Ever heard of the boiling frog? The idea is that if you put a frog into boiling water it will jump out, but heat it up slowly and it will be boiled to death, not sensing the danger. This idea is often used as a metaphor for the fact that sometimes people don’t react to threats that materialise slowly. Could the current sector changes and increased competition be creeping up on you?
In my local area there used to be three small to medium hardware stores about 10 years ago. I was spoilt for choice and variety. The last of these just closed recently and my only option now is a single big box style hardware store. Could similar market forces be quietly happening to your organisation?
Currently, two main forces are at work in the aged care and disability marketplace. Firstly, service providers are getting more ruthless in the way they’re doing business (and there’s more of them) and slicker at marketing. Secondly, the customer mindset has changed, with customers now more empowered and expectant than before.
But how do you know you’re really prepared for the increased competition? What warning signs might there be that you’re just not sensing? What should you look for? You may have put some solid plans in place, but it might not be enough. It’s a question of degree.
By stepping back and assessing your current position and your strategy, we outline the things that you should be looking for. If they’re not there, you may need to adjust your transition plan. Addressing the four common problems below will help enhance the transformation of your organisation – and stop you from being like the frog that doesn’t sense the danger until it’s too late.
1. Your board is not equipped with the right skills
Your board needs to ensure the financial viability of your organisation. This allows the organisation to achieve its outcomes. Many for-purpose organisations may have a treasurer, but this doesn’t change the responsibility all directors have to make sure the organisation makes effective use of its (often limited) resources and that the organisation continues to remain solvent. Directors are required to read and interpret financial information to monitor the financial health or position of the organisation and monitor operational performance.
Therefore, it’s critical that directors grasp the nuances of the sector around CDC and NDIS, so it becomes easier for them to understand the significance of the financial information at the board table. Similarly, there’s a big shift towards digital marketing that’s been going on for some time. Many directors may be unfamiliar with social media and digital marketing capability, coming from a more “old school” background.
Tell-tale sign: Does your board actually have the right skill composition, especially around marketing and finance? Do you have too many specialists that either can’t see the big picture or join the dots?
2. Your business model isn’t well developed
A business model typically defines the problem you’re solving for your customer. It sets out the financial models to solve that problem in a sustainable way. Your business model needs to change to keep up with, and address, the shifts in the marketplace. Your business model will particularly need to be robust around financial management and integration of your business processes. New ways of working will probably look unattractive to your internal teams initially, but you need to be committed to change.
Tell-tale signs: Do you know who your ideal customer is? Do you have a good understanding of your profit formula and its drivers? Are your key resources in place and are your business processes well established and integrated?
3. You don’t understand/know your point of difference
The for-purpose sector has historically catered to the masses, to help as many people as possible. But in this changing marketplace, you need to focus on your point of difference, particularly around customer intimacy. Following the leader means you won’t stand out, even if you’re very good at what you do. This is because everyone is playing the same game and it’s more of the same from the customer perspective. While being different means some people won’t like you, be bold and dare to be different. And remember, your marketing should cater to your ideal customer.
Tell-tale signs: Do you have a clear niche you’re focusing on? How can you be different to the leader in your sector? Could you set up a new business unit to compete with yourself by using a differentiation model?
4. Your team isn’t embracing the new environment
Addressing the three problems above isn’t enough if your team doesn’t embrace the changes. While change is difficult for most people, change is necessary to survive in the current market. Be aware of how much change your team can handle, but also implement strategies to help them get on board. And be flexible – your new world may not be fully envisioned, and it’s okay to make changes as your new business model unfolds.
Remember, it’s your people who create value for your customer, and this value needs to be integrated with your processes. Your people are your most important asset in most respects.
Tell-tale signs: If you’re trying to be all things to all potential customers, how can you possibly integrate your people and processes to do all of them well?
Where to next?
The social sector marketplace has, and still is, changing. You need to be aware of the changes and continually adjust and revise your business model as the market unfolds. Focus on learning and adjusting as well as executing. Don’t have a fixed mindset, and allow for prototyping and mistakes.
If you’re showing any of the tell-tale signs above, take action now. If you have the right board, the right business model, are clearly different, and your people and processes are well integrated, you won’t be caught out when the water reaches boiling point!