The New Reality - Full report

THE NEW REALITY

Full report

JUNE 2015

The New Reality is a research study about how digital technology will deliver the next step-change in social impact

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Executive summary

The digital revolution has already happened, and we are living in the aftermath.

The scale of change that has taken place - in how people choose to communicate, watch TV, learn, bank, shop, and organise their lives - has been likened to the industrial revolution.

And it’s not over yet. The pace of technology-fuelled change is still accelerating.

For the non-profit sector this process of digital transformation offers both exciting opportunities and significant risks. Those organisations who relish the task will find new ways to both revolutionise their internal operations, and to deliver high impact services to more people who need them.

The insights from the New Reality study reveal that there is no magic wand to wave which can create digital transformation overnight. This is a journey with multiple potential paths, and some serious challenges to be faced. Some organisations have already made significant progress. Others are uncertain about where to begin. This study aims to provide some of the answers.

The New Reality offers a framework, examples, and specific guidance on how organisations can get further along this digital transformation journey - and reap the benefits along the way.

A note on audience: This study has looked across and outside the non-profit sector to bring as broad a range of shared insights as possible. However, in order to deliver most value, the report is aimed at established organisations rather than the new or start-up non-profits who tend to be more digital by nature.

How do we turn all this sector talk into sector action?” Emma Thomas, former CEO of Youthnet

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Having a digital strategy will soon seem as ridiculous as having an electricity strategy” Kay Boycott, CEO, Asthma UK

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Key insights

Digital services will deliver greater value than anyone can imagine (but first we need to address the culture and infrastructure issues that are standing in the way)

The use of technology to deliver social value is still in its infancy, yet examples given reveal an already staggering level of impact: from emergency health information delivered on Whatsapp - to low cost, 3D-printed, prosthetic limbs for landmine victims. To realise the full potential of ideas like these, the change inside organisations will need to be as far reaching as those we see on the outside.

Until sector leadership stops delegating responsibility for digital we’re not going to get very far

Lack of engagement and buy-in from senior leadership was by far the most frequently cited barrier to digital transformation across the study’s interviews. This applies to CEOs who have mistakenly delegated all responsibility for digital to middle management, to trustees who think digital is just for the young, and to other senior executives who have yet to reassess their strategies in light of the potential on offer.

Major skills gaps need plugging

The speed of technology change has created a gap between the digital skills that organisations have, and additional ones they need. Key areas identified were: data, digital strategy, lean and iterative process management, and business model innovation.

You don’t need a digital strategy

When organisations first started to develop digital strategies it was a clear sign of progress. However increasingly this separation from the central mission reinforces a perception that digital is just another department with its own goals, rather than an enabler for all. Instead we need central organisational strategies that weave technology throughout everything - for every department, and for all audience groups.

The age of big, corporate IT is over

In the commercial world, painful legacy systems are finally giving way to a new generation of more nimble and flexible tools championed by a new style of IT leadership who say “yes” rather than “no”. Most non-profit sector organisations need now to question whether it might be the style of IT leadership that needs changing, not just the kit they’re running.

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Until we’re further along this process - your CEO is your Head of Digital.” Jonathan Simmons, CXO, Zone

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Key insights

A tried and tested process for delivering transformation already exists - it’s just not being used

Start small: pick one problem and put enough effort into transforming that one area through a lean, iterative approach. Learn from that and move on to the next thing. A huge number of contributors were advocates of this prototype-test-iterate process for transforming operations, but few had managed to get their organisations to adopt it at scale.

Funders need to divert efforts towards supporting core costs to help organisations through this period of change

Funders came under fire for choosing product-led investment over core-funding at a time when organisations need to reinvent themselves from the centre outwards. Non-profit organisations themselves must also get smarter about the funding they seek in order to make better use of the rapidly expanding social finance market.

The next stage of digital for non-profits is not fundraising and marketing

Efforts and successes in digital to date have largely been focused on digital marketing and fundraising. Whilst these have been - and continue to be - valuable, the focus now needs to be on how digital technology can transform organisations around their core mission. This may mean moving digital teams away from these directorates in order to grow digital expertise across the board.

Organisations need to implement and formalise R&D programmes

In order to avoid external disruption we need to move faster and challenge ourselves more in these extraordinary times. Some of the biggest successes in digital transformation have come from organisations who have integrated structured research and development activities into what they do. A range of options exist for how to do this - many of which are low cost and low risk - but few non-profits have prioritised innovation.

We need to think beyond web to a broad range of digital technologies to achieve maximum impact

The Government Digital Service has already demonstrated the value of reinventing information, advice and transactional services via the web. There is huge potential in web-based services for non-profits too but an even bigger opportunity exists if we can bring together the best of the web’s capabilities with other technology services from sensors and trackers to wearables and AI.

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#8The sector is too complacent about the new, more digital entrants” Karl Wilding, Director of Public Policy, NCVO

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Themes from the researchThe insights from the New Reality are divided into 6 themes:

LEADERSHIP

INNOVATION

CULTURE

FUNDING

INFRASTRUCTURE

SERVICE DELIVERY

Leaders of all types have a role to play in delivering digital transformation, but the sector is crying out for more inspirational change-makers at the top to help guide the sector through the next few years of change.

This theme offers three models that non-profits can use to experiment with technology-enabled ideas for the future, and explains why organisations who are not investing in R&D risk major disruption in the next 5 years.

Don’t be fooled by the word ‘digital’ in ‘digital transformation’ - this is a culture change process at its heart. This theme explores how to achieve the new culture needed to thrive in this new reality.

What’s holding organisations back from both getting and giving investment to support tech-enabled transformative work? This theme explores and reviews the available options put forward by the New Reality’s contributors.

After years struggling with legacy IT, a new generation of infrastructure tools is emerging. This theme asks: What kind of relationship with technology do we want for our organisations? And what kind of people do we need to deliver that?

Our vision of digital to date has been heavily focused on digital fundraising and marketing. Whilst valuable, the real prize is in using technology to deliver social impact through digital services - a journey that we’ve only just begun.

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THEME: LEADERSHIP

Leading from the front... not bringing up the rear

“Until we’re further along the journey of this transformation, your CEO is your head of digital” Jonathan Simmons, CXO, Zone

The central hypothesis of the New Reality is that technology can and will affect every aspect of how non-profits operate (to varying degrees). Yet when we look across the sector, the conditions aren’t currently set up to facilitate this shift. Within this context, leadership - of all forms, and at all levels - was by far the most frequently mentioned topic across the interviews carried out for the New Reality, and the concerns raised here should be a wake up call to any established organisation in the sector.

Before throwing punches it’s important to recognise that until a few years ago, the sector had actually been doing pretty well under the stewardship of incumbent leaders. Non-profit organisations both large and small had been sailing the fretful waters of policy change and shifting supporter demands whilst growing in the process (according to a 2014 study by SCVO the third sector has doubled its income in the past decade despite the recession). So why is leadership coming under such fierce criticism now? Jon Alexander provided this concise summary:

“We’ve come out of a period where things were ticking along nicely. But now, when you’re in a period of flux, you need people who are prepared to stick out their necks. It’s the difference between leaders playing to win versus playing not to lose.”

Jon Alexander, Founder, New Citizenship Project

The New Reality’s contributors are making a clarion call for pioneering leadership: CEOs, senior directors, trustees and chairs to seize this opportunity to use digital transformation to drive a new era of social impact and to also recognise that `business as usual’ is a more inherently risk-laden choice than creating space for experimentation and action.

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4 STAND-OUT CONCERNS WERE IDENTIFIED AROUND LEADERSHIP:

1. Sector leadership isn’t currently demonstrating vision or bravery in digital transformation

2. Responsibility for the process has been delegated away from senior levels

3. Digital leaders and champions within the sector are often focused on delivery not strategy

4. Trustees are failing to support proactive change

1. Develop your vision and be brave

“If I could only change one thing? It would be for CEOs to be more open and brave.”Vicky Browning, Director, CharityComms

A handful of organisations have used the period of change caused by the financial crisis as an opportunity to reassess the feedback loop, adjust their business models and they’ve come out swinging:

“Having all our budgets cut was actually good for us. We slimmed down and now we only have budget to facilitate stuff rather than deliver and that’s working.”CEO of a major City Council

Others have battened down the hatches and are sitting tight in the anticipation that the storm is weatherable. It may prove to be so, but meanwhile, it might also break up the boat before it blows itself out.

