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A Cautionary Tale –
Corporate Lessons applied to Entrepreneurship:
How to Identify and Avoid Future Disasters
Interview with Dan Goodwin
Have you ever had a time when there was a nagging doubt about a certain person or situation? Ever wonder how confidential information is being handled and protected within your organization? Do you know if your employees/volunteers understand the parameters of your mission, passion, and vision? These three items: people, processes, and communication all directly impact your ability to lead and encompass what is needed to be protected at all costs. Primarily, your reputation. When bad things happen, it impacts the organization, not just the person who committed the wrongdoing. While having a great reactive response plan, it has better results with you invest proactively to eliminate those future nasty surprises. Let me share some of my experiences and observations spanning both corporate and entrepreneurial experiences.
Dan Goodwin completed his lengthy corporate career in 2007 as an internal investigator and transitioned into a business owner, coach, mentor, consultant, and teacher. Dan uses his unique talents and training of interview and interrogation techniques to assist entrepreneurs as they prepare and/or revise their business plans. Dan’s interactive style makes him unique in his ability to communicate to the complete range of business contacts, whether that be solo entrepreneurs or C-level executives. In addition to in-person appearances, Dan leverages technology and uses video and webinar training as a part of his follow-up sessions. Dan brings a large network of contacts and is fiercely loyal to those whom he endorses.
When considering a business coach, conference keynote speaker, or simply want to explore a new business idea, you can reach Dan at Dan@CYAConsulting.Services
Read the Interview
Hugh Ballou: Greetings, this is Hugh Ballou, founder and president of SynerVision Leadership Foundation. Every Tuesday, we interview somebody who has a message to share. Different walks of life, different experiences, different skillsets. Not everybody has done everything perfectly. We have all learned from these opportunities to reboot and reset the bar. I have a friend today, Dan Goodwin, who is going to tell you about his thing, but we’re going to help you up the game.
The title of today’s interview is, “A Cautionary Tale: Corporate Lessons Applied to Entrepreneurship.” You say, “I’m running a church or nonprofit. I’m not an entrepreneur.” Excuse me, you’re a social entrepreneur. You’re forging new ground. You’re doing something that’s important. You’re not working in the corporate system. How to identify and avoid future disasters, that’s what this is about.
Dan Goodwin, welcome to The Nonprofit Exchange today. Please tell people a little bit about who you are.
Dan Goodwin: Thank you, Hugh. I’m delighted to be here. My name is Dan Goodwin. I am a business consultant. I am located in the Kansas City area. My background experience was 19 years in the corporate world and 14 years since for the entrepreneurial world. Those I serve, I am able to take my corporate skills as an internal investigator for a Fortune 500 company and parlay and leverage those for business owners and even some corporations that may be in scale-up mode. That is who I am and how I serve.
Hugh: Your message I’m seeing is a universal message. We’re talking to nonprofit leaders and clergy who don’t realize they are running a business. Why does your message apply to them?
Dan: I have a friend here in Kansas City who has done numerous start-ups for nonprofit organizations. It is true. Best practices apply no matter if you are a corporate entity, a nonprofit entity, or a solopreneur. You are better served when you have best practices. That includes what we’re going to talk about today. I even go down to the point of telling my new clients that every decision they make needs to be thought about, You Incorporated. It is the Hugh Ballou plan for world domination. It is the Dan Goodwin plan for world domination. In the end, we need to make sure we have protected ourselves in order to apply best value to whomever we choose to serve in our own client space.
Hugh: Your background says CYAA, Cover Your Angle Consulting? What is this?
Dan: Absolutely, that’s one interpretation. Cover Your Assets. You may have heard it differently in your locality. It’s tongue and cheek. Everybody knows what they have heard CYA to stand for. I considered doing CYA Cubed. Basically, cover your assets, curate your assets, and circulate your assets. We are going from what one of my mentors called eating money, what we need to do to survive and pay our bills, all the way to circulate, which is what are we doing to do for our legacy when we decide to leave this earth?
