Navigating the Storm: Decision Making Amidst Uncertainty

JANUARY 5 / Mike Grogan

 

“At sea, things appear different.”
Nathaniel Philbrick  

One of my favorite books is, In the Heart of the Sea by Nathaniel Philbrick. It is the remarkable story of the whaleship Essex which sets sail in 1820 from Nantucket and provides an account of the journey which would become the basis for Herman Melville’s classic work of fiction, Moby Dick.

There is a passage early in the book that recounts the ship’s first challenge of the voyage that, although minor in comparison to having one’s ship sunk by an angry whale later on, has stuck with me over the years. As they sail east towards Africa, a storm forms on the horizon. Initially it appears to be just a squall and they continue full speed ahead with all sails set. As the storm nears, the captain and crew recognize that this is no minor squall. It is a severe storm that will require them to act.

Philbrick lays out the choices a captain has when a major storm approaches. In short, a ship can turn and run, or it can sail directly into to the storm. Both options come with risks. Sailing directly into the storm risks damaging the ship, perhaps to the point where the journey will be in peril. The seemingly safer choice of turning and running means giving up miles of hard-won distance gained with no guarantee that the storm still will not damage the ship. Either choice requires deliberate action and preparation to have a chance of success.

There is little doubt that the winds are blowing these days in the nonprofit sector and we are in turbulent waters. Two questions that we need to ask as we head into 2021 will help us decide whether facing the storm directly or changing direction is the wise choice: “Is it a squall on the horizon or is it a storm?” and, “How prepared is our organization to withstand the inclemency?”

What makes forecasting the strengths of the approaching storm perhaps more difficult is the weather of 2020. The nonprofit sector – and individual organizations - have battle headwinds for years, but nothing like we did in 2020. The dual forces of the pandemic and deepening recession have not only demonstrated our remarkable resiliency, they have, for many, taken a toll on our ability to operate financially and emotionally. The Christmas break, for some, was but the eye of the storm providing needed respite, however several indicators suggest that the storms of 2021 will be large with all critical funding streams under significant pressure.

  • Government funding in Alberta has provided a buffer for the sector and organizations against the financial challenges in the economy over the past few years and has been one of the few stable sources through the pandemic. While government has provided much needed funds during the pandemic, given the fiscal situation of the province, it is unlikely that this level of support will continue. A freeze at current levels for a few years would be a squall. However, reductions to all services are not unheard of, nor are they a distant possibility. While it is unrealistic to think the province can cut their way out of a $21 billion deficit, we would be wise to consider what the implications of a “fiscal reckoning” might look like.
  • Overall donation amounts have stagnated over the past decade and there has been a steady decline in the number of Canadians who donate to charities. While average donations may be rising, so too is the concentration of gifts amongst fewer and fewer charities “In short, we’ve been saying the same thing at CanadaHelps for three years in a row: the giving patterns we’re seeing are leading towards a crisis in the sector. As the demand for charities’ services increases, the donations aren’t following. We’re not seeing a turnaround.” Marina Glogovac, President & CEO of CanadaHelp. ·
  • Even the sector’s largest revenue stream, earned income, will be impacted as real GDP is not expected to return to pre-COVID levels, or even 2014 levels, until 2023. “The recovery in the labour market will lag behind. Even as the economic recovery begins to take shape, real GDP per capita, a measure of standard of living, will remain below pre-COVID levels.” GOA Fiscal Update December 2021.

Given the forecast, it is critical we be intentional about the course we set.

If we believe that the clouds on the horizon for the sector are but a continuation of the squalls of 2020 or if we believe that our organizations are sturdy enough to weather any coming storm, then the choice is straightforward. Sail on.

However, if we believe that the storms of 2021 will be larger, longer, and more powerful than we have seen for many years, or if our organization has lost capacity over the last year or two, the choices are harder. Turning from the storm and giving up hard-earned distance gained is perhaps the most difficult choice any leader can make.

The lesson from the tale of the Essex is about what happens when we fail to choose. Faced with a storm that was much bigger than originally anticipated, the captain of the Essex fails to make the choice between turning away from the storm and shortening sail and heading directly into it. Initially the ship sails head-on into the storm, but at the last minute, the captain changes his plan and tries to turn and run. By that time though, the storm is upon them and, as the ship turns, the winds catch them broadside and turn the boat on its side. The storm does not sink them but pins and holds the ship at a 90-degree angle, allowing the winds and waves to slowly tear the boat apart. The failure to choose a course leaves the ship at the mercy of the storm. When the storm abates, the ship rights itself, but it has suffered damage that will eventually prove to be fatal when the next crisis hits.

There are no guarantees as to what the weather ahead holds for the sector. At the very least it is time to have conversations, internally and externally, about what the future holds as we move into 2021 and beyond. We need to ask hard questions about our organization’s viability and sustainability. We need to honestly assess the risks we face through both our choices and our indecision.

One of the biggest challenges that confronts organizations is the sheer number of uncertainties. They encompass all aspects of the environment – economic, political, social, and technological. Crafting strategy is difficult in an uncertain environment. As both the number and significance of the unknowns increases, the length of time for strategies to be effective decreases. Given the degree and magnitude of the uncertainties facing organizations today, the value of working in longer timeframes is limited.

One method of actively engaging uncertainty is using scenario planning to begin to envision variations of what the future may hold. Scenario planning identifies some of the critical uncertainties our organization faces and helps us think through the possible impacts and our responses to them. If we are aware of what could happen, we are more able to deal with what does happen.

Scenarios are essentially stories about the future intended to help us gain insight into the forces driving change and the uncertainties shaping our future. They are not predictions of what might occur but rather a way to challenge assumptions, explore issues, and broaden understanding of the range of environments that organizations could face in the future. Please reach out at admin@integralorg.ca or our Contact Us page if you would like to talk with IntegralOrg about whether scenario planning might be a strategic fit for your organization.

The time to act will come. The time to prepare is now.  

“The future depends on what we do in the present.”
Mahatma Gandhi    

Mike Grogan is the President and CEO of IntegralOrg. Mike has worked in the nonprofit sector for over 25 years and is recognized for his ability to create effective and adaptive solutions to organizational and community issues. His skills and experience stem from a diverse background that encompasses building organizations from the ground up to developing leading-edge nonprofit collaborative, public policy, and capacity building initiatives.