It’s becoming increasingly apparent that this changing landscape calls for a new style of leadership - one that is playing to win. And the game is all about finding better ways to serve audiences and run services. Bravery could mean:

• Stopping some existing operations to free up space and budget for digital planning and delivery

• Investing in unfamiliar skills like data science over traditional ones like marketing

• Replacing trustees who aren’t up for the journey

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It may even mean going back to square one and completely reassessing the shape of an organisation in light of the new potential value offered by digital services:

“Is digital just a better, faster way of communicating? Or are there more fundamental issues about power, ownership and decision making? About participation and co-production - and all those buzzwords that are really relevant to us?… Can we decentralise? Can we devolve? Can we let go and start doing things in a different way?”Steve Ford, CEO, Parkinson’s UK

“This is where you need to start from scratch with your strategy. You need to park all of your current activities and start again asking questions such as who are your core beneficiaries? What are they really doing in their lives?”Kay Boycott, CEO, Asthma UK

Is digital really the bottom of the list of CEO’s priorities?

Some interviewees made a link between lack of vision in this area and a perceived lack of urgency. This appears to be backed up by recent research from ACEVO and CAF. The recent ‘Social Landscape’ study asked 427 CEOs ‘Which are the three most pressing challenges facing your organisation?’ The list included options around finances, awareness, resourcing – and only one option for ‘New technology - online and mobile solutions for giving and communication...’, which ranked 16 out of 18 - almost the bottom of the list of CEO’s priorities, below everything from ‘maintaining volunteer engagement’ to ‘finding skilled staff’.

The message this reflects back to ACEVO’s own membership is dangerous: it says “it’s OK, other CEOs don’t think technology is a priority either”. It also seems to suggest that even though sector leaders have a huge list of worries, they don’t yet see how prioritising technology might help them find the answers. The message that this is urgent isn’t getting through.

According to the majority of the New Reality cohort - the majority of sector leadership isn’t playing to win here – and we don’t yet know what the costs of watching from the sidelines may be. The answer to delivering greater social value exists, but only if we find leaders brave enough to take some risks. Otherwise the consequences may be dramatic:

“We’re going to cease to exist if we don’t make everything that we do relate to how people live their lives now. And digital is really changing the way people live”Beth Thoren, Director of Fundraising & Comms, RSPB

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2. Don’t delegate itByron Dorgan once said, “You can delegate authority, but you cannot delegate responsibility.”

Many of the contributors to the New Reality shared the view that the responsibility for delivering impact at scale through digital had indeed been erringly delegated away from senior leadership. This appears to also be borne out by the experience of requesting interviews with CEOs for this study – the response was typically positive, but most CEOs asked first if this should be a conversation with their Head of Digital in place of themselves.

Various studies have highlighted that digital has yet to find a permanent ‘home’ and can variously be found in Fundraising, Marketing, Comms and IT. But these studies may be missing the critical point - the question is not where can digital live within an organisation to be effective? But, how can digital be harnessed if it only lives in one place? Trying to ‘own’ digital from one functional perspective limits its potential: to support an effective change process all functions must be enabled - from the Director of fundraising to the Director of HR (see more on HR’s role in the Culture theme). The current picture of many digital operations is one that is deeply silo’d, and disempowered.

In many commercial organisations the post of Chief Digital Officer (CDO) has been introduced to raise the profile/weight of technology within organisations. See: Guardian and Techcrunch articles on this.

CASE STUDY:BRAVE LEADERS = GREAT SUCCESSES AT PENGUIN

Anna Rafferty was Digital MD at Penguin from 2009 to 2014: “I was lucky to have worked with two great leaders who fully understood the need for digital transformation. At Penguin John Makinson the Chair was very active in social transformation. He was very supportive, very interested, and very brave. At Pearson (Penguin’s parent company) Marjorie Scardino the former CEO really lived the core values of ‘Decent’, ‘Innovative’ and ‘Brave’. She did things like giving me access to an innovation fund where I could apply to for money to do things that were outside business as usual. I used that to deliver projects like the Penguin online dating business - a joint venture with Match.com. The incredible surprise it generated meant that we were on the front page of major broadsheets, and in press everywhere from Toronto to Tobago. The experiment was all about using our brand digitally elsewhere, and selling our expertise around metadata rather than our content. It worked, it got good PR and it made us money.”

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A handful of non-profits have followed suit (the Met in the US and Royal Historic Palaces being notable examples), but as yet, the New Reality’s cohort remained unconvinced that a permanent role at this level was the real solution (although seen as a definite step in the right direction):

“To have a permanent CDO sort of misses the point. That’s potentially creating another silo - albeit a more effective one - it still says “this is something separate for someone else to worry about”Gareth Ellis-Thomas, Head of Digital, Prostate Cancer UK

Creating a temporary role at director level (a 2-3 year FTC post), combined with a serious evaluation and up-skilling in digital know-how for all senior management is one solution (with the obvious caveat that they must work together against traditional silos to be effective).

Among interviews there were many examples given where senior teams were constantly “at each others throats”, and rarely in a mood to see how collaborating on digital projects could offer cross-functional benefits. In a more positive example David Steadman, an executive director at Action on Hearing Loss shared this insight about how their senior leadership team work together to effectively support new initiatives:

“What makes our leadership team work here? The people in the top team are very collegiate and work closely together. We’re small enough that I can get involved in innovative projects and help the organisation support them”David Steadman, Executive Director Fundraising & Marketing, Action on Hearing Loss

It is an unhealthy organisational culture where work aiming to secure a positive future for the company has to be done in secret, yet this is clearly happening. Interviewees who’ve successfully led and managed change processes around digital often cited examples where work was done ‘under the radar’ following unsuccessful attempts to engage senior leadership. Others said that they sought out ‘the real leaders’ within their organisations - managers with some power and budget who were prepared to help work against the grain to make tech-enabled projects happen.

In the New Reality, your CEO is your head of digital.

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Digital champions must focus on strategy not just delivery

“Digital managers are trying to do both delivery and strategy and there isn’t enough room. Charities are wasting the opportunities that these people could bring with more space to think. I’ve finally got round to doing some strategy - it’s only taken a year!”Erin Hedger, Digital Manager, Depression Alliance

Most references to ‘leaders’ in this theme are about the most senior levels of leadership within an organisation - the CEO, senior directors and board of trustees. This section is an exception - focusing instead on the specific digital leadership within organisations, only a handful of whom are currently at director level.

Let’s be clear: the demands on digital leadership are vast. Heads of Digital are expected to be experts in everything from social media marketing to digital fundraising, from data use through to systems integration. Nonetheless some interviewees raised the question of whether we have been guilty of fostering digital leaders with high tactical competence and delivery skills, over more strategic (and potentially more impactful) behaviours in the sector.

“Lots of charities don’t empower their digital leaders to be strategic. We’re not developing that enough in the sector. I truly believe there’s a bit of a gap there”Laila Takeh, CMO, Raising IT

A third of study contributors felt strongly that existing digital leaders were not able to achieve their ambitions without further support or intervention from higher up. And it appears that this is creating an even bigger problem: 10% of the study participants had either left internal roles within the sector – or were intending to leave – because of a deep frustration over the barriers blocking digital transformation.

Interviewees from cross-sector organisations involved in this study suggested that the conversation amongst digital leaders in non-profits is changing from one of frustration at budget and resource limitations (this still exists as a concern but to a lesser degree), to a firm call for greater prioritisation and more structure around the process of tech enablement. That certainly looks like more strategic progress, but the question remains about whether this push is being effectively supported, and whether the distractions of daily digital delivery are significantly impeding organisations’ digital transformation processes.

There are, of course, some inspiring stories of success showing how and where digital leaders in organisations are making significant headway in partnership with senior leadership. But it’s also apparent that every success required a hard-fought battle to win support in the first place.