Hugh: That’s an important point: our legacy. What we are creating is a legacy. We start this journey wanting to impact humankind with doing good and sharing what we can do to help others. However, we are starting an organization, which ought to be a legacy that goes on past our years. That is my desire for SynerVision Leadership Foundation. It has methodologies and programs and systems that can run without me.
You picked a title today: “Corporate Lessons Applied to Entrepreneurships.” I connected the dots that nonprofit leaders are social entrepreneurs. It’s a specific niche of doing good for others and impact to the culture. It’s about how to identify and avoid future disasters. Talk a little bit about that. Why did you home in on that for a topic and title today?
Dan: Hugh, when I left the corporate world, one of the things I quickly discovered was that small and medium businesses have the same issues that big businesses do—the human issues, fraud, theft, embezzlement, inappropriate relationships—all of the things you sometimes see in the news. While I found myself helping business owners react and work through those, I discovered that on the proactive side, some of those could have been avoided. That is really where I started to hit my stride as far as who I was able to serve and head some of those problems off at the pass. That was really the beginning: responding to crises and not only helping them through crises, how to respond to it, stop the bleeding, make the adjustments, make sure that particular problem never happened again. But I found out that there was some methodology that probably could have prevented those from happening in the first place.
Hugh: That’s a blind spot for a lot of nonprofit leaders. I want to remind people when we use the word “business,” you are running a tax-exempt business when you are running a charity or religious institution. There is the business of the church, and there is the business of the charity, which we sometimes neglect, which then compromises the work we are able to do.
I used to live in a smaller town of 30,000 people. in one year, there were three nonprofits that had $750,000 disappear off their books because they put somebody in a signature position that they had not done a background check for. They had not installed systems that would prevent that. We say, “It’s a good person. We don’t need to do that. They would never do this.” There is probably a lot of loss in that area. That is probably one area you’re talking about. Why implement best practices to avoid these situations?
Dan: That could be a four-hour seminar by itself. Best practices allow you to mitigate risk. The greatest business plan in the world is a risk mitigation plan. That is what a business plan is. We have identified the 10 sections of our business plan and have planned, visualized, cast a vision to what we believe it will do. Just a quick reminder: I don’t care if it’s a business for profit or nonprofit. It is a living, breathing document that needs to be reviewed and responded to. The whole point of that piece of it is when you put as many risk mitigation policies in place, there is a balance here. They can throttle you if you can’t do anything because the plan says you can’t do this.
It also gives you guidelines that if another opportunity comes up, the powers that be, the people in charge (the director and the advisory board) can take a look and say, “Does this fit? Or do we need to modify our business plan?” The business plan is simply a way to memorialize and document the vision and purpose of that business or nonprofit.
Hugh: It also lets everybody know where you’re headed. It’s an engagement tool. I want to go back to what I said a minute ago. We tend to be on automatic pilot running a nonprofit. We don’t think we need these business systems installed in our enterprise. When we don’t do that, those are the very things that limit our effectiveness and maybe cause a disaster. There are some pitfalls that we can have happen. I mentioned one type. What are some pitfalls? Who needs to be aware of the potentials of those?
Dan: The underlying issue, the catalyst sometimes, is our ability to ask questions and the ability to ignore questions. There are two reasons why people ask questions. They are genuinely curious and seeking new data points, or they are looking for someone to affirm and agree with them. “I did a great job, didn’t I? Pat me on the back.”
But the first kind, the curiosity and seeking new data points, is a sign of a true leader. That is the sign of exploring, “Did we make everything? Did we miss anything?” It’s easy, as you said, to run on auto pilot and assume that things are taken care of. Everybody knows, like CYA, what the acronym for assume is. The reason people don’t ask questions is they don’t want new data points. The reason they don’t want new data point is because they are the responsible and accountable to process that information and then make a decision as to what to do with that information. That gets people very uncomfortable.
Your example just now of fraud, three nonprofits inside the small town. I have heard this once if I have heard it two or three dozen times in my 14 years of consulting. “Hugh, when did you first become aware of this issue?” “I don’t know, four to six months ago?” “Hugh, go run to the bathroom. Look in the mirror. That is the person responsible for anything that happened in the last four or six months because you didn’t ask the question.” I am softening this a little bit. You have to ask yourself why you didn’t ask the question. There are a myriad of answers: childhood friend, sibling-in-law, my best buddy, referred by somebody else.
