A broad strategy for digital transformation of the charity sector using six questions
Where are we now and why can’t we stay here?
Behind the curve
The charity sector’s use of digital is far behind the curve of society.
The blue line represents the diffusion of innovation (Everett, 1962) across society. To the far left are the early adopters of new technologies, with the majority of people in the middle, and the laggards to the right where the blue line meets the black zero line. This includes the adoption of all kinds of innovation, but mostly those we refer to as ‘digital’, from using Uber to watching Netflix to buying the latest iPhone. All of these innovations go through this adoption curve.
The green line represents the charity sector’s adoption of ‘digital’. It follows the same curve as the blue line and shows how some charities are early adopters and some are laggards. If we wanted an example we could look at charity sector websites using responsive design. When responsive design first became a possibility businesses with customers that were beginning to adopt multi- device behaviors would have been the first to redesign their websites so that it could be viewed on any device. Some time later the first few charity sector organisations would have redesigned their websites to be responsive, then more until the majority were responsive, and to today where the laggards are still yet to make their websites responsive to different devices.
The orange area represents the people in society that are adopting the innovation at the same time the charity sector is using it. The further behind the curve of society that the charity sector is, the fewer people there are to engage with.
The white area within the green line represents the total lost opportunity from the charity sector using that innovation.
A risk-averse approach of waiting for a dominant design to emerge (Utterback and Abernathy, 1975) and be adopted by the majority before using the innovation reduces the overall number of people that can be engaged with.
Given the increasing pace (McGrath, 2019) at which new innovations are introduced it’s likely that the charity sector will fall further behind over time.
Where do we want to get to and why is it the right place to go?
Keeping pace with change
The charity sector needs to get to the position where it can keep pace with the rate of innovation adoption in society.
The orange area shows the increased number of people (compared to the diagram above) available for the charity sector to engage with through newly adopted innovations if the charity sector is closer to the adoption curve of society.
The adoption curve shows that not every organisation in the charity sector has to adopt new innovations at the same time. Individual organisations can make reasoned decisions about if and when to adopt a particular digital technology or practice as long as the sector as a whole has some early adopters exploring the new innovations shortly after wider society begins to.
If we accept the assumption that the charity sector serves the needs of society through connecting people, essentially acting as a resource distribution mechanism, then the more people that can be engaged to provide resources (money, time, skills, etc.) and the more people that can be engaged to utilise those resources to improve their lives, the better our society becomes. Keeping pace with change in society enables the charity sector to better serve society.
How are we going to get there and why is this the right way to do it?
From investing in capital to investing in knowledge
Capital investment and return involves large upfront investment with diminishing returns over time. Knowledge investment requires ongoing investment with increasing returns over time.
The red line shows investment and return in capital resources such as buildings and purchased technologies which require considerable upfront spend with diminishing returns over time. The pink line shows the investment and returns for investment in knowledge, including regular formal training and informal upskilling which require more constant (and probably increasing) investment with increasing returns as the knowledge is applied. For illustrative purposes, both the investment and return are shown as single lines.
As has been demonstrated (Goldin and Katz, 1998) technology adoption (in an organisation and a sector) usually results in the distribution of ‘number of people’ and ‘level of digital skill’ shifting from more people with lower skill levels to fewer people with higher levels of skills.
Knowledge can only be held within people, hence an investment in knowledge is an investment in people. Some tacit knowledge can be codified as transmissible information to pass onto others. People with more knowledge about digital innovation are better able to respond to changes and ensure the sector keeps pace with society.
From being tied to technology to using loosely coupled products
Being constrained to enterprise technologies offered by well-established companies because of the presumed reliability they provide will shift as confidence in the security, reliability, usability, speed of deployment and interconnectivity of new consumer-focused products grows.
Charity sector organisations have often struggled to make technology choices that allow them to use new innovations in microservices architecture, jamstack principles and no-code products. As an example, the dream of having one large CRM to enable better data-driven fundraising only works if data quality is a reality. The shift away from ‘one big system’ could allow fundraising teams to adopt their own lightweight CRM products knowing that when a better product is launched next year there will be an API that can pass data between them and enable the fundraising team to quickly adopt a new product. As a new breed of products begins to appear that are designed to allow organisations to cross the boundaries into the digital spaces of people outside the organisation, charity sector organisations will expand their thinking about how they use technology products.
Charity sector organisations will become more comfortable with the low commitment ‘sign-up quickly and throwaway when a replacement comes along’ approach to using technology products just as consumers across society are.
From delivering projects, products and services to developing business models
From optimised-for-production pipelines of projects, products and services charity sector organisations will move to developing optimised-for-consumption platform business models that facilitate self-reinforcing value exchanges.
These platform business models will be part of open innovation ecosystems that share resources and make the boundaries of organisations more permeable in the pursuit of keeping pace with the innovation adoption in society.
References
Everett, M. R. (1962) Diffusion of Innovation. The Free Press. A Division of Macmillan Publishing Co., Inc. 866 Third Avenue, New York.
Goldin, C. & Katz, L. (1995) The Decline of Non-Competing Groups: Changes in the Premium to Education, 1890 to 1940. NBER, Cambridge, Massachusetts.
Utterback J. M. & Abernathy W. J. (1975) A dynamic Model of Process and Product Innovation. The Journal of Management Science.
McGrath, R. G. (2013 UPDATED 2019) The Pace of Technology Adoption is Speeding Up. Harvard Business Review.