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Given that Heads of Digital are chomping at the bit to drive digital transformation, but are sometimes struggling to be heard due to their limited representation at director level, it is also relevant to consider whether change will ultimately be led from the bottom up rather than the top down.

The dominant view from the New Reality’s cohort was that even though the bottom up approach may be able to deliver the bulk of the transition, there must be explicit permission and endorsement given from senior leadership to get the ball rolling.

“You need both top down and bottom up leadership to change an organisation. The most powerful thing is to start bottom up with small projects to show that it works - but getting permission (from top down) to even start – that is the key to everything”Sarah Prag, Digital transformation coach, Quotidian Consulting

“We’re trying to create bottom up change - and it is working - but it’s not fast enough. We need the top down backing to really move us forward quickly. When did Noah build the ark? Before the rain”Frankie Wicks, Digital Delivery Manager, RSPB

4. Trustees are failing to support proactive change

The role of charity trustees in enabling and supporting change was raised by over a quarter of interviewees, with clear frustrations bubbling up about the perceived risk-averse behaviours of most boards:

“The relationship between CEOs and their trustees in many charities is really broken. There’s often an atmosphere of mistrust”Rich Williams, Head of Digital, Bloodwise

“All of our trustees have a direct connection to our cause. Whilst you can see how that’s happened it has blocked people from other places, who may have something new to offer our organisation”Anonymous senior director at a major health charity

There is clearly a problem here.

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Nesta outlined the urgency of this issue in their 2014 Going Digital report:

“Getting buy–in from trustees and management is crucial. Even if it requires a shift in culture, it is important to educate people as much as possible”

And whilst the sector isn’t ignoring the issue – significant numbers of the organisations who have been involved in the study are actively in the process of recruiting new trustees, some with the explicit intention of bringing in digital knowledge – even this strategy is not a sure-fire way to raise support for transformational change. A word of warning was offered by one contributor:

“In my experience individuals seem to put another hat on when they become a trustee for a charity - and it makes them much more conservative and risk-averse.”Jon Kingsbury, Head of Digital Economy, Knowledge Transfer Network

Fortunately these problems are surmountable and evidence was offered by a handful of The New Reality’s contributors of some trustees really championing the use of digital within organisations. Laila Takeh provided this comforting contrast:

“At Unicef UK the trustees were the fire behind bringing in the digital transformation role. They were pushing for it, and at MS Society we had trustees who were key users of the very popular forums which meant there was lots more scrutiny but also support.”Laila Takeh, CMO, Raising IT

The New Reality cohort identified the age profile of the average trustee as a key challenge that many were grappling with: 2.1% of all charity trustees are under the age of 30, with the average age being 57 (source: Charity Commission).

Although bringing a younger generation into trusteeship may result in resistance from existing trustees and senior management (see this paper), it is an approach that has been endorsed commercially. The benefits of the diverse viewpoints brought to boards by digital natives should not be ignored or underestimated.

“Put someone under 30 on your board. It may raise eyebrows but they’ll soon understand the benefits.”Pete Davis, Landsdown partners

What is clear is that for existing boards there is work to be done. All non-profits without a clear tech champion should develop a programme of trustee resources to educate and press the scale and urgency of this New Reality. A presentation from the Head of Digital about ‘how the new website is doing’ won’t scratch the surface.

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Conclusion

“Business leaders are getting away with this because we’re not demanding it.”Baronness Martha Lane Fox, from her recent Dimbleby Lecture

According to the New Reality’s contributors - outside a handful of inspiring individuals - senior leaders in non-profit organisations (of all sizes) are failing to embrace the digital transformation opportunities on offer. This applies to: CEOs who have mistakenly delegated all responsibility for ‘digital’ to middle management; trustees who think digital is just for the young; and to other senior executives who have yet to reassess their strategies in light of the potential digital technology offers.

The very real risk of losing relevance in a competitive market over the next 5 years has been recognised by some enlightened leaders, but not enough action has happened to date. The importance of the pioneer or inspirational change-maker cannot be ignored, whether that’s the CEO, a leading trustee, or a senior director who has both the will and capacity to push this forward. This doesn’t mean that leaders need to understand the technology itself, simply that we cannot unlock the next stage in social impact without it.

“Your digital leader doesn’t need to be a technologist. They just have to understand the scale of change and the necessary plan to get there.”Ed Humphrey, Digital Director, British Film Institute

RecommendationsFor CEOs, executive directors and trustees:

• Remember, until you’ve got this nailed, you are Head of Digital. Ideally find a digital transformation champion or coach. This person is your critical friend – they may be inside your organisation already – or you may need someone with an external point of view. Listen to them and let them support you in realising your ambitions

• Make time to listen. Make the most of other conversations that are already happening – meet with your digital and technology agencies to hear what they have to say, seek out the spaces where the debate is going on and turn up with your listening ears on

• Set targets. Put targets around digital transformation in every directorate’s strategy

• Let the experimentation commence! Commit to creating the budget and space for some tech-focused R&D to happen

• Hire someone senior to help. If you still really feel this still has to be delegated, don’t keep ‘muddying through’. It’s not going away. Put a director in charge of this and seek buy-in from the senior levels within your organisation and your trustees to open a digital transformation post. This is a priority hire, but a temporary one: a 2-3 year post for someone who has a background in strategy and implementation

• Break the silos. Focus on breaking down any traditional silos that are frequently your organisation from getting the most out of the technology

• Build digital knowledge into your trustee board. If you don’t have a clear tech champion on your trustee board, ask yourself and your senior team why not. If you can’t get buy in from trustees straight off the bat, develop an evidence base and an education programme around trustee resources. You are laying the foundations for when you revisit the issue with a bigger call to action

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THEME: CULTURE

Be the Change: how to live and breathe digital transformation

“This comes down to the culture of the organisation rather than the technology itself” Simon Gillespie, CEO, British Heart Foundation

The next few years will be critical to the digital transformation process. We’ll start to see organisations who ‘get this’ re-merging their digital strategies back into their overall mission - pushing through a series of unglamorous internal changes, from investment in skills to changing recruitment processes, from overhauling IT to, ultimately, changing how they think – and how they do. And whilst it may not feel like innovation from the outside, the organisations who grasp this change-nettle will be laying strong foundations to survive and thrive in to the future.

The New Reality’s leaders do not underestimate the task: shaking off the shackles of old habits and expectations will present difficult challenges. Our experts were quick to highlight that we should not be fooled by the word ‘digital’ in ‘digital transformation’ - underlining that what we bring to the party as people is what will ultimately create cultural change.

“The culture is the fundamental thing. You can talk about digital, but actually if you don’t change the culture of the organisation then nothing will happen. It’ll just be window dressing.”Vicky Browning, Director, CharityComms

The good news is that we obviously aren’t starting from scratch here – this is a cultural change that is already underway and there’s an existing zeitgeist to tap into – if you know where to look. Yet, it’s also crucial to acknowledge that in any discussion about business transformation, you’ll quickly run up against the “people don’t like change” mantra. Indeed, the fear of a painful and costly change process was cited as a key factor in the slow progress to date. But perhaps we should stop listening to the rhetoric, because there there’s plenty of evidence that we are good at change where technology is concerned: we all learnt to use computers as part of our daily working lives, we all adopted email, we accepted smartphones as an improvement over our landlines, and the fastest growing group on Twitter are 50+ (Source: Fastcompany). Yes, there may be some casualties in the process who resist this change, but we humans are adaptable.

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To minimise resistance, we must make a relatively swift and smooth transition between demonstrating why this transformation is needed, to showing how it is possible. The change may not happen overnight - cultural transformation of any organisation is hard - but the tantalising prospect of weaving digital technology into the fabric of our organisations is, in the New Reality cohort’s view, worthy of all the rejuvenation effort we can muster. And when the idea of a digital strategy - as separate from the core organisational strategy - prompts snorts of derision, organisations will know they’re on the path to technology invisibility - and success.

