back from expecting staff to follow a detailed multi-year plan with predictable outcomes. It also means that evaluation methods must take a developmental approach that focuses on learning and sensing opportunities, not just on evaluating the outcomes attributable to specific interventions. Foundations must also invest in relentless “sensing” activity—developing the ability, structures, and systems to scan for how various forces intersect and interact with one another. Active sensing takes time apart from grantmaking. To make sure that it happens, foundations can create structured time for staff to reflect on not just what is going on with their grantees, but also what is going on with the broader set of conditions affecting strategy—probing for actions or events that are causing ripples in unexpected ways due to the interdependent nature of the many players involved.

Leadership and culture | Successful leadership in situations of great complexity prizes inquiry over certainty. Effective leaders of emergent strategy must be capable of creating the context and culture in which real learning, reflection, and evolution can occur. Leaders must build a culture that continually invites staff, grantees, and other system stakeholders into collaborative problem solving. Lines of inquiry that help unpack the complexity include: What are other funders doing that affect the ecosystem in which we work and how do they affect our own strategy? How are organizations that are not our grantees reacting to our interventions? What unanticipated interventions and exogenous events are changing the conditions in which we work?


Bloomberg came up with this approach in December 2009 while attending a conference of mayors. While the leaders of the world’s greatest nations were deadlocked in the Copenhagen 15 climate change conference, a group of mayors from two dozen of the world’s largest cities met in a tent nearby. Originally formed by the mayor of London and seven other cities as the C-8, the group grew to be renamed the C-40, and it has since grown to include the mayors of 63 major cities. The mayors, too, were concerned about climate change—after all, 80 percent of global greenhouse gas emissions come from cities. But what most impressed the mayors that winter day was the fact that, despite snow and darkness, one out of three Danes commuted to work on a bicycle in dedicated bike lanes. Seeing this phenomenon, many mayors looked for ways to get more of their constituents out of the car and onto a bike. The mayor of London decided to install bike lanes when he went home. Bloomberg decided to install them as well, and Los Angeles added 330 miles of bike lanes the following year. Rio de Janeiro and São Paulo realized that bikes could not only reduce pollution, but enable people who were too poor to afford public transit to commute to jobs, so they added lanes, too. Within three years, 34 cities around the world added tens of thousands of miles of bike lanes. But that was just the beginning.

Bloomberg saw the power of the C-40 and decided to increase the system’s fitness. Bloomberg Philanthropies provided C-40 with $6 million in annual funding, tripling the organization’s budget and increasing its staff to 43. The C-40 team began to work closely with the mayors and especially their staffs to coordinate their efforts, pooling their knowledge of what initiatives had worked, showing each other how they might use their mayoral powers to reduce carbon emissions by controlling traffic, public transit, building codes, utilities, parks, and the like. Today, all 63 cities have climate action plans, and collectively they have undertaken 4,734 discrete climate actions that are on track to reduce annual CO2 emissions by 1.3 billion tons by 2030, a stunning global impact for a $9 million annual budget. Bloomberg’s leverage, in this case, comes from improving system fitness, rather than from funding, evaluating, and replicating individual solutions. Improving the interactions and relationships within a system by sharing knowledge, comparing results, and stimulating competitive instincts is what continues to drive a profusion of locally tailored climate change solutions to emerge.

A Compass Instead of a Map

Whereas emergent strategy is a relatively new practice at the Rockefeller Foundation and Bloomberg Philanthropies, the J. W. McConnell Family Foundation has been practicing emergent strategy in many of its program areas for almost two decades. The McConnell Foundation is one of Canada’s largest and oldest private family foundations, with program areas that include health, education, community development, sustainable food systems, immigrant integration, and the arts.

The foundation eschews the development of thick strategic plans that attempt to map out every detail. John Cawley, director of programs and operations at McConnell, is quick to point out that this doesn’t mean staff and board aren’t guided by strong strategic direction. “The difference,” says Cawley, “is between having a compass and a map. A map assumes that you’re going over terrain that somebody has been over before.” A compass, on the other hand, keeps one oriented toward the ultimate goal regardless of the unanticipated obstacles and detours that may appear during the journey. Each step taken is decided in the moment, on the basis of past experience and the unique combination of circumstances then present. Although the path is unknown, the goal remains clear. As Zia Khan, vice president for initiatives and strategy at the Rockefeller Foundation, explains, “Clear goals allow for flexible strategy.”

