Innovation: Key to Your Own Survival

With the appropriate support from the board, developing an organisational capacity for innovation can contribute to meeting the challenges of the Not for Profit and government funded sector, according to innovation specialist Danny Davis.

Just five years ago, the phrase “innovate or die” was enough to have you labelled amongst the radical fringe – now it is accepted orthodoxy.

In my experience there is little remaining argument that all mature-stage Australian organisations need to innovate to thrive within the volatile global economy. Executives and Boards in all sectors are self-identifying growth, strategic agility, competition and digital disruption as significant priorities.

Community and government funded Not for Profit entities are not immune. Some theorise that the impact on the third sector is even greater – amplified by further high rates of change in surrounding regulation and funding regimes.

Every segment is showing shifts towards more client directed funding – most notably with health and the NDIS.  The vast majority of service providers have been put on notice that bulk-funding contract renewals are no longer guaranteed, that increased competition is certainty, and that some services will just be withdrawn. Providers are needing to value add, demonstrate efficiency and innovate services just to maintain existing revenues.

Developing an organisational capacity for innovation is vital. Just one idea on its own, or three, or six is not enough. We need to re-harness the passion and can-do of our staff and stakeholders to be driving our organisations and communities forward with new ideas, new momentum and new solutions.

But, against this backdrop, our Not for Profit sector has earned a reputation for being highly conservative. Making conservative use of community money – not to mention community time and passion is indeed a weighty responsibilities. Our boards both represent and embody this conservatism.

But where does this heavy responsibility lie if we fail to adapt to the changing environment? Is a board, and good governance, and an organisation well served if it lets events overtake it?

I have coined the term “future fiduciary” to describe the most important of trust responsibilities in volatile times. Its primary question for leadership and the board is “Are we appropriately invested in our own future?”

Good governance certainly does not suggest that we dive blindly and uncontrolled into innovation. Despite many pundits recommending “skunkworks” and other fancy models for suggesting executives throw money and get out of the way. These suggestions are naïve and inappropriate in any well run organisation.

However, there are a number of practical techniques that do appropriately enable mature stage Australian organisations to transform themselves to survive and thrive in the volatile global digital economy – and Not for Profit directors ignore them at their peril.

As a fiduciary responsibility you hold in trust all of the assets of your entire stakeholder community – the financial resources, passions, volunteered time, attention span and more. You hold in trust the unique market position and innovation opportunities you have in front of you. Squandering the opportunity to innovate to further your cause, your mission, your service – as a result of the value of this asset base is a breach of this trust.

Failure to make yourself aware of the best practices emerging from the commercial sector, and understanding how to apply them in a mature fashion for not-for-profits is a failure of good management.

Ask yourself, “Do you want your innovation and strategic thinking driven by Aspiration or Desperation?”.  Are you and your organisation, a thinker, a leader, an improver of what you find – or one that responds only when pushed?

Not for Profit directors who want to be successful and lead thriving organisations into the future have simple options. They need to grasp the opportunity to learn from world leading examples about how the boardroom can gain visibility of business futures and innovation portfolios.

Directors will first need to learn to enhance the value contributed by their own board through lifting their skills in the most fundamental of Directorship roles – strategy, direction and assessment.

Innovation Aware Governance describes the practices that enable the appropriate “Director’s role in innovation”. It addresses the seeming paradox that what may look impossible – improved visibility of  volatile and unknown futures – is actually a vital key to success.

Do we know who we are and where we’re going? Do we as a board have visibility of where our existing streams of business place us in the context of our future market environment? Are we happy with who we will become on the basis of those evolving streams of business? If we want to be something else, something better, are we taking the steps necessary to get there?

In an environment where the only constant is change, an Organisational Capacity for Innovation is central to your sustainable survival.

An investment in deliberately enhancing an  organisation’s skills and capacity is an investment in a sustainable future. Survival is determined by the ability to respond and optimise the opportunities and challenges of our futures.

Investing in improving your own performance is investing in the effectiveness of your sector. You need to believe this. You need to set real effectiveness targets that represent this. And you need to communicate your targets, investment and success to your stakeholder community.

I find that many Not for Profit boards struggle with an appropriate form of leadership as is required for re-inventing themselves and their governance as highly innovative organisations. It is ONLY leadership from the top that will make this work.

Boards need to consider how to develop the maturity and capabilities of their organisations, and need to question. Where do you start? Do you grow your staff or do you need to replace them? How do you know what good enough looks like – how do you set performance targets for unknown futures – and how do you build or assess skill levels for new modes of operation.

In my experience, and from observations of leading commercial boards on this journey, Not for Profit boards need to start by looking at and building their own capacity for leadership, their own understanding of, and mastery of Innovation Aware Governance.

Only then can they as a boards can take the appropriate leadership role in assessing and deliberately targeting improvements to the innovation fitness of their organisations. To develop the strategy, direction, measures and governance to ensure that their organisations are fit to operate, ready to survive and able to achieve optimal outcomes from their custodianship of our community assets and our community passions.

About the Author: Danny Davis, The Innovation Coach, is a global thought leader in the development of an Organisational Capacity for Innovation through Innovation Aware Governance approaches. As well as executive mentoring, consulting and board advisory, Davis is a speaker, author, facilitator, trainer, innovation coach and experienced director on both commercial and NFP boards. www.vandis.com.au