Ditch the digital strategy

“Having a digital strategy will soon seem as ridiculous as having an electricity strategy.”Kay Boycott, CEO, Asthma UK

Initially the development of digital strategies within non-profits was seen as a clear sign of progress, but increasingly this separation from the central organisation’s stated mission is reinforcing a perception that technology is just another department with its own goals, rather than an enabler for all.

“We’re developing the digital strategy now, but should it have been more of a part of the central strategy at the start? Some would say it should have been. That’s what I’d say to other Chief Executives – they need to question that.”Steve Ford, CEO, Parkinson’s UK

The New Reality cohort are leading from the front and their message is clear: there is a discrepancy between having a digital strategy separate from the broader organisational strategy:

“Many organisations are still asking for a digital strategy, instead of an organisational strategy that embeds digital and technology as a universal enabler, across the board.”Owen Pringle, Director of Therein.org

A number of interviewees also highlighted that existing digital strategies may already be out of date because of the rapid change in technology and digital skills. Their recommendation was clear: as a minimum organisational strategies should be reviewed on at least an annual basis to assess digital technology’s performance. And strategies should equip organisations with a mandate to seek further opportunities for its use in wider operations.

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Unlikely protagonists? Why HR is digital’s new best friend!Human resources teams and directors are rarely experts in digital technology, but according to some of the New Reality’s most experienced contributors, they urgently need to take up this mantle.

Owen Pringle, Director of Therein.org and former Global director of digital for Amnesty International, originally identified this crucial gap in thinking in his excellent blog post ‘The role of HR in digital transformation’ and went further during interview to explain why HR has been so absent from thoughts and conversations to date:

“HR has a key role to play due to its unique and organisation-wide perspective on strategy and resources. However, a lack of awareness in terms of its importance in this transformation is resulting in HR people under-delivering in this area.”Owen Pringle, Director of Therein.org

The common consensus from this study is that most established non-profits still have a largely non-digitally-minded culture and the lack of HR involvement in and around technology conversations may have something to do with that. To date, outside of pastoral and line management issues, only a handful of the New Reality contributors had met with their HR directors to discuss the opportunities offered by technology.

And as any transformation process can only succeed if it successfully captures the hearts and minds of staff, HR directors must understand that they are instrumental in shifting internal culture to integrate digital thinking. As a matter of priority digital leaders and champions within organisations must therefore develop strategies for getting HR onside.

Interviewees cited three key areas that require HR leadership:

i) Upgrading digital capabilities across the organisation

Efforts to grow digital capabilities to date have focused on the creation and growth of digital teams. The next stage will be about shifting the emphasis to up-skilling more broadly across organisations. In addition to core digital skills like social media marketing and digital content production, staff across the board will need to become conversant with how the changing audience behaviours around technology impact on what they do. To create an effective digital working environment HR will need to communicate, co-ordinate and co-operate closely with facilities and infrastructure teams to make sure that all staff have adequate access to high-speed internet, modern web browsers, and are not ‘locked down’ in the range of digital tools and software they use. Saying “staff must only use IE7” is unacceptable.

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ii) Recruiting a digital-ready workforce

Charity staff recruitment practice needs an overhaul. The pattern of recruiting in the shape of previously successful candidates no longer works when business operations are being revolutionised. The growing demand for digital capability across teams means that job specifications for all departments must include digital competencies:

“Take off ‘must be proficient in Word’ and put in ‘must have used a CMS’, ‘must understand basic data analysis’ or ‘must be able to write pithy copy’.”Gareth Ellis-Thomas, Head of Digital, Prostate Cancer UK

Leaders must support their HR teams to help bring in more digitally-capable senior roles.

We will also need completely new skills – particularly in the key areas of data management, digital strategy and business model planning. Not all of these will be easy hires – there is just as much demand for these roles in commercial businesses and traditional charity salaries may struggle to compete for the best talent. Instead HR teams may need to form new partnerships - with universities producing brilliant data graduates, or with corporate secondment schemes - in order to find the right new kinds of staff.

iii) Anticipating and managing increased staff turnover

The elephant in this particular room is whether or not digital transformation means a smaller workforce, and therefore job losses. The honest answer is “possibly”. Views from the New Reality contributors were split between those who believe the efficiencies offered by improved digital processes and tools will create more space to deliver great services, and others who see the potential benefits of running a lighter, more agile workforce.

The experiences shared suggest that after initial reticence most staff come along willingly after some technology myth-busting and the potential benefits to beneficiaries are clearly demonstrated. However, some resistance is inevitable, particularly among longer-serving staff. HR teams should prepare for a higher staff turnover rate in the next few years which, although more work for them in the short term, will lead to a fit-for-purpose workforce in the future.

“Our staff turnover is around 30% at the moment and that’s what I’d expect during a transformation process. We’ve needed to move people on and have new people coming in. It helps to create the revolution.”HR director at a major charity

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HR has a major role to play as the challenger in ensuring organisations’ digital capabilities are up to scratch – and leaders and HR directors must recognise that these assignments won’t be optional. Over two thirds of contributors to the study raised the point that the incoming generation’s use of and expectations around technology will change the shape of workforce whether the old guard likes it or not. For an average graduate the idea of not being digitally enabled will seem an absurdity.

“As digital natives grow up and enter the workforce it’s going to be increasingly odd for those skills to be silo’s.”Vicky Browning, Director, CharityComms

From the New Reality interviews it’s apparent that beyond the CEOs and digital champions, HR directors and their teams are the unlikely protagonists of digital transformation. Firstly, it’s therefore crucial to invite HR directors and teams to participate in meaningful conversations around digital. Secondly, it’s important to then challenge them to lead up-skilling and recruitment to get your organisation’s fit-for-purpose workforce of the future ready to jump to it.

CASE STUDY:HOW THE CYSTIC FIBROSIS TRUST ARE CHANGING THEIR CULTURE THROUGH TECHNOLOGY

Lucy Semmens is Director of Strategy & Performance at the Cystic Fibrosis Trust. She is currently leading a major change programme at the charity to coincide with their office move.

“We want to create a culture where our staff feel empowered so we’re using the opportunity of moving offices to do that. We’ve invested properly in infrastructure technology - everyone has a laptop, we’re getting rid of landlines, everyone will have a mobile. All the applications are in the Cloud - for example we’re using Office 365 in the Cloud. In terms of office continuity it’s amazing. If the office burns down everyone can carry on working!

We’re also introducing some robotics because we have people who can’t physically meet because of the infection issues with Cystic Fibrosis. We’re using something like a Segway with a mini iPad on it. You can control it from home, you can FaceTime with people through it, you can get IT support through it. It’s all part of making the office a place for collaboration, and for working together to deliver on specific things.

In the space of 6 months I’ve seen a change in my office that’s huge. We haven’t needed any major training - people have just adapted. If that’s possible in 6 months - 10 years down the line what might we be talking about? “

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Breaking the digital bottleneck

When it comes to current digital staff’s role in bringing about culture change it’s not all about revolution. This is one area of digital transformation where fuelling the good practice that already exists can bring quick and important wins. The Directors and Heads of Digital who contributed to The New Reality shared an unusual common ambition: to try and do themselves out of a job…

“I would love for the digital team not to be needed because it’s just a part of how everyone works. We’ve quite a way to go before we get there.”Luke Surry, Head of Digital, RSPB

“Digital leaders need to hand the flame around as quickly as possible. As a Digital Director you want your role to be obsolete as soon as possible.”Ed Humphrey, Director of Digital, BFI

This strong desire to push digital capability across organisations rather than empire-build is evidence of the New Reality as it already exists – and a demonstration of the positive and open mindset that many suggested typifies good ‘digital’ people.

