Tag: strategy

The internet is here and it isn’t going away. Our society is being digitised and there is no going back. Charities need to become ‘digital’. What might a truly digital charity look like? The answer is, we don’t know yet because it hasn’t happened, but broadly I’d say that a digital charity will be able to keep pace with change in society.

Becoming a digital charity offers new modes of operating. It isn’t just digitising existing ways of working, but completely transforming the business model and how they achieve their purpose. But its all about steps in the right direction. The Charity Digital Code of Practice can help charities think about what those steps might look like.

“The Charity Digital Code of Practice is for charity professionals looking to get more strategic with digital. The Code can help you figure out the key actions that your charity needs to take to stay relevant and increase your impact, efficiency and sustainability.”

The Code of Practice has seven elements. And I have some thoughts about how charities can look at each of them from a transformation perspective to consider the underlying models that inform the current way of doing things and what might emerge as new models.

Leadership

“Digital should be part of every charity leader’s skillset to help their organisation stay relevant, achieve its vision and increase its impact.”

New digital leaders

If you google ‘digital leaders’ you’ll find all kinds particularly unhelpful articles advising leaders to ‘transform people’ and ‘inspire teams’, and all seemingly based on the idea that being a digital leader is just like being a leader but digitally. Charities need leaders who understand that digital leadership requires an entirely new approach.

“Leadership models of the last century have been products of top-down, bureaucratic paradigms. These models are eminently effective for an economy premised on physical production but are not well-suited for a more knowledge-oriented economy. Complexity science suggests a different paradigm for leadership—one that frames leadership as a complex interactive dynamic from which adaptive outcomes (e.g., learning, innovation, and adaptability) emerge.” (Uhl-Biena, Marion, & McKelvey. 2007).

Peter Drucker made made the point that leadership practices were out of date more than twenty years ago. “As we advance deeper in the knowledge economy, the basic assumptions underlining much of what is taught and practiced in the name of management are hopelessly out of date… Most of our assumptions about business, technology and organization are at least 50 years old. They have outlived their time.” (Drucker, 1998).

And slightly more recently Manville and Ober highlighted how thinking from previous centuries still permeates our leadership and management thinking. “We’re in a knowledge economy, but our managerial and governance systems are stuck in the Industrial Era. It’s time for a whole new model.” (Manville & Ober, 2003).

Emergent and interactive leadership

Leaders having more knowledge and skills about digital ways of working, practices, tools and technologies, etc., is essential for charities to evolve, but if digital is just seen as a channel (same approach to marketing but do it on Facebook) or as technology (we got a new website, why haven’t online donations gone up) then that leadership will never transform the charity.

Internet-era leadership models will undoubtedly involve moving from a command-and-control, centralised approach to a decentralised and distributed approach, or as Uhl-Biena et al (2007) propose, “leadership should be seen not only as position and authority but also as an emergent, interactive dynamic—a complex interplay from which a collective impetus for action and change emerges when heterogeneous agents interact in networks in ways that produce new patterns of behavior or new modes of operating”. This complex systems thinking approach describes ‘leadership’ as an emergent property of the interactions within the system rather than as a characteristics of individuals. A practical example of this might be distributing decision-making authority to closer to where the information to make that decision is, rather than decision-making being held within a gate-keeping role of a small number of people.

Stan McCrystal, retired General and business solutions consultant is slightly more poetic about the type of leader required to succeed in complex and interconnected environment. “The temptation to lead as a chess master, controlling each move of the organization, must give way to an approach as a gardener, enabling rather than directing. A gardening approach to leadership is anything but passive. The leader acts as an “Eyes-On, Hands-Off” enabler who creates and maintains an ecosystem in which the organization operates.” (McChrystal, 2015).

User Led

“Charities should make the needs and behaviours of beneficiaries and other stakeholders the starting point for everything they do digitally.”

A social model of user-led

To be user-led is to be strongly influenced by, in the case of charities, service-users and beneficiaries. “A user-led organisation is one where the people the organisation represents, or provides a service to, have a majority on the management committee or board, and where there is clear accountability to members and/or service users.” (Morris, 2006).

Morris roots this definition in the social model of disability (Shakespeare, 2010) that whilst considered outdated now introduced the idea that an individual impairment differs from the social construct of disability. In practical terms this was interpreted as ‘a person with an impairment is disabled by a society that doesn’t treat them fairly, they aren’t disabled by their impairment’. Although coming from the field of health and social care, the thinking broadly fits the wider charity context. A person’s need isn’t the problem, the problem is a society that puts barriers in the way of a person meeting that. Charities are a mechanism to overcome some of those barriers in society, but the charity itself can also become a barrier to people meeting their needs.

