November 4, 2012

If focus is so good for non-profits, why do so few do it

Is your organisation focused? And if not, what’s getting in the way? Check if you are, and discover the three common obstacles to focus – and how to overcome them.

Most management experts will tell you one thing about focus – your organisation needs it. Whether commercial or non-profit, organisations that focus perform better.

As Professor Robert Kaplan of Harvard Business School says: “You’ve got to decide, what are the 3 to 5 top priorities or goals that you must do extraordinarily well? You can’t have 10 top priorities. In fact worse than that, 7 to 10 top priorities is the same as zero priorities. Why? Because human beings can’t focus on 10 things at once”.

After five years of working with non-profits, SVA Consulting has found that Professor Kaplan’s words ring true and loudly in the Australian non-profit sector. Focus can bring non-profit organisations what they desire most – more of the impact that matters to them – by allocating resources more effectively and aligning team members around a common goal.

While most agree that focus is good, there are three main obstacles that non-profits face when trying to achieve focus. We will explore them and outline what you can do to overcome them.

The challenge of focus

We define a focused organisation in much the same way as Professor Kaplan: ‘You are focused if you can state what 3 to 5 things you are going to do or achieve over the next fixed time period in a specific and measurable way’.

You are focused if you can state what 3 to 5 things you are going to do or achieve over the next fixed time period in a specific and measurable way.

These 3 to 5 things may be things that you do (activities), things that you achieve (outcomes) or even how you behave (culture). Which it is will depend on the different types and stages of the organisation, but the organisation must be deliberate in setting these goals.

When asked if they have a focused organisation, most non-profit CEOs answer ‘yes’. There are two good tests to see if this is the case with your own strategy.

The first is to ask – are there too many competing objectives and are you all things to all people? If a commercial organisation said, ‘We want to be the lowest cost, highest quality, most innovative, most influential provider’, it would clearly have a losing strategy. Yet we have observed non-profits with a strategy that says, ‘We want to reduce our costs, have the highest client satisfaction, expand the reach of our organisation, and expand our influence’. Anyone who has too many different pieces of work to do knows the problem with this – you end up getting nothing done. For an organisation, these competing priorities often lead to confused resource allocation, and over-stretched staff.

The second test is to see if your goals are clear, measurable objectives or actually vague – albeit honourable – statements of intent. Often loaded with catch-phrases and social sector jargon, ‘vague statements of intent’ are challenging to decode and even more challenging to manage to. Instead of stating clearly and precisely e.g. “We will deliver a service that 90% of our clients are satisfied with”, objectives are often made into broad, vague statements – something like “we will respect the human rights of people with the disease”. While these statements give an organisation more flexibility, it often leads to other issues, such as staff not knowing what to prioritise.

Unfocused statements of intent Focused objectives
We will respect the human rights of people with the disease We will deliver a service that 90% of our clients are satisfied with (i.e. client satisfaction is the most important thing for success right now)
We will become a thought leader in the area We will be invited by the Federal Government to present to them on these two areas (i.e. influencing Government policy is the most important thing for success right now)
We will support people to lead dignified lives All our clients will tell us, three years after our service, that their lives have been significantly improved as a result of our program (i.e. client impact is the most important thing for success right now)

Figure 1. Examples of unfocused statements of intent versus focused objectives

So what’s so hard about focusing?

If your organisation’s goals or objectives fail one of these two focus tests, don’t stress. In our experience of strategic planning with over 30 Australian non-profits, we’ve found that it is relatively common to have at least one of these issues with goals or objectives.

What puzzled us when we noticed this trend was why do organisations fall into these traps, particularly when most non-profit leaders agree that focus is a good thing?

The answer lies in three big issues : infinite need paralysis; consultative compromise and fear about cutting programs.

1. Infinite need paralysis: What do you do when everyone needs help?

Imagine this: You have two young people in front of you, one born in New South Wales and the other in Queensland. Both have hard-working parents who want their children to succeed but can’t afford to give them the support they need to do well in school. You can choose to give just one of them a great university mentor to help them thrive in school and get into university, setting them on the path to a well-paid and rewarding job. Which person do you choose? Who gets this opportunity?

