Use strategic levers for change

If there is only one message which has emerged from our deliberations so far it should be that in-depth change in our sector is necessary and unavoidable. The other insight which may have arisen is that such change won’t come easily. Recently I gave the keynote speech at a global leadership conference for one of the leading ICSOs. I had been asked to deliver ‘a wake-up call’ and the organisers had selected the title “What should keep us awake at night?” So the scene had been set and I worked hard to convey my message. I generated some animated applause and started a lively debate among my audience. In the session that followed my presentation, the deputy CEO reported on the changes the organisation had conducted over the past year. When he had finished not one of the 120 strong audience wanted to ask a question and we all went for lunch. What had happened? We had discussed the need and modalities for bold, existential change and people were ready to seriously take the options into consideration. When they were taken back from the big picture to the routine of incremental change they were not at all motivated to discuss the details. I didn’t attend the rest of the conference, but I assume that it focused on the next steps which had to be taken on the organisation’s path of incremental change.

Starting a process of big and bold change is a difficult undertaking: it is scary because so much can go wrong, it requires courageous and strong leadership with the stamina to lead through the unavoidable frustrations and set-backs, and it requires good tactics at every stage of the change process. A very important success factor is also finding the right starting point: selecting the most appropriate lever for change. The choice of the lever very much depends on the individual organisation and its specific situation. We will briefly review three starting points for an in-depth journey of change: accountability, crisis and opportunity. Finally, we will look at two strategies which may help remove obstacles to change: taking a long-term perspective and creating a separate organisation.

Accountability

In our chapter on accountability we pointed out the specific strategic importance of accountability for our sector: in the absence of the incentive of profit, and the disincentive of bankruptcy, accountability is our most important driver for organisational effectiveness. Or, in other words, only full transparency and comprehensive accountability will allow us to assess the real state of our organisation. Leaders who are prepared to improve accountability will create much better tools to share information with their colleagues regarding successes and failures of the ICSO. Both will help in making the case for change and in re-directing the organisation. Accountability which has become an essential part of an ICSO’s core identity will be implemented by all volunteers and employees. Thus everybody working for the organisation will see for themselves what works well and what needs to be changed.

Effective accountability, which can serve as a basis for change, needs to be much more than the accountability we observe today. The accountability the average ICSO practices today is focused on the large institutional donors, which have clear requirements of how much accountability is expected and in what form. If an ICSO does not fulfil the donor’s demand the channel of funding will most probably dry up. Therefore ICSOs undertake every effort to serve large donors well. Less impressive is the average ICSO’s accountability towards their individual donors, the women and men in the street, who provide the organisation with one off donations or with small amounts of regular support. Donors’ magazines and project reports provide some information but rarely the hard facts which would be required to hold the organisation accountable.

When it comes to the recipients of ICSOs’ support, accountability is mostly a one-way-street: the recipients are accountable for the use of the support, but rarely is the ICSO equally accountable for the way in which it resources and delivers that support. Listening attentively and systematically to the people the organisation is supposed to serve is not only a matter of ethics, it is also vital in a situation of accelerating change, requiring a precise picture of the conditions and demands under which the ICSO works. Lately the call for two-way, or mutual accountability has become louder but practice is still very much lagging behind.

Another major area which requires improvement is internal accountability. All too often responsibility for specific tasks is unclear or widely spread among different units. Reporting is often scarce and insufficient in serving as a solid basis for decision making. Strengthening internal accountability is a key strategic component of major change. If staff and volunteers can see with their own eyes, and based on their own collection of information, which part of their work is effective and which one is not, change acquires a much broader basis and is easier to initiate.

Finally, there is accountability to the wider community of ICSO stakeholders: tax and legal authorities, ministries and government agencies, the media, the interested public – in short: everybody the organisation works with or against, and all those who take an interest in it. Securing full accountability to the wider community increases an ICSO’s credibility, legitimacy and impact. It can also help secure acceptance of and support for in-depth change processes. If played cleverly, parts of the wider community can even demand change, which the ICSO wants to undertake but finds difficult to embark on.

Taken together all of these different angles of accountability will provide a full picture of the organisation with all of its strengths and weaknesses. Such ‘360° accountability’ will point to the need for change, and help those who want to start in-depth change in making the case and rallying support.

Crisis

Winston Churchill is supposed to have said: “Never let a good crisis go to waste” and similar quotes are turning up worldwide as soon as a major crisis hits. Crisis usually means that the way in which we have worked to date has not functioned well: that’s why the crisis arose. As a result, motivation to embark on change is strong. Using this motivation quickly in order to initiate far-reaching change is a clever leadership strategy. However, without enlightened leadership, change which has its roots in crisis situations can easily end up in superficial or merely symbolic action. Crisis frequently goes hand in hand with panic, and panic is rarely a good driver for thoughtful and sustainable change. Therefore crisis is only a useful lever for change if there is a well-considered strategic change programme at hand. Germany’s surprising opt-out of nuclear energy after the Fukushima disaster is a good example, illustrating how crisis can initiate major change, while the global banking crisis is an example to the contrary. Let’s briefly look at both cases.

