PART I
The Challenges for Leaders

CHAPTER ONE
The Change Imperative

Public and nonprofit sector leadership in the 21st century is challenging and risky. Rapidly evolving global conditions and shifting political and economic influences are changing our ideas not only about “what” the government, nonprofit, and private sectors should do, but about how they should work together. Advances in information technologies and methodologies, as well as rising expectations of leadership, are driving and supporting changes in how public and nonprofit agencies accomplish their missions.

Unfortunately, the tragedy of the September 11 terrorist attacks, the multiple National Aeronautics and Space Administration (NASA) disasters, the failed Federal Emergency Management Agency (FEMA) response to Hurricane Katrina, and the various scandals involving misuse of funds by the leadership of well-known public and nonprofit organizations (most recently the Smithsonian Institution) highlight the need for public and nonprofit leaders to anticipate and respond to many kinds of risk. Public and nonprofit leaders face new and still-emerging circumstances that require them to design and implement more effective ways of doing business, and to improve organizational performance in support of the public interest.

Public and nonprofit sector leaders need to be comfortable with change, while recognizing that change is risky business. Organizational change is inherently unsettling, requiring the modification of traditional structures and sometimes new ways of doing business altogether. Pay-for-performance, competitive sourcing, public-private partnerships, performance-based budgeting, an increased consumer orientation, and other initiatives often create a shifting environment in which public and nonprofit leaders must satisfy a variety of external constituencies while maintaining supportive internal organizational norms and values.

To meet the challenge of change in the public interest, we believe that public and nonprofit leaders in the 21st century must become transformational stewards. Transformation and stewardship are reciprocal and mutually reinforcing aspects of public service, and both are vital responsibilities of tomorrow’s public and nonprofit leaders. Transformational stewards are leaders who pursue organizational transformation effectively, while serving as stewards of their employees and protecting core public and nonprofit values. We contend that public and nonprofit leaders of the future require heightened creativity and initiative in anticipating and planning for risk, in addition to the skills and commitment to focus consistently on the public interest while implementing change.

The need for transformational leadership in the public and nonprofit sectors is most evident when we examine the pressures for change felt by today’s public and nonprofit managers. These pressures emanate from many sources: an aging and increasingly multisector workforce; resource constraints; new horizontal relationships among public, nonprofit, and private sector organizations; globalization; technology breakthroughs; and increasingly complex public problems. In many cases, demands for change conflict with one another, competing for the leader’s time and resources.

In this chapter, we begin by defining change in the public interest. We then identify some major changes underway that are affecting public and nonprofit organizations, particularly in terms of how public services are delivered in the United States.