At the heart of several non-profit growth strategies lies this exact dilemma; with so many people who could benefit from our assistance, how do we choose?

In 2009, the Australian Indigenous Mentoring Experience (AIME), which partners university students with Indigenous school children, was facing this challenge. Having expanded its mentoring program to five universities reaching 800 Indigenous children, AIME was looking to its next growth milestone. It had set the ambitious target to more than double its program to 12 universities, but had to decide which of Australia’s 39 public universities to approach.

AIME tackled this issue by considering three factors:

  • the pattern of need (where Indigenous kids were located relative to where universities were);
  • the availability of funding (was the University willing and able to pay for the entire program?); and
  • the enthusiasm of the university (were the university’s key stakeholders supportive of AIME?)

The first factor reflected how aligned its expansion would be with its mission. The other two ‘ease of implementation’ factors applied a reality test to ensure that the expansion could be achieved.

Interestingly, the two ‘ease of implementation’ factors played the biggest role in AIME’s decision. It judged that it was best to build a base from the universities who were easiest to partner with and then later, with the backing of this base, expand to the more challenging universities. This choice allowed AIME to allocate its limited resources where they would be most effective – building a small number of relationships with the universities that had the highest willingness to partner.

Since that decision, AIME has grown strongly. In 2012, AIME is connecting close to 1,000 mentees and 1,000 mentors across 10 university sites in New South Wales, Queensland and Victoria. In 2013, AIME will expand for the first time to Western Australia and South Australia and by 2016, it intends to engage 6,000 Indigenous students and 2,000 university mentors annually across 20 university sites.

Ultimately, we find the best way through ‘infinite need paralysis’ is to recognise that your choice needs to be justifiable and logical rather than ‘correct’ in an absolute sense. We have also found that organisations navigate this paralysis better by framing their growth choices as ‘who they will help first’ – i.e. the organisation has not forgotten about the rest, but it makes sense right now to focus on a particular group first.  They’ll get to the rest later.  

For many organisations, as it was for AIME, this navigation is a balance between addressing your need  and doing what is practical or easiest. While choosing between these options can be painful, it is crucial that a choice gets made. Without a deliberate choice, many organisations find themselves forever debating the point, expanding haphazardly, wasting management time and confusing their teams about what the organisation is doing.

2. Consultative compromise: Too many cooks…

Consultation is a critical component of how the non-profit sector works. Most of the strategic planning processes that we have conducted involved consultation in some form – with the directors, staff, clients, competitors, funders and/or others with an interest or opinion. There is a strong sense that everyone’s opinions matter, but particularly those who have direct contact with clients, not to mention clients themselves.

The consultative approach has proven excellent for creating alignment in organisations. If everyone believes that they have influenced the organisation’s direction, it is much easier for them to align with that direction. However, this same process can lead to problems.

In early 2010, a non-profit service deliverer carried out a highly consultative strategic planning process. The senior management team came up with a focused, clear and measurable direction for the organisation. However, they felt insecure about the plan as they were not working ‘on the ground’. As a result, they were keen to ‘test’ the focus with 50-odd managers at the coalface of service delivery.

In an open forum, the organisation’s goals were debated one by one. A wide range of feedback was captured and then appended to the goal. It was an attempt, in effect, to resolve 50 separate opinions – a process which destroyed any focus in the direction.

The strategy was compromised from ‘we will work in five specific places and reduce disadvantage according to specific indicators in all of them’ through ‘we will work in five places and reduce disadvantage in two of them’, and eventually to the much less specific ‘people we work with will report reduced disadvantage’. The first gives a clear statement of what the organisation will do and achieve, the last essentially says ‘we’ll do good stuff’ 1. The balance between getting a wide range of opinions through consultation while maintaining a focused approach is a delicate one. Too little consultation and you risk having a team that isn’t listened to or aligned. Too much consultation and you risk falling into the trap of consultative compromise.