As digital teams gradually shift from being the owners of all digital knowledge to being enablers and centres of expertise that can empower their people and their organisations, so the New Reality will gather its own forward momentum. Currently many teams are on the nursery slopes – and the temptation (particularly at more junior staff levels) to assume responsibility for all digital production is hard to resist. But others have already graduated to the black runs and are demonstrating an accomplished approach to devolving digital responsibility across their organisations:

“We picked an area of focus and spent a lot of time on training staff on social media. We’ve trained nearly two thirds of the organisation in social now, so instead of having 3 people in the social media team, we’ve effectively got 1000! To support that we’ve also put social media in as part of staff objectives and job specs.”Amanda Neylon, Head of Digital, Macmillan Cancer Support

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A word of caution to digital ‘experts’ though: humility appears to be in as much demand as expertise. During interviews some levelled criticism at digital professionals in non-profits for alienating others by slipping from being knowledgeable to appearing arrogant:

“There are quite a lot of people in digital right now who think they’re hot stuff. But then you look at the fact that some big charities aren’t landing their digital strategies. It might be that they didn’t listen to their digital hot potato or give them enough power, but it also might have been that they weren’t humble enough to recognise what they could learn from your 20 years experience and work with the organisation.”Matt Davis, Director of Comms, Shareaction

The aspiration to devolve ownership of digital is the right strategic goal to aim for, but immediately getting rid of digital teams isn’t the solution. And whilst insufficient digital knowledge persists across organisations – from specific, technical knowledge to the right digital mindset – it will continue to be impossible for digital teams alone to deliver transformational change. For now, we need our digital teams to refocus (if they haven’t already) on how they can support and enable the wider organisation to help themselves.

“As you start to be successful in digital transformation there are more people who start to pay attention, which is good… but it also causes a problem and slows things down because more people are involved [in sign off].”Laila Takeh, CMO, Raising IT

In short what we really need is:

“more people doing digital, fewer people in the digital team”Amanda Neylon, Macmillan Cancer Support

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Be curious. Be proactive. Be transparent and, above all, collaborate.

The nature of ‘digital culture’ was a frequent topic of discussion during the New Reality interviews. No single definition emerged, but four words came up time and again: `curiosity’, ‘proactive’, transparent’ and ‘collaborative’.

The positive, ‘can-do’ attitude of modern digital thinkers and doers was supported in interviews by countless examples where digital champions had tended to “ just get on and do things” – often under the radar, without waiting for permission - with brilliant results:

“I’ve put together a group of what I call ‘Ninja innovators’. They’ve all got different skillsets and I’ve given them space separate from the day-to-day issues to deliver some quick wins. It means we’ve got things launching and delivering all the time - while the bigger stuff is rumbling on. It helps to changes attitudes about tech, and it helps the team through the tough times. I don’t ask for board buy in because it doesn’t cost much - we just get on and do it.”Rosie Slater, CIO, British Red Cross

The particular emphasis these examples reveal is how finding small ‘low-hanging fruit’ projects which offer digital success stories, pays dividends and helps to build stakeholder buy-in to do more.

DIGITAL WITHOUT BORDERS

Almost all examples centred around the need to create small, collaborative, cross-discipline and cross-department teams to deliver these projects. This offers the two-fold benefit of feeding years of organisational insight into new digital-enabled work, and in creating a culture of understanding and engagement with digital practice across internal borders. To extract the value of their close engagement with beneficiaries, many contributors placed particular emphasis on involving helpline and frontline staff in these projects.

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TRANSPARENCY IN ALL THINGS

Contributors also raised the need for increased internal and external transparency around these collaborative projects. The open sharing of examples – both successes and failures – from internal tech initiatives can offer guidance, reassurance and even inspiration to other organisations seeking to do the same. It was for precisely this reason that the Government Digital Service put transparency at the heart of it’s GOV.UK programme:

“People ask “what problems has being open caused you? Honestly? None! How much difference has it made? A lot. It helps the communication because there are lots of people out there who get it and know what to do, but maybe aren’t senior enough to break through. We give them examples and evidence to give them more power to get things done.”Senior spokesperson, Government Digital Service

Having a transparent and open culture was also cited as increasingly vital in light of both personal and aggregate data collection and use:

“Data is going to ramp up the transparency agenda. Charities will have to be naked in 5 years time, because people are asking for it.”Karl Wilding, Director of Public Affairs, NCVO

Director of Audience Research for Intel, Hannah Scurfield explained the particular importance of this type of transparency for a new generation of potential supporters:

“Gen Z [the born on the web generation] believe that they can be agents for change, but they will only engage with brands who are upfront with them. They value honesty, transparency and have a very direct relationship with the organisations they engage with.”Hannah Scurfield, Director of Audience Research, Intel

At a time where trust in charities is decreasing those that are able to offer a compelling, honest and real time picture of what they are doing for their beneficiaries and supporters are likely to increase their market share, particularly with younger audiences, at the expense of those who don’t.

To read more around the issue of transparency see Zoe Amar’s JustGiving blog

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CURIOSITY CULTIVATES CREATIVITY

The final characteristic that digital culture can offer organisations is curiosity.

The British Library is guardian and champion of millennia of human cultural history - you might expect that they would be one of the organisations who might struggle with this very modern change - but not so. As an organisation they are embracing digital transformation from their internal culture outwards, and CEO Roly Keating shared this explanation as to why:

“We’re not immune to the headaches that any large organisation with limited resources confronts when trying to do anything in the area of technology. But the community here are curious-minded people, and they are very hungry for any tool that can build new insights into our collections. They are absolutely not precious about whether they are very old tools or very new ones, and it’s an attitude that has created some very digitally adept people who inspire others. Ultimately that’s how gradually you engineer a change in an organisation like this - by fostering curiosity.”Roly Keating, CEO, British Library

The culture of curiosity at the British Library is creating room for digital transformation

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Conclusion

According to the New Reality’s contributors The New Reality cohort were emphatic in their belief that the benefits of digital transformation cannot be achieved without a far-reaching internal culture shift. There is no magic wand here, achieving a fundamental shift requires curiosity, creativity and commitment from CEOs, trustees and HR – as well as money, time and resources to enable teams to deliver.

More importantly this is a culture change process that needs to involve staff from across departments. Having recently been through a major internal culture shift including a full brand redevelopment, NSPCC’s Head of digital, Helena Raven, had this advice to offer:

“You can only create real change when people feel like they’ve done it for themselves. Unless people feel that they own it, then it won’t be successful… We’re not there yet, but our vision is that every volunteer is a digital volunteer, every fundraiser is a digital fundraiser, and every senior exec understands how digital shapes their business plan.”Helena Raven, Head of Digital, NSPCC

The shift in culture towards fewer silos, more collaboration, and greater transparency will offer multiple benefits for those staff who are prepared to weather the bumps in the road.

Recommendations

• Don’t start developing a digital strategy - instead take the organisational strategy and be explicit about how digital technology can help your organisation deliver on that

• Be transparent - sharing your successes and failures is the new reality – we help others learn and avoid the same mistakes and, in turn, we benefit from the experience of others

• Be thoughtful about the change process - understand that it won’t work if it’s a set of imposed top down ideas. Consider using external consultants or facilitators

• Be agile - create small, collaborative, cross-discipline and cross-department teams to deliver quick-win projects

• Annual organisational strategy review - no organisation can consistently reinvent the wheel year on year, but understand what elements of the strategy you can topline review and make sure you do it

For digital champions

• Start talking to HR - about their role in digital transformation today

• Develop a mantra for your digital staff - around facilitation and enablement: acting to support other departments – not doing things on their behalf

For HR

• Change recruitment and internal job specs - they should include digital competency by default

• Set up reverse mentoring - between digital experts and senior staff, or set up a cross-departmental buddy system

• Seek advice on new digital skill sets - to ensure you can operate well in a digitally-transformed way

• Seek out partnerships - partnerships with innovative companies, universities and other organisations might help you fill those skills gaps in the short term

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THEME: INFRASTRUCTURE

Computer says “yes”

“The best technologies are the ones you stop noticing” Chris Thorn, Head of Digital, British Heart Foundation

This may look like the only theme in the New Reality that is actually about technology. In fact that’s only half true. When discussing barriers to digital transformation interview conversations repeatedly turned to issues and questions about the culture surrounding infrastructure technology and ‘IT’ not just to the kit itself. It appears that the role that IT has to play in the New Reality is as much about human-ware as it is hardware, and as much to do with mindset as skillset.

‘IT’ is often seen as a nerdy-but-necessary evil - operating in darkened office corners, conducting impenetrable technical wizardry, whilst its people talk about “security” and “compliance” a lot. In some organisations this picture is not far from the truth, but the notion that infrastructure-focused technology can be handled by a single department “over there” – and largely left alone - is well past its sell by date.

