It’s no exaggeration to say that we are living in turbulent times. Another new set of government ministers, the impending prospect of Brexit and a potential general election might be the most obvious, but their impact will pass, probably quicker than we expect.
The more powerful forces reshaping the sector are actually the big, ongoing trends: globalisation, technology development, wealth polarisation, government austerity and, last but by no means least, the increasing – some would say ruthless – marketisation of public services. By this I mean the pace of outsourcing and the accelerating shift from grants to contracts and then to competitive tenders for commissioned work.
Since 2001 virtually all of our sector’s revenue growth has come through earned income. Voluntary income has grown in real terms by just 6 per cent – not per year, but in total over the past 15 years. Over the same period, earned income has grown by 100 per cent, from £12bn to £24bn a year. According to the National Council for Voluntary Organisations’ most recent analysis, only 21 per cent of the UK voluntary sector’s revenue came from individual giving, while 55 per cent came from earned income – half from public sector contracts, half from straightforward retail and commercial sales.
The elephant isn’t just in the room, it’s half the room – and it’s growing.
That scale of change is always going to create winners and losers, and while some organisations are thriving in this new reality, others are clearly struggling to come to terms with it. Looking at the all of the organisations I’ve worked with, one of the most obvious distinguishing factors between those that are thriving and those that are barely surviving is organisational agility.
A few weeks ago, I hosted a seminar with a group of chief executives from larger charities on how to develop more earned income. Together we identified six capabilities critical for success, and each chief executive scored their organisation on each area. Organisational agility came out consistently as the single most important capability for them to develop.
Agile organisations are faster at identifying, evaluating and acting on opportunities, at turning ideas into new products and services, at building new relationships, at finding and integrating with new partners and at building new skills and capabilities for areas they want to go into. And they can do these faster because they have five things in place.
First, a clear strategy that defines what kinds of things they will do and, critically, what kinds of things they won’t.
Second, an outward-looking perspective, constantly scanning other organisations, sectors and technologies for useful partners, models and ideas.
Third, a mechanism for rapidly redeploying resources within the organisation, based on a tight list of projects that are frequently assessed and prioritised.
Fourth, leaders who visibly champion their projects, even when they’re delegated to others, and who proactively step in to overcome issues and barriers.
Fifth, and above all, a willingness to quickly and efficiently stop projects and exit services.
Of all of these factors, it’s the last that seems to be the single most important, and it’s also the one that seems the hardest to do. It might be another one of those uncomfortable words, but to become agile, to develop the ability to continually adapt your organisation to meet ever-changing needs, a degree of ruthlessness can be a very important asset.
Martyn Drake is the founder of the management consultancy firm Binley Drake Consulting