Will the sector be like the slowly boiled frog?
The recent furore over the government tax relief cap has unified the third sector in the Give It Back George campaign, with over 3,000 charities signing up to the protest. There are a number of commentators pointing out the damage of the government plan, with the potential loss of 11,000 jobs.
Will this be the event which drives the sector to change? Because change is surely needed. The sector has for too long rested on its laurels, providing services because we want to, funded by grants, rather than because we are necessarily adding real value. This has led to an unnecessary proliferation – for example, there are around 850 cancer charities all tackling the same fundamental problem. These are crying out for consolidation but the lack of a bottom line is a real barrier to change. Where are the explicitly understood drivers for change, which, in the private sector, lead to mergers and acquisitions? These drivers certainly exist, but are they being acknowledged and dealt with proactively?
The danger is that with increasing competition from the private sector and from social enterprises, the sector will become like the proverbial slowly boiled frog, failing to see the change in the temperature until it is too late. And with the recent change towards a contract culture many charities are gradually feeling the heat, as one contract after another goes to competitors and they suffer the death of a thousand cuts.
So, what should senior managers and trustees do? They could do worse than forensically analysing all their services, and really understanding where they add value for service users. Where are their unique attributes which competitors don’t possess? And then honestly looking at external market opportunities, where their competencies give them competitive advantage. Then they need to adapt their strategy to highlight these strengths before the outside pressures force changes – once you are forced to change by external pressures it is often too late. Where you have identified a gap in your own provision this strategy may include merging or partnering with other charities offering different but complementary key competencies.
Impose your own drivers for change from the inside, setting the right strategic objectives and measuring them assiduously. As Josef Schumpeter, the forward thinking Austro-Hungarian economist, said way back in 1942: “A bit of your business dies everyday. The trick is to work out who’s killing it – you or the opposition.”
Steve Morley is managing director of Sango Consulting. He spent 10 years working in campaigns, marketing and communications for big NGOs, before setting up his own consultancy in 2006