June 13, 2011; Source: Bloomberg | As a Harvard Business School professor specializing in strategy, innovation, and leadership for change, Rosabeth Moss Kanter is an authority on new models for business in the private sector. In a recent essay, originally published in the Harvard Business School Review (reprinted by Bloomberg), she converts the expertise she has honed in launching and sustaining businesses, to tips for nonprofit leaders.

According to Kanter, the “challenge of growth requires making sometimes-painful adjustments” related to the following five organizational areas: people, finances, partners and allies, organizational culture, and outcomes and impact.

Kanter emphasizes that “(f)or nonprofits, clinging to the past can lead to marginality and stagnation” and for this reason it is necessary for leaders to review organizational decisions and to be aware of the particular stage of growth their organization is in. Referring to an organization’s start-up funds she notes, “Whether the original source of funds is venture capital or venture philanthropy, an investor base or a donor base, each growth phase challenges organizations to shift assumptions and thus change practices.” Kanter acknowledges that for nonprofits, the move from “being discretionary nice-to-have in a portfolio to essential-to-fund” is not a straightforward one.

In addition to finances, Kanter also emphasizes the overall importance of organizational culture as being critical to an organization’s lasting success. She notes, “Values, stories, artifacts, and rituals provide a source of identity that makes the organization feel the same, in pursuit of the same mission even while everything else changes. Culture provides internal glue.”

As a way to evaluate impact, Kanter suggests the guiding question: “What results are being produced, for whom, and are these sufficient?” Although difficult in a weak economy, she recommends that nonprofit leaders avoid the viewpoint that “existence is a sufficient sign of importance” – which she notes is a particular trap for nonprofits. Instead, she recommends that nonprofit leaders ask the "so what if we weren't here?" question which she notes can lead to “soul-searching and strategy change.”—Anne Eigeman