Your point was well taken. They didn’t complete the due diligence in order to get the background check done. You may still miss it. Somebody may pass through. There are plenty of sociopaths and narcissists out there who may be charming on the outside. They still may slip through. But at least, you’ve done this.
The other piece of that is training. How do you have those crucial and sometimes confrontational conversations? It is all about the mission and vision for your business or nonprofit. Anything that comes against that and threatens it needs to be addressed immediately.
Hugh: Or it gets worse.
Dan: Your word is “disaster.” It can shut it down. It can shut down an organization. I have seen churches fold because of these types of activities.
Hugh: I have seen medium-sized businesses fold because of inside corruption. You have worked in corporate America. You have worked in higher education. You belong to a mega-church. You have worked in various settings. You find the same deficiencies in all of them, right?
Dan: Absolutely. If it weren’t for the dang human beings, we would have a great organization.
Hugh: Yeah. It is the problem that exists when leaders don’t step up to what they need to be doing. We don’t want to confront issues because we see that as harsh. Really, if you break down “confront,” it means with your front. We are not bashing people; we are facing it. I did a webinar last week on conflict. One of the worst things that we do is not to deal with it. A little thing becomes nuclear.
There is a number of examples here. One area of compliance is do the due diligence with your background check. Also, install systems. Here is an example. I served some very large mega churches. I went into one, and there was this form for requesting a check. You fill it out and sign it, and then they will write a check. I said, “No way. I am going to fill it out and do a request. Send to the person who supervises me. They will sign off on it. It has a budget line item. Then the administrative financial person writes the check. The church treasurer signs the check.” That safeguard system, it’s amazing how many people run the books, just one person. There is no checks and balances system in place. Is that a type of system you advise people on?
Dan: Absolutely. Especially in a church setting, smaller churches- We have friends that pastor a smallish church. They face exactly what you just described, where one person was wearing all the hats. Listen, we do that as nonprofit owners, solopreneurs. We are wearing all the hats. When you get to that point, especially in a nonprofit, that dividing of the duties/responsibilities, those checks and balances, are so important. I always tell my clients when they are ready to do the scale-up to review the systems and processes to make sure that when they redistribute the work across the new organization, there are those safeguards in place. That is an excellent point you just made.
Hugh: When we go for grants, they will want to know. Sometimes we have to have audits. Sometimes people giving us money want to know about the systems that we have in place. We need to focus on our work and not get sidetracked by people, who want to take our money or otherwise compromise us.
Dan, I encourage all business leaders to sit on a nonprofit board somewhere because that is our service to our community. It is a form of philanthropy. We learn stuff about our businesses by giving to others. It’s part of our community duty and delight, as we say in our faith. We are responsible. The board members are ultimately responsible. What is your advice to business leaders and community leaders who sit on nonprofit boards? The buck stops with them. They are ultimately responsible for all the financials of the organization as well as contracts and misbehaviors by the people on the staff.
Dan: Correct. I think that’s overlooked. People say, “I’d like to be on a board somewhere.” I say, “Okay. Is this a profit or nonprofit? What are you thinking?” If they have never thought or had that desire before, to find out that they are personally liable for actions, it’s a real eye opener sometimes.
Here is what I would tell prospective board members thinking that is what they would like to do some day. Guess what? You need to flip the script. You need to do the due diligence on the organization. Is this something you’re behind? Can you go in and interview people? Can you find out if your visions and values align? I’m not saying that the nonprofit would need to open their books. Can you look at the processes by which they do fundraising and continuing education for their members? Look at all of these things before you sign on to say you want to be a part of this and put your name on this. It is a reflection of you also. It is a reflection of your professionalism, your reputation in the community. You buy into the vision for you to consider it. Flip the script and do your own due diligence in reverse.