The balance between getting a wide range of opinions through consultation while maintaining a focused approach is a delicate one. Too little consultation and you risk having a team that isn’t listened to or aligned. Too much consultation and you risk falling into the trap of consultative compromise.

We have found the best method is to invite input at very specific points in the planning process and to use specific questions related to the audience’s direct experience and field of view. For example, rather than inviting input from operational staff on the organisation’s goals, ask them what challenges their team would have in implementing the goals. Often staff can’t see across the entire organisation, but have a good idea of the challenges their team would face.

In addition, while it is important to listen carefully to feedback about the organisational direction, it is just as important to set clear expectations – that management/the board will decide the organisation’s strategy and that not all the feedback will be incorporated. The issue of how to best consult in the development of strategy is explored in more depth in this SVA Quarterly article by Duncan Peppercorn.

3. Fear about cutting programs

Cutting services can be daunting – for good reason. Clients may suffer without your service, staff may lose employment, and there can be other relationship, public relations and funding backlashes.

However, cutting is often necessary to focus an organisation, particularly if a service no longer fits with what the organisation intends to do. But how can you remove services without all the potentially difficult and unpleasant downsides?

In 2004, when Richard Spencer took the helm of the Benevolent Society – Australia’s first non-profit started nearly 200 years ago – the organisation had already been on a long journey of change.

A decade earlier, the Society’s centrepiece, the Royal Hospital for Women, was closed and what remained of the organisation became four Centres: the Centre on Ageing, the Centre for Children, the Centre for Women’s Health and the Centre for Social Leadership. The Centre on Ageing was by far the largest, generating over 80% of the organisation’s revenue. Of this, 80% was generated by providing residential aged care facilities.

Yet residential aged care was a problem for the Society. In 2002, an analysis had shown that several of the facilities were sub-scale and underfunded leading to significant losses.

Moreover, the Society did not own the land that most of the facilities were on, so there was no certainty that any capital investment that was made in the facilities could be recouped. However, shutting down the facilities involved moving elderly residents, redeploying or making redundant a large number of staff and taking a home away from people that the Society was there to serve.

When Spencer took over in March 2004, he sensed that the residential aged care facilities no longer had a place in the Benevolent Society’s future. However without a clear vision shared across the organisation about what would replace them, he felt that there would be too much of a backlash to make a decision immediately.

Reflecting on it later, he said, “Unless you’ve got a place that you’re moving to, it’s nearly impossible to close something. You need a compelling vision of the future that’s shared in the organisation”.

Unless you’ve got a place that you’re moving to, it’s nearly impossible to close something. You need a compelling vision of the future that’s shared in the organisation.

Spencer embarked on a strategy to help the organisation understand what was at its core. He focused the organisation around its mission, spending significant time with his team to build the idea of ‘caring and inclusive communities’ while at all times being ‘leading-edge and innovative’.

With this high-level mission, Spencer then asked the organisation the tough focusing question – which of the offerings in the Centre on Ageing fitted that mission? Quickly it became clear that residential aged care institutions did not. When surveyed, 82% of the public wanted to grow old and die in independent accommodation supported if necessary with community care. The more damning data was when the Society surveyed the people who actually worked in the residential aged care facilities – 87% of them did not want to grow old in the very places where they worked. As happened in the 1970s with institutions for children, an uncomfortable and confronting view was emerging – the institutions that the Society had been running for several decades were not in the best interest of the people they were designed to serve. It was clear to the Society that it could best pursue its mission by putting its resources into developing new models of care and accommodation for older people that would better meet the needs of older Australians.

The Society made a decision to exit residential aged care, and, where a reputable alternative provider could be found, transfer these facilities with their residents and staff. However it was unable to find operators for two of the facilities, so decided to close them. To avoid the negative impacts of closing the facilities, Spencer was careful to focus the staff not on what they needed to do but how they should behave while doing it – their values.

Spencer and the leadership team made clear that the Society would handle the closures with great respect for the clients and staff; it would honour the services as if it was opening them rather than closing them. The Society also went to extraordinary lengths to ensure that virtually all residents had alternate housing. It was this focus on how the organisation behaved during this challenging episode that helped the Society have, what Spencer describes as, “virtually no resistance” – a rarity when shutting down a service.

