The Discipline of Elimination

The biggest advantage for-profits have over nonprofits

In the trainings I do for CEOs, we get a surprising number of nonprofit CEOs.

We find that 90% of our CEO operating system applies to what the nonprofit CEO (or executive director or whatever their title is) does.

These nonprofit CEOs have the same ultimate responsibility for the functioning of a large organization, the same balancing act of delivering value to distinct stakeholders, the same basic tools of management, leadership, and coaching, on and on.

But there are key differences. To me, the biggest has to do with efficiencies driven by the market.

When a for-profit business is doing something that doesn’t work, its interaction with the market often forces it to quit doing that thing. Sometimes it takes a while, but if people aren’t buying our product or we’re losing money on it, we’re going to eventually stop or change the product.

But nonprofits, because they don’t get that same direct market feedback, don’t feel the same pressure. The people who pay for nonprofit services (donors…