Carolyn Miles: Merger is just beginning of a trend

Carolyn Miles, CEO and president of Save the Children. Photo by: Devex

Carolyn Miles started a chain of coffee shops in Hong Kong while in the private sector. But nearly a decade ago, she had to sell all of her shares in the company she helped grow. Last year, she became involved once again in another partnership, this time as the head of one of the world’s leading nonprofits.

The international nonprofit landscape was shaken up by the merger of Save the Children and Merlin, and there was speculation that more mergers and acquisitions are in the pipeline. So far, this was followed by just one other merger: that between U.S.-based nonprofits East Meets West and Blue Planet Network.

But Miles, CEO and president of Save the Children, does believe the merger with Merlin is just the beginning of a trend, particularly among middle-tier organizations. These are organizations earning between $50 million and $300 million that are very dependent on a certain type of funding source — organizations that are very much like Merlin, which relied largely on very short-term government grants.

Miles flew to the Philippines to see the situation in Tacloban three months after Typhoon Haiyan devastated the once-bustling city. In this interview with Devex, Miles — who calls the merger a “take in” — talked about how Merlin’s very rapid onset emergency response health programming complemented Save the Children’s Haiyan response. The social media-savvy leader also discussed how she is navigating her organization through the biggest merger in 2013 — and why innovation is her word for 2014.

One of the biggest stories that came out from the development community last year was Save the Children’s merger with Merlin. How did this come about?

For this to actually happen in the nonprofit world, an organization has to decide that that’s where they’re going, that they’re interested in a merger or an acquisition or a takeover or whatever we want to call it — but that has to be the first step because it’s not going to happen otherwise. So then the reason [we seriously considered the merger] is because of the fit with the strategy of what Save the Children does and what Merlin does.

We’re both very large players in the health space — it’s really all Merlin does, it’s a huge part of what Save the Children does and it’s about health. So there was a very good fit in a lot of the things that they were doing with things that we already did: strengthening health systems, working on health in longer-term development on these grants, doing that kind of work. [But] they have a piece that they did that we didn’t do. And that was this very rapid onset emergency response health programming. So they actually send doctors into emergency situations, doctors and nurses and medical teams, and they do medical services immediately following an emergency. Save the Children didn’t have that capability. So we said, what’s really interesting about this is, you’ve got an organization that not only does a lot of the same things that we do and is a great complement, but they do something that we don’t do. And so by putting the organizations together, you’re going to not only strengthen the piece that we do, but you’re going to add something that we don’t already do. That I think is the thing that made it most interesting.

The people from Merlin, many of them came from Save the Children, so they knew each other. In fact, Merlin was started by some people who came out of Save the Children a long time ago. So there was always something there between the organizations and … the culture is really similar. When people [from Save the Children] started to meet the people [from Merlin], it was obvious that we had a similar culture, and people thought similarly. That’s the thing that’s probably going to derail [the partnership] the most is if the cultures don’t match. You could have all those other things I talked about, and if the cultures didn’t match I think it would be tough.

And so that’s when Save the Children really started to seriously consider and there was a very short time frame — this was between March and July. Merlin was in a position where they had to make a decision by July. From a financial standpoint, they were not going to be able to sustain what they were doing past that. So they either had to merge with somebody [or] they had to close down the place.

So far, things are going really well. There are 17 countries where we both have operations [and] we just started transitioning those countries and putting them together. We started doing that in the fall, and we are probably about halfway through that transition right now, so we’ve got about 50 percent of the countries that have been merged, and now we’re working on the other 50 percent.

When are you targeting to complete the transition?

By this fall. I think the last ones will be in October.

The transition hasn’t happened here in the Philippines — April 1st is the date that’s going to happen in the Philippines.

How did Merlin’s very rapid onset emergency response health program complement Save the Children’s Haiyan response?

I saw [this really great capability] in Tacloban. The medical doctors and nurses who were doing these mobile health clinics there [told me about how] they started surgery within 30 minutes of landing at the airport. The need was so great right after the typhoon because you have many injuries. So they were literally on the ground and operating within 30 minutes. And we wouldn’t have had that capability — that’s Merlin’s capability. So in Tacloban we’re working together and doing things together, and we’re basically part of one team.

What will happen to staffing and programs once the transition is completed?

[Save the Children] is bringing on the programs that Merlin is doing. Most of the program staff will become part of Save the Children and there won’t be a lot of staffing changes in terms of program people and the people in the country offices because most of them are working on specific programs and projects. They need to keep working on those and we need to keep those going so they’ll come with those programs and projects and they won’t lose their jobs.

Now, at the headquarters and at the country director-level, there some people will be redundant. But I think … everybody understands that and there’s been a big process [where we go] through what positions do we need, what positions do we not need because there’s three of them and we’re not going to have all three of them. In the end, my bet is we actually will — because of the opportunities now to keep doing this kind of work in a bigger way than what Merlin was doing before — we’ll actually end up adding staff. So my bet is if you look at the portfolio of work that Merlin is doing in the Philippines right now, and what we hope to be doing a year from now, we’d probably have more people who’ll come in with the skill sets that the Merlin people have than we will.

There’s a huge team in the U.K. to figure out at the headquarters level who stays and who doesn’t, and there’s a process there. In the countries — the country director is the other level where that’s going to change — in the countries, you know everybody kind of gets it. They [know that] they’re not going to need two country directors, and in most cases, the Save the Children presence is much bigger.

But we’re talking to some of the country office directors about [possibly] running the health programs. All Merlin did was health; Save the Children works in five or six different sectors, depending on the country. There may be positions where that country office director would become director of all the health programs in that country.

