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Inc.: You've said that more and more community jobs are being handled by local institutions, for-profits and nonprofits. Why are so many small nonprofits, to use your phrase, "grotesquely mismanaged"?
Drucker: Because they wrongly believe that good intentions move mountains. Bulldozers move mountains. But there are exceptions.
I helped start a foundation for nonprofit management in 1990. We have in our files more than 1,000 stories of small and mostly local institutions that do a job that nobody else can do. We gave our annual innovation award this year to the Rainforest Alliance, which has found a way to save the rain forest while increasing both the crop and the income of the banana farmers, once the greatest enemy of the rain forest. Even the runners-up for the award are social innovators.
These are social entrepreneurs, not business entrepreneurs. The social entrepreneur changes the performance capacity of society. Clearly the need is there, or we wouldn't have founded 800,000 nonprofits over the past 30 years.
Yesterday charity meant writing out a check. Today more and more people who are reasonably successful don't feel that's enough. They are looking for a parallel career, not a second career. Very few of them change jobs.
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Inc.: You've said that you think we're on the verge of a period of enormous innovation. We've also got enormous numbers of people in the private sector who want to be involved in social entrepreneurship. Are you arguing that we're now going to see more social innovation than we've seen in a long time?
Drucker: No doubt about it.
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Inc.: But so many people in business are leery of nonprofits because they see them as nonprofessional.
Drucker: And they're both right and wrong. They're right because far too many nonprofits are either poorly managed or not managed at all. But they're wrong because nonprofits are not businesses and should be run differently.
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Inc.: In what way?
Drucker: They need more not less management, precisely because they don't have a financial bottom line. Both their mission and their "product" have to be clearly defined and continually assessed. And most have to learn how to attract and hold volunteers whose satisfaction is measured in responsibility and accomplishment, not wages.
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Inc.: What about innovation and entrepreneurship in government?
Drucker: That's probably our most important challenge. Look, no government in any major developed country really works anymore. The United States, the United Kingdom, Germany, France, Japan -- none has a government the citizens respect or trust.
In every country there's a cry for leadership. But it's the wrong cry. When you have a malfunction across the spectrum, you don't have a people problem, you have a systems problem.
Modern government needs innovation. What we have now is roughly 400 years old. The invention of the nation-state and of modern government in the closing years of the 16th century was certainly one of the most successful innovations ever. Within 200 years they conquered the globe.
But it's time for new thinking. The same holds true for the economic theories that have dominated the past 60 years or so. Government -- not businesses or nonprofits -- is going to be the most important area of entrepreneurship and innovation over the next 25 years.
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Inc.: Do you see any signs of that happening?
Drucker: No one, as far as I can see, is asking the right question. In developed countries the question is not "What should government do?" It's "What can government do?" Still, there are signs of entrepreneurship and innovation in government.
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Inc.: Such as?
Drucker: It doesn't matter whether I approve of his policies or not -- and I have grave doubts -- but the most visible entrepreneur in this country today is in government. It's Newt Gingrich. If ever I've seen a real entrepreneur, he's one. He is trying to totally change American politics. And if he succeeds -- which is by no means certain -- he will have created what we have never had, not even during the New Deal: a disciplined party in Congress under a Speaker's control. And he started with that goal 10 or 12 years ago.
Inc.: Hmm, Newt Gingrich. I suppose it depends on one's definition of entrepreneur.
Drucker: There is only one definition. An entrepreneur is someone who gets something new done.
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Inc.: Well, from that perspective do you think of yourself as an entrepreneur?
Drucker: No, I'm a writer. I could not or would not ever run a business. You know, I don't even have a secretary. And contrary to some of the stereotypes, entrepreneurs are not loners. I am.
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George Gendron (george_gendron@incmag.com) is editor in chief of Inc.
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