Taking the calculated risk

A young Navy man during a nighttime convoy of oil tankers passing through the straits by Cuba during World War II discovers the ships are on a heading that will send them aground.

Despite having no authority and serving as an enlisted signalman, Ewing Marion Kauffman was confident the mission was on a dangerous course and took a risk in waking up the captain.

Mr. Kauffman’s calculations proved correct. The convoy adjusted its route and Captain Crenshaw rewarded him by promoting him to ensign and the ship’s chief navigation officer.

Reflecting on that experience, Mr. Kauffman summarized it, saying, “If you take a risk, sometimes you lose, but sometimes it pays off big.”

He carried that concept in the start of Marion Labs, born out of frustration with a boss who treated him unfairly.

As the company grew over time, Mr. Kauffman continued to challenge his associates, “You should not choose to be a common company. It’s your right to be uncommon if you can. You seek opportunity to compete. You desire to take the calculated risk, to dream, to build, yes, even to fail, and to succeed.”

The foundational challenge

I want to focus on key phrase in Mr. Kauffman’s challenge, “… to take the calculated risk …”

But what is risk?

In looking for a definition of risk, we thought this one captured it nicely: “The intentional interaction with uncertainty. Uncertainty is a potential, unpredictable, and uncontrollable outcome. Risk is an aspect of an action taken in spite of that uncertainty.”

As a foundation, we have a lot of privileges afforded to us.

That means it is imperative for an organization like ours to take risks. We have the privilege to do so in service of trying to meet some of society’s most intractable challenges.

Taking a risk is relatively easy for a foundation but hard for others.

What does risk mean for today’s student? The teacher? The aspiring business owner? The mayor?

I think about these questions everyday as we approach our work.

We believe all people – regardless of their background – should have the opportunity to learn, to take risks, and to own their success.

In the spirit of Mr. Kauffman, we seek and share approaches that break down barriers to provide people with the necessary skills throughout life to make or take a job, and ultimately give back to their community.

We first listen to the communities we serve, tap into our learnings and relationships, and bring everyone together to build and support programs that improve education, boost entrepreneurship, and help Kansas City thrive.

At the end of the day, the “how” we work with our communities – by listening and sharing the risk along side them – makes each risk we take collectively more of a calculated risk. We don’t always get it right, and we work to share our lessons along the way.

Past, present, and future risk

Today’s associates are building off of a rich history of the Foundation taking risks, starting with Mr. Kauffman.

Mr. Kauffman’s decision to focus on entrepreneurship was a bold move. Entrepreneurship is not inherently charitable. Yet, in 1992, Mr. Kauffman announced he was to devote half of the Foundation’s estimated annual endowment of $50 million to entrepreneurship including a major investment in Kauffman FastTrac, a program that still exists today. At the same time, he delivered a commencement speech to Westport High School kicking off Project Choice, sending hundreds of high school students to college with full tuition and living expenses paid.

Since those beginnings, the Foundation continued to make major investments and innovations, starting and spinning off such successful programs as Kauffman Fellows, Global Entrepreneurship Week, and the Angel Capital Association. It also learned lessons from Project Choice and created Kauffman Scholars, a 20-year investment program to support college completion. And, it was the first foundation in the nation to operate public charter school.

I could go into the numerous programs we’ve worked on during the past few years with our communities from KC Scholars to SchoolSmart KC to 1 Million Cups, to supporting the emerging field of entrepreneurial ecosystem builders – ranging from people working to make those connections full time to policy makers to civic leadership – with a community playbook. Each of those, and many more not listed, provides examples of the Foundation pushing beyond traditional grantmaking to listening and working alongside the communities we serve to develop solutions.

Rather than dig deep into our many programs, I’m going to focus on three major initiatives we’re focused on in 2020: Real World Learning, America’s New Business Plan, and Community Wealth. The common denominator with our Foundation is that it is uniquely positioned, based on its history and mission, to understand the challenges facing our society with the future of learning and work.

