Without profit motive, can nonprofit leaders be as innovative and successful as their profit-seeking counterparts? As it turns out, there’s a type of motivation that transcends the drive for profit and it can influence the behavior of nonprofit leaders towards improving results as well. It’s called social comparison—and research shows it can be even more powerful than money.
The first time my wife and I visited Great Falls, a national park located on the Potomac River just north of Washington, D.C., we knew nothing about it. We pulled up to the Maryland side of the river and started walking toward a sign labeled “Falls” pointing into the woods.
After about 100 yards we came upon a beautiful series of cascading falls that passed under the footbridge where we stood. The water was rushing fast and loud. Growing up in Florida where the flat elevation makes for few waterfalls, we were both impressed.
After taking a few pictures one of us wondered aloud where the trail led to next. People were coming and going in both directions so we decided to continue down the path. Less than a minute later we heard it. The dull roar of what turned out to be an incredible expanse of water churning. The full scope of it soon came into view.
These were the falls that were actually “great.” We were completely stunned, in total awe of the scale. We were amused at our own ignorance in thinking that what we had previously visited, easily 1/100th the size of what was now before us, was the main attraction.
What determines whether falls are great? Why were we initially satisfied with the much smaller falls? If you think about it, it’s the same thing that determines whether nonprofit results are great. It’s all about comparison.
The Power of Comparison
Comparison is something universal, even central, to human behavior. The social psychologist Leon Festinger is probably best known as the father of cognitive dissonance, the practice of holding two conflicting beliefs at the same time. But Festinger’s early work in the 1950s introduced what he called social comparison theory: the insight that as social beings our self-assessments are heavily influenced by others.
In the decades since, researchers have validated the core of Festinger’s theory. In 2014, for example, academics across three different studies found that the influence of social comparison is so powerful that even when people set out to evaluate themselves using mastery-based goals, ultimately they are still more influenced by comparison-based information.
Here’s a familiar example. Imagine yourself getting a 75% on your first physics quiz in college, a disappointing C minus. How would you feel? If you’re interested in mastery, you would probably feel deflated and unsatisfied with your performance. But then imagine you come to class and find out your 75% was the highest grade in a class of 40 students. Now, how do you feel? Elated? Proud? What changed? What changed is the overpowering effect of social comparison information (or TOESCI as some researchers call it).
Social comparison explains more surprising results, too. For example, it explains why in experimental settings some people tend to prefer less money if it means their income exceeds that of their peers. That is, they would give up greater wealth for the sole purpose of avoiding relative income inferiority.
This should make us rethink the supposed supremacy of the profit motive, per se, in driving success. Of course, wealth and profit represent one of the most useful measures for comparing ourselves to others, but when it comes to the motivation money can inspire it serves more as a means rather than an end.
This is all good news for nonprofit leaders because it means the marginal difference between one firm’s returns and another’s is analogous to the marginal difference between two nonprofit leaders’ achievements. The trick is to set aside the nonprofit conundrum of trying to quantify that difference and instead, look at how we might increase the volume, relevance, and impact of social comparison information among our sector.
The Role of Social Comparison in Nonprofit Success
It’s clear that in order for comparison to occur, nonprofit leaders need peers. Less well known is what social psychology can teach us about the type of peers we should seek and the type of environments most conducive to increasing the quality of social comparison-based information. For the ambitious nonprofit leader, learning and applying those insights can mean the difference between maintaining modest success and carving out new standards of excellence.
Richard Durana is the head of a nonprofit think tank in Slovakia. Earlier this year, after spending four intensive days at Atlas Network’s Europe Liberty Forum in Copenhagen, he told me, “I call these events mindquakes. Meeting the brightest minds in the movement always pumps new inspiration and energy into my veins.”
Richard’s inventive word, “mindquakes,” in my opinion, perfectly captures what can happen when you get the right mix of people together. But it’s not all serendipity. Researchers from the University of Michigan and University of Notre Dame explain there are three dimensions that have been shown to affect the level of competitive juices among peers: relevance, similarity, and closeness. How relevant are the peers’ points of comparison to their success? How similar are they to each other? How personally close are they in their relationship? In my observation, many think tank leaders intuitively emphasize those dimensions when they reflect on their experience at Atlas Network events.
For example, Joe Lehman is president of a think tank in Michigan. He and his organization are widely admired as successful examples of the kind of work they do. If you ask Joe, though, part of the secret to that success is his practice of seeking out the kind of peers who represent relevant dimensions of comparison. Specifically, he explains, “The most effective way for me to improve is to surround myself with people who are better than I am, at something. That routinely happens in CEO exchanges.”