Hugh: It makes a huge amount of sense. We have blind spots. Good people doing good work, we don’t need to do that. We are polite. But we can still be polite and ask good questions realizing that we are responsible once we say yes to the board. We get a vote. The financials are public information with nonprofits. Everybody is going to know what’s going on. You just need to ask the hard questions. We’re not insulting people. We’re doing our due diligence. That is part of our personal best practices. You just highlighted things that we teach. Does your new board member fit the values and principles that you stand for? Otherwise, they won’t be a good board member. We need to get that out of the way at the beginning.
We’re running a nonprofit. When is a good time to start putting some of these processes in place?
Dan: Before you organize the paperwork. How’s that? Before you file the paperwork.
Listen, the planning process on the front end is absolutely crucial. The paperwork is the paperwork. I’m not making light of it because I know it takes a while, and there are details. It is the coming together before anybody signs off as the director of a nonprofit. It starts way before that. It is working it, working it, working it, massaging it, laying those plans out. That is the time to start all these implementations, to go out and seek knowledge, seek data points, and make sure that barring a disaster, you are employing and attracting the right people to your nonprofit.
Hugh: Thank you, that’s good advice. Your title is “Corporate lessons applied to entrepreneurship,” which I’m adopting nonprofits under the social entrepreneur banner. There are lots of corporate issues. I work for groups like accountants and quality control people and HR people in doing keynotes or workshops. They all say, “I wish the leadership would listen to what we had to tell them.” We have relevant information that would make this organization run better.
There are classic examples of failures in leadership. IBM came out with a personal computer and thought it was a toy and not worth protecting any of those properties, so they let it go. Kodak was #1 in silver imaging in the world. They thought digital imaging was a fad. They didn’t treat it seriously, so they went from controlling that whole market to going bankrupt. There are many lessons to learn from corporate leaders not asking the questions and not paying attention to what’s really going on. What do we learn from corporate America that we can install in our organization in the community that we lead?
Dan: Communication is the key. Communication, up, down, sideways, and to your patrons, the fundraising events. One thing that is thrown in the mix after 30+ years of experience is the impact of social media to pay attention, not discount it. Make sure that someone is on top of it. Decide those standards up front. I’m working with a nonprofit right now in start-up phase, asking, “Who do you have on this? How do they align visions and values?” It’s the same question you would ask in corporate America. “Are you a fit for this job?”
The one advantage that corporate America has sometimes over solopreneurs or the volunteer army, as I like to call the people who are attracted to the mission of a nonprofit, is I call it the wearing of the hats. You know this, Hugh. The CMO/CTO/CFO/CEO. What are those equivalencies in the nonprofit? Make sure that as you grow your nonprofit, you are up-leveling talent every time you grow. There are things I can do on a start-up that when we hit a certain revenue, it is time to pass the torch. It is time to give somebody who has that expertise the chance. That is what I observed in a corporate environment.
You scratch your head sometimes because somebody that is technically the leader because they have all the head knowledge gets promoted to managing a team. Of course, you’ve heard this story lots of times. They have no people skills. They have no relationship-building skills. It’s a disaster. Then they double down in management. It’s not that they can make the right decisions. By golly, they will make the decision right no matter what. Everybody is miserable, including the person who just got promoted. That is the lesson. Just ask great questions.
“I don’t want to be a snitch. Don’t want to embarrass anyone.” Where I am in life, I am way past that. You can ask confronting questions, and you can still do it professionally, and you can still treat everybody like human being. Three needs: a person needs to be seen, heard, and validated. Even if I am mad as fire at you for something you have done, I can see you, I can listen, and I can validate you as a human being, even if I hate what you have done or not done, sins of omission.
Hugh: Sins of omission is what we fail lots of times as leaders. “I can’t do that because it’s not polite. I can’t make waves” It will make a bigger wave if we don’t deal with it.
We’re talking about best practices. Couple of things here. Define what best practices are. What is your definition of a best practice? Give us some examples of some best practices that we need to consider or we gotta have.
Dan: Okay. Best practice allows you to operate at the optimal level for the present task in the present moment. How’s that for boom? I couldn’t say it again, so don’t ask me.
Hugh: Are they rules or guidelines? What are they?
