Thursday, April 8, 2010
I lifted the following from http://bit.ly/aX7HiM - Mike Myatt's blog on Leading Change. The image is courtesy of FutureMakers a not-for-profit organisation based in south west Victoria.
Why didn’t Folgers recognize the retail consumer demand for coffee and develop a “Starbucks” type business model? Why didn’t IBM see Dell and Gateway coming? Why didn’t more established social networks see Twitter coming? How did the brick and mortar book stores let Amazon get the jump on them? I could go on-and-on with more examples, but the answer to these questions are quite simple…The established companies become focused on making incremental gains through process improvements and were satisfied with their business models and didn’t even see the innovators coming until it was too late. Their focus shifted from managing opportunities to managing risk, which in turn allowed them to manage themselves into brand decline…
As a manager in a not for profit organisation you may be asking what has this 'profit making' stuff got to do with me? Here is a question for you to ponder. If you were a Government funding organisation and you had on your desk two funding submissions, both from non-profit social agencies, both with established history and both seeking funds to achieve the same outcomes. The difference is one of these agencies is a social venture operation, it generates revenue from business units, it doesn't rely upon Government funding to remain viable and it is seeking a lower input from Government. Where do you think the funding is likely to end up?
Your response to this question may determine whether your organisation continues to provide a service into the future or whether historians will look back and ask, why didn't they see this coming?
For decades now, not for profit organisations have stuggled for adequate funding and they continue to do so from an ever diminishing pool of funds. For the next 30 years Governments will face severe pressure on taxation revenue and increased costs, in particular associated with ageing and health care. This will place pressure on funding for disability, mental health, AOD, Family & Children, community capacity building and so on. Service providers will also face increasing costs, in particular labour costs. This will place pressure upon financial reserves for many.
Is the answer to engage in social ventures or to create business enterprise units that generate cashflow and supplement Government funding? I cannot answer that. This is an issue for every Board and Management team in every not for profit organsiation to begin to address - NOW.
To achieve this will require a different mindset and a different set of skills at both board level and management. This will be the age of the social entreprenuer. The high energy, visionary that sees community needs and understands that these needs cannot be fully met from Government funding alone. Instead of being trustees of community funding, Boards will become strategic planners for the future. Instead of being passive managers learning how to work within severe financial constraints, management teams of the future will push their Boards to plan ahead, they will demand their boards work with them to find the means to adequately fund people and service delivery. It will be a brave new world where many current and passionate community-minded people will struggle and a new breed of leadership will emerge, along with new operating models.
Many people involved currently with non-profit organisations will struggle with this concept and likely prefer to not read about it. Many will experience conflict between passion and mission and profit. Many will say it shouldn't be about making money and they are right. It isn't about making money per se; it is about making sufficient money to firstly attract and retain the best people for the future and secondly developing customised service delivery that actually meets the needs of the community. Do you truely believe this is being achieved to its fullest potential under the current funding models? Will you be a part of the future or will you be looking back with a sigh and asking, What If I had . . . ?
Let The Journey Continue
Taking You From Frontline Manager to CEO