Foundation for Government Accountability’s founder and CEO Tarren Bragdon reinforced the benefits of similarity when he wrote me to say, “Atlas Network’s CEO Summit is a must attend event for me. I learn, get inspired, and get challenged by my peers who understand my world like no one else [emphasis mine].” Another think tank leader, London-based Mark Littlewood is general director of the Institute of Economic Affairs. He underscored the importance of creating closeness via networking when he assessed his time at an Atlas Network event saying, “I have never come across any event on the planet at which I have made so many vital personal and professional friendships amongst my peers.”
Choosing Your Peers
These three dimensions—relevance, similarity, and closeness—represent an opportunity for nonprofit leaders to assess how motivating their peer group is in driving their own success. Luckily, unsatisfactory assessments need not be fatal.
In his book, Choosing the Right Pond: Human Behavior and the Quest for Status, economist Robert Frank observes that because we can largely choose to whom we compare ourselves, we have the power to influence whether or not our chosen “pond” dulls our drive to succeed or inspires us to achieve even more. We’ve all heard the expression, “big fish, little pond,” to describe the relative standing of someone who, if compared to a wider pool of peers in a much bigger pond, might not rank as highly as they do at home.
Ultimately, no one wants to be a victim of “big fish, little pond” syndrome, believing you are already the best you can be simply because you avoid comparing yourself to fish in bigger ponds. Using the three dimensions to avoid that mistake, nonprofit leaders can ask themselves:
- If I am determined to achieve even more than I am now, what peers can I choose that are most relevant for a motivating comparison—and from whom can I learn the most?
- Are those peers similar enough to me that my comparisons will truly inspire in me a desire to try to outperform them?
- What am I doing to develop meaningful, personal relationships with those peers, and am I willing to invest the necessary time to get closer to them?
Atlas Network’s Coach, Compete, Celebrate! Model
Through the lens of social comparison, the global network of think tanks represents an incredible resource for ambitious nonprofit leaders to engage. At the same time, those individual dimensions are not the only levers available for increasing comparison and competitiveness. Organizations like Atlas Network are also in the position to foster those productive behaviors through what researchers call “situational” factors such as: incentive structures like zero-sum games; “proximity to a standard” dynamics, whereby a fine point is put on differences in performance through ranking; enhanced competition, a phenomenon that occurs as narrower bands of peers are formed to try to outperform each other; and social category fault lines, where forms of self-identity become rallying cries for competitiveness (e.g. Americans vs. Europeans).
Atlas Network developed its Coach, Compete, Celebrate! model based largely on those factors in combination with other insights we unearthed from our research on networks and innovation diffusion. In the absence of profit margin, we think those insights taken together represent the most effective strategy for fueling the powerful effects you can expect from social comparison.
Specifically, we convene peer groups for training, networking, competitions and awards. Each year we host regional Liberty Forums in Africa, Asia, Europe, and Latin America as well as our global Liberty Forum and Freedom Dinner, each with all of the key insights of social comparison and innovation diffusion baked into our strategy.
What’s more, award-winning projects become the basis for case studies to continually update the curriculum of our training programs so peers are engaging the latest success stories to inspire and motivate new ambitions. We also bring cross-sections of CEOs to new regions to generate new peer groups across diverse organizations and to establish new personal friendships around the world.
One of the ways we validate our model is to compare the year-over-year increase in the quality of the six finalist projects for the annual Templeton Freedom Award. Each year the caliber of applicants and finalists leaps forward as the network-wide definition of what it means to be “good” at this kind of work is continually lifted to new standards of excellence. We can hardly contain our enthusiasm each year as we carefully review, and become inspired by, the incredible achievements of our partners that consistently outpace the high watermarks of the past.
Just the Beginning
Our experience makes clear that nonprofit leaders are just as capable of being innovative and results-oriented as for-profit leaders. The key is for our network of partners and philanthropists to embrace together the power of social comparison as our industry’s most important and most powerful strategic alternative to profit-based measurements of success. This strategy is working. It’s incredible to see how quickly we are making progress—and, as I would say to that former version of myself who was just starting to look curiously beyond that first set of stunning waterfalls, just wait till you see what’s coming next.
Matt Warner is Chief Operating Officer and Senior Fellow of Atlas Network.
In addition to advancing an ambitious and results-oriented grant making operation, Atlas Network offers its partner organizations a robust suite of world-class training and mentoring programs that help independent nonprofit organizations better position themselves for measurable success. Our partners share a vision of a free, prosperous, and peaceful world where limited government, the rule of law, private property, and free markets help to remove barriers to human flourishing. We rely on the investment of generous donors around the world to achieve this vision. To support this effort, please visit www.atlasnetwork.org/donate.
For further reading:
A Theory of Social Comparison Processes
Is More Always Better?
Choosing the Right Pond: Human Behavior and the Quest for Status
Ranks and Rivals: A Theory of Competition
The Overpowering Effect of Social Comparison Information
The Psychology of Competition: A Social Comparison Perspective
Social Network Effects on the Extent of Innovation Diffusion