So it really is a case-by-case basis of looking, and that’s what this transition is about. There’s a team of people that go into each country and work on that transition in that country for a period of time and look at all of those things, and they look at the positions and they look at the people and they make recommendations.

You mentioned that in your opinion, Save the Children’s merger is only the beginning of a trend especially among midsize organizations. What advice would you give to leaders of such organizations on merging with larger groups?

Well it’s interesting because we’re in discussions with a couple of other organizations right now. I think the time to actually reach out and talk to people is before you’re at a point where you see a cliff. When you see the cliff, it’s probably a little too late.

The people we are talking to now, it’s not to that point. It’s exploring, how does your vision of what you are trying to do with your organization fit with the vision of Save the Children and is that vision going to become more successful if you come together with an organization like Save the Children or some other larger organization?

And I think what we’re finding in the discussions that we’re having is — it’s interesting, on the one hand you should go and talk to people earlier, but on the other hand, I have to say that the urgency is what drives people to actually do it because when people start thinking about an organization that has maybe existed for 25 years, and now it’s really going to go away as itself, it’s going to become part of something bigger, you know that’s hard for people to deal with. And so, sometimes that urgency still has to be there, but the discussion should happen sooner so that people understand what their options are.

I think organizations need to think about that partnering and it doesn’t have to be the same structure that the Merlin-Save the Children one has been, which is basically, it’s going to merge and Merlin’s not going to exist anymore. It could be a different form where you actually do have an organization that stays as itself as a subsidiary but has the strength of a larger organization. It could be two totally separate organizations that are somehow joined in some kind of a partnership, [where] there are different things that could flow back and forth between the two. I don’t think we’ve really explored those different opportunities and those different mechanisms to do this.

But I do think at the end of the day there are so many NGOs that we have to figure out more ways to partner together rather than just recreate what we all do. And I think that is going to be the trend that’s going to be happening. So it’s not necessarily a merger or an acquisition or whatever we want to call this.

How is it called?

It’s really difficult to figure out what it’s called. We mostly called it a merger, but it’s not really a merger, it’s really a takeover. But that doesn’t have great connotations for people. The only reason to do this is because we want to bring what Merlin has into Save the Children. We don’t want to take it over, because if we take it over and make it look like Save the Children — what’s the point? You want to keep the pieces of things they do so well and you want to keep that as its own thing and you want to keep those capabilities inside the organization. So it’s actually kind of hard to figure out what to call it.

Maybe there should be a new word that needs to be invented. I’ve been calling it a “take in.” Somehow it sounds better and it is more like what it is, you are taking it in, and you do want to take it in, you don’t want to take it over. We’ve had many discussions about this. If we turn around two years from now and we can’t see any evidence of those capabilities that Merlin has that we didn’t have or the strength that putting the two capabilities that we had together, then it wouldn’t really be a success to me.

Priorities for the year?

My word for 2014 is innovation and [there are] three ways that I am trying to drive innovation.

One is in the types of programs that we do. Can we try to do our programs differently, I mean really differently? Can we make our programs economically self-sustaining? Rather than [be] dependent on grants and aid, can we figure out an economic engine for our programs? Can we get our front-line health workers [to sell] small pharmaceuticals or something so they can actually be self-sustaining economically so they can keep doing their front-line health work? Can we do more programs that [use] very basic technology, like things that can help babies breathe in very low-resource settings?

Secondly, funding streams. Can we look at crowdsourcing? Can we look at venture capital models? Social impact investing? How could we hook into different funding streams? Crowdsourcing in terms of bringing our programs closer to people using technology and getting people to invest in our programs?

And then third, which is really cutting across both programs and funding, is technology. At the field level, I feel that we are still very low on the scale of innovating using mobile. I can go to the ends of the earth, and I can use [my cellphone]. That’s in the last three years. And literally I am in some of the most remote places in the world and I can still use my cellphone. And most of our beneficiaries have a cellphone. So why aren’t we using mobile technology more? It might be about delivering unconditional cash, it might be about delivering information to our field workers, so reminding our front-line health workers that they need to remember that when a woman comes in for her checkup, one month before, these are the things that you need to ask. Collecting data using mobile technology — there’s just a whole slew of things in terms of embedding technology into the way we do our programs. And we are getting there. I saw a program in Guatemala when I was there right at the beginning of the year for finger-printing beneficiaries, so we’re using an iPad [to do] finger printing. We’re tracking every beneficiary by their finger prints and keeping track of all the food that we’ve distributed.

Using technology better on fundraising as well. So whether that’s crowdsourcing or whether that’s using technology in a way to bring programs to life for people. Again, because we have this technology out in every place where we are in the field, can we do a better job of providing video to our donors in terms of them being able to actually see the program as it’s going on?

Is crowdsourcing really an effective mechanism for large organizations?

In a way we’re kind of already crowdsourcing. We’re out there raising small amounts of money from many, many people to do the work that we do. If we use that very basic definition of crowdsourcing, we’re kind of already doing it.

But I think what we haven’t done on the crowdsourcing side — we’re just starting to do now, because I think this is the other definition — is how to engage people in the issues that we are trying to solve. One of the things we are doing with GSK is we’ve … sponsored an innovation prize — $1 million — and it’s innovation at the country level. We’re asking people from those countries to submit their ideas on innovative ways to attack challenges — it might be malnutrition, it might be education results for kids in primary school, it might be economic opportunities for youth. So it’s crowdsourcing in terms of the issues.

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About the author

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    Aimee Rae Ocampo

    In her role as editor for business insight, Aimee creates and manages multimedia content and cutting-edge analysis for executives in international development. As the manager of Development Insider, Devex's flagship publication for executive members, she is constantly on the lookout for the latest news, trends and policies that influence the business of development.