Profound changes are underway in the social sector. In this post, innovation consultant Dale Renner shows how not-for-profit organisations are wrestling with fundamental questions of identity: what to keep, what’s important and what can be changed? This post originally appeared on Pro Bono Australia.
With the impending arrival of individualised funding (consumer directed care) in disability, aged care and mental health, social organisations are in the midst of reform and readiness projects to make the operational changes required. But in all the sound and fury of the busyness, issues of fear, change and identity are ever present.
Not for Profits have some reason to fear these changes. In the UK, which has implemented individualised funding, 78 per cent of aged care residential beds are now provided by the private sector, with 58 per cent of these run by large corporate providers (Grant Thornton UK 2014).
While there are some differences, this points to the direction of change – increasing numbers of commercial organisations and small firms winning business in social markets. And while there will be teething problems, with some people missing out during the changes, service users are clearly demanding the ability to make choices about their services. This demand will continue to drive change.
The identity inherent in the term “Not for Profit” is strong. Many providers are concerned about what will be lost with the move to social markets. The challenge for these organisations is: “How do we keep core elements of what it means to be a Not for Profit, while making the changes necessary to succeed in the new market-driven environment?”
This process of maintaining the essence of an organisation or movement, while continuing to move forward, is not unique to the social sector. In a way, this is the constant struggle we see between progressives and conservatives. Progressives without conservatives would change too much, too fast. Conservatives without progressives would slow down positive change.
Organisations need to conserve some of the status quo, while changing toward a better system.
In adjusting to the changes, we can learn from the radical market changes in the print media. Change has been thrust upon them in the form of the internet, disrupting their business model, which was primarily based on selling advertising.
What is important to keep, and what to change in this situation? While newspaper people might love the feeling of ink-stained fingers or the smell of the giant presses, fighting to keep presses going in the face of digital delivery doesn’t make much sense. Newspapers have been asking themselves: “What is the valuable essence of our organisation? The things that must be preserved?”. Fearless journalism, holding powerful people to account, raising the quality of debate – these are the core functions that must be retained. The challenge is how to preserve what’s important while letting go of the rest and adapting to digital delivery. The irony is that print media are now experimenting with Not for Profit structures for online newspapers.
It’s the same challenge for Not for Profit organisations as they adjust to individualised funding. Ask: “What is the core essence of our Not for Profit identity, that which is vital to preserve?” Is it the fact that the organisation doesn’t make a profit, but makes a surplus instead? Is the legal structure the essence, or is it just the format? As an analogy – when The Age and the Sydney Morning Herald moved from broadsheet to tabloid “compact” format, did it change their essence or just their format?
Not for Profit organisations can undertake a documented, deliberate approach to assess the aspects of the business that are vital to keep, and the aspects than can be changed.
Keep: The important core that needs to be preserved is the identity, the culture, those intangible elements that capture “how we do things around here”. It’s the purpose and passion and magic that happens when people dedicated to a cause work together to make it happen. In a social market where firms compete for customers, this core identity should translate into the “positioning” that the organisation takes – the unique approach and way of doing things that makes an organisation stand out from the rest.
The irony is that a move from block funding to social markets makes an organisation’s uniqueness and identity even more important. People want to buy from an organisation that specifically meets their needs, not a generic organisation that provides exactly what everyone else provides.
Social organisations will need to be very clear about values and how decisions are made. A written decision-making process can help when values come into conflict with each other. For example, the values of respect for the individual and commitment to quality may come into conflict with the commercial imperative to grow the organisation and generate an operating margin.
Change: If our social organisations fight to keep those identity and purpose elements, what elements of the organisation should they be prepared to change or lose? Ethically, outcomes should matter more than our own identity as a Not for Profit. Anything that holds us back from achieving better outcomes that our customers want – that is something we can change.
In addition, many organisations can afford to change their legal structure, or some of their services. Some organisations may choose to become social enterprises, or for-benefit corporations (B Corps), or may choose to merge with others. Organisations will need to experiment with how things are done, while preserving for whom they do them and what value they offer. We may need to change our language from “client” to “customer”, or change delivery method to involve more efficient service delivery. And while many customers may choose to use skilled case managers to help them manage their services, other customers may wish to avoid using case managers.
Organisations need to know how much and what they can change before they can embrace a different identity. If a friend dyes their hair a different colour and changes their style, they are still the same person. But if that person changes their personality, what they value, who they care about – then we would say they have changed and become a different person.
Boards should be struggling with this question now, before the switch to individualised funding is fully upon us. What is your organisation’s identity, and how much can you change before you lose your essence? What should you keep, and what are you prepared to change?