Dan: To me, it’s guidelines. Young Dan would have said, “No, it’s a hard and fast rule. You can’t change it.” You do have to look at the circumstances in each situation. Who you hire in your organization to be your chief financial officer or equivalent may not have the same depth if you’re hiring janitorial outsourcing crew although it should because I have worked plenty of internal cases where we are getting taken to the cleaners’ by our cleaning crews. They were stealing equipment, etc.
The examples of best practices, I would say this. Not to get bogged down in committees. However, it takes more than one person to hire, ideally more than one person to interview. Interviewing by panel. The ideal one I have worked with is the three-person panel. Any one of the three had veto power. They were from three different places in the organization. That is the best practice. Along with due diligence. That would be one.
Let’s talk about software and hardware. Best practice is not to go with the cheapest, but do your research and go with someone that has demonstrated in the past they have the capability to do what you need to do, whether that be a CRM, financial software, documentation. The cheapest can cost you money in the long run. That is one thing I tell my clients all the time. If you are just looking for the deal, remember that can cost you your company later.
Hugh: There are lots of areas to consider. You look at the different hats and areas. Brand slaughter is where one person doesn’t abide by the cultural norms, the guidelines, the values, the principles. Guiding principles are how we function. They do enormous damage. There are best practices in hiring, which the #1 dysfunction in churches and nonprofits is the search committee. They have this paradigm and don’t know what to ask. They are putting square pegs in round holes.
Another one is social media. We probably need to think about what is our standard practice that identifies our brand and our brand promise and brand value to the people we serve?
Dan: That is the biggest challenge right now that I’m working on with clients. Who makes the decision for social media? You don’t have to go far to scroll through Instagram and Facebook and LinkedIn. Name your channel. If you scroll through all the ones I mentioned, you will find 99% of the examples of what you don’t want to do. Those things rise to the top. They get viral and retweeted and reposted. I don’t have all the answers for that. That is a big mess.
Hugh: It’s a huge mess. I call that the anti-social media. We have this buzz thing: social distancing, which means nothing. We physically distance. It’s anti-social distancing. Those are examples of bad practices that we misinterpret words and misuse them, and the words don’t mean anything. There are lots of ways we inadvertently install things that are meaningless or send bad messages to people.
Dan: Absolutely. Sometimes it’s inadvertent. Sometimes it’s not even intentional. Something gets twisted. Something gets sideways. You’re having to backtrack or apologize when maybe no apology would let it die a quicker death. I don’t know. Those are those crisis moments that we just work through when they come. The whole prevented defense on that is one person, single point of contact that you highly trust that understands the value and vision of the organization that will post on behalf of you. Focus on the things you can control and do not worry about the things you can’t.
Hugh: Neither you or I have ever made any of these mistakes. I have learned to frame mistakes as learning opportunities. There is grace. I don’t hear you telling anybody you need to cut off somebody’s head when they have made a mistake. We want to live in the preventative. How do we write it? There is a credibility damage when someone goes outside of these lines.
Dan: Yes. You opened the show today, which I was inwardly giggling, because you said opportunity to reset. If I had thought about that way back in the day when I was doing employee investigations, I may have used that phrase. Basically, I was there to give them an opportunity to tell their side of the story. I didn’t hire or fire. Just like Dragnet, for all the older people watching, just the facts, ma’am. that’s what I was about.
Hugh: Dan Goodwin, thank you for being a guest today. You have given us a lot of things we need to wake up to and think about. Contact Dan at dan@CYAConsulting.Services. You can go directly to him. It’s crucial to have this transparency and accountability for our work. As we end this helpful interview, what do you want to leave people with today?
Dan: I’m going to piggyback on what you said. No matter what, the last 18 months have been extraordinary in our lifetimes. I do the same signoff. Practice grace, mercy, and love above all. You may have to make hard decisions. You may have to let someone go. You may not hire the person who you thought was going to be a rockstar. No matter what, practice grace, mercy, and love.
Hugh: Always. Thank you for your important messages today.
Dan: Thanks, Hugh. I enjoyed being here.