Already in the 1980s Germany had a strong anti-nuclear movement, with the Green Party demanding the end of nuclear energy and ICSOs such as Greenpeace organising peaceful resistance against a highly risky form of providing a densely populated country with energy, and an unresolved issue of where to deposit all the nuclear waste. After years of intense and systematic campaigning by a broad coalition of CSOs, movements and the Green Party, the government of Social Democrats and Greens decided to phase out nuclear energy and agreed a time plan. Only a few months before Fukushima the conservative government, which was in charge at the time, reversed course and extended the phase-out period. Suspicions arose that this was only a first test to find out how much resistance there was to continuing the use of nuclear energy. When Fukushima occurred, the German anti-nuclear movement was well prepared. They mobilised all support they could get, promoting the thesis that if nuclear disasters of such a calibre could happen in Japan, we couldn’t exclude them from happening in Germany. The very same government which had slowed down the exit from nuclear energy very recently, felt so much pressure now that they decided to phase out immediately. The reaction to Fukushima was stronger and more effective in Germany than it was in Japan itself. The main reason for this was a decades-long campaign which prepared the ground for the exit and just needed a final additional push to prevail. Fukushima delivered that push.

The global banking crisis hit the world completely unprepared. Very few economists had expected a crisis of such a magnitude being possible at all, and hardly anyone saw it coming at that specific point in time. The regulation of global banks had been a specialists’ topic with little, if any, interest from the wider public. There were no major CSOs working on global finance, a fact which was occasionally criticised but not remedied. So, when the crisis hit, there was no plan available for what to do and how to avoid such a disaster in the future. We all remember the series of ad hoc meetings of heads of government, finance ministers and experts. The crisis was somehow contained, but sufficient provisions to prevent future banking crises have not been established yet and deeply entrenched interests will probably make sure that this won’t happen any time soon – at least until the next crisis arises.

These two examples illustrate that crisis does not automatically promote in-depth change. On the contrary, the focus on managing the immediate fall-out of the banking crisis absorbed all energy, impeding the discussion on how to prevent a repetition of such a catastrophe. While in Japan people had to focus on the immediate management of the nuclear disaster, 20,000 km away Germans had the space to consider their long-term nuclear policies.

For ICSOs this means: crisis first of all requires short-term crisis management. Using crises to initiate fundamental changes requires having a clear and well thought through concept at hand which they can follow. Hoping to develop such a concept when you are in the midst of a crisis is very optimistic. If such a concept is not readily available, it is much more likely that management will have to turn all their attention to keeping the short-term effects under control. Embarking on a change process once the peak of a crisis is over is certainly possible, but the drive for change is weakened as the immediate threat fades away. If you have developed an ambitious change programme – and possibly tried but failed to roll it out before – crisis may be the right moment to try it again: this is exactly what the anti-nuclear movement in Germany did. Yes, you shouldn’t waste a good crisis – but it takes excellent preparation in order to use the crisis successfully to initiate lasting change.

Opportunity

Opportunity is by far the preferable way to go for change: while crisis cannot be ignored, and forces you to act, opportunity provides you with an option, but it can easily be overlooked. While crisis forces you to change, opportunity offers you change. This is why opportunities go so often unnoticed or unexplored or are not taken advantage of. The merger talks I reported about earlier were two great opportunities for the ICSOs involved, but as the organisations were free to accept or reject the opportunity, they decided that change was all too painful and allowed the opportunity to slip away.

Using opportunity as a lever of change requires leadership which is able to turn an opportunity into a driver for change. What does this take? The first step is spotting an opportunity which can drive change. This is something most well-established ICSOs are not set up to do. They have business models in place which have been successful and not been challenged for decades. Within the reigning model, they are very good at spotting and exploiting opportunities: the EU opens a new line of funding and ICSOs are among the first to file an application; Myanmar eases the restrictions on civil society and ICSOs quickly build up their presence in the country; etc. But to date they have not had major incentives to look for opportunities outside their business models, opportunities that would promote change. Farsighted leaders will accept that major change is at the doorstep and that driving change will be a more comfortable position than being surprised and driven by change. They will change their perspective and start looking for opportunities outside their business models. Scanning the horizon for opportunities as part of a major change agenda is a task which could be shared among several ICSOs. This would save costs, and, by bringing in a range of perspectives, deliver a more solid basis for judgements.

Once an opportunity has been spotted it needs to be carefully analysed in the context of the individual ICSO’s needs and possibilities. This is a crucial phase during which an organisation’s leadership should try to develop the widest possible support base for change. However, often the process of analysing the viability and desirability of change is being conducted in strict secrecy. The senior management team does not want to raise anxieties among staff before a decision on change has been taken. But keeping the considerations secret means that, sur-prised by the final decision, staff will be suspicious of the reasons for change and much more likely to resist. An ICSO that defines itself as an organisation in permanent development, always aiming to be ahead of its time, will systematically assess opportunities as they arise. Identifying and following up on new opportunities will be the focus of the wider organisation, not only the senior management. Such an organisation’s leadership will rather have to act as a filter, making sure that the ICSO does not lose its focus or divert its strategy by going after too many, too diverse opportunities.

