Last Mother’s Day my family treated me to a dinner at a swish Melbourne restaurant. It had an impressive 4- star rating from the critics and looked just like a real Parisian bistro. But despite the lovely setting and friendly service, the steak was overcooked, the sauce bland and the wicker seat kept catching on my dress. It made me wonder what criteria they used to give it four stars. And what does four stars even mean?
It made me think of the McNamara Fallacy. Robert McNamara was US Secretary of State during the Vietnam war. He was obsessed with reducing complex human processes to numbers. His measure of success for the war was a simple body count, meaning that he completely missed the bigger strategic picture and the growing public resistance to the war.
Non-profits make the same mistake when trying to measure corporate partnerships. How? Let’s take a closer look at the McNamara fallacy.
Coined by sociologist Daniel Yankelovitch, the fallacy has four parts:
- Measure what can be easily measured
- Disregard what cannot be measured easily
- Assume that what can’t be measured easily is not important
- Assume that what can’t be measured easily does not exist
How does that play out when measuring the success of corporate partnerships?
Firstly, we measure what’s easy, which is usually cash income. It’s fair that non-profits are keenly interested in receiving cash from corporate partners, but money is not always the thing that achieves mission success. When Lifeline struggled to switch to remote working during the early months of COVID lockdowns, a simple cash injection wasn’t the solution. Their partnership with Cisco tapped the corporate’s core tech skills to create a platform that enabled volunteers to answer calls from home and via multiple channels. The obsession with cash income can also drive a non-profit to seek high volume, but lower value partners. It might help towards the cash KPI but those partners are often energy suckers, demanding lots of attention for low return.
Secondly, non-profits can disregard what can’t be measured easily. Skills, volunteering and in-kind support are incredibly valuable to an organisation but don’t fit easily into a financial statement. I once asked a CFO where he wanted me to record $100,000 worth of pro-bono legal fees from a partner. His answer was “anywhere you like, but don’t go near my P&L”. It’s not hard to quantify the costs savings from pro-bono corporate support. Your corporate partner will often give you an estimated value of goods or time. The challenge is to capture the information and use it thoughtfully to unpack the total value of the partnership, beyond cash. Don’t disregard it, or you could be neglecting a ton of value from your partnerships.
Lastly, it is destructive and self-defeating to assume that anything outside of cash income is not important or doesn’t exist. I know that corporate partnerships are challenging for non-profit leaders used to the predictable formula of individual giving campaigns. Partnerships just don’t fit the mould. But the success of partnerships is often in the long-term shifts for your mission and for the community. Think about the corporate advocacy that helped advance public support for Marriage Equality, the US corporates changing their policies to support abortion rights or grocery retailer Tesco reducing the environmental impact of its business. You need the combination of corporate skills, assets, strengths and networks to achieve change- because money alone won’t do it.
To be successful in partnerships you need to embrace the bigger strategic picture and the holistic value they bring. Counting bodies didn’t win the war for Robert McNamara. If you want to shift the dial on thorny societal problems and the reason your non-profit exists, you need to go deeper into the value of partnerships. The real opportunity may not be measured easily, but the world will feel the difference.