3 reasons why we don't do anything new
1. Approximately 6 months before the fiscal year ends, we turn in our first crack at the budget. If we happen to have an interesting idea that is likely to cost money after that -- say 2 months into the fiscal year -- then anyone in the chain of command can basically kill it with the words "we didn't budget for it." To overcome that, it had better be a whopper of an idea.
2. We don't have time. Middle- and lower-level staff are swamped executing the plan (I love the double meaning of the word execute -- you be the judge of what's happening in your organization); senior staff spends gobs of time as personnel managers -- both for staff and committee/council/task force volunteers; and CEOs are mired in board and component and funding traps. Thinking about the future, if it happens at all, comes in tiny, disjointed bursts.
3. We've built an entire culture around painfully slow-to-change organizations. A group of consultants likely well known to readers of this blog even wrote a book about it: We Have Always Done It That Way: 101 Things About Associations We Must Change. We've made making big decisions extremely hard. Maybe that's livable, but we've made making small decisions extremely hard, too, and that leads to stagnation.
So what can you do about it?
Well, you could come with an alternative to the annual budget cycle (here's a previous rant on that). Something less radical, but just as hard: set aside 5 percent of the budget for unbudgeted ideas -- and develop a process to ensure the money gets used and is not cut the first time financials start to look a little iffy. (That should handle part of the time issue, too.)
As far as time and culture -- if you're a CEO you have tremendous power to affect your organization's culture. Start now as it will take time – years – for a change to take hold. Other staff people can still have major effects on culture, though without support from the CEO, you may be pushing boulders uphill. To steal from Jim Collins and use what has become a cliché, I think it comes down to having the right people on the bus. Set up structures and procedures that force future thinking, and use the hire-and-fire authority to get the right people thinking for you.
And then there's the volunteers. Sometimes it's the board or members whose collective inertia are the real culprits. CEOs have to convince them that the best interests of the organization (and industry/profession/interest) necessitate looking beyond what the organizations is doing and asking "what if...".
I know all of this is more easily said than done, but we have to try, don't we?
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Comments
Thanks for the link, Scott. No comments so far?! I'm surprised.
Beware of the CEO who says: I need to change this culture. Not that it doesn't need changing, but you don't usually directly change the culture--you actually change the organization, and if the new behaviors take hold, then the new culture can evolve. THe trick is figuring out the right structures, procedures, and behaviors to work on. It's the new metaphor I am working on: are you running a "patch" or are you upgrading the operating system?
Posted by: Jamie Notter | October 30, 2007 9:26 AM
Thanks Jamie -- and I like the new metaphor a lot. Seems like sometimes you do just want to patch it. Then again, it's too tempting to waste time trying to patch something when an overhaul is what's really needed, so it's easy to fool yourself into thinking maybe it's not as bad as it seems.
Posted by: Scott Briscoe | October 30, 2007 10:49 AM
I think Scott's point of alternative resources to the annual operational budget is very important. If an organization wants to encourage innovation and entrepreneurial activities, then funding sources outside the operational budget are essential.
At ASME we have created a Strategic Priorities Grant Fund (SPGF), which is funded through year-end positive variances to our operational budget. Our committee on finance can recommend to our board that up to 100% of a year's positive variance be allocated to the SPGF. We have had 3 consecutive years of positive variances and our fund now is in the $5MM USD range. We have an quarterly grant proposal and review process to consider and support proposals that advance our strategic priorities. Among the few stipulations is that the fund cannot be used to fund normal operations--it must be used for expanded or new activities tied directly to our strategic priorities.
As a result of our organizational transformation, our board adopted a policy that we should sunset 3%-5% of our programs annually, in order to redeploy those resources in support of new programming. That simply hasn't happened, for many reasons that I'll be happy to describe in a private email. So a reduction of the operational budget is something that some associations (like ours) will not be able to achieve. FWIW, this is why zero-based budgeting has never worked in volunteer organizations.
Every organization is different and rightly so, but if an organization is to do new (and important) stuff, there must be new resources. That takes creative (and entreprenurial) leadership.
Posted by: Virgil Carter | November 1, 2007 7:12 PM