Entities Endure (For Better)

In a story worthy of Charles Dickens, last Christmas Eve, Malcolm (Mike) Peabody, a 20^th-century titan of affordable housing, died at the age of 96, all but unnoticed except for the legacy of initiatives and entities that he and his forebears have stood up over the decades. As I read his obituary, and that of his ancestor George Peabody, ‘the father of modern philanthropy,’ the thought came to me, entities endure. 

They endure for a reason that Mike Peabody knew. They adapt to and re-engineer their ecosystems from within. Four decades of experience, including standing up three change-making mission-entrepreneurial entities of my own,[1] have demonstrated these ecosystemic equations:

Visionary + philanthropist(s) = entity runway. An innovative entity always starts with a founder, someone with a burning vision of a better mousetrap—whether a tenure model, financing paradigm, operational approach or a combination of all three—and an irresistible internal drive to make that happen via a new entity. That vision can become reality only by the founder launching head-first into creating the new entity, giving it life and purpose, and solving all the problems of its establishment, experimentation and growth toward sustainability. 

The philanthropist perceives the founder’s inner fire, believes in the founder (hence the frequency of spouses, families and friends as small-scale philanthropists), and wants the founder to succeed. The founder needs enough guaranteed funding to enable him or her to spend time and money obsessing about the entity and building its launch platform: value proposition, core customer (or beneficiary/funder combination), core executive team, revenue model (whether contractual, philanthropic or asset-based), core thoughtware, both external (promotion) and internal (processes and protocols). For that, the founder needs a runway. The philanthropist provides it.

Rising entities + enough runway = rapid growth and ecosystem change. At some magic moment, the entity lifts off by demonstrating an example of the innovation. From that instant onward, the newcomer becomes part of an evolving ecosystem, and from that instant on it knowingly or unknowingly changes that ecosystem in multiple ways:

1.         Provide visible proof of the vision, via one or more pilots. We all have eyes but cannot see what the founder sees; we are all Doubting Thomas who must poke before we can believe. As Steve Jobs said, in a quote whose first sentence is often forgotten: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.” 

2.         Use the tools to discover how to improve the tools. As I’ve written many times, government is a factory that desires outcomes and impact yet can produce only two products: laws and money. Laws and money as tools are designed by well-intentioned and dedicated people who are inherently generalists, not domain-expertise specialists. When those who are domain specialists get their hands on the machinery, they use the tools in niftier ways their designers never thought of.

3.         Comment on and advocate for the ecosystem and for how to improve it. “Had I been present at the Creation,” said King Alphonso X the Learned of Castile, “I would have given some useful hints for the better ordering of the universe.” It is human prerogative to use tools made by others without thanking them, in fact complaining all the while, so those who did write the laws are never short of self-interested ‘useful hints’ from those who didn’t. Still, there is an unmistakable authenticity to the advice given from deep and current experience, and if the users tell the designers honestly and factually, that never-ceasing chattering feedback continually improves both later versions of the tools and the skills of every other tool-user in the ecosystem.

In a paradox of social entrepreneurship, sustainability—reliable or recurring revenues that cover its full platform costs and working capital—is every questing mission entrepreneur’s holy grail, it is the lack of sustainability that generates creative urgency and drives innovation forward.

Sustainability = infinite runway = endurance. Arriving at the plateau of sustainability is a transformative event that gives the entity wider horizons, longer timelines and the luxury of strategic reflection. This means new methods of symbiotically evolving the ecosystem:

4.         Act consistently across multiple election cycles. Those who write the laws are subject to periodic bouts of institutional schizophrenia known as elections. Political and policy priorities can and do change dramatically when the government’s composition is scrambled, but of equal significance, consistency of strategic execution can be vaporized. In housing, where the properties have useful affordability lifespans, contractual and regulatory arrangements and funding streams, ranging from 15 to 50 years, this is especially problematic. Someone must be the consistent steward of that enduring housing commitment, and that someone is often the mission entrepreneurial entity.

5.         Represent living institutional memory of how things came to be. For any of us, anything that happened after we were little isn’t history, it’s memory. For governmental agencies, anything the current leadership does not remember might as well be prehistoric because it will have been forgotten. Entities that outlast the legislators who created the laws and money and the regulators who established the procedures, thus become living institutional memory. 

Feeling My Age
If anything can make me feel older than explaining the origins of Government Sponsored Enterprise (GSE) conservatorship, it’s explaining those of the Low Income Housing Tax Credit (LIHTC), or even older programs, like Section 8. As the dueling married couple says in The Awful Truth:

“Things could be the same if things were different.” 

“But things are the way you made them.” 

“No, things are the way you think I made them. I didn’t make them that way at all.”

Endurance = Opportunity for perpetual evolution. With the potential for indefinitely extended life, much can become possible, as Mike Peabody knew from his heritage. In 1862 his ancestor George Peabody, a successful American banker working in London, launched the Peabody Donation Fund with an initial gift of £150,000, to “ameliorate the condition of the poor and needy of this great metropolis, and to promote their comfort and happiness.”  A hundred and sixty years later, the Peabody Trust has grown, via development, acquisition and merger, to comprise over 104,000 homes, making it one of the UK’s largest and oldest housing associations. 

As Mike Peabody said, successful programmatic and business models “often come from the bottom, not the top.”

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[1] Recap Real Estate Advisors, the Affordable Housing Institute and AHI Capital Gateway.