From paternalist to agentic

Where “clear accountability to members and/or service users” (Morris, 2006) doesn’t exist, an organisation cannot be said to be user-led and runs the risk of adopting a paternalistic approach to serving the needs if its beneficiaries. When a charity (and by that we mean the people who work for a charity) makes decisions it believes to be in the best interests of those it serves without involving them in those decisions it is expressing an attitude of superiority that reduces the agency and liberty of it’s beneficiaries (Dworkin, 2017). It is saying in effect that it knows what service-users need better then the service-users themselves.

Paternalism is a complex and multifaceted philosophical and ethical problem which we aren’t able to go into deeply here, but it is clear that paternalism perpetuates inequality (Schroeder, 2017). And if we agree that part of the role of all charities, regardless of cause, is to contribute towards a fairer society, then they must challenge the paternalist thinking, attitudes and practices that prevent charities from becoming user-led organisations.

Charities bring genuine expertise to bear on the issues that they tackle, and expertise holds a certain legitimate power which increases trust and voluntary cooperation. It is this that gives charities a unique and powerful place in the civic space, but that power should be balanced by transparency and be subject to public scrutiny in order to ensure beneficiaries

What’s digital about all of this? Nothing, if you think digital is about websites and social media, but everything when you understand that digital is about reinventing the ways we think about things in the 21st century to replace outdated modes and models. Charities will need to become more user-led as they become more digital.

Culture

“Charities’ values, behaviours and ways of working should create the right environment for digital success.”

The amalgamation of the values

Wherever people get together, culture develops. Seth Godin describes culture as “People like us do things like this“. Organisational culture is what we call the amalgamation of the values, assumptions, and most importantly, behaviour in the workplace. It gives those who experience it a sense of inclusion and belonging.

Flamholtz and Randle (2011) talk about an organisational culture being either strong or weak, where a “strong culture is one that people clearly understand and can articulate” and a “weak culture is one that employees have difficulty defining, understanding, or explaining.” They equate their definition of a strong culture with alignment to organisational values that results in cohesiveness between teams and departments, higher motivation and loyalty, greater coordination and control, and various other things that are of benefit to the organisation.

But we should question whether that idea of a strong culture is rooted in the concept of an organisation as a hierarchy with command-and-control (as above in the leadership section), and that if a charity, as it becomes more digital, moves towards a decentralised and distributed model perhaps the need for a ‘strong’ organisational culture as Flamholtz and Randle define it becomes a hindrance to flexibility and adaptability. Kotter and Heskett (2008) describe ‘adaptive cultures’ as those which can take risks and absorb change more easily than unadaptive cultures, and that this is a route to organisational effectiveness.

A network of subcultures and microcultures

Schein (2013) says “With the changes in technological complexity, the leadership task has changed. Leadership in a networked organization is a fundamentally different thing from leadership in a traditional hierarchy”, and talks about culture being made up from lots of subcultures and microcultures. All of these different smaller cultures within an organisation interact in a network of people connecting with those that they find commonalities with, and then those groups connect with other groups with shared values. It is this bottom-up approach to culture emerging more organically than when defined by a top-down hierarchical approach that Schein describes.

The network of subcultures and microcultures that form within the organisation benefit from the strength of weak ties. Granovetter (1973) describes weak ties as being bridges which allow us to disseminate and get access to information that we might not otherwise have access to. As information flows through networks far more quickly than in hierarchies, and as networks can act as ‘load-balancers‘ to distribute information via other routes if one becomes blocked, a network model serves the culture of a digital charity by facilitating faster decision-making, communicating valued behaviours, and .

So, culture is an important aspect for digital charities, but what we mean by culture in a digital age can’t just be imported from a non-digital mode of thinking. Culture needs to be rethought and redesigned for the internet-era.

Strategy

“Charities’ strategies should be ambitious about how they use digital to achieve their vision and mission. This could mean investing money, but it definitely means thinking creatively about how digital can increase impact, reach and sustainability.”

Digital takes strategy up a level

Whatever digital does in supporting in the creation and implementation of a strategy to achieve the vision and mission of a charity, digital will have to take strategy up a level to become about redefining the business model of digital charities to ensure their continued existence and ability to operate effectively in the internet-era. Digital thinking changes the nature of strategy, it turns the concept of using past patterns to create future plans (Mintzberg, 1988) on its head, it forces an embracing of the uncertainties of modern times, and changes how to approach dealing with constant fact-paced change.