Such an intentional yet flexible approach can be found in the Mc- Connell Foundation’s Sports for Development initiative. Research found that sports are a powerful force in building social capital and community resilience among children and teens, especially in disadvantaged communities where strong schools and after school programs are scarce. McConnell established an initiative within the foundation called Sports for Development based on this research and immediately reached out to others to co-create their strategy. “The first thing is not to assume that we alone are going to have a plan,” says Cawley. “It’s going to be co-created by the people we’re bringing around the table. It is much more nerve-racking but ultimately more interesting when you co-create strategy.”

McConnell’s work focused not only on supporting specific organizations, but also on investments in system fitness that built the connective tissue between players in the field and accelerated collective knowledge sharing and problem solving. Many unanticipated opportunities emerged throughout the course of the initiative, such as challenging limitations in federal charity laws, creating a “sport for change” Web platform, providing organizations and networks with training, and supporting the development of new business models.

To build more effective connections between community and national sports leaders, McConnell supported the Sport Matters Group—a network of more than 30 sports organizations that collaborate with municipalities, academics, councils, and other local entities to promote community sports activities. The network also collaborates in jointly conducting research on the value of a physically healthy lifestyle and advocates sport as a means to encourage community development nationally. As a result, sports organizations across Canada that are devoted to youth development are now part of a stronger system that enables them to learn together about what works and speak with a united voice. The foundation has seen an extraordinary return on its investment. When the economic downturn of 2008 led to the federal government’s stimulus plan, the Sport Matters Group was already organized to advocate for sports infrastructure in deprived communities. It estimates that some $3 billion has been invested in the construction or renovation of sport facilities as a result.

Brave New World

Albert Einstein once said, “Everything should be made as simple as possible, but not simpler.” In strategic philanthropy’s earnest desire to become more disciplined and rigorous, there has been a tendency to demand and impose simple solutions to complex problems. As a result, the board and staff decision-making structures, organizational design, evaluation methods, and leadership style of foundations that embrace strategic philanthropy today are, to a great degree, anchored in perpetuating the development and implementation of simple solutions. What’s required of both staff and board in complex situations is the ability to take nuanced steps toward solutions, guided by a dynamic compass without relying on a static map. For emergent strategy to take hold, changes must take place in the organization of how strategic philanthropy happens. (See “How to Move to an Emergent Model” on page 32.)

As we rethink strategic philanthropy to address complex problems, we can draw useful insights from science and commerce, the same fields that influenced earlier stages of strategic philanthropy, although in different ways. If strategic philanthropy first borrowed from physics to establish clear cause and effect, we now must look to biology to understand interdependent systems and the process of evolution in which success depends on continuous adaptation. From the field of commerce we borrowed the management principles of business to incorporate more discipline into our work. Now we must look to behavioral economics, which exposes the less rational psychological factors that govern so much of human behavior.

As strategic philanthropy shifts from predictive to emergent strategy, we see tremendous potential for staff and boards to see more clearly their relevance and connectedness to the people they wish to serve. And yet we also acknowledge the daunting demands placed on individuals within organizations that choose to pursue the emergent strategy model. This work requires heavy doses of humility combined with doggedness, reflection combined with constant action, and openness to change combined with dedication to intent. All this must be undertaken with the same commitment to rigorous analysis and honest assessment that strategic philanthropy and evaluation first brought to the field. The need for these qualities may require new types of people to carry out the work of strategic philanthropy. And perhaps it will also draw out to a greater degree these qualities among people who work in strategic philanthropy today.

There is much that is uncertain in this evolution but also much that is exciting and energizing. If you work in strategic philanthropy and plan to adopt emergent strategy as your approach, we expect that you may be challenged as never before. We also expect that you will come into contact with a great many others experiencing the same challenges. Don’t retreat from the field, but take heart. Find inspiration in Miranda, the indefatigable heroine of William Shakespeare’s Tempest (an apt term for the state of the world today). Uncertain, but taken with the promise of a new way of living, she exclaimed with wonder and amazement, “O brave new world, That has such people in’t!”

