Organizations that want to be effective for very long must understand their context – their context within the communities in which they operate, their context within the larger society, and their context within the industry or industries in which they compete. They need to understand where they fit and how what they are doing relates to what others around them are doing.
They also need to have their antennae out and constantly be alert to changes in their external environment. They need to be aware of what’s happening “out there” – changes in the economy, demographics, technology, the competitive landscape, the legislative and regulatory environment, etc. – that could affect what they do or how they do it – that could create a new opportunity or pose a threat.
Organizations that fail to understand their context or the changes taking place in their external environment run a serious risk of becoming irrelevant or extinct. This happens far too frequently – especially among smaller organizations in which the chief executive is too preoccupied with day-to-day operations to pay enough attention to what is going on outside the organization.
The more an organization is removed from day-to-day market forces, the greater the danger it will develop 20/20 tunnel vision and eventually be blindsided. People in leadership positions in some not-for-profits can also be so focused on and passionate about what they are doing that, even if they are aware of external threats, tend to ignore them and just hope they’ll go away. Organizations that allow themselves to engage in such wishful thinking may have a short life.
Of course, once you’re aware of changes that might affect your organization, you have to decide how to respond. During my career we have had to adapt to an incredible number and variety of changes in the world in which we operate. Some of the changes we’ve made have been incremental; others have been more revolutionary. Some have involved launching new initiatives; others have involved shutting down operations or services.
We put a lot of emphasis on continuous improvement and innovation. If you look at what we are doing this year compared with last year, you might not see a lot of change. But look back five or ten years, and you might wonder if it’s the same organization.
Occasionally, someone will ask me what I’m most proud of in my work with Goodwill. The answer is not any particular initiative or development. What I’m most pleased with is how far we’ve come over time. We’ve grown, to be sure. But the level at which the organization functions is orders of magnitude higher than it was 30 or 40 years ago. Our challenge is to continue raising that level, increasing the organization’s impact, and making better use of all of our resources. And that will continue to involve frequent incremental improvements, occasional major innovations, and constant adaptation as the world in which we operate continues to change.