Center for Social Innovation Reaching Across Public and Private Sectors

February, 2003

By Janet Zich

With the involvement of many Business School and other Stanford faculty, a new organization searches for solutions to some of today’s most pressing social problems.

Betsy Vander Velde is president and CEO of Heart of America Family Services in Kansas City, Kan., an agency that serves a seven-county area. In March 2002, she attended the Executive Program for Nonprofit Leaders. "I was pretty beat up when I got there," Vander Velde recalls. "2001 had been a horrible year for us." The nationwide economic downturn had put her agency’s normally healthy budget in the red for the first time in years. "I felt my board blamed me. I blamed myself. I was exhausted. When I got to Stanford I was like a garden that hadn’t been watered."

The Executive Program for Nonprofit Leaders (EPNL) is as much about nurturing nonprofit leaders like Vander Velde as it is about developing their management skills and capabilities. "The demands and sacrifices of working in the nonprofit world often lead to burnout and eventually to the loss of talented leaders," says James A. Phills Jr., acting associate professor of organizational behavior at the Business School who is also faculty director of the executive program. "All the folks in the program are presidents, executive directors, CEOs of their organizations, and that’s a particularly lonely job. The fact that they came together and shared the experience of the solitary nature of leadership was an important part of community building."

Vander Velde and her classmates were sponsored by the Center for Social Innovation (CSI), an umbrella organization led by Phills and Dale T. Miller, the Morgridge Professor of Organizational Behavior. With 17 affiliated Business School faculty and many others throughout the University, the center reaches across the public and private sectors to find solutions to some of today’s most pressing social problems. The reason for its inclusive approach is simple. Says Phills: "The fundamental nature of the problems we’re concerned about can’t be addressed by just one discipline or one professional field."

CSI’s concerns are indeed wide ranging: They include education, the environment, philanthropy, nonprofit management, and corporate social responsibility, an interest fueled by the recent accounting scandals at Enron and other major companies. The center supports the development of new courses and cases in all these areas. "In contrast to some of our peer institutions, where there might be a center that focuses on nonprofit or public sector management and a different entity that focuses on corporate social responsibility, CSI is distinctive in studying both," Phills says. "CSI’s approach is important because corporate social responsibility and nonprofit and public sector management are both fundamentally about trying to make the world a better place."

Business School Dean Robert Joss has made a major commitment to CSI to reflect his belief that all students need a deeper understanding of business as a social institution as well as an economic one. Corporate managers must realize the impact their leadership and the actions of the company itself have on employees, the environment, and the people around it, he says.

The Center for Social Innovation came together in the heady stock market of 1999. The economic woes of the past few years have only made its mission more compelling. "The social problems that CSI was originally concerned with have been exacerbated by the declining economy–concerns like poverty, urban economic development, and educational reform," says Phills. "We’re more acutely aware of our limited resources today."

" The social sector has been asked to address problems the government previously focused on," Miller adds, citing examples in education, health care, and social services. "It’s not just that they’ve been working on the same problems and not making any progress, and now it’s time for us to help them out. These problems have become more intractable than people thought. This is the time for a partnership between nonprofits and business."

Under CSI’s broad umbrella we find familiar names like the Public Management Program, which last year awarded certificates to a record 25 percent of the graduating MBA class, and the Alumni Consulting Team, which has been contributing pro bono consulting services to nonprofit organizations since 1987. These stalwarts stand beside new programs like the nonprofit executive program and the Stanford Educational Leadership Institute (SELIi). Introduced last fall, the center’s partnership with Stanford’s School of Education attempts to integrate the best of education and business in the quest for educational reform.

"Schools were designed 100 years ago," says Linda Darling-Hammond of the School of Education and codirector with Phills of the new institute. "Education is a mass process like businesses used to be when they were designed on assembly-line models, and school leaders have been trained to lead organizations as they are. Businesses have redesigned. We have the same need."

What the center brings to SELI is its expertise in organizational design and development of the nonprofit leader, says Darling-Hammond, adding, "Our first point of connection is the Executive Program for Nonprofit Leaders." SELI also is developing a summer program for urban school leaders and their teams as well as a class in case research, to be taught by Darling-Hammond and Phills, in which students from master’s programs in business and education will go out into the public schools to conduct on-site research.