There are certainly decisions to be made about the kit needed to build a fully technology-enabled future (and if you just want handy thoughts and recommendations about the ‘Kit’ then jump to this section below), but there are two broader questions which must first be answered:

1. What kind of relationship with technology do we want for our organisations?

2. What kind of technology people do we need to deliver that relationship? (And do we currently have them?)

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What kind of relationship with technology do we want?

Strong feelings emerged during interviews when discussing the damaging impact that current infrastructure systems are on having digital transformation ambitions. Examples given repeatedly painted a rather dark picture of internal ‘IT’ that has become unfit for purpose – with systems that have grown monstrous in both size and reputation over time.

“How is our internal IT? We have four database systems that currently don’t talk to each other and Raiser’s Edge costs us a fortune. We’ve been trying to replace our intranet for the past 18 months. The only thing I’m happy with is our website CMS since we relaunched last year...”Head of Digital, at international development charity

“The biggest challenge we have is around IT. It’s a culture challenge and ways-of-working challenge - and a question of roles and responsibilities around technology. We don’t yet have the right internal architecture to support the customer facing things we want to do. It’s not robust enough to build upon and do amazing things so we have to make short-term fixes which, longer term, create more complexity.”Anonymous, Head of Digital at major health charity

Ouch! It’s no wonder that people are failing to see the opportunities technology can offer when this is the kind of treacle they’re wading through on a daily basis. So, what would an ideal relationship with technology look like?

AN INVISIBLE RELATIONSHIP

“It works best when the technology disappears. Invisibility is a good thing.”Ed Humphrey, Director of Digital, BFI

Many interviewees expressed this vision for technology: a world where infrastructure was no longer erecting barriers between reality and progress within the organisation – and therefore becoming, to all intents and purposes, ‘invisible’.

But how likely is invisible IT when most organisations report that even though their websites and social channels are ticking along well enough, their infrastructure is complex, cumbersome, and mired in legacy issues? Most of the New Reality cohort felt that their organisations were some distance from this goal and for some, it seemed as achievable as finding the holy grail.

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Certainly it is true that IT nirvana cannot be reached until there is a better understanding of both the existing systems we have, and the smorgasbord of new options available across the broader technology landscape.

A note of caution: There is a hidden danger that when IT becomes invisible – or, ostensibly, out of plain sight – it is also out of mind. One study participant in a very senior IT role described the perverse situation that had arisen after she had solved some of the technology ‘pain’ at the major charity she worked for:

“IT went from being everyone’s top priority to fix it, to no longer being on the shit list... so they cut the funding. The original problems were caused by systemic underfunding, so clearly they’ll see the same problems occurring again in 5 to 10 years.”Anonymous IT Director, major UK charity

A RELATIONSHIP BUILT ON UNDERSTANDING

“At the moment people at senior levels who are tech literate, let alone tech strategic, are very rare.”Richard Craig, CEO, Technology Trust

For an organisation to have a strong and transformative relationship with IT and technology we must start with the basics: being clear, at all levels of an organisation, about which areas of IT we need to focus on.

Emma Thomas, former CEO of Youthnet, offered this excellent and straightforward definition of the technology services within an organisation:

“There are 3 levels of technology: #1 public-facing digital services, #2 your day to day hardware, #3 strategically managed infrastructure (how things fit together to serve the organisation)”Emma Thomas, former CEO, Youthnet

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The three areas Emma identified overlap, but it is #3 where understanding most frequently breaks down. Most leaders who contributed to The New Reality believed that they still had a way to go to realise a truly strategically managed infrastructure, rather than one based on a series of tactical decisions taken over years. What did they feel was holding them back?

a. Reporting lines: currently most sector IT teams report into Finance - a reflection of how tech infrastructure has historically been viewed as a tactical means to efficiency, rather than underpinning the wider organisational strategy. For organisations without a strong CIO or collaborative IT Director to bridge the divide, technology infrastructure conversations are usually separate from conversations about the core organisational strategy.

b. Perceived complexity: Some areas of IT infrastructure require a deep level of technical knowledge to fully comprehend. However others – for example integrating databases in order to build a single view of the supporter and beneficiary – are not difficult concepts to grasp, but the vision still ends up being lost in translation:

“In IT, we are our own worst enemies. We speak in acronyms and we convey an attitude that says `Only we understand this technology.’”Brian Lurie, CIO at Stryker - from “The Transformational CIO”

Clearly the fear of complex technology scenarios is damaging many organisations’ ability to work strategically with IT teams to achieve the best outcomes.

A SUSTAINABLE RELATIONSHIP

Unlike other areas in digital technology high importance is placed on IT infrastructure within organisations. Many larger non-profits are now investing millions in their internal systems, but interviewees questioned the quality of decision-making around this expenditure, and whether it was actually delivering `bang for buck’. A critical gap was identified between the amount of investment made and whether that investment was structured sustainably:

“In my experience it hasn’t been uncommon to see an organisation buy a product that they can afford to get, but not to have the budget to tailor it to what they needed it to do... And the cost of the person to support is £800 a day - but that wasn’t factored in”Rosie Slater, CIO, British Red Cross

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What solutions are there to prevent bad investment decisions in IT infrastructure?

The following summary of interviewees responses offers a useful checklist:

1. Make sure that there is enough money – not just to pay for the implementation and any licence costs – but also to customise the system to the organisations specific needs.

2. Be really clear about both the need and the cost of ongoing system management. If software consultants are going to be £800 a day, make sure you’ve factored that in.

3. Focus on building a solid relationship with the service provider you choose – this is crucial.

4. Make sure that the provider has a well planned roadmap for future iterations, and that your organisation is able to adopt upgrades relatively painlessly.

5. Make sure you have someone in-house who really understands the system and can troubleshoot before you need to start paying for expensive consultancy.

You might think this checklist is stating the obvious, but you might also be surprised to learn that many organisations had failed on one or all of these factors for building a sustainable infrastructure – and that it had cost them dearly.

To get further on this transformation journey we need a shared understanding of both the technology and how to handle it sustainably. Ultimately we need to see a New Reality where the technology has become so much a part of everyday working culture that it is invisible.

How do we achieve this? The New Reality cohort’s recommendations and successes were drawn almost exclusively from efforts to break silos between ‘IT’ teams and other departments, and from making tough decisions to ditch systems that their organisations felt they were intrinsically bound to.

Whether the technology achieves invisibility or not, we need to get a place where this is a relationship that works – and most of the New Reality’s participants believe this needs to start with redefining the roles of technology and IT people within non-profit organisations.

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2. What kind of technology people do we need to deliver digital transformation? This is a much thornier question than asking ourselves about the kind of relationship we want with technology. Firstly because it involves actual people, not just software and hardware. The blunt answer, according to the majority of the study’s interviewees, appears to be “not the people we have now”.

New research from Harvard Business Review Analytic Services shows that roughly half of 750 business and technology leaders said their organisations had missed out on new technology-enabled business opportunities because their IT department was too slow to respond.

Be aware though that the IT team is a soft target for taking the rap – they aren’t very good (on the whole) at self-publicity – and the balance of maintaining systems that handle key risks like privacy, performance and security (whilst keeping them flexible and usable across an organisation) is sometimes hard to strike.

Perception is everything and IT technologists need to take control of their own PR and change how they’re viewed internally and externally. Naturally this will require that some people also change or adapt their behaviour to deliver the step change integral to the sector’s overall positive development.

The New Reality’s cohort had a clear view of the kind of technology people needed to lead the sector through this transformation:

PEOPLE WHO SAY “YES”

Many contributors highlighted the growing divide between what they described as ‘old school’ IT and the growing generation of ‘New school’ modern technologists. Where the majority of digital professionals can be categorised by their positive attitude to change, classic IT teams are often seen in stark contrast as the people who always say “no”.

“The general spirit of openness, collaboration and generosity which is a direct product of digital culture and technology – it’s becoming a norm and technology people who are adopting this way of thinking are leading the way.”Adam Gee, Commissioning Editor, Channel 4

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The defined differential boils down to mindset – it’s not enough to only have ninja tech skills within a team; the foundation stones also need to rest on strong people skills and a positive attitude to the New Reality.

