In this article, Bill Petch, ex-CEO of the Leukaemia Foundation Australia, describes how disruptive innovation can help the for-purpose sector remain relevant, sharing his own case study for success.
The last 12 months challenged many organisations regardless of their size or success. The pandemic quickly became more than a health crisis, it became a crisis of sustainability. Nowhere was this more apparent than in the for-purpose sector. Much has already been written about how to help the sector, from funding and intervention to sector reform. If history has shown us anything, responses by government, business, and philanthropists are rarely uniform or consistent and takes time. What is most concerning is that globally trust in all institutions including the for-purpose sector is at an all-time low and Covid has highlighted the vulnerabilities of many operating models. This means the community now does not trust organisations to readily solve social issues and are willing to look beyond the traditional with their money and loyalty. Now more than ever the sector is ripe for disruption.
Disruption happens when needs are unmet
What Covid revealed is no one should think they are immune, and that disruption can occur anytime and anywhere. By definition, disruption happens when needs are unmet, and value occurs when innovative solutions are found to meet them. So, if for-purpose organisations only exist to fulfil the needs of and create value for their stakeholders; why then is disruption accelerating and trust declining? Where is the disconnect? The answer can be found in three key attributes: an organisation’s ability to remain relevant, resilient, and future-ready. These three are inextricably linked - you cannot succeed in one without the other.
The Leukaemia Foundation’s World’s Greatest Shave fundraising event.
Stakeholder needs are not static
Previous relevance and success are not reliable indicators of future relevance and impact. Stakeholder needs change. Organisations cannot focus on what they do at the expense of how or why they do it. They cannot focus on fundraising as an end rather than a means to their end.
The real challenge is how do you sustain the organisation and reframe the problem at the same time? It means thinking differently about how you approach the mission. At the heart of your mission is your stakeholders. Being truly stakeholder-centric is critical, but that is easier said than done. It doesn’t mean surveying them to rate what you already do and probably do well. It also means discovering what needs you are not meeting. Because this is where your untapped value lies.
How do you find untapped value?
You must have your strategy, structure, culture, and governance properly aligned. Strategy focus then is on addressing need across the spectrum of incremental, evolutionary, and transformational innovation. Creating an innovation roadmap for each will ensure you improve on your core offering while developing future offerings that are relevant. This ensures you will have ongoing resilience and rather than be vulnerable to change you will be the driver of change.
This will require you to think differently about structure and governance. Structure must follow strategy and be stakeholder-centric. Innovation becomes the driver of value and as such should also be properly recognised within organisational and governance structures. The single biggest risk to this model and the impact of the sector in the future is better governance.
Being stakeholder-centric builds sustainability
Overall this methodology will build sustainability because you will remain relevant to stakeholders. If you are relevant to stakeholders and creating value for them then you will be relevant to funders because you are creating impact. If you are creating impact you will build greater trust. This is a virtuous cycle and can happen within existing policy, funding, and structural constraints. It can ensure your organisation is future ready and disruption ready.
You’re probably saying this sounds great in theory but in practice, there are so many roadblocks, be that a conservative board, a lack of strategic thinkers on the executive, a federated structure that is hard to get alignment on new or innovative projects, the list goes on; so let me share an example.
A few years ago I took over as CEO of a large patient organisation. Their single biggest concern at the time was their reliance on event fundraising. They were worried about long-term sustainability as they did not get direct government funding and they were seeing a slow and steady decline in income, and therefore in service delivery and research.
It wasn’t about fundraising, it was about relevancy
Unpacking the organisation it quickly became apparent they didn’t have a fundraising challenge they had a relevancy challenge. They were highly transactional in their approach to mission, they had not changed approach to mission fulfilment in many years because they were always told they were doing good work and their event income until recently had been strong so they had been able to spend freely without deeper consideration to impact.
The important circuit breaker here was the stakeholder discovery research that we undertook, to try and better understand stakeholder engagement and loyalty and where value could be created.
During the research, hundreds of underserved and unmet needs were identified. This demonstrated to the board, the executive, and staff that the organisation was not fulfilling its mission as they had thought and they were at risk of disruption. We developed a new strategy, one that enhanced the organisation's core competencies as they were well known for particular services but at the same time looked to re-frame their view and create new value.
This new value would come from innovative opportunities identified in the unmet needs. This broadened the organisation’s relevance and engagement with stakeholders. An ambitious stretch goal was developed (zero lives lost) which served to galvanize stakeholders because it was more than a marketing campaign: it was a campaign for system reform.
To achieve this, firstly the organisation had to restructure and move from a federated model to a stakeholder-centric model. This alone saved over $1.5 million in the first year and also led to the repurposing of over $2 million, this was a significant result on its own, however more was to come. The organisation improved its core offerings and developed some incredibly innovative projects like a shared value accommodation model. It also developed an Australian first genomic clinical trial and a trial access program.
Stakeholders did not just want the organisation to help them directly, but to advocate for them. We developed the first state of the nation report which identified for the first time the true scale and scope of the disease; the first national task force, that created for the first time an ecosystem focused on change; and the first national action plan and road map for the next decade to improve access for patients to new diagnostics and drugs.
Understanding stakeholder needs and building value for them led to increased relevance and engagement. This led to double-digit increases in their net promoter score i.e. loyalty and trust and a $5 million increase in income and the establishment of a diversified income platform, i.e. increased resilience and sustainability.
All these achievements occurred within 2 years of the establishment of the new strategy. So, the lesson is simple. Know your stakeholder, don’t just transact with them, build a relationship to create value for them. When you do, you will be rewarded not just with loyalty and trust but with a true mission-centric impact that will transform lives.
Bill Petch was the CEO of the Leukemia Foundation Australia and continues to be a dynamic social change agent. He has led strategic transformation, social innovation, and structural change across the health care and third sector.