When exploring new opportunities which arise outside an organisation’s core activities, risk assessment is of special importance. Many ICSOs do not have sophisticated risk assessment procedures in place: they prefer to avoid risk than trying to scope and manage it. Enabling an organisation to strive for new opportunities requires developing solid risk assessment processes and systematically taking risk into account when deciding on whether to go after an opportunity or not.

Implementing change in order to grasp a new opportunity is usually much more than a management task. It may include embarking on a new business model, and it may have significant repercussions on the organisation’s culture. Therefore, the broader the base of change is among the organisation’s staff, volunteers and other key stakeholders, the higher the chances of success. Creating excitement about an opportunity, and developing the widest possible ownership, are essential conditions for turning change into a success. In the chapter ‘Leading by vision’ we have discussed the wonderful possibilities which the highly ethical missions of ICSOs open up to their leaders. The question of whether an ICSO is able to grasp a new opportunity which arises outside its established core activities is answered predominantly by the leadership it has. Courageous and credible leaders can enable their organisations to open up to new opportunities and embrace change with optimism and confidence.

Avoiding obstacles to change

Recently I was asked by one of the oldest and most renowned ICSOs to support them with a project envisioning the next 20 years. At first I wondered whether such a long-term perspective would make any sense at a time of rapid, often disruptive change, where nobody is able to predict how the world may look in 20 years’ time. But as I reviewed the project more carefully I started to like the idea very much. By looking at the far distance the organisation was able to avoid many of the concerns which would have arisen if they had defined a three or five year change process. With a 20 year perspective, both board members and staff did not immediately have to think about their own concerns: hardly anybody would be personally affected by how the organisation might look 20 years from now. By taking such a long-term perspective the organisation was able to focus everybody’s minds on how the ICSO would be best positioned rather than simply on their own future roles and responsibilities.

Once an ambitious change agenda was agreed for the long-term, the question of how the organisation should start its change process in order to achieve the 20 year targets would have to be discussed. This would indeed affect everybody in the room, but as the direction and scope of the change process was already agreed, refusing to start moving in this direction would be much more difficult. Taking a long-term perspective can be very useful, but only if the objectives to be achieved are commensurate with the timescale. Agreeing to achieve a goal in 20 years’ time which the organisation should be able to reach in five would probably mean managing the organisation’s slow decline, rather than preserving its future relevance.

Another way to avoid resistance may be to create a separate organisation. Many observers of the decline of Kodak agree that setting up a new company which would be independent from – and even allowed to compete with – the mother company would have been the best strategy to organise the shift to digital photography and the emergence of a new business model. With the patents Kodak held in digital photography, the enormous financial reserves, the impressive global brand and two decades time at their hands, they should have been able to build an impressive new business while their old one was going down. We know that this was not the strategy Kodak chose, but it is interesting to note that a group of communications and IT directors which the Centre brought together some years ago came to a similar conclusion.

Asked how their ICSOs could optimally use digital communication, they quickly and unanimously came to the conclusion that their organisations were unable and, for the foreseeable future, would remain unable to optimally use digital communication. To explain their assessment they drew up a long list including: our decision making processes take too long; we are unwilling to allow diverging opinions on our website; our senior management is not interested in digital communication; we are about projects and not about communications; we don’t have the budget required to build a state-of-the-art web presence; etc. In the end, the endeavour to control and direct everything said under the ICSOs’ brands, and the slow decision making processes emerged as the key obstacles. At this point we asked the workshop participants to form small groups and develop concepts for how their organisations’ internet use could be improved significantly. When the different groups had developed their answers and came back to report to the plenary they all had come to very similar conclusions: ICSOs should set up independent internet platforms which would complement their organisations’ traditional work, while at the same time being able to work effectively under the conditions of the digital world.

Since then several aspects of this idea have been taken up – for instance with WWF’s ‘Earth Hour’ website69 – but, as far as I know, none of the ICSOs has developed a fully-fledged, independent internet presence as of yet. However, I believe that it is only a matter of time until some start taking steps in this direction. Generally I would advise change leaders to carefully examine whether the most effective use of their limited power and resources would be to focus on changing the existing organisation or whether they would be better advised to set up separate units, or business arms, which are only loosely connected to the established organisation and can take shape in line with changing requirements from their very beginning.

Earlier we described ICSOs as organisations ‘for’ rather than organisations ‘of’. Let’s take a youth organisation to explain how an ICSO could learn to move from ‘for’ to ‘of’. The change leaders could decide for the time being not to change the traditional ICSO; where older people govern, manage, fundraise   and provide services for younger people. They could rather focus on supporting groups of young people to build their own virtual platforms under the ICSOs’ name but largely outside the realm of the older people’s decision making. Thus a new and more contemporary organisation could emerge which would be able to continue striving for the ICSO’s mission once the old approaches fade away. Rather than wasting time and energy in battles with deeply entrenched power, the change leaders would focus on building alternative models in parallel to the continued existence of the traditional one. Convincing the traditional leaders of an ICSO to allow such experimentation will be the main challenge to this approach. But leaders who seriously care for their organisation should allow new approaches to be tested and invite the next generation to step in.