This is a legacy issue. Look at the job history of most IT directors and CIOs in large non-profit organisations and you’ll see a career developed in classic, locked-down companies from the security and finance sectors. It is unsurprising then that in trying to protect organisations from risks around data security, these people have uninten-tionally become leaders of a risk-averse “no” culture.

Modern technology leaders need to be pioneering: open minded, curious, development focused and collaborative. They have the people skills required to excite those around them and bring them on board with new ideas, approaches and tools. These aren’t people who want to hop on every new, shiny piece of tech, but they are typified by their continual search for better ways of doing things - and they aren’t afraid to throw things out and start again. Their attitude is reflected in the development of hardware and software itself, which is exciting, empowering and growing exponentially.

“We’ve got a great IT guy who’s got the vision to say ‘let’s just do it’. We knew we needed a new strategy so we brought him in to deliver that.”Lucy Semmens, Director of Strategy and Performance, Cystic Fibrosis Trust

COLLABORATORS

“[if you’re an IT person] you need to stop being aloof. You need to be one of the idiots that runs the 10k and speaks the language of the rest of the organisation.”Rosie Slater, CIO, British Red Cross

The need for collaboration is a recurring theme across the New Reality, and nowhere more so that between those who are supporting the infrastructure of an organisation, and those who need that infrastructure to facilitate what they do. Concerns were raised about IT team’s lack of engagement with the wider organisation, but this is not a one-way street - contributors also admitted that they rarely sought to involve IT staff in audience-facing service discussions.

Better collaboration may help us use the untapped potential that exists within IT teams. One example given was the humble IT service help desk: the people working there almost certainly know more about the pain points within their organisation’s infrastructure than almost anyone else. They may also be in charge of the systems that gather audience feedback through digital channels. The data from both those sources would provide extremely useful insight into where transformation efforts in internal infrastructure could offer the most value.

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The vast majority of IT successes shared by the New Reality’s interviewees were as a direct result of efforts to break down silos within their own organisations, and to build new ways for teams to work together.

British Red Cross CIO Rosie Slater describes her process for breaking down boundaries:

“It’s all about broadening people’s experiences - it’s bigger than just getting people to talk to other teams more. I bring in apprentices and put them on rotation in the applications training team, then in digital, then the service desk… that way they get an all-round view of how to support the business through technology. I also try to do secondments for staff - so that they’re bringing different experiences back to the organisation”Rosie Slater, CIO, British Red Cross

The takeaway here is clear: treating IT as one directorate, separate from the wider business isn’t working. Keeping a hard distinction between IT in one and digital in another is a recipe for disaster when technology of both types have a role in enabling all departments to succeed. Although simply merging the two also risks stalemate. The New Reality research shows that now, more than ever before, there is a clearly defined need for people who can cross the IT/digital divide and foster collaborative working practices.

In practical terms this means:

• No more acronyms or pet names for systems – speak the same language as each other and the rest of the organisation.

• Build cross-discipline groups that include IT/IS people, digital people and services people working together on a regular basis.

• Make sure there’s someone in the mix who has good supplier management skills.

• Ensure HR are primed to hire people with a variety of backgrounds and knowledge - not an identikit ‘tech person’ – no-one has all the skills needed on their own.

• Have teams undertake secondments to other departments (or even outside the organisation).

EXTERNAL ADVISORS WHO OFFER OBJECTIVE ADVICE

Internal teams cannot be expected to cover every aspect of the fast-evolving technology world, and there is an important role for external consultants in the sector. As high-paced change is the New Reality, trusted sources of advice are going to be crucial – and in high demand. Unfortunately – as many interviewees identified – it is not always easy to find advice you can trust:

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“There’s a gap in objective advice here. There are some really shoddy people out there offering technology services. And others who just haven’t moved with the times themselves.”Emma Thomas, former CEO Youthnet

This isn’t a malicious attempt to sabotage the sector - the fast pace of change also means there are lots of IT consultants out there who haven’t caught up yet either. Many are tied into selling particular systems, often proprietary, non-modular and not cloud-based, and they haven’t adjusted their position to keep up with the new tech movement and its development.

Digital technologists who are excited about these changes, and who are actively trying to bring their organisations along with them are worth their weight in gold. IT dinosaurs who resist this change should be very worried indeed about their place in The New Reality.

3. WHAT KIT DO YOU NEED?

ASSUME THAT THE KIT YOU NEED ALREADY EXISTS

“The number of freely available services, tools and platforms is just incredible now. The ability people have to get stuck in and do something amazing – if you have a clear view of your mission, it’s quicker and easier than ever before to get something out there.”Senior spokesperson, GOV.UK

There has been a proliferation of low cost tools and services launched into the world and led by the growing tech startup movement. Initially these services were aimed at small businesses, but now many have established themselves as mainstays of major businesses and will soon be the market leaders ahead of the Sage, Care, Raiser’s Edge, and the rest of the old guard.

In the New Reality there’s already a proliferation of options which will help you run your organisation more effectively and they’re probably cheaper and easier to use than you might expect.

What kinds of services and tools are we talking about? The New Reality cohort’s bucket list is here, but a few favourites stand out: Quickbooks and Xero for finance, Dropbox or Box.com for file storage, Slack for internal comms, Stripe for payment and donation services and Basecamp for project management.

“So much can be achieved for very little input. There are so many tools out there that we can use, that don’t really cost any money.”Adam Gee, Commissioning Editor, Channel 4

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GO MODULAR AND NIMBLE

“Taking class leading, independent platforms that can talk to each other and plugging them together is infinitely better than trying to find one, off the shelf solution that will involve compromises.”Richard Craig, CEO, Technology Trust

This theme has already described how big IT systems can cause a lot of pain. In non-profit organisations and commercial organisations alike we suffer a semi-regular ritual of trying to replace a failing system with a new one that is affordable, comprehensive, flexible and user-friendly. Often we have to compromise on at least some of these ambitions (usually one or both of the last two). Traditional IT systems are rarely well loved. Tolerated is probably the most positive any of us feel about them.

There is an alternative to this fruitless search for a one-size-fits-all panacea. A new, more flexible way of developing infrastructure has been born out of the types of tools and services outlined above, and this approach is now being embraced by both commercial companies and non-profit organisations. To free yourself from the beast you need to take a nimble and modular approach.

What does this mean? At its most basic it simply means ditching the idea of a one-size-fits-all, multi-function system in favour of making your own – shaped to your organisational needs – by combining best in class small services. It sounds painfully obvious, but it has taken until now for the range and quality of these services to reach a tipping point.

There are two key differences between the old systems and these new more modular ones:

a. These systems are built to be open and to integrate. They all come with straightforward APIs to use as standard and for free.

“Some of the big name systems in the sector - the problem is they lock everyone down and block integration. We thought Microsoft were going to stay on that path, but they woke up and have had a major reversal. For organisations who don’t embrace that openness they’re going to start to struggle – for example to get an API from Raiser’s edge is thousands of pounds – are we still going to pay that when we don’t need to anymore?”Richard Craig, CEO, Technology Trust

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b. There is higher value placed on the user experience and design than on the number of features. Given the important functions of many of these modular tools it is incredible how fast the learning curve for most of them is.

Modern software technologists no longer believe that creating a great user experience is someone else’s job, or that an IT system should require a manual.

This modular approach allows organisations to find tools to fit the size of their operation, and to scale up or down according to need. It also means that even though there may be right and wrong decisions about which tools to choose, the learnings happen quicker, the impact is less costly and any mistakes made can be fixed without impacting the broader system too significantly.

The move towards this type of modular infrastructure has been led and championed in many emerging markets. The prohibitive cost of established, big systems has created a huge rise in demand for both customer-facing and internal systems that are more nimble.

CASE STUDY:HOW EMERGING MARKETS ARE GETTING AHEAD IN DIGITAL - THANKS TO NIMBLE TECHNOLOGY

Steve Rogers, Google’s Director of EMEA shared this story from a recent trip to one of Rio’s favelas:

“There’s millions of people who don’t have the baggage we have… they’re coming online incredibly rapidly because the cost to entry is now low enough, and the tools are there.”