CSI blesses courses and cases on social innovation at every level from undergraduate through graduate to executive offered by Stanford’s schools of humanities and sciences, education, engineering, medicine, and business. Under the center’s Environmental Sustainability Initiative, more than 40 new case studies have been completed or are under way. They will be used in courses like the one on eco-tourism developed by William Barnett of the Business School and William Durham of Stanford’s Department of Anthropological Sciences, to be offered this spring for the first time.

The center also supports research in many areas. Researchers from the Stanford Project on Emerging Nonprofits, led by Walter W. Powell of the School of Education, are tracking the growth and organizational development of 200 new nonprofits over a 2- to 5-year period. A research fellows program that will bring three or four scholars from different disciplines to the Business School is slated to begin in the near future. During their year of residence, the fellows will address, from their various perspectives, a topic relevant to social innovation. The topic will change from year to year, says Miller. Reports from these and other research projects will be covered by the Stanford Social Innovation Review, a journal founded by CSI that begins publication this year.

At age two, the Executive Program for Nonprofit Leaders is the granddaddy of CSI’s "new" programs. It will meet next month for only the fourth time, but to hear EPNL’s graduates around the country tell it, it already is having an effect on their agencies. Nearly 150 executives have attended the EPNL since the first class met in June 2001. Participation in the academically rigorous, two-week program is competitive. Participants must be nominated by a foundation or individual before they are invited to apply. The center digs into its $4 million annual budget to subsidize up to 90 percent of the $11,000 cost for each successful applicant.

"What Stanford has done is to validate the work of this sector, not just as those little organizations that do nice things, but as a marketable and important sector of society, " says Linda Croushore, executive director of the Mon Valley Education Consortium in southwestern Pennsylvania and a member of the first EPNL class.

Bill Bolling, executive director of the Atlanta Community Food Bank, credits the program with creating a safe place to share ideas and ask questions. "It was an environment where you could put anything on the table and not be laughed out of the room," he says. Bolling continues to share ideas with some of his classmates, as does Dave Cousineau, president and CEO of the Seattle Children’s Home, who occasionally meets with other Seattle-area grads to plan how to bring home to their agencies the lessons they learned at Stanford. You have to tread easily at first, Cousineau has found. "You have that two-week wonder thing to deal with. I approached the board first. They’re business people; they can relate to it."

Six months after EPNL, Vander Velde phoned last fall from Philadelphia, where she was attending the annual conference of the Alliance for Children’s Services. "EPNL profoundly affected my life," she reported. "I came back from Stanford realizing I really love what I do. I’m developing a new strategy to deal with my agency’s problems, and I’m optimistic about it. My communications have improved; I’m more visible. I have a renewed sense of confidence; I’m doing the right thing. My husband sees the renewal. My agency sees it. Even here at the conference, everybody who knows me sees the change–and they all want to know how they can go to Stanford, too!"

		Creating Better Philanthropy Poverty doesn’t necessarily breed terrorism, Gordon Conway, president of the Rockefeller Foundation, told the gathering at a conference on international giving six months after the terrorist attacks on New York and Washington, D.C. "But we do know that poverty provides justification, a sense of legitimacy, to those who wish to be terrorists." The Rockefeller Foundation concentrates its philanthropy on the poor and excluded of the world, particularly in areas where government or big business have let them down. The foundation has stepped in to finance small, struggling biotech companies in developing microbicides for African women to protect against HIV/AIDS. It has partnered with the Gates Foundation to develop a vaccine against the disease; the vaccine is now in the final stages of testing in Nairobi. And it joined with the United Nations and the Japanese government to fund African scientists who crossed an African rice with an Asian rice to develop a new strain growing now in West Africa. "I believe that modern societies, whether they are in the developing countries or here in the United States, are like three-legged stools," Conway says. "They have three legs: the government, the private sector, and the NGO sector. I think the big chance for philanthropy, apart from funding the NGO sector, is to help create the binding that brings those three sectors together." Conway was speaking at a two-day conference on global philanthropy, "Borderless Giving," one of four major conferences on philanthropy sponsored by the Center for Social Innovation in the past four years. The others included one on entrepreneurial philanthropy, another on corporate philanthropy, and a third, called "Executive Program in Philanthropy," which was followed later in the year by a three-day executive education program of the same name. Although it is most visible for its outreach in philanthropy, the Center for Social Innovation also has several research projects under way that deal with the subject, most notably the Stanford Project on Emerging Nonprofits, in which researchers are assessing the impact of various types of philanthropic funding sources on young nonprofits. The center hopes to determine how different funding models–traditional foundations, venture philanthropists, corporate and individual foundations, and individual givers–affect the growth, organizational development, and performance of startup service agencies. The study of philanthropy promises to remain a major concern of CSI. As Rockefeller Brothers Fund President Stephen Heintz put it at the "Borderless Giving" conference, philanthropy is, after all, "the venture capital of social innovation."

