August 6, 2014

This has been my first Better Boards Conference and I have been most impressed with the practical hands-on information that has been presented.

The purpose of this closing keynote is simply to draw together some of the main threads of the conference and to suggest some ways forward.

“Charm Offensive”
Dr David Cooke on Friday morning talked about a new paradigm in corporate partnerships.

I think that it is important that we have a “charm offensive” whereby there should be recognition that not-for-profits help companies become profitable. Charities/ NFP provide an essential role for the for-profits that often isn’t recognized by the for-profits (or government). We need to speak to businesses in their own language: you get rich partly because of us.

A flourishing economy cannot be built on top of a social graveyard. No successful businessperson is ever entirely “self-made”: it takes at least a village to raise a business.All people are products of the economic and social environment in which they live. Charities/ NFP provide the social foundations for a flourishing economy.Rich people can only get rich because they live in favourable economic circumstances.

Charities/ NFP provide “social capital”: education, health, formation of trust between individuals in specific geographical areas in which businesses want to set up and operate. This helps explain Australia’s economic growth compared with, say, Somalia. We facilitate the smoother running of businesses,for example, a worker has fewer anxieties (and so can concentrate better on their work) knowing that (say) their children or elderly folks are being looked after in an aged care centre or via community services.

Therefore charities/ NFP help the for-profits make their profits

Mobilizing Humanity
We not-for-profits can mobilize people in a way that businesses can’t.
You can’t put a price on passion and commitment.
The business sector is amazed at how community organizations can mobilize volunteers/ low-paid staff via passion for exceptional commitment.
Low-paid staff don’t think any less of themselves – they only think more of other people.

Therefore community organizations can mobilize people in a way that the for-profits cannot.

Social Innovation as Community Renewal
The 2012 London Olympics were a great example of community renewal and a reminder that community organizations can be local innovators.“Innovation” is not done solely by scientists in white coats – NFPs can do it.

Three decades ago, the Rev Andrew Mawson was deployed to a rundown parish in the rundown Bromley-by-Bow community in east London. By trial and error he invented a form of community renewal: working from the grass-roots, “inside-out” approach (as distinct from “top-down”/ “bottom-up”) starting with one person and building upon their passion. He realized that poor people were great survivors and had a range of skills not usually recognized by middle class society. He was able to mobilize local assets.

He and his community started rebuilding lives, one at a time. Mawson said: “…my aim became to firmly nurture an entrepreneurial culture, in which people from all kinds of different backgrounds would work together to fashion their own futures”.How many businesses can make that claim?

Bromley-by-Bow has improved so much that it hosted the London Olympics in 2012 and Mawson is now in the House of Lords.

Digital Disruption
Rachel Botsmanyesterday morning took us through the impact of digital disruption.

Yes: I agree that the Internet is revolutionary – but it is not utopian; it does disrupt our lives but not necessarily always for the better. For example, Facebook is very useful for US burglaries: a person announces when their home will be empty (eg they are going overseas for a vacation) and the criminal comes around shortly thereafter. More people now get their news via Facebook than from any other source – they are not so much being informed as just being entertained.

Also be aware that the Internet was not designed for all the functions we are now using it for (banking, commerce, entertainment etc); every hour, 7,000 hours of You Tube material is being uploaded. The Internet is vulnerable to disruption (hacking/ cyber-warfare). NFPs need to be careful that they do not get hacked, such as having details of donors stolen.

We have often been blind-sided by change. For example, newspapers carried stories of IT changes but newspaper boards themselves failed to ask: “What does all this mean for our newspaper business model?” Board members were unable to see the wider implications of the IT progress – Rachel gave us a very clear warning on this overall risk.

For the first time in history we are now losing jobs faster than we can create them. Software eats the world: keep asking “How will the Internet affect my business model?”

Yes: robots do work 24/7, never take annual leave or sick leave,and have no ego and no personality squabbles – but they don’t need to “consume” many goods or services, either: where will the consumer demand come from? How will people in the future be employed? Where will they get their money? I am worried about long-term unemployment, especially for the youngsters entering the labour force.

There is no privacy in this new era. If the CIA Director David Petraeus can’t have an affair with an IT -savvy mistress (Paula Broadwell) without being caught out (she was tracked down by the FBI who used hotel registration data), what hope is there for privacy? If FBI can track you, so can criminals/ terrorists etc

Finally, there is the speculation over the “Year of Singularity”. The rate of scientific progress is itself increasing. Millionaire IT genius Ray Kurzweil (who publishes a free daily newsletter) has speculated that the knowledge curve will become vertical by about 2045. This is covered in the You Tube documentary: Transcendent Man/ The Singularity is Near.

