When Jamie Merisotis became president and CEO of the Lumina Foundation a few years ago, he realized that even one of the largest private not-for-profit foundations in America couldn’t rest on its past successes or its $1.2 billion endowment.

“The foundation was doing very good work in the area of higher education, but with the levels of assets that we had, we have to aim even higher than just doing good work and making a small contribution,” he says.

Setting a goal and mapping out the strategy needed to achieve it became his assignment. Merisotis had majored in political science in college. He had spent much of his adult life in Washington, D.C., where he worked in the policy context, so he felt he had the tools and experience to make it happen.

“I wanted to figure out if we could exercise our leadership, that is, be responsible in our leadership by actually aiming at much bigger societal needs and goals,” he says.

Merisotis knew his best shot was to take several measures that were very much like those any for-profit company would take. It was about being clear with your goals and very clear with the strategies you are going to pursue to help achieve them.

The Lumina Foundation’s goal was a noble one — get more people to go to college or obtain certification beyond high school.

“Four years later now, after we begun our mission, we feel like we have had some influence on that,” Merisotis says. “President Obama has set a goal for the country, and many states are attempting to dramatically improve their higher education systems. A lot of the specific strategies that we are pursuing in our work such as helping colleges and universities to become more productive, helping adults getting college degrees because the significant issue of adult retraining and worker retraining are very apparent in the sort of economic crisis that we have been facing.

“So in those kinds of things, we feel like we have made some progress. It’s certainly not all successes, but we feel like we’re on the right path to set the table to build a new higher education system.”

Here’s how Merisotis went about analyzing and setting his goals and developing the strategies to achieve them for the foundation, whose only source of revenue is investments — that hopefully will top its $55 million to $60 million annual operating budget.

Ask two basic questions

For any organization, it does not have to be a difficult task to set goals. To simplify the process, it is a matter of looking at the mission and answering two questions.

“One: What does the market need?” Merisotis asks. “Two: What are your competitors doing?”

To find out what the market needs, the approach not surprisingly is to undertake traditional market investigation.

“Do the market research,” he says. “You’ll get a sense of what is happening in other parts of the world and a feeling for where is this demand going to come from for your product.”

Commission some people to do the work along with your own research and work as a leadership team together. Prepare to spend a lot of time on the analytics.

“We had a whole staff involvement on the input side,” Merisotis says. “We made decisions about how to define the plan, set the goal and then we developed the plan.

“In our case, the goal was to set a figure for the nation as to the portion of Americans who should have high-quality college degrees, or even some form of training, some certificate, etc.,” he says. “We set the goal at 60 percent by the year 2025. We are currently at about 40 percent right now. The research showed the market needs a lot more people with college degrees, because that’s where the jobs are.”

Once you have established what the market needs, it’s time to study who your competitors are and what they are doing. You should be able to identify them easily and quantify their production efforts.

“We concluded that our competitors are other countries and many of our competitors around the world are actually doing better than we are in the United States,” Merisotis says. “We are about 15th in the world in the proportion of 25 to 34-year-olds who have college degrees. So we set the goal based on that, and then we started architecting what we needed to do to be able to reach that goal.”

Design your strategies

Clarity in your strategies to meet goals is essential to a successful outcome. It’s not an easy task, and it’s considerably more involved than setting a goal. You have to have vision and an understanding of your strengths in order to formulate effective strategies.

“If you’re a manufacturing firm, a financial services firm or you’re an entity that works in some other sphere, such as insurance or what have you, there are certain strategies that you have to select that you think are going to help you get to those goals,” Merisotis says.

“In other words, you can’t have a generic approach and say, ‘Well, we’ll throw a bunch of stuff against the wall and we’ll see what sticks.’ You have to architect your way through it with specific questions.”

The first question is, “What are we good at?” It’s sort of old-fashioned business advice — be very good at something so that you can excel, you can stand out in the field. But it forces you to think in a narrow manner.

“It’s extremely important that you not try to do everything, that you become very focused and specialized in terms of where your expertise is,” Merisotis says. “That’s not market niche; that’s about capacity, your ability to deliver and so on.”

The focus may be exceptional customer service, innovative products, an outstanding employee culture or flexibility in adapting to changing demands. Find your strength. Define it in the simplest manner.

The next question is, “Where can we get the highest return?”

To answer this question, you have to look at the numbers for the figures that stand out, but you also have to be willing to pass judgment on what is not really giving you the results you need.

“I think that the right return on the investment is really a question to ensure that you don’t keep investing in things that don’t have a payoff,” Merisotis says. “You may have a really good idea, and your really good idea may not pay off. You know throwing good money after bad is not a really good idea, and it’s hard to change directions; it’s hard to switch gears and move into something else.”

Some good ideas sound great on paper but turn out to be not marketable. And beware of legacy investments — just because you may have always done something a certain way doesn’t mean it can’t be changed or discontinued.