NOTE: On June 16, 2014, this article was changed from the original print version of the article by adding a reference to Patricia Patrizi's writings in the text of the article and in the Notes.

Notes

1 In “Leading Boldly,” Stanford Social Innovation Review, Winter 2004, we distinguished between technical and adaptive problems, a parallel distinction developed by Ron Heifetz in which technical problems are analogous to David Snowden’s simple and complicated problems, and adaptive problems are equivalent to complex problems.
2 The description of the Rockefeller Foundation’s impact investing initiative and the assessment of its impact is primarily taken from the independent evaluation by E.T. Jackson and Associates Ltd., Unlocking Capital, Activating a Movement: Final Report of the Strategic Assessment of The Rockefeller Foundation’s Impact Investing Initiative, March 2012.
3 See also Fay Hanleybrown, John Kania, and Mark Kramer, “Channeling Change,” http://www.ssireview.org Jan. ,26, 2012; and John Kania, “Embracing Emergence,” http://www.ssireview.org Jan. ,13, 2013; which further explore the relationship between collective impact and complexity.
4 Of particular relevance: Patricia Patrizi, Elizabeth Heid Thompson, Julia Coffman, and Tanya Beer, Evaluation Roundtable, “Eyes Wide Open: Learning as Strategy Under Conditions of Complexity and Uncertainty,” The Foundation Review 2013 Vol 5:3, pp 50-65. Also note: Patricia Patrizi and Elizabeth Heid Thompson, “Beyond the Veneer of Strategic Philanthropy,” The Foundation Review 2011 Vol 2:3, pp 52-60. While our findings are consonant with Patrizi and her colleagues, we learned of this work subsequent to developing our article. We recommend anyone interested in this field refer to this body of work.
5 Henry Mintzberg, Sumantra Ghoshal, and James B. Quinn, The Strategy Process, Upper Saddle River, N.J.: Prentice Hall, 1998, paperback, revised.
6 E.T. Jackson and Associates Ltd., Unlocking Capital, Activating a Movement, March 2012.
7 Brenda Zimmerman, Learning about Complexity Science, North American Primary Care Research Group. Resources, 2009.

 
Tracker Pixel for Entry
 

COMMENTS

  • BY Nathan Huttner

    ON May 15, 2014 03:14 PM

    Thanks for this challenging reflection on strategy under uncertainty. To draw on and connect two themes from the responses:

    First, as Paul Brest pointed out, the best strategic philanthropists have always taken an emergent approach, even to simple problems.  They consider the complexity of the system and keep an eye on it, building in ways to assess and learn from progress and the external context to guide them through the complexity. So the central tenets of emergent strategy have been the aspiration for many of us working on strategic philanthropy.

    Second, it’s worth differentiating between modes of failure. Mediocre strategic philanthropy may fall victim to over-simplification, but it can at least produces a bet which, even if bad, others can learn from. As Zia Khan wrote in his response, “you learn more by being specifically wrong than by being vaguely right”. Conversely, a mediocre emergent strategy could use system complexity as a crutch to avoid spelling out clear hypotheses. This, in turn, could easily lead to investing too little in too many spots or to analysis paralysis in which no direction is selected. Either possibility would likely produce little in the way of impact, and few meaningful lessons for others to learn from.

    From my perspective the right answer is somewhere in between the extreme caricatures of strategic philanthropy and emergent strategy. I vote for forming clear hypotheses, along with close attention paid to the world around so that the hypotheses can be continually improved.

    I look forward to the ongoing discussion about how the field can raise its level of strategic practice in many of the ways the authors suggest and as demonstrated by many of the best strategic philanthropists.

  • BY Phil Buchanan

    ON May 19, 2014 08:35 AM

    Patti Patrizi, among many others, has been making these very same arguments for years, if not decades. This very recent article is a good distillation of her perspective.

    http://evaluationroundtable.org/documents/Eyes Wide Open.pdf

    I attended an excellent conference of foundation folks she put together—with Henry Mintzberg as featured speaker—many years ago at RWJF.

