Navigating through uncertainty: Key questions NFP board members should be asking today
20 October 2020 at 7:00 am
Spark Strategy’s Felicity Green shares three considerations that can help drive the expansive conversations that every organisation should be having at the moment.
Strategy and planning are difficult when the external context is unclear. We don’t know how long COVID-19 will affect our communities and economies, whether this summer will bring with it more fires and floods, or what we’ll see tomorrow in the political sphere, both here and abroad.
This does not mean that board directors should shy away from planning for the future – after all, it is their fiduciary responsibility to guide their organisations through these challenging times. As the custodians of strategy, there are several key levers that should be raised and explored around the (virtual) board table. They might stray from the usual agenda, but extraordinary times call for a change in conversation.
Below are the three key considerations that we have found are making the biggest impact to drive expansive conversations:
1. Is today the rainy day for which we have been saving our cash reserves?
Many organisations have strict financial policies that state a minimum level of reserves to ensure that the organisation remains resilient through tough times. If you currently have reserves above this threshold, and your financial performance has declined through 2020, it’s prudent to ask whether now is the time to unlock these funds. Organisations with a larger risk appetite may consider revisiting their cash reserve policy altogether.
Either way, it’s critical to determine why you need access to these funds. If you’re considering doing this just to cover operational costs, that’s not a sustainable strategy in the long-term. Instead, consider how these funds might fuel innovation. Invest them in trialling and testing new approaches, such as developing a fee-for-services offering, which in the long term may bolster your overall business model.
If you are receiving push back from your fellow directors, engage in a conversation around what it is that they see you are saving the funds for – this is likely to open up critical conversations about the future.
2. Is your organisation best placed to deliver your purpose?
This question is a big one, and in its existential nature, can be very confronting to consider for those who have been committing their time to an organisation, often for many years.
This dialogue brings us back to the core strategic questions of “what problem do you exist to solve? For whom? And, importantly, why you?” We often see that when organisations are first established, they are addressing an unmet need. Over time, however, community needs change, systems develop, and sectors evolve. In these challenging times, it’s worth asking “are we just fighting to keep our organisation alive, or are we still being guided by the impact we wish to create?” We’ve worked with organisations who’ve boldly explored this line of enquiry and realised that their competitors are better placed now to be the service deliverers and have instead transformed so that their role changes to one of advocacy or funding.
Through this exercise, your vision does not need to change, but your role in leading towards those outcomes, may. This, in turn, could open up opportunities to restructure your organisation or form new partnerships and collaboration.
3. Do you need to be aspiring for different scope and scale?
There’s an old surfing analogy about organisations that get stuck in the “whitewash”; where they’re not large enough to be out catching the breaks, and not small enough to be paddling safely in the shallows. We are finding that these mid-sized organisations are being particularly challenged in the current environment, as their operating model carries a significant cost but there isn’t a lot of extra capacity to rise above the weeds and pivot.
If you find your organisation in this position, ask your fellow directors whether there is an opportunity to either grow or consolidate, and whether your remit should be expanding or contracting. If scaling back seems the best option, can you set this up so that there is flexibility to expand again if the opportunity arises? Think here about contemporary workforce models.
If you decide to grow your scope, just make sure that these new undertakings still align with your theory of change. We see so often in the not-for-profit sector organisations that lose clarity of identity by chasing funding that results in non-strategic scope creep.
A simple way to ideate different possibilities is to plot opportunities on a matrix that looks at “existing market, new market vs existing product, new product”. Done well, this exercise can rescue you from the whitewash.
The above three questions are a good starting point to ensure board level discussions are relevant and impactful for the times in which we find ourselves. Of course, the executive and other relevant staff members should also be engaged as appropriate to add layers of detail to the analysis before significant changes are made.
Directors are brought into an organisation for a reason, and now is the time that great leadership can be demonstrated to help guide not for profits at the strategic altitude when many are overwhelmed by operational pressures. We may be in a climate of ambiguity, but that’s where some of the greatest strategies are born.