The process to close or transfer the residential aged care facilities took over five years to complete (in part due to complications of ownership and title issues). Staff at these facilities were often disappointed and felt a great sense of loss, but many also believed that the organisation had made the right, albeit tough, choice.

From our experience, it is critical when cutting services to be clear and honest about why you are doing it. Without a transparent purpose, it is nearly impossible to convince your team that exiting a program is the right thing to do. It is also important how you behave as you close a program – you need to demonstrate and act by the values on which your organisation is based.

If you achieve this, it is possible to shut down services successfully when they no longer fit with the focus of your organisation.

But what if this great, unexpected opportunity pops up…

While we recommend that the majority of non-profits could benefit from more focus in their strategy, many senior managers of focused Australian non-profits are faced with a dilemma when a fantastic opportunity comes up that could be the future of their organisation – but lies outside the focus. Should they stay within the focus and ignore the option or should they step outside and seize the opportunity?

Social Ventures Australia (SVA) has come up against this dilemma several times. The core of SVA’s business has always been (and still is) a practice known as ‘venture philanthropy’. It takes growth stage non-profits and social enterprises and adds a mix of funding, networks and professional services support to help them grow.

In 2009, the organisation focused this approach even further by narrowing its venture philanthropy portfolio down to only organisations in two specific areas: education and employment. Its focus was around expanding its partnerships, and portfolio organisations, in these two areas.

However in the same year several opportunities came up. One of them would have been nearly impossible to predict at the time – the collapse of ABC Learning, then Australia’s largest childcare provider. It presented a once in a lifetime opportunity to acquire a large childcare organisation and run it for social benefit. The importance of early learning, particularly for disadvantaged children, was clear to SVA. However, a large-scale commercial acquisition represented a significant investment away from its core focus.

Seeing the potential long-term benefit that this opportunity could provide, SVA’s Board allowed its CEO to pursue the opportunity – to work very intensively and close to full-time on the acquisition over a six month period. The result was a success for SVA.  A consortium of four large non-profits formed what became Goodstart Early Learning.

While the main beneficiaries of this deal are undoubtedly Australia’s disadvantaged children, it also built knowledge within SVA, particularly in the practical know-how of social finance transactions. This know-how went on to form the basis of what is now one of SVA’s core businesses – its Social Finance team.

Pursuing the opportunistic route worked for SVA – not out of chance, but because it was a calculated gamble on the organisation’s next area of growth. The opportunity built on previous experience with social enterprises such as the joint acquisition of Bonsai Social Firms – a Bonsai nursery providing employment and training to people with a mental illness or disability – and was an area in which SVA wanted to develop a core capability. It is not always the right option to follow unexpected opportunities. For most organisations, a more focused strategy is a better one.

It is not always the right option to follow unexpected opportunities. For most organisations, a more focused strategy is a better one.

However, for organisations which are looking for the next growth area or are early-stage and still experimenting with the best way to deliver a program it can be advantageous to take opportunities outside their stated focus.

Conclusion

Across the 100 or so strategic planning projects that we have run with Australian non-profits, we have seen the benefits that focus can bring. And while most non-profit CEOs and managers strive for focus, they also experience major challenges in achieving this.

We have found that the three most common pitfalls that non-profits encounter are infinite-need paralysis, consultation compromise and cutting-phobia.

There are ways to overcome these obstacles. In the face of paralysis, make a deliberate choice recognising that it needs to be justifiable and logical rather than ‘correct’. To avoid consultation compromise, invite input at specific points in the planning process and use specific questions related to the audience’s direct experience and field of view. And when closing down services, be clear and transparent about your reasons, and do it in a way that reflects your organisation’s values.

With these obstacles conquered, non-profits can develop the focus that is critical to achieve the impact they seek.


If you’d like to know more, contact us on consulting@socialventures.com.au


1 Phrasing of the goals has been changed to preserve the anonymity of the client