    Many other advocates of foundation strategy, including those of us at the Center for Effective Philanthropy (CEP), have for a decade been cautioning against the top-down, corporate, “unique value” approach that has been promoted by some of the very folks who now appear to feel quite differently. Here is one recent example, from SSIR.

    http://www.ssireview.org/blog/entry/five_myths_that_perpetuate_poor_philanthropic_strategy

    There is also, by the way, data on the use of strategy at foundations. We have studied this topic and put out, to date, these three reports on our findings.

    http://www.effectivephilanthropy.org/wp-content/uploads/2014/01/EssentialsOfFoundationStrategy.pdf

    http://www.effectivephilanthropy.org/wp-content/uploads/2014/01/StrategyDisconectComFund.pdf

    http://www.effectivephilanthropy.org/wp-content/uploads/2014/01/BeyondtheRhetoric.pdf

    Phil Buchanan
    President
    The Center for Effective Philanthropy
    http://www.effectivephilanthropy.org

  • BY Rhonda Staudt

    ON May 19, 2014 11:00 PM

    Thank you John Kania, Mark Kramer, & Patty Russell for this enlightening article.
    Should we stop asking the question; “what are your anticipated outcomes” when sharing project ideas.  Let’s break the mold, move away from what’s been written and develop 21st century approaches to 21st century challenges.

  • Sara Taggart's avatar

    BY Sara Taggart

    ON May 20, 2014 08:34 AM

    This is a fantastic article.  How do we use this lens to think about when, where, what and how to measure impacts?  Often that is the rub.  We feel compelled to see “something…anything” as a result of investments and efforts, and thus revert to measuring the simple or complicated, at best.  Measuring impacts on the complex feels a bit like trying to gauge changes in the ocean after dropping pebbles from outer space.

  • BY Dan Bassill

    ON June 12, 2014 11:20 AM

    Another great article from FSG. Thank you.  I also have been focusing on engaging resource providers and service providers in on-going innovation and problem solving. I focus on helping youth in inner city neighborhoods connect with mentors, learning and other supports that support them as the move from first grade to the first job and beyond.  In this blog article I provide a graphic that illustrates the need to influence actions of resource providers as well as non profit leaders and illustrates the use of maps as a planning tool to assure a distribution of resources, and programs, in all the places where needed. http://tutormentor.blogspot.com/2014/05/building-tutormentor-org-capacity.html

  • Emily Giudice's avatar

    BY Emily Giudice

    ON June 12, 2014 01:22 PM

    There are two interesting discussions of this article being carried out elsewhere – on the blog of the Center for Effective Philanthropy (http://www.effectivephilanthropy.org/emerging-views-of-emergent-strategy/) and in an article in Nonprofit Quarterly (https://nonprofitquarterly.org/philanthropy/24337-strategic-philanthropy-so-yesterday.html). Those discussions respond to critiques by Phil Buchanan of the Center for Effective Philanthropy and Bill Schambra of the Hudson Institute, respectively. Please read these reactions and join in the conversation.

  • BY John Kania

    ON June 17, 2014 09:50 AM

    The authors of Strategic Philanthropy for a Complex World, John Kania, Mark Kramer, and Patty Russell, offer a sincere apology to Patricia Patrizi and her colleagues for omitting a reference in our article to their two Foundation Review publications (cited below).  Although these Foundation Review publications were not a source for us, readers interested in this topic would have benefited from a reference to these perspectives. We became aware of these articles in December of 2013 during the final editing stages of our article with SSIR. By then, the academic research and foundation interviews that shaped our thinking had been completed. We deeply regret any unintended perception of disrespect for highly regarded colleagues.

    To rectify this oversight, we reached out to the editors at Stanford Social Innovation Review and they agreed to add these citations to the online version and future reprints. Ms. Patrizi’s et al thought leadership in complexity and emergence merits full study and consideration: Patricia Patrizi, M.A., Elizabeth Heid Thompson, B.A., Julia Coffman, M.S., and Tanya Beer, M.A., Evaluation Roundtable, “Eyes Wide Open: Learning as Strategy Under Conditions of Complexity and Uncertainty,” The Foundation Review 2013 Vol 5:3, pp 50-65. Patricia Patrizi, M.A., Elizabeth Heid Thompson, B.A., “Beyond the Veneer of Strategic Philanthropy,” The Foundation Review 2011 Vol 2:3, pp 52-60.