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Connecting the Dots

by Edward P. Kelley, EPNL ’01

It’s July 8, 2001. I’m sitting on a plane cruising at 30,000 feet on my way back to Boston after spending two weeks at the Stanford Executive Program for Nonprofit Leaders (EPNL). The Stanford experience was much more than I had anticipated. It wasn’t just about education. It turned out to be a reflection on how I functioned as a manager and a leader and what that means to the Robert F. Kennedy Children’s Action Corps. All of this is simply a way of stating that I am seeing myself, my skills, and most important, the agency I’m working with from a different place. Dare I say, a more enlightened place. I’m grateful. I’m fascinated. And I’m scared, as I sit here reflecting on the best way to share what I’ve experienced.

I remember a long walk back to the Schwab Center after class with Joel Podolny and Jim Phills. They advised me that if I had approached the strategy of my agency’s contracting differently, a contract we’d recently lost might very well still be with us. I raised the contract issue in the first senior team meeting after my return from California explaining that I learned we do some things extremely well, but that we’ve also made mistakes. I could tell people didn’t believe we could have done anything differently. I reached into my briefcase and took out Built to Last by Jerry Porras and James C. Collins. I told them, "This is an interesting book, and when you walk through it, you’ll see what I mean."

I distributed copies of the book and Joel and Jim’s presentations to the 11 members of my senior management team. We agreed to meet two weeks later and share our thoughts on the materials. The time arrived, and as we sat through lunch, I could sense in the group a certain uneasiness. I asked how many in the team had read the whole book, and I was disappointed to see only 2 hands out of 11 raised. I reflected on my own skepticism before I went to Stanford and resisted the temptation to bark like an executive director.

Instead, when we got to a discussion of corporate cultures, I asked the group, "Well, what do you think the culture of the RFK Children’s Action Corps is around new initiatives? I think one of the cultures of the organization is that you don’t really have to do what the executive director tells you."

I pointed out that if the executive director asks 11 people to read a book and 2 do it, then the other 9 must have a sense that to not read the book wouldn’t have any ramifications. This was the first time our discussion became delicate but certainly not the last.

Two weeks later, on a deck overlooking a lake in central Massachusetts, the senior team assembled one more time. This time, they had read the entire book and all the materials. I watched this talented, committed group of leaders discuss, debate, and critique the principles that are vital to their trade. We were on the same page. We understood there was a strength and an integrity in the agency that we all shared great pride in. At the same time, we saw the difference between being leaders and being managers. And we came to the full understanding that our job was no longer perceived to be the protection of the children who are in our care today, but, beyond that, to be certain that the agency is available to children 10, 50, 100 years from now. We have the responsibility to make sure this agency is truly built to last.

We decided the best way to continue this paradigm shift within the agency was to involve as many people as possible in the discussion. In order to do this, we founded the Robert F. Kennedy Children’s Action Corps Leadership Institute, which met for the first time on Oct. 29, 2001. Forty-four program directors, assistant directors, principals, assistant principals, clinicians, outdoor adventure experts, and administrators assembled in a professional conference center for a presentation and discussion designed to convey the message that something new has begun and you are part of it. At a later meeting, the institute would arrive at a statement of the core values of the agency that I believe is the most clearly articulated description of the agency’s purpose in its history. It would go to the board of directors in March 2002 and be ratified.

It’s easy to tell anecdotal stories about the value of something. And so, when asked to document change in our agency as a result of the EPNL program at Stanford, I would say that we are a long way from knowing exactly the long-term effects. But I am confident that over the next year or so we will continue on our path and implement new ways of connecting our actions to the core values arrived at by the Leadership Institute. If there is one place where the epnl connected the dots for me, it is that leadership is not a secondary responsibility having only to do with the financial life of the program. Far more important, it is a commitment to make an organization live its values on a minute-by-minute, second-by-second basis–thus guaranteeing the long-term viability of the organization.