Embrace digital and data.

Australia’s NFP sector is facing unprecedented change, with multiple sources disrupting organisational strategy and performance.

Government divestment of service delivery, such as the National Disability Insurance Scheme (NDIS), the rise of social enterprises, greater competition from for-profit entrants, technology and the emergence of hybrid financing instruments, such as social-impact bonds and impact investing, are driving major changes. An already complex and highly competitive sector is becoming even more complex and uncertain, placing greater demands and expectations on organisation leaders.

To succeed in such a volatile environment, NFP organisations need dynamic leaders who have the courage, resilience and capability to address these challenges. They must be able to create new organisational capabilities, lead innovation and rewrite the rules. Leadership teams need greater diversity of experience as well as new skills and capabilities.

Both leaders and their organisations need to maintain balance of purpose along with financial, customer and operational considerations. A greater appetite for accepting risk will also be needed to help “future-proof” their organisations.

How can your organisation address this leadership challenge? Here are some positive steps…

Foster greater inclusion

Organisations need leaders, teams and advisors who can address complex operational and social challenges. Greater levels of accountability are needed, as well as collaboration and innovation, to achieve better organisational performance. Greater inclusion is needed to build team diversity in terms of demographics, skills, experience and professionalism. This diversity of thought can be harnessed to tackle Australia’s most complex social challenges. Supporting strategies include adopting inclusive leadership practices, changing HR tactics, such as recruitment, and revamping governance and decision-making processes to incorporate greater diversity.

Encourage lifelong learning and nurture curiosity

Work, our workplaces and our workers are also undergoing significant change, so it is critical for NFP leaders to continually challenge existing working methods in their organisations. This entails nurturing a perpetual sense of curiosity, creating a personal and collective desire for lifelong learning, and developing a continuous learning environment that shares knowledge across the organisation, as well as the industry and between industries. NFP leaders should be ready to learn from other sectors, such as start-ups, technology firms and the social-enterprise sector.

Build strategic business perspective

In an environment of constant change, it is important for leaders to continue to develop and maintain a future-focussed strategic perspective for their organisation and their industry, as well as be cognisant of market trends. NFP leaders need to devote time to understanding market trends, exploring issues, understanding customers with their changing needs, as well as researching governmental and other macro trends. A deeper understanding of these elements will enable leaders to identify and predict strategic opportunities and threats, and plan how best to respond to them.

Align your culture with your strategy

American educator Peter Drucker famously said “culture eats strategy for breakfast”. In the face of increasing disruption, NFP leaders need to continually adjust organisational strategy to ensure direction is not compromised. Equally, the behaviours needed to execute strategy, embedded in the organisation’s culture, also need tweaking to ensure efficiency and effectiveness. If key attributes of culture, such as KPIs, role modelling and customer service behaviours, are not aligned with changes in strategy, the prevailing “cultural settings” are likely to delay or even prevent effective/efficient strategy execution.

Embrace digital and data

Digital technology, such as robotics, artificial intelligence and mobility, is rapidly transforming organisations and redefining markets (witness the rise of platform businesses like HireUp and Uber). To thrive in this rapidly changing context, it is important NFP leaders have a greater understanding of digital matters. Digital insights can make sense of the world and improve decision-making. Organisations should consider hiring people who are digital savvy, as well as ensuring digital content and data interpretation are part of the ongoing development of their leaders.

Liberate your intraprenuers to drive growth

As change accelerates, NFPs increasingly need to liberate their leaders to experiment, innovate and embrace failure. Organisations should create an environment in which employees are encouraged to pursue innovation that addresses business and societal challenges. It is time to identify and liberate an organisation’s “intraprenuers” (internal entrepreneurs) to generate new ideas – disruption from within. Such initiatives will support NFP organisations as they aim to reduce their reliance on government funding and diversify their revenue streams.

Investing in the development of your leadership team, and in the right leadership behaviours, is the best way to “future-proof” your organisation so it will become more resilient and more capable of handling sector disruption. Most importantly, your organisation will continue to make a major difference in the lives of the people it supports.

NFP leaders with the skills, capabilities and confidence to navigate the uncertainty in today’s environment will be in a better position to provide strong leadership so an organisation continues to deliver social impact.

Tharani Jegatheeswaran, Partner, and Phillip Mottram, Principal, Social Impact Consulting, Deloitte Australia.

This article originally appeared in the March print edition of Third Sector magazine.