2 Techniques to Increase Board Resiliency
It’s that time of year when four things fill our email inboxes -- Season’s Greetings, Top 10 lists of the past year, Predictions for the new year, and an increased volume of holiday SPAM. Many of the top 10 -- or any other number -- lists are enjoyable and some are even enlightening. However, it’s the predictions that I find most intriguing, sometimes even amusing. However for a year like 2012 it seems predictions are abundant, especially considering the end of the Mayan calendar and other “2012 phenomena” waiting to unfold.
Since my crystal ball reception is slightly worse than satellite TV in a blizzard, there’s only one prediction I’m confident and comfortable about making regarding the nonprofit world ...
resilience will be an essential survival skill and sustainability strategy for nonprofit organizations and their leaders in 2012 ...and 2013, 2014, 2015, and beyond.
Why do I say that? Well, without getting political or raising anyone’s ire during the holiday season, let’s just say that we’re living in what military strategists call a VUCA world. A VUCA world is an environment characterized by:
Volatility
Uncertainty
Complexity, and
Ambiguity.
These four word summarize the environment nonprofits live in and the volatility, uncertainty, complexity, and ambiguity were intensified with the collapse of our economy. At the time of this writing it appears the VUCA world for nonprofits will continue unabated through 2012.
These four issues -- volatility, uncertainty, complexity, and ambiguity -- often create enormous challenges for many boards. As you’ve probably experienced, most boards like issues to be black and white, either this or that. However, in the VUCA world there’s much more gray than black or white, and usually situations are more of a both and rather than an either or.
The grayness of the VUCA world paralyzes many boards and the most common decision many boards make is to table an issue until they have more, or complete information to make an informed decision. However, one of the realities of the VUCA world is that you may never have complete information, and the information you have may be outdated in a matter of days or hours. Tabling the issue may be a guise covering the fear of making the wrong decision. So, instead of making a decision that might turn out to be wrong, boards punt the decision into the next meeting when they hope to have more information. Frequently this action is repeated at the next meeting, and the next...until at some point, the decision is no longer required. You see, delaying a decision is often the same thing as not making a decision.
So what’s a board to do? I see two primary skills boards need to lead in our VUCA world -- courage and resilience. You need courage to make brave decisions. As Al Pittampalli wrote in Read This Before Our Next Meeting, “Brave decisions lead to a brave organization; fearful decisions lead to a fearful one.”
It’s decision time -- do you want to be a brave organization or a fearful one? Brave organizations rise to confront the challenges of their community. If you want to be a brave organization you need courage to make brave, even bold, decisions in a world that is volatile, uncertain, complex, and ambiguous.
- As you look and plan ahead for 2012, realize the volatility and uncertainty of our world and its economy will require you to develop multiple scenarios in which your plans may, or may not, play out.
Rather than developing just one plan for a predicted, or ideal, future and hoping for the best; scenario planning encourages you to explore the alternatives that might emerge and challenges you to think through those scenarios. Scenario planning leads you to identify the key variables affecting your situation and develop a number of scenarios involving various combinations of those factors.
It’s highly unlikely that you’ll be able to accommodate all of the possibilities, but by considering at least 3 -- many organizations like to use the best case scenario, the worst case scenario, and the most likely case scenario -- you’ve increased the understanding of the situation and your options. Hopefully, this equips your board with confidence and insights to make wise and brave decisions for each of the various scenarios.
- the same concept applies to budgeting. Instead of creating just one budget, develop three different versions of the budget, each based on a different set of assumptions. One is usually very conservative using higher projections for expenses and lower projections for revenues. The other end of the spectrum is the stretch budget which is usually ambitious in terms of projecting income (all grant applications are funded) and conservative when it comes to expenses (programs come in under budget). Somewhere between these two extremes is another version that may be the most likely. One benefit to having a stretch budget arises if you receive an unexpected gift, or offer of a gift, you’ve already thought through where the money would have the greatest impact on your organization.
Working through these scenarios for plans and budgets provides a broader framework of understanding and hopefully equips the Board to make brave decisions that result in a brave organization.
Organizations also need resilience, as a complement to courage. Resilience is the capacity of an individual or organization to survive, adapt, adjust, and respond particularly through adversity or unforeseen changes. Your board must be courageous to make brave decisions based on the best information available at the time. Yet, as situations change, or new challenges arise, your board must also be resilient to adjust course as needed. They must be willing and able to adapt and respond when the changes of the VUCA world dictate a change in direction that will modify, even reverse a previous decision about direction. Scenario planning and budgeting help prepare board members to take these steps should they become necessary.
The VUCA world is not for the timid. The timid choose to play it safe and avoid all risks of making a potential wrong decision by refusing to decide or take action. And as Meister Eckhart wisely observed, “The price of inaction is far greater than the cost of making a mistake.” Not making a decision is usually worse than making a wrong decision because as the saying goes, “it’s hard to steer a parked car.” Scenario planning allows you to map your route to your intended destination while preparing alternate routes in case you encounter obstacles or detours.
In 2012 encourage your board to remember that progress, not perfection is what you aspire to. Be bold, be brave. Take wise actions that advance your mission. But be quick to be resilient. Recognize when decisions aren’t working the way you planned and make the necessary adjustments.
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NONPROFIT RESOURCES
Read This Before Our Next Meeting by Al Pittampalli
HBR Blog - Leading in a VUCA Environment
Scenario Planning Resources