Note for corporate challenges: This blog and number of other blogs on 20/20 foresight and other topics are applicable to both corporations and non-profit organizations. The examples that follow relate to non-profit organizations, but I am happy to work with corporate boards.
A number of blog entries will reflect an overriding theme in my approach to non-profit organizations that I call 20/20 foresight. 20/20 foresight focuses on keeping accountability and decision-making more generally forward thinking and voluntarily at the forefront of best practice (above and beyond legal requirements). The key question in decision-making for both the Board and management team of a non-profit organization is: what do organizations want to be able to say in the future that they implemented today in terms of voluntary policy and practice, above and beyond regulatory requirements, (i) to maximize positive business developments and (ii) to address any difficult future scenarios? Difficult scenarios might include a crisis in accountability, a sudden decrease in revenue, a financial or other crisis in the external environment, programmatic failure, a change in the regulatory environment, or other unexpected issue.
Basic elements of 20/20 foresight:
- applies to almost every aspect of management and governance, including accountability and board oversight matters, strategic planning, international structuring, management structuring and evaluation, organizational culture, and one-off issues such as a merger
- allows organizations and management in difficulty to point to policies and practices pre-emptively implemented to demonstrate the highest standards of accountability, governance, and ethics (see below)
- is both a positive and a defensive approach
- applies to both internal and external issues
- does not preclude taking past experience into account
- raises the bar from anticipating crisis to managing constant present and future uncertainty
- applies equally to corporations and non-profit organizations
The following are three specific strategies.
- Pre-emptive crisis management: Establishing and regularly reviewing policies and practices today provides a foundation for tomorrow. Establish first in class policies and practices today to ensure a solid basis for defending organizational excellence and integrity in the future should internal or external challenges arise. Think forward to what would be useful should a problem arise so that you can look backward to these policies and practices for support at such a time. These might include standard policies such as conflicts of interest, human resources, e-mail and confidentiality policies. However, they might also include a custom-designed approach to risk mapping and risk management specifically targeting your organization’s sensitive areas or more custom-designed governance mechanisms.
- Example 1: Donor Funds. One recent international example involves how NGOs ethically and proactively manage donor funds from humanitarian crisis campaigns. For example, the 2010 Haiti earthquake and the 2004 tsunami proved very different in terms of donor needs from the 2011 Japan earthquake. Each took many NGOs by surprise, some declining restricted funds given the uncertainty of the need, others taking restricted funds with the risk that they would need to be derestricted, and in the case of Japan some taking funds in support of Japan without determining there was truly a need for the funds (with the risk of misusing restricted funds and/or misleading donors).
- Example 2: Corruption. How will your organization handle threats of corruption, ranging from situations involving human health or life (e.g. bribing to get drugs delivered) to material situations (e.g. bribing to get computers delivered)? NGOs should develop policies for these situations.
- 20/20 foresight drives effective decision-making: Test today’s decisions against tomorrow’s potential challenges. In general, decisions should never be taken relying on past experience and present context alone. Rather, the decision takers should always project themselves into the future – sometimes into several “what if” scenarios – to test the wisdom of the decision should various scenarios arise in the future.
- Example 1: Transparency. How would a decision about transparency look should a crisis of accountability such as fraud by an employee occur? or a sector-wide concern such as a reduction in government funding for non-profit organizations (e.g. the reduction of government grants arts organizations in the UK in 2011 or uncertainty in the healthcare environment in the US or with the NHS in the UK)? or in anticipation of international expansion or a plan boost revenues from major donors?
- Example 2: Financial structure. Structuring the financing of a school as a for-profit institution involves myriad potential future issues: public relations issues linking profit to education, future impact of fund-raising capacity if donors perceive that a for-profit institution should not fund-raise, expectations of a return on investment, potential issues around faculty and staff salaries and conflicts of interest, and the ethical questions of investors’ voice in the policy and operations of the school.
- Two suggested exercises:
- Test current decisions and policies against crises in other organizations appearing in the news and/or the hypothetical worsening of external challenges. Examples on the negative side might include a news report about an organization mishandling donor funds (e.g. the Greg Mortenson Three Cups of Tea scandal) or testing potential changes in tax policy reducing donor benefits against your revenue base (e.g. President Obama’s threatened change to charitable deductions upon taking office or recent discussion of capping deductions for charitable giving in the US for donors above certain income thresholds). On the positive side, challenge your organization to meet the achievements of others in addition to your own stated strategic goals. In other words, envision the future through rigorous testing against hypothetical scenarios. I recommend selecting both scenarios within your policy and strategic objectives and a sampling of scenarios that are unlikely just to test the adaptability to changing conditions. As one leader noted, non-profit organizations always expect everything except what actually happens.
- Imagine the story about your organization in the press. What would you want the media to say in the future about today’s decisions – whether relating to positive developments such as achieving your strategic objectives or challenges tomorrow? Look backward at the decision from a future mediatized perspective rather than looking only forward from a present and historical internal perspective.
- 20/20 foresight today establishes a foundation for credibly relying on 20/20 hindsight tomorrow. While no individual or organization can guarantee that failures of accountability or other difficulties will not arise, or that they will not face isolated incidents of intentional wrong-doing, the 20/20 foresight “proactive implementation” approach decreases the likelihood and seriousness of accountability crises. In addition, 20/20 foresight mitigates reputational and other damage. It allows organizations to state credibly that all reasonable steps were taken as a matter of first in class accountability, governance, ethics, and risk management. Organizations facing an unexpected challenge or crisis in accountability can then isolate the issue and potentially the related media attention. The person committing the wrong-doing becomes the focus of the attention rather than organization, the management team, or the Board.
I will consider in upcoming blogs a range of additional 20/20 foresight strategies. Virtually all will integrate the notion of managing uncertainty.
Copyright 2011 Susan Liautaud. All rights reserved
 The expectation is that the organization will be complying in full with the legal requirements, so whilst compliance is part of 20/20 foresight it is not the point of this blog.