This may be mean that we are coming to the end of the human body as we currently know it. There are two scenarios (i) computers will have replaced humans or humans will have annihilated themselves (ii) humans will be reinvented via “intelligent” parts in their body and the planet will be in a new era: rise of trans-humans.

Blue Ocean Thinking
Rachel Botsman challenged us to think differently about how we run our organizations.

A good book to help this creative process is Blue Ocean Strategyby W Chan Kim and Renee Mauborgne. “Blue ocean” is new market space. This is in contrast with “red ocean” which is the contested market space (think of blood in the water from all the fighting).Most strategy work has been done on competition-based red ocean strategies.

Blue ocean Henry Ford (working in a field of 500 established car producers) invented the mass-produced, inexpensive automobile (rather than contest the red ocean of expensive, elite automobiles). He created a car for ordinary lower middle class Americans. Henry Ford did the thinking for his customers: “If I had asked my customers what they wanted, they’d have said a faster horse”.

The blue ocean intention is not so much to beat the competition – as to make it irrelevant. The authors shift the emphasis off “excellent” companies (which do not exist permanently) and process benchmarking – to an evaluation of winning strategies.

As to blue ocean techniques, stop benchmarking the competition – the more you benchmark, the more you get to look like the competition. Don’t focus so much on the competition and instead look at the blue ocean horizon: look to non-customers; they provide the most insights into how you can create new, uncontested opportunities.

Ask some basic questions
– which of the factors that the industry takes for granted should be eliminated?
– which factors should be reduced below the industry’s standard?
– which factors should be raised well above the industry’s standard?
– which factors should be created that the industry has never offered?

The Future of Voluntary Organizations
Brian Herd yesterday afternoon challenged us to think about the membership of our organizations. This is a good question. Is there is a slow death of the community spirit? Non-governmental organizations (such as service clubs, religious bodies and advocacy groups) maintain the fabric of society. But can they maintain their own fabric? Many NGOs are reporting a decline in membership and have financial problems.

I suggest that the management technique of scenario planning, with the creation scenarios, is a way of helping us to think about the unthinkable and reduce the risk of our being taken by surprise. I have devised a diagnostic test to assist an NGO assess its future. The diagnostic test helps an NGO determine which of two scenarios is coming into play.

Here are the two scenarios on the future of NGOs. Scenarios should have memorable titles: these are called “Recessional” and “Tango”.

The “recessional” is a hymn sung as the clergy and choir withdraw at the end of the church service and people can look forward to some refreshments in the church hall. Many NGOS are in a “recessional” trajectory. Membership is literally dying off. These organizations often draw their membership pool from the people born before World War II. These people (the “Depression Generation”) know the value of contributing to the community because they saw how well it worked in the Depression in the 1930s and wartime (1939-45). They value loyalty and tradition and have a high regard for institutions of all sorts. But they are not being replaced. Their children and grandchildren do not join organizations. They may turn up for a specific event on a particular day (if they feel like it) but they will not commit themselves to being involved on a regular basis (such as by serving on committees).

Alongside demographic factors, there are also economic reasons for the Recessional scenario. Before the current era of down-sizing and economic rationalism, people had more time for community activities. Meanwhile, people are now working longer hours and so have to spend more time on their business than on community activities.

It is also becoming more difficult to run NGOs. Volunteers have to be insured, trained and supervised; appointing employees entails extensive government red tape; and staff working with children have to be subjected to police checks. No doubt many of the government regulations were well intended but cumulatively they have made the actual running of an organization much more onerous.

No NGO has a guaranteed future. There is already a sense of crisis in some. Once an organization hits a downward spiral, it continues. For example, declining members mean declining income, so staff (if any) are laid off, so members get fewer services for their fees, and so they are reluctant to renew their subscriptions.

TANGO is the alternative scenario. The acronym means “Third Age Non-Governmental Organization”. The tango dance is agile, swift, and colourful. The starting point is again demographic. There has been a silent revolution. People in western countries have gained as much life expectancy in the last century as they did in the previous 5,000 years (about 25 years). 5100 years ago, average life expectancy was about 25years; by 1900 it had crept up to 50; now it is around 75 or 80.

There is therefore a new “age”. Previously people were young, middle aged and getting ready to die. Now there is a “new age” after the formal middle age paid working stage in a person’s life, and before people are ready for their fourth age: some form of aged care.

In this “third age” (for people aged around 60 to perhaps 80), they are still in good health, may have access to superannuation funds, and have high expectations about a long and active life. Retirement is a health hazard. Being involved in NGOs is good for a person’s health because it gives them a sense of purpose and a way of being useful to the community. It gets them out of the house and away from watching television and other sedentary activities.