    FSG writes and publishes in the social sector because of our deep passion for supporting the hard work of social change under challenging and complex conditions.  Over our 14-year history we have operated with integrity in our publishing work and with our clients.  We write from first-hand experience, supplemented by ongoing research and dialogue with many in the field.  As a nonprofit mission-driven organization and a publisher of ideas, we welcome the spirited and sometimes messy debate of ideas that can advance thinking and practice.  We remain committed to continuous learning by working with our colleagues in the field to help accelerate positive social change.

  • Ben Cairns, Director Institute for Voluntary Actio's avatar

    BY Ben Cairns, Director Institute for Voluntary Actio

    ON June 18, 2014 12:49 PM

    Having followed this discussion with great interest from the other side of the Atlantic, it was reassuring to read the apology from the authors. Patti Pratizi and colleagues have been encouraging us to engage with the idea of ‘collective’, ‘emergent’ and ‘adaptive’ strategy and learning for some years now - indeed their Foundation Review articles have become require reading for a number of UK foundations grappling with change. So it seemed a little odd to find no mention of their work in the SSIR article.

    It was more than a little surprising, therefore, to then come across a video that calls emergent strategy a “new approach” and makes no reference to Patti Patrizi et al (https://www.youtube.com/watch?v=JzWOG4lzMTcI). 

    Whilst I appreciate the observation that the generation of ideas and concepts can be messy and blurred,  omissions of this kind might, at best, be regarded as sloppy and, at worst, disingenuous.  One would hope that, as members of an international community of researchers and thinkers, we can all act in the spirit of collegiality, show due regard for each other’s contributions and avoid vainglorious pursuits.

  • BY Jara Dean-Coffey

    ON June 18, 2014 06:24 PM

    I have been watching or reading this exchange for the past few weeks with mixed feelings.  On one hand, it says much about where we are as a field/sector/philanthropic industrial complex, that we can can have heated debate about strategies put forward and the integrity of those that do so.  it suggests we take this work seriously.

    On the other hand, it is saddening and maddening that those who have the privilege to inform the field (be they authors or publishers) can put forward ideas “from our experience” that do not acknowledge or recognize the research and experience of others.  It is not clear how anyone who does this work in our information saturated environment and let’s be honest, somewhat incestuous, believe their ideas were not informed by others who warrant acknowledgment.  Doing so does not diminish ones own contribution but places it more honestly in the context of the larger whole.

    That all being said, it is inspiring and affirming to see voices, that don’t have to,  rise up to name those things which cast a cloud on this work. Thank you.

  • BY Alisa Del Tufo

    ON June 19, 2014 11:51 AM

    I am happy to read such a thorough analysis of the dangers of rigidity and the assets of flexibility and relationship building. These are the fuel that all community organizers and change agents recognize as the most powerful aspects of wide, sustainable, complex change.
    My work as the founder of Threshold Collaborative, http://www.thresholdcollaborative.org  is t,he fruition of many years of work in the civic sector. Threshold is dedicated to working with communities to design, develop and assess change. We focus one level deeper than this well written article goes….we focus on participant level knowledge, experience and insight. Sometimes called Participatory Action Research (PAR) this important strategy and philosophy highlights the power that the “lived knowledge” of community/program participants have in surfacing solutions to the challenges they face and assessing the impact of initiatives designed to make change. Ignoring their ideas, insights, know;edge and experience is a peril that we often fall into as professionals who seek to make things better!
    PAR and other community engagement strategies create buy in, develop and strengthen relationships and empathy, building an environment that nurtures the type of change we all seek: profound, meaningful and sustained. I encourage the writers and readers of this piece to look more deeply into these strategies!

  • Julia Coffman's avatar

    BY Julia Coffman

    ON June 19, 2014 07:08 PM

    This exchange has made me think. A lot. I am appreciative of this space to comment and to all those who have contributed here and elsewhere.

    It always has been my philosophy and the philosophy of my organization that the philanthropic sector can be a collegial space in which organizations that support foundation strategy and effectiveness should share ideas, build on one another’s work where it makes sense (there is no need to recreate the wheel or further confuse the sector), and communicate and learn from one another when we share areas of focus. And when we disagree, our patterns of working with one another should allow us to engage in healthy debate that further shapes our thinking. Of course our sector does not always function this way (as there is competition for resources and for thought leadership), but my experience is that to a large extent it does because we ultimately share the same aim of helping foundations and their grantees work toward more successful social change. Indeed, we have published and collaborated with FSG and other contributors to this exchange.