“Just because you have a good idea doesn’t mean it’s going to be successful,” he says. “It’s part of the reason why metrics are so important. You will have to be able to hold yourself to standards to say, are we doing what we said we wanted to do? And if we aren’t, we either have to do better at it, or we need to abandon it and try something else.”

The final question is, “Where can we add value?”

“Use the example of iPhones and iPads,” Merisotis says.

Apple figured out what it can be really good at in a specific market niche. The leaders reinvented this idea of personal communication devices by the fact that they developed an application-driven approach for the devices.

“It doesn’t mean that the iPhone is a great telephone. It doesn’t mean that the iPhone is necessarily good at certain subtasks, etc., but they figured out a specialization where they are really adding value. In the case of the iPhone, it’s adding value to the quality of life of the people who are using it. They are literally adding value from a personal perspective, from a business perspective, from a productivity perspective, etc.

“But it’s being clear about where you are going to add value,” he says. “Develop ways to measure progress: They can help you set your own direction on how much value you want to add. That’s another question — being realistic about how much value you think you really can add. If you are developing a new drug, what’s that drug going to solve in terms of the physical or other challenge that that person is facing? Being very specific about that I think is really important because you are adding value.”

To be clear about the values that you represent is just as important as the actual investment you make in marketing and communications.

“Part of communicating the message is the value that you project,” Merisotis says. “In other words, the image of the company can be as important as the marketing that you put into it. Go back to the Apple example. The image of Apple is really that ‘Think different’ philosophy of Steve Jobs. That image has helped to be as important of a communication tool as the cool TV ads.”

Get the pulse with specific metrics

Metrics are indicators. They are markers to help you figure out whether or not the execution of your strategies is actually working. They are the next matter to figure out once strategies have been decided.

“You have to develop your standards and your specific metric to ask, ‘Are the strategies working?’” he says. “What are our sales goals? What are our goals in terms of quality improvement? Whatever the unit of analysis is, the point is using metrics to drive the development and execution of the strategies is very, very important.”

As the phrase “less is more” originally applied to minimalist art and design, the phrase “simpler is better” goes hand-in-hand with metrics.

“Simple is always better,” Merisotis says. “The reality of that is what you want to do is to use the metrics as indicators and not as a way of defining the universe. In other words, see them as markers on the pathway to success, not as literally the only thing you’re trying to achieve.

“That totality has got to be those goals as they are being executed to the strategies. So the metrics should be limited, they should be focused and they should be revisited often.

“They really need to be reconsidered as you learn,” he says. “It’s a learning process as you go along as you learn what you are doing well and what you’re not doing well. If you’re not achieving what you thought you were going to achieve, it may be time to change the strategies and determine some new metrics.

At that point, you have two pathways: either to continue and decide that you need to do better or decide that maybe it’s not worth it – maybe that strategy is not worth pursuing. “Maybe it’s, ‘Let’s abandon that and pursue a different strategy or pursue a smaller number of strategies,’” Merisotis says. “To me, that is really a question of you can’t do everything if you are a player in a market niche.”

How to reach: Lumina Foundation, (317) 951-5300, or www.luminafoundation.org

Jamie Merisotis

President and CEO

Lumina Foundation

The Merisotis file

Born: I was born in Manchester, Conn., which is just outside of Hartford, so I am a New England native. They call people from Connecticut ‘people from Connecticut.’ It’s a funny thing — coming to a place like Indiana, which I love living in, I sort of find the word ‘Hoosiers’ cute, but in a way that I value. It’s sort of a funny word but I get it. It’s not Indi-an-ers, it’s something better than that. I like it. It’s creative.

Education: I am a graduate of Bates College in Maine. I studied political science in college. I am a first generation college graduate; my family was of very limited means, a working-class family.

What was your first job?

I started delivering newspapers when I was 10 years old. I picked tobacco when I was 14. I was very industrious as a young kid. In high school I worked three jobs. After graduating from college, I moved to Washington, D.C., where I spent a lot of my adult life and worked in the policy context. I was essentially a researcher, an analyst of policy.

What was the best business advice that you ever received?

Make sure whatever you are doing ultimately contributes to something bigger than just that company or that enterprise. Don’t just work for the money, don’t just work for shareholder value, don’t just work for return for that entity — work for something bigger. If you work for something bigger, you will actually be motivated and you will do well by that company, but if it’s only about eternally driven motivation, you’re probably not going to be as successful. That was very good advice. It was from early in my career so it stuck with me for a long time.

Who in business do you most admire?

On a certain level, it is Warren Buffett, probably because he has cut his own path, and I admire the way that he’s done that, but I tend not to look at single people and say I wish I could be that person. I admire things about various people. To give you an example of somebody from our community, John Lechleiter, president and CEO of Eli Lilly and Co. is someone whom I really admire because he is a very successful scientist, someone who is a real expert in his field, and who became a great business leader. That’s really admirable. There are people like that who I admire for different reasons.

What is your definition of business success?

Achieving your goal. I think that’s it. Being very specific about what your goals are and then achieving them. That’s what every business should be about.

Published in Indianapolis