The future cannot be predicted with accuracy. Scenario planning encourages people to think about what could happen and for them to then have contingency plans in place.

The immediate task for NGOs is to draw up indicators to see which of the two scenarios is coming into play. My diagnostic test covers such matters as: level of membership, membership revenue, donations, and bequests. For example, the nature of volunteering is changing: there are more people willing to volunteer but they will do so for less time on each occasion.

There is also a need for brain-storming to see what actions could be taken to avoid “Recessional” coming into play, such as: what new programmes could be introduced to attract new members, what new membership categories could be introduced, how could the organization function with different notions of membership?   The next stage in the scenario planning process would be to have contingency plans to cope with either scenario coming into play. For example, if Recessional comes into play for an organization, there may be a “gold rush” as unscrupulous people enter NGOs to get eventual access to their assets (such as buildings and capital reserves). What mechanisms do these organizations have to protect themselves against “entryism”? Branch stacking already occurs in political party branches – will there be a form of organization stacking to get eventual access to the assets once the current office bearers retire or die?

What exit strategies do NGOs have if they need to wind themselves up? Are the members psychologically prepared for the role of executioner: the decision to terminate a dying organization which may have a long history? We know the trauma associated with Australian farmers who have to leave the properties they inherited and their despair as they hold themselves responsible for poor stewardship of a proud tradition. Much the same applies to NGOs.

If TANGO comes in to play, what plans do NGOs have to attract later generations looking for good causes in which to “make a difference”?  They will be entering the organizations after a hectic career in business or the professions. They will not be keen on “old-fashioned” rituals that their parents liked. They will be more results-oriented and less process-oriented. They will not be there out of any intrinsic sense of loyalty and so they will move on if they are dissatisfied.

Will existing members be ready to make the changes necessary to accommodate the new members? For example, in churches it is sometimes the case that the families that keep the church doors open, are also the families who keep the church pews empty. In other words, their dedication to the local church keeps the church ticking over. But they are reluctant to accept new members because they want to make changes to the liturgy, type of worship etc and so the newcomers go elsewhere. How will such families learn to “let go” and become reconciled to the fact that a new generation wants to do things differently?

To sum up, scenario planning helps us to rethink our perceptions. It encourages us to think about the future differently. It also helps us deal with denial. Denial is a defence mechanism to protect ourselves from bad news. “We’ll cross that bridge when we come to it”. But that desire for security may in the long run make us even more insecure as we are taken by surprise by events for which we have no preparations.

Finally, can an NGO on a Recessional trajectory avoid death? It is possible but it requires drastic change.

The Woman’s Christian Temperance Union (WCTU) has a branch in each Australian state. It is almost impossible to write a social history of Australia in the 19th century/ early 20th century without referring to the WCTU (much the same could be said about its role in its country of origin: the US). Whatever the issue, WCTU were involved: opposition to the liquor barons, votes for women (with the expectation that female politicians would take a tougher line with the liquor barons), and opposing the “white Australia” policy. Now Australian branches have considerable property but few members.

I worked with the WCTU in NSW with my diagnostic test underpinning the two above scenarios. It was clear that Recessional was coming into play.

The president sought her branch’s consent to winding up the WCTU as a membership organization, the sale of its valuable inner-Sydney property and the creation of a trust fund to finance projects with an anti-alcohol focus.

The eventual aim is the same; the methods have changed. (I am one of the honorary trustees of the new fund).

The use of the trust model would be of use to other NGOs who wish to continue
albeit with a declining membership. They could separate out the day to day membership activities (which could be vulnerable to “entryism”), from the long-term membership of a trust fund to hold in stewardship the major assets of the NGO.

Unscrupulous people could still try to gain control of an NGO via AGM elections – but they would not gain automatic access to the property in the trust fund (and so perhaps not bother to stack the AGM in the first place because they would not gain any advantage from it).

In short Recessional does not necessarily mean an inevitable death – but it does require drastic action and good leadership to avoid a slow slide towards extinction.

I have just completed my third PhD, which is on the application of scenario planning to the future of the Uniting Church. I am willing to send a soft copy to anyone who would like a copy.

Start with Why

To conclude, at last night’s Gala Dinner Michael Dawson, of CBB: the not4profit people, mentioned the work of Simon Sinek. Sinek’s book is entitled Start with Why: how great leaders inspire everyone to take action. There is also a Sinek TED talk on You Tube. The book and video tap rightinto the work we do: the challenge to be inspired to do something bigger than ourselves.

This conference has given us many ideas on how we can carry out our vital work for humanity.

Keith Suter
Global Directions