When we started writing Creating the Vital Organization, we were repeatedly struck by a simple fact: While organizations must be driven by unique strategies, the underlying principles outlined in the book are universal—equally applicable to a variety of organizations whether they are global powerhouses, not-for-profit organizations, solo practitioner medical practices, or even many governmental entities.
The reason for this is clear: Any organization will fail if it does not balance both driving current performance (effective execution of day-to-day operations of producing goods or services) with building future potential ( renew to remain relevant). No matter what the differences are between various organizations, in order to thrive over the long-term they must understand these pursuits, which are the yin and the yang of vitality. As you may have read in our previous blog, Vital organizations are ones that manage the inherent tension between current performance and future potential, using the cash flow or other resources generated by current performance to support investments in future potential, which, despite inevitable trials and errors, are needed to create new successful products or services when eventually incorporated back into current performance.
Consider a small nonprofit: Mission-driven organizations, while not looking to maximize profits, face the same challenges as corporations, even though their cash flows may be generated by donations or grants. How do these organizations stay relevant in an increasingly competitive and often evolving space? Like for-profit corporations, it is not enough for a nonprofit to rely solely on what currently works, because eventually, environmental pressures—whether brought forth by competing nonprofits, politics, natural disasters, new technologies, changing behavior patterns, or something else—will require the organization to adapt and respond. Even large nonprofits with fairly self-sustaining endowments, such as the Ford Foundation, must focus efforts on balancing their current performance with future potential to stay relevant.
Here’s a current challenge facing the non-profit world: More and more, people are offering organizations contributions that are earmarked for certain things—targeted or non-discretionary giving. For example, people often donate to the Red Cross after a natural disaster, with the stipulation that the money go to helping relief efforts for that specific disaster. The Red Cross is not free to decide whether the money might be better spent elsewhere, as they can when they receive discretionary funds. Nonprofits must explore ways to fundraise that meets their overall needs while maintaining a donor’s desire for control. This is a future potential challenge
The same holds true for small businesses, such the solo medical practitioner. In an age where many are being swallowed up by behemoth medical groups, and drowned in insurance paperwork, how does the lone doctor survive? Again, it’s a future potential challenge, as what has worked in the past is being increasingly difficult to sustain. Survival is not simply based on delivering excellent care.
Whether we are discussing large or small businesses, start-ups, educational or religious institutions, or nonprofit organizations, these issues are fundamental to the long-term survival and success of the organization. The language may be different, but underlying it all is the need to strike the balance between how to operate in the present with an exploration of how to operate successfully in the future.
As we tell our clients, this is an issue of consistency. Unfortunately, consistency is too often confused with complacency or stagnation. An organization must be consistent—reliably delivering valued products or services—to ensure long-term success. When an organization becomes complacent, resting on its laurels or assuming what has worked in the past will continue to be successful, it runs the risk of stagnation and obsolescence, and eventually, will be driven out by new competitors or marketplace changes that make the organization irrelevant. An organization that is consistent continues to deliver good products and services while always improving upon them—continuous renewal.
If this sounds challenging, that’s because it is. But it is also entirely doable. The key is a commitment to vitality, and the alignment of all the top leaders. An understanding of these principles will help ensure the long-term viability of your organization, no matter what type of organization you’re leading.