Alliance Online - July 2007

Interview Pier Mario Vello
Changing sectors

Fifteen months ago, Pier Mario Vello left his job as CEO of a supermarket chain in northern Italy to take up the job of Secretary-General of the Cariplo Foundation, one of the largest of Italy’s banking foundations with assets of €8.2 billion – a big change. What has he made of it so far, Caroline Hartnell asked him. From the range of activities to management style to approaches to measurement and use of figures, it seems there has been a lot to surprise him.

Has anything surprised you about the philanthropy sector?

Many things! First of all, I was shocked by the range of activities – inside philanthropy and inside the Cariplo Foundation. Cariplo operates in four strategic areas: the most important is arts and culture; the second is social activity; the third, scientific research; and the fourth, environment. So managing them is really a difficult job because these areas are very different and you have to be a specialist in each one, but at the same time you have to manage the foundation overall.

My second surprise was that I was used to directing people, giving orders, making decisions. Now I have to build consensus about my ideas. So there is greater democracy, but it takes longer to produce results.

Do you think the results are affected? Do you think you’re less able to take advantage of an opportunity or come up with something creative because you have to go through this process?

Well, the philanthropic process must be creative, otherwise you don’t find the best solutions. But in the for-profit sector, you must be creative as well. Particularly in mature businesses, there is a lot of pressure to be creative, to differentiate your company from your competitors. When I managed the supermarket chain, my fixed idea was change – we have to change everything and we have to do something different from our competitors.

I think this kind of managerial approach can be transported to philanthropy. Of course in philanthropic activity you have to be more patient because you don’t see results immediately. You have to be more patient in starting the process – that is, in the decision-making – and more patient about seeing the results. It’s another management style. But it’s very interesting.

Another shock was that philanthropy generally doesn’t use figures when it talks about its activities. It talks about ideas, strategic scenarios, but it seldom measures the results of its actions. So I think an interesting revolution in the Cariplo Foundation would be to invent a measurement system for philanthropic activities, for our programmes.

Have you started to invent this measurement system, or is this something for the future?

No, we’ve already started. For example, we’re measuring the social impact of our projects in educational systems for a programme called EST – education in scientific and technological fields. Of course it’s a work in progress but it does exist.

Was Cariplo not measuring before?

Not the results or the impact.

Measuring social impact is very difficult. How are you dealing with it?

We are planning to measure the social impact in the sample where the programme is active and in a sample where it isn’t. So we have a control group and make a comparison between the two groups, using the same system as we have in, say, the medical field.

But I don’t think that measuring impact is the key strategy for the future. It’s much better to measure the immediate result of the programme and also the quality of the different phases of the project. It’s less useful if you measure the impact without measuring the ‘inside’ quality of your projects. So it’s better to build a system where you can exercise control, where you can reflect in the boardroom about how your projects are doing, which phase they are in, how their quality is, and so on.

Do you say impact is less important because it’s further down the line?

Social impact costs a lot to measure, first of all. And you get the results very slowly in a late phase of the project or when the project is already finished, so it’s too late to change it along the way. I prefer the quality measurement of the project, and I prefer control inside the project and the process.

You mentioned the other day that you were surprised that foundations often start programmes with very little knowledge of what’s going on.

Well, they do have good knowledge about the sector where they are used to working, but it is tacit knowledge embedded in the specialists who are running the projects. So we have – generally speaking, I don’t speak only about Cariplo – very specialized people who know the sector, very good people with long experience behind them, and a lot of tacit knowledge. And we have to make some investment in order that the personal, tacit knowledge becomes knowledge to be shared with other people.

But even when we have expressed, shared knowledge among experts, generally people are not used to measuring or making judgements about the field in which they’re operating on the basis of figures. In the for-profit sector, of course, everything is figures, only figures, nothing else. So that’s one extreme, and at the other we have philanthropy’s rare use of numbers and a lot of use of quality approaches and analysis of problems. I think probably the best approach is a mixture of the qualitative and quantitative approaches.

When you talked about measuring your processes as you went along, in the different phases of a project, were you calling that a qualitative approach?

Measuring the field where you want to intervene is one thing – and this is where the for-profit sector would use more figures. Measuring the quality of your programme or project – how you conduct it, the time, the budget and so on – is another. These are measurements inside the process. They measure its quality and dictate how we plan the project. So one measure is about the field where you are acting and the other is about how you act in that field.

The third aspect is measuring social impact, but this is longer term and I prefer to work with the first two. I think social impact comes at the end and it’s better not to start from the end. Later, when those results on social impact start to come in, you can use them to improve the beginning phase of another project, a new project.

Are there any things you found really frustrating about the philanthropy field?

Sometimes I think I am the boss of everything and sometimes I feel that I am useless.

Why is that?

In the for-profit sector, of course, it’s clear, you are really the leader. In the philanthropic sector you have to have some humility and admit that you don’t know everything and you can’t do everything, that you need people. You face complex problems, and sometimes you don’t have any solution at all. Even if you have a lot of money to spend, your money may not be sufficient.

This happens with the for-profit sector, too, where it’s usual that you don’t have enough budget to do what you want. But I think this is the sort of job that forces you to be a bit more humble.

So what made you want to change from your previous job – it was a big change?

But I chose this change, and I did it because I don’t believe in a continuous professional life. If you don’t cut your professional life at a certain point, you don’t learn any more. Or, maybe it’s better to say that you always learn something, but incrementally, the learning is too little. In that case it’s better to change and start again from zero. That way, you can learn more.

Is it a useful thing for the new job to bring in this completely fresh perspective?

I think it’s useful because you have to reinvent your management model. You cannot adapt your previous management model, your previous way of life. You are obliged to learn because you are at the top of the foundation but at the bottom in terms of knowing how it all works. And so I am obliged to reinvent my approach to the people and to the business.

Because a foundation is a business. Generally speaking in philanthropy, people don’t think of foundations as businesses. I think on the contrary that they are, particularly Italian banking foundations. They manage big assets – Cariplo’s are €8.2 billion at the end of 2006 and our grants during 2006 were €190 million. How can you say that Cariplo is not a business? It is really a company, whose aim is philanthropic activity. You have to manage the assets very well if you want to ensure enough return on capital to finance your philanthropic activities. And when we decide where to put our money, we have to pay great attention to analysing the project, the situation and the programmes and so on in order to spend the money in the best way. This is a business way of management. But of course I can’t use the same means as in my previous professional life so I have to devise a new model.

And you see this as good both for you personally and for the foundation?

For me personally, absolutely, this is good. And if it succeeds for me, it succeeds for the company as well. I must succeed and my success will become the success of the foundation. So it’s a challenge.

Pier Mario Vello is Secretary-General of the Cariplo Foundation. Email PierMarioVello@fondazionecariplo.it

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