Real World Learning

We believe that the Kansas City region can be a “Real World Learning Community,” where everyone has the opportunity to achieve their potential, and employers engage and inspire the creators of tomorrow. School districts in the Kansas City metro are already doing great, innovative things to prepare students for life outside the classroom, but how do we scale those innovations to make sure all students have access? How do we get there?

We’ve been approaching those questions for a few years and have gathered students, educators, and business leaders at Rethink Ed to help us better understand the pathway to success for all students. The pathways consist of three core elements:

Real World Learning at scale

High school design: Changing what it means to graduate high school, prepared for learning, work, and life so all students have a plan.
Connecting employers and educators: Making data and tools support educator and employer engagement to increase accessibility across the region.

Equitable college access and completion (two- and four-year degrees)

KC Scholars: Transforming college completion at scale for low- to moderate-income students.

Innovative workforce training (non degree)

Skilled KC Technical Institute: Setting a new standard for workforce credentialing, scaling the program in collaboration with regional employers and postsecondary institutions, and developing an entrepreneurial mindset in every student served.

The risks associated with this approach are clear – first and foremost, how do we ensure equity across multiple school districts and populations? In addition, how do we play a productive role in expanding the conversation about multiple pathways without degrading the importance of any one of them, whether degree-bearing or not? Also, how do we work with employers to think about long term needs, not only the shorter term? Short term thinking can put tomorrow’s students at risk, not preparing them for the jobs of tomorrow. Finally, how can we work best with established systems to enhance offerings rather than undercut or destabilize an already fragile educational ecosystem?

As we develop this comprehensive approach, we will work to share lessons with other cities and learn from similar efforts across the county to create a national movement that better prepares our kids for the future economy.

America’s New Business Plan

Our approach to policy that supports the ability of individuals to more effectively make or take a job will take a more aggressive stance in 2020.

Most foundations won’t touch policy – especially in an election year. Private foundations in particular are bound by strict rules that guide our actions. However, we see this year as an opportunity to generate more discussion and debate about the types of policies needed to help all people succeed.

We have a 30-year track record of helping to educate policymakers on how to improve the ability of individuals to make or take a job. And, we developed a statement that helps us guide our policy efforts.

As such, it’s worth the risk to us.

We interviewed thousands of entrepreneurs nationwide, gathered information from hundreds of organizations that support entrepreneurs to create a policy framework – America’s New Business Plan.

A coalition (currently more than 120 organizations and growing) will continue to educate policymakers and update the plan during the next several years.

Community Wealth

For the past year, the process of working alongside community members in thinking through how the Opportunity Zone legislation taught us a valuable lesson – it’s not only a lack of resources that keeps our most-challenged zip codes challenged.

The historic and systematic disinvestment is a big reason why there is a lack of economic mobility in many zip codes in our region. Opportunity Zones has opened up a conversation about racial history, including urban renewal, redlining, and the placement of highway systems. However, it’s also opened up positive conversations about the need for shared values, the right mechanisms, and creating the conditions for success. It can happen as there are individual examples of success happening in each of the zip codes despite the odds. It’s a matter of bringing those success points to scale with a more coordinated approach.

For a foundation that does not do traditional community development, this has been a risky and tricky conversation for us to lead. The reality is that our mission and strategic focus won’t allow for us to put funding into things like affordable housing or real estate. Yet, that limitation has helped us to think more creatively about how to rally others who do that type of funding into the Foundation.

It’s also helped us think about how our mission can support and influence the systems-level changes needed to rethink the way economic development happens in our Kansas City area. For example, we will be working for policies and programs that more directly support building wealth for the residents currently living in these zones through entrepreneurship and skill building.

Support our risks

These approaches will continue to push the Kauffman Foundation’s willingness to take the calculated risk to support our communities and live Mr. Kauffman’s challenge.

As we take these risks, don’t expect the big headline announcements. Rather, expect for us to share what’s working and not working.

And, we can’t do this work alone.

First, share anything we do with others who may or may not think like you but are active in their communities.

Second, give us your story. Tell us what’s working and not working from your perspective.

And, finally, please let us know if you think we are taking a wrong turn. We certainly know we don’t have all the answers. The more we get questioned, the better we get.