In order to respond to this increasing uncertainty and speed of change charities will need to develop new business models and new ways of working that can not only respond to change but leverage it for their advantage.

From pipelines to platforms

First, the business models of digital charities. Business models can be thought of as the missing link between strategy and business processes and describe “how a business works, the logic that creates its value” (Osterwalder & Pigneur, 2002). The important part of the phrase is “creates its value”. That’s what every organisation on the planet aims to do, it’s why people forms into groups, its all to create value that otherwise would not have existed. Charities are the same, they are all about creating value for the people they engage with and society as a whole. The business models that create the most value in the internet-era will be platform-based.

All of the current non-digital business models that charities use are pipeline-based. Fundraising brings the money into one end of the pipeline, it is used to enable some kind of processing, for example paying the people at the charity to deliver a service, and then out the other end of the pipe come the outputs, in this case people using the charity’s services and getting value from it.

In its simplest terms a platform business model enables all of those on the platform to both contribute and benefit. It’s easy to think of a platform as technology based because that’s what we’ve come to know from using the likes of Facebook where we contribute by post our stuff and we benefit by seeing other people’s stuff, but the concept of platforms as a business model isn’t limited to technology. Lots of the concepts that we use in platforms, ideas like network effects and feedback loops, we wouldn’t have learned without internet technologies (Choudary, 2013) but it’s important to be able to abstract the concepts away from the tech. A platform creates value for both contributors and consumers through connecting their contributions and consumption’s.

From mono-structure services to service components

Having a platform business model requires a service-orientated business architecture (This is the business processes part that Osterwalder mentioned above). And this relies on another digital mindset shift, away from building a mono-structure provision/offering/service that has all of the elements it needs contained within it but only usable by that service, to creating smaller independent interconnected components of services (Watts, 2017) that can be connected to create a new offering and also reused in other services. This service-oriented approach to business architecture means that once a means of handling appointments, for example, has been built, any other provision needing to allow people to book appointments can use the component. In the mono-structure approach every service offering would have its own means of booking appointments which makes their interoperability almost impossible. As the charity build and connects more of these capabilities their platform business model grows.

From long term planning to rapid iteration cycles

Where digital has caused charities to shift their business model towards platforms and their business processes and architecture towards component capabilities, it will also require that charities change their approach to planning and delivery (the part that most people call strategy). The traditional approach to strategic planning is for senior managers to engage in creating five year plans (often justified because it takes that long for an organisation to change isn’t direction even slightly) and then the rest of the organisation to work on implementing it.

Digital moves charities away from long term strategies towards rapid cycles of planning, implementing, and receiving feedback to guide the next cycle. The goal can be the same but how you get there is very different. The world changes far too quickly to expect a strategy that makes sense now to still be effective in years to come, so charities need to establish these ways of working that enable them to create things in small chunks that deliver value quickly, receive feedback, and iterate on what they’ve learned about the users needs.

So we’ve looked at how digital will cause three shifts in how charities approach strategy; from pipelines to platforms, from mono-structure services to service components, and from long term planning to rapid iteration cycles. I could go on, but that’s probably enough for now.

Skills

“Charities should aim for digital skills to be represented at all levels of the organisation. Digital success is dependent on the confidence, motivation and attitude of the people who run, work and volunteer for charities. Technical skills are important, but equally so are softer skills such as influencing, questioning and creativity.”

The trend of fewer people with higher skills

There is a recognised trend in how technology adoption leads to a demand for higher skilled workers and so higher wages (Goldin and Katz 1995). As charities adopt more digital technologies the types of skills required will shift towards more technological proficiency and it is essential that skill development keeps pace with technology adoption to prevent charities from falling into the trap of having technologies that are not used to their fullest potential.

As the Code of Practice points out, the skills needed by those working in digital charities are not only technical, there are also a wide range of communication and collaboration, interpersonal and decision-making, critical and creative thinking skills among many others. Charities find it challenging to recruit people with specialist skill sets (NCVO, 2019) and it seems likely they will find it increasingly so. This, along with many other factors make it likely that as the charity sector becomes more digital it will have a smaller workforce of highly skilled generalists.

Investing in knowledge over investing in capital.

As charities become increasingly digital and more a part of the knowledge economy they will have to make very different investment decisions to their non-digital counterparts. Instead of large investments in buildings they will be investing more in developing the knowledge, skills and abilities of their workforce in order to achieve their missions in increasingly digital ways. This will require a shift (yes, another one) in thinking for the finance function in charities as the large initial outlays with diminishing returns over time are replaced with ongoing outlays with increasing returns over time.

Charity knowledge workers, whatever their role, will have two jobs: learn, and integrate that learning into the organisation. And charities will have to recognise that the learning has to be part of how a person spends their time at work and that the expectation of people developing their skills in their own time increases inequality and reduces the opportunities for people with children and caring responsibilities to succeed in their role and progress their career.

Team as the unit of delivery

Digital charities will realise the benefits of problem-focused multi-disciplinary teams rather than functional departments for their ability to adapt quickly and tackle new problems. The acceptance that no problem a charity faces can be dealt with by the marketing team or the HR team, for example, will encourage the adoption of ‘the team as the unit of delivery’ (Arnold, 2012), and this will allow for a greater diversity in how skills are spread across a team. The question of whether a person has the requisite skills will be replaced by whether the team has the skills. This focus on the team will also encourage replacing measuring individual performance with team performance (Meyer, 1994).

Managing Risks & Ethics

“Charities need to determine and manage any risks involved in digital. Charities will also need to consider how some digital issues fit with organisational values. They will need to plan how digital may impact all areas of their work.”

Recognising the risks from bad actors

Digital changes the nature of the risks charities face and how they respond to them. Gone are the days of thinking as risks as some quantifiable with a severity by likelihood score. Risks in the digital age are unpredictable, change quickly, and can have vastly out-scaled consequences. So before a charity manage any risks involved in digital, it first need to change its relationship with risk.

Pre-digital awareness of risk is mostly centred around acts and omissions made by the charity. Risk management becomes far more complex as charities become more digital and requires an outward looking approach with an increased awareness of the far greater risks posed by external bad actors. They will appreciate that their services are open to misuse and will adopt red teaming practices to uncover these risks and mitigate against them.

Ethical framework for making decisions

Doing good doesn’t automatically correlate with being good. Ethics has to be worked at. As digital creates a greater need for transparency charities need to develop an ethical framework for making decisions. An ethical framework is not a code or conduct, it doesn’t provide answers but it can facilitate discussion and help charities agree the lines they will not cross. Whether lines those are around introducing automated decision-making technology or agreeing a contract with a corporate partner, having a framework that allows for or even requires an ethical discussion will be essential for digital charities. An organisation cannot have ethics. It can have an ethical framework that helps the people in that organisation express and discuss their ethics but ethics can only be held within a person.

Ethics are complicated. There are no easy answers. Charities can choose to adopt more ethical approaches (Ainsworth, 2018) (by which I mean making ethical considerations an active part of their decision-making, not to suggest that charities knowingly make decision the average person might consider unethical) , they can sign up for voluntary codes of ethics, but as we have seen from from data protection over the last few years, its legislation and the threat of fines that motivates change.

Adaptability

“Charities will need to adapt to survive and thrive as digital changes how everyone lives and works.”

Adaptability seems like a curious thing to be on the code, but also an essential thing. Charities will have to be adaptable in order to adopt more digital, and as a digital charity they’ll have to adapt even more as they attempt to keep pace with the changes in society.

For the purposes of this discussion I’m going to equate adaptability with innovativeness. Our dominant model for innovation includes ideas about disruption, first-mover advantage, and winner-take-all business models that aim to monopolise a market. These come from the the thinking of an economist called Schumpeter, who in the nineteen thirties coined to term ‘creative destruction’ (Schumpeter, 1934) when talking about innovation. He was thinking about how America should deal with the Great Depression but as we often do, the ideas were taken on and applied in different situations, most notably Silicon Valley, without being reconsidered as to whether they are still applicable given what we now know. The creative destruction model for innovation isn’t the only model, and probably isn’t the best model for charities.

Perhaps charities could develop a more evolutionary approach to innovation, one that takes account of what went before, learns from it and builds on top of it rather than trying to destroy and replace it. Charities, and the charity sector, can indeed be innovative if they aren’t being measured by a definition that doesn’t fit them. They can learn to be adaptable through approaching innovation as being in a perpetual state of change and growth, embracing uncertainty and accepting that the spirit of innovation, as part of the digital mindset, is a good thing to have. It takes the “We’ve always done it this way” focus on the ‘how’ and changes it to “This is why we do it, and we can do it lots of different ways” to focus on the why, because when you know you can achieve the same thing in lots of different ways adapting to any of them becomes the usual way of working.

Into the future

The Charity Digital Code of Practice is a helpful step in the journey charities need to take in thinking and doing more digitally. Over the next few years (well, decades really) I hope charities will adopt more of a digital mindset and redesign everything about themselves with the goal of keeping pace with a digital society.

It’s going to be an exciting future.

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References

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