    For all of this to work, however, it is critical that we adhere to standard principles of professional practice—in our research, in our publishing, and in our dealings with one another. When this does not happen or we suspect there might be an issue, I believe it is important to call each other on it so that we can understand what happened and why and corrections can be made if needed. So I want to thank those who have played that role here and those who have responded. It is a good reminder for all of us working in this field to examine regularly how we conduct our work and ourselves.

  • BY Patty Russell

    ON July 1, 2014 07:00 PM

    Thank you, Ed, for the thoughtful comments in your new “Up for Debate” response on how the field might collectively push the conversation forward on emergence. We agree the “stickiness” of the concept can be elusive in practice, despite success stories of emergent strategies taking root and flourishing under specific circumstances and leadership. The structural and behavioral barriers you outline warrant additional discussion, and we believe many of your suggested next steps could prove quite helpful in engaging the field on this topic. In particular, we felt your first and second ideas, which emphasize the importance of peer learning, could help foster a productive dialogue about which tools are most valuable in practice to foundation leaders.

    As a start, we would ask foundation staff and board members: do the ideas in this article resonate with you? If yes, what have you found to be most successful tactics or greatest challenges in implementing them? What additional tools or peer learning opportunities would be helpful in advancing your work? And finally, are there other approaches you are employing to navigate complexity that you would like to share with the field?

    Again, thanks to Ed, Nathan and others for their reflections on the ideas presented in this article (e.g., the role of co-creation, working the attractors, and system fitness). We hope others will join the discussion and share their perspectives so that the field might, in Ed’s words, “hasten the steps toward emergence.”

    Patty Russell, FSG

  • BY Patty Russell & Hallie Preskill

    ON July 22, 2014 01:17 PM

    Thanks for the important question about whether or not there are metrics for assessing increased system fitness broadly.

    The simple answer is no… the construct of system fitness is abstract, multi-layered, and constantly evolving. Our perspective is that evaluation can’t create system fitness, but it can support its development by building the system’s capacity to learn. This is accomplished by strengthening feedback loops and improving access to, and the use of, information. Since the system (and the relationships that strengthen it) is constantly changing as dynamics shift, real-time sensing and learning are critical.

    Evaluation would therefore:

    1) focus on the ways in which (as well as how and to what effect) learning processes, in the form of feedback loops and other mechanisms, are providing access to meaningful, credible, and relevant information, and

    2) ensure that information is being used to make decisions relative to strengthening the system.

    For instance, Communities Foundation of Texas (CFT) took a developmental evaluation approach to assessing and evolving their system fitness strategy focused on the working poor in Dallas (read more about it here in their guest blog on FSG’s site (http://www.fsg.org/KnowledgeExchange/Blogs/SocialImpact/PostID/572.aspx). In CFT’s case, they collected and used data to develop a program for nonprofit leaders. This investment not only helped participants learn how to use data for strategic decision making, but it also increased the participants’ “connectivity” within the system, leading to a “compounding positive effect on the social impact we [CFT] are trying to achieve.”

    Another great resource we would recommend is from Carol Lawson, President of The David and Lucile Packard Foundation (http://archive.constantcontact.com/fs164/1104935062761/archive/1117689287523.html). Carol reflects on 50 years of grantmaking and offers case studies and tools about emergent strategy in their work, evaluation as a tool for impact, and a toolkit for sourcing new ideas.

    We at FSG continue to explore the evaluation implications of this article and plan to publish a learning brief on evaluating complexity in early October. We know others are thinking about this topic as well, and would welcome evaluators and practitioners to weigh in with their perspectives.

    Patty Russell (Managing Director, FSG) & Hallie Preskill (Managing Director, FSG Strategic Learning and Evaluation Practice)

  • BY Patty Russell

    ON July 22, 2014 05:17 PM

    Please excuse the typo in the comment above. The President & CEO of The David and Lucile Packard Foundation is Carol Larson.

    Patty Russell

Leave a Comment

If your comment references a specific author or article in this Up for Debate series, please be sure to make that clear in your comment. This is a central discussion area; it appears on all articles in this series and includes all comments, regardless of what page of the series you submit to.

 
 
 
 
 

Please enter the word you see in the image below: