Where and How to Scale Nonprofit Success

Over breakfast recently with a very smart foundation leader, John Annis,
we discussed our shared interest in growing successful programs and
organizations. Without scale, each successful grant yields that proverbial
drop in a bucket compared with the number who have a problem. We
discussed a number of challenges, including the need to know just what
caused success, and the reality that many leaders successful at a small
size are not the best persons to lead a much larger organization.
Soon after this discussion I gained insight from how one father and son
grew a tiny business into a large one. Mark Forst shared his story of how
he and his father grew a tiny and failing business into a large thriving
one. His story has meaning for grant makers and nonprofits. We will
ponder the lessons of this story for nonprofits after you read it.

Mark, with his father Mel, wanted to buy a small business that had major
scaling potential. A business broker showed them laundromats, gas
stations, and other place-based businesses that, upon inspection, had
high debt and low potential. They then looked at another losing business
that sold uniforms to postal employees. The details intrigued him. Each
postal employee gets an annual allowance to buy uniforms—shoes to
caps. The uniforms are tightly prescribed in fabrics, stitching and
everything else. The market was highly fragmented with hundreds of
small vendors generally focused on one geography.
Mark and his dad saw a path to scalability that was in some ways
intentionally decentralized. They hired salespeople skilled in personal
relations at a local level. Many were often former postal employees
themselves. The salesperson came in with displays and personal banter.
“Joe, I see your annual allotment is coming up. What do you need for
next year?”
The business saw its sales force as its customers. These locally based
people placed the orders and were the source of profitability in a business
where product improvements were minimally allowed. Mark notes they
kept the company management group very small to avoid persons at
headquarters who might well say “no” to salespeople. The most
important job beyond sewing was answering the phone and helping
salespersons when they called with orders, questions, or anything else.

They had 20 lines open and Mark reports that if all staff were engaged,
his job was also to pick up a ringing phone.
The model worked so well that this company soon had the second largest
market share for postal uniforms in the country. He sold a large and
profitable business and is now looking for a similar opportunity.
Two final points:

1. Mark noted that while the product was not differentiated, the
   promise that came with it was. For example, they fixed zippers
   that broke after ten years without cost. This gave the customers
   the sense that the salesperson would stand behind the product in
   exceptional ways.
2. I asked if the father and son had the usual problems with family
   businesses across generations. He said no, because they started it
   together. The father could not say “we have always done it this
   way” and the son could not say how urgently updating was
   needed. They defined and grew the business together. Mark
   credits the marketing genius of his dad.

So, what can grant-makers and nonprofits glean from this story relevant to selecting and growing organizations?
Four points:

1. The strategy to scale was to replicate localism.  Rather than bring a national model to a new city this approach had a quiet but disciplined process whose face and value were local. The customers remembered the name of the helpful salesperson far more than the name of the company. Nonprofits can find similar ways to honor  cherished localism while keeping the rigor of one proven strategy. 
2. The business honored its shop floor.  Mark knew he was totally dependent on his local salespeople and went out of his way to support and appreciate them.   Nonprofits can find similar value in showing the highest support for those who interact with customers.  That relationship is the critical factor in changing lives.
3. The opportunity to scale was due to structural factors. This started with third party payments which could only go for uniforms, thus providing an immediate and reliable income stream. Also, each post office has the same systems so the sales staff could spend their time on personal relationships. Given government regulatory funding streams in many areas of social and human services, similar opportunities can be uncovered.
4. The business was customer centric.  Little time was spent refining the product or doing better branding at headquarters. The focus was on provisioning the salesperson to add value to postal employees in the settings in which they worked. Too many nonprofits define themselves by the services they offer, while the participant defines it by the persons who interact with them. Replicating the selection of persons based on attributes is a path to growth in many places. 

John Annis and Mark Forst, thanks for giving me a great starting point on scaling.