‘Upcycling’ organizations: Lessons from nonprofits’ transition to open management

“Sunlight is the best disinfectant”, US Supreme Court Justice Louis Brandeis once said. This adage, now the mantra of openness activists, has reshaped management and organization in all sectors: openness, transparency, and inclusion have since been hailed as universal cures for such challenges as scandals and racial and gender discrimination. Who still wants to voluntarily work in a secretive, opaque, and exclusive organization these days? Nevertheless, openness is far from universal among organizations.

Being transparent about one’s environmental, social, and community impact and including clients and constituents in management decisions is no longer a rarity reserved by the likes of the Wikimedia Foundation or what MIT economic sociologist Cat Turco calls ‘radically open’ tech ventures, but rather an expectation for all organizations. This imperative is all the more evident when scandals rock our trust in nonprofits – be it the Mutuelle Nationale des Étudiants de France (MNEF) embezzlement scandal or reports of toxic work culture at the Silicon Valley Community Foundation – and show the downsides of shady management.

Our study exploring the transformation of nonprofit organizations in the San Francisco Bay Area between 2005 and 2015, recently published in Organization Studies in collaboration with Woody Powell and Aaron Horvath of Stanford University, illuminates how organizations have opened up to become “glass houses” and why some have stayed in the shadows.

California open

No one opens their blinds from one day to another. So, to find out why some organizations took openness more seriously than others, we tracked a series of nonprofits over an entire decade. As part of Stanford’s Civic Life of Cities Lab, we reconnected with a representative sample of over a hundred nonprofits when we started this research in 2015. We learned about each organization’s trajectory through survey interviews, new methods for analyzing organizations on the web, and administrative data from tax authorities.

We did not just want to write a paper; we wanted to contribute to understanding the radical transformations during a time of political upheaval in the United States – Donald Trump had just been elected President. So we sought to involve the local nonprofit community in our research design. We put the insights from our surveys on a web page to help them situate themselves in the nonprofit landscape. We organized a workshop with local leaders in 2016, asking them to put our early insights into perspective and telling us what they thought we should study. What it means to be open in the digital age made the list.

During this transformative decade in Silicon Valley – which brought with it the total ubiquity of the Internet – calls became loud for organizations to report not only their financial records but also whether they had a sound theory of change, tangible evidence of impact, and a strategy for listening to their constituents. This paradigm of ‘organizational openness’ was in quite some contrast to a period of more inward-focused reorganization with its focus on efficiency that consultants and philanthropy foundations prescribed to organizations in the early aughts.

Enter the Internet

Considering this history, the answer to who complied with the turn to openness surprised us at first. Precisely the nonprofit organizations that were most inward-looking and reticent in the early 2000s were the ones that had opened up the most. How so?

We learned that nonprofit organizations that had become most oriented towards openness, impact, and inclusion had altered established bureaucratic management practices to meet the call of duty. Interviewing leaders both in 2005 and 2015 showed us how organizations repurposed some of the tools of bureaucratic management – such as internal performance indicators and plans of action – to become tools of open management, allowing the organizations to prove their impact to funders, share information about their finances, and incorporate constituents in strategic decisions.

Early exposure to the Internet and its many promises helped some organizations share available internal information, such as evidence of impact, with the public – perhaps at times without anticipating the consequences. Public trust in nonprofits was low, and websites offered an opportunity to rectify the lack of trust. As one executive told us: “We began to realize there were a whole lot of opportunities for putting information online that would help people. We had the database. Why not put it on the web?” Organizations that already had data to share put it on their websites, and later on social media.

Transforming organizations

But openness was more than saying things on the internet: openness can be transformative. A senior center in one of the roughest neighborhoods of San Francisco interviewed constituents to learn more about their organization, and the feedback was not what they wanted to hear: “You guys are kind of tired”. So the organization got volunteers from a local tech company to take their clients sightseeing on rickshaws and handed out iPads to help seniors communicate with their distant families. Our study revealed many such ingenious moves.

One area where even the most open organizations drew the line? Nobody wanted to share information about personnel decisions like hiring, promotions, and layoffs.

Apart from that, the idea of openness became a new organizing principle among many nonprofits, some of which have now started to look to whom exactly they serve with a new concern about equity and inclusion. Open management may have played a role in this concern about socio-economic inequality in an area marked by such drastic disparities that one would often find homeless encampments just across the wealthiest tech campuses with free canteens for employees with six-figure salaries. Some executive directors even started giving talks at local tech companies and asked them: “What side of history are you going to be on?”

New life

These observations did not just shine a light on what had turned bureaucratic organizations into glass houses; it also provided a wonderful springboard to think about how organizations take existing organizational practices and breathe new life into them. This dynamic is what we call repurposing: When organizations encounter new challenges, they may adapt not by taking up entirely novel practices but by giving existing practices a new purpose.

Repurposing is all around us, and we often hold it up high as evidence of the ingenuity of civic and business leaders. It means turning old warehouses into community centers like the former Halle Girondins or the Cité des Halles next to emlyon’s new campus in Gerland, or reviving crumbling ruins as temporary concert venues like the Nuits de Fourvière in the hallowed Théâtre Gallo Romain. Repurposing is also a crucial idea in the age of the circular economy, but it leaves us with a big question. If we can turn recycled truck tarps into cool messenger bags like Freitag and turn tossed groceries into candles and creams like Pulpe de Vie, how can we ‘upcycle’ the organizations we work in?