Over 50% of people in Rio’s biggest slums are now online.

“During a recent Google project, in one of the huge slums in Rio – where you’ve got people who are really living at a subsistence level - we found this incredible hive of digitally-enabled industry.

On one floor there was a full digital radio station being run. There were two cyber cafes with pretty high grade computer systems. A big hotel turned into a community hall at the top - that was being used as a school where they were running computer science classes. Another room where a women’s collective was running an online-only fashion house. Those people are all leapfrogging – they’re missing out desktop web. You can run a whole business on a tablet using apps. A massive change is happening.”

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GO CLOUD BASED

“We’re only just seeing the start of cloud-based opportunities. Everything GDS does is cloud supported.”Senior spokesperson, Government Digital Service

The Technology Trust offer this simple explanation of cloud computing:“The cloud refers to an ability to store files and work together with colleagues via the internet. Think of it as a virtual storage or collaboration space.”

Cloud-based services have been around for a while and many organisations have already adopted a cloud-based way of working. A recent survey by Eduserv suggests that the Cloud will be the dominant way to handle infrastructure in the next few years:

“61% of have adopted some sort of Cloud technology already, 30% of charities have adopted or plan to adopt Cloud infrastructure next year”.

The 70% who have not yet planned to move to a Cloud-based infrastructure need to get moving, or risk being left behind. Even Microsoft has moved to leading with a Cloud-based service (Office 365 is available free to charities).

Technology Trust provide an excellent summary on the benefits of using the Cloud for non-profit organisations. Of these benefits - the ones most frequently cited during this study were:

• scalability to suit growing organisations;

• flexibility for staff to work productively outside the office (particularly helpful for regional teams who are usually last to get any IT infrastructure updates)

• software that is automatically updated for staff

This last point is a significant shift for the sector. Charities often don’t have the most up to date software and therefore security, simply because they don’t have the resources to keep pace. As the cloud computing service provider is constantly updating its own software, the problem disappears.

So are there any serious risks? Security used to be a reason cited for not adopting cloud-based data storage, but these concerns have shown to be unfounded. In fact a study conducted by Microsoft found that: “Among small and mid-size businesses, 91% said moving to cloud services had a positive effect on the security of their organisation, and 94% said they’ve had security benefits (like up-to-date systems and antivirus protection) that they didn’t get with an on-premises solution.” (Source: Capterra)

There are of course some other important considerations. In particular the need to consider where data will be held in order to check that the provider has a UK data centre.

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CASE STUDY:LEADING BY EXAMPLE

Richard Craig, CEO of Technology Trust shared his organisation’s approach to IT infrastructure:

“We realised a while back that to really offer future-proof, strategic advice to charities we’d need to live this stuff ourselves and trial it. In the space of three years we’ve put everything cloud based including telephony. Anyone can work from any computer or work from home in the same way.

We run our finance systems in totally different way - we have an app for $18 a month that automatically sucks in credit card statements, we take photo of receipts, it scans them and pays them. It’s a nice interface and I can do it on the run on my mobile. There’s no way you could deliver that kind of feature-rich experience cross platform for that cheap cost in the old way of doing things.

The world has moved on from an idea that you take a one-size-fits-all system, to thinking actually we’ll find the right app for this one thing and make sure it works with the other things we’ve got. That way if we decide we don’t like one part any more, it’s quite easy just to switch out that module without impacting the wider network of services.”

CASE STUDY:STAFF ARE STARTING TO REJECT TRADITIONAL IT

One study participant offered this insightful - and common - modern scenario where staff are moving to cloud-based solutions in spite of official IT policy:

“We had an older IT director who set up everything on non-Cloud contracts and has since left. However none of the staff are using the massive server that hums in a corner of the office - they’re all using the Cloud. This is happening to a large extent below the radar – people are simply using their own devices, and choosing their own software services to do what they need to do. In the meantime all of the IT budget is being poured into the wrong place.”

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Conclusion

The fundamental changes which have taken place in technology culture and practice over the last couple of years is reflected in this theme more than any other: this is about having organisational infrastructure that is truly ready for ‘The New Reality’ we are living today.

Painful IT projects and dinosaur infrastructure systems have been responsible for giving tech a bad name. Better tools, services and working practices that are leaner, more nimble and with better future-proofing now exist, and are already helping staff to work more flexibly and in more efficient ways. If your organisation is yet to see these benefits, it might be that it is the IT leaders that need changing, not just the kit they’re running.

Non-profit organisations’ approach and attitude to IT needs to change along with the tools we’re using. IT must be seen and led as a strategic function that can improve productivity and service delivery across departments.

The age of corporate infrastructure systems is over.

Recommendations

• Sever ties: Start planning how you can phase out systems that are causing you pain

• See what’s out there: Get familiar with the new range of software options that exist and test them - app development in particular is prolific and has much to offer all sectors, but particularly those who need to show maximum value for money

• Don’t start with the crown jewels! Pick one system to change first - but probably not the biggest. Try a new approach with something like the intranet – if it’s done swiftly and is a reasonable success then it’s easier to build the case for the bigger system changes

• Beware the snake oil: Just because a consultant has 20 year experience in IT consultancy, doesn’t mean they know what works now. Seek independent advice from people or companies who can demonstrate that they’re moving with the times

• Put in the right technology leadership: If your technology leadership is letting you down - get a CIO from the new world, not the old one

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THEME: INNOVATION

Transformation through experimentation

“We need more R&D. Create an umbrella that protects the team and let them experiment with trying to break your business” Jon Kingsbury, Head of Digital Economy, Digital Transfer Network

Nobody is going to confess to being anti-innovation, but non-profit organisations are rarely the first that spring to mind when thinking about who’s pushing the boundaries. ‘Innovation’ is a broad concept, but in relation to digital transformation it’s all about introducing new methods, ideas or services which change the status quo. This theme is about the kind of experimentation which will help us to find better ways of doing things to achieve better outcomes; it is not about chasing an impossible Willy Wonka style vision that can never be implemented.

Across the course of the 50+ interviews carried out to investigate the New Reality, the conversation around technology regularly blurred with the question of innovation in the sector. Opinions on the extent to which non-profit organisations could - or should - be at the cutting edge of new products and practices varied. However, the majority of the cohort agreed that the changing landscape would make it both necessary and beneficial to actively seek out new approaches to both business practice and service delivery.

When discussing barriers to innovation interviewees were critical about the lack of commitment to tech-led initiatives in the past:

“Middle management is all-too-often incentivised to achieve efficiency, and that means a preference for repetition of what is already working well.”Laila Takeh, CMO, Raising IT, former Unicef Head of Digital Engagement

Many felt that funding for experimentation (whether internal or external) was either inadequate or focused almost exclusively on idea and product development rather than more sustainable and fundamental service or core business evolution.

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Where innovation is happening many cited an over-reliance on ‘band-wagonning’ rather than investing in development which might lead to genuine breakthroughs. Many blamed a lack of strategic planning as well and recognised that, as a direct result, ideas were tending to fall flat before they had been given a chance to come to fruition.

“With innovation - you have to carve out some time, and do it in a structured way.”Bob Barbour, Head of Digital, Shelter

Few organisations have formalised innovation or ‘R&D’ staff and teams. Where specific innovation job roles exist, these are usually assigned to Fundraising. Macmillan Cancer Support is one of the few examples that also has an innovation team within Services - and Leukaemia & Lymphoma Research - recently rebranded as ‘Bloodwise’ - have recently made innovation a core part of digital, creative and marketing team remits.

Of course this is not just a non-profit sector problem, the Dysons and Googles of the world remain few and far between and the context here is that the UK invests significantly less in R&D than other nations: just 1% of GDP in comparison to 4% in the USA.

Apple is the tediously repeated exemplar of companies who have achieved a transformative shift through innovation. What most people don’t note is the circumstances that led Apple to innovate and change so substantially. By the early 90’s Apple’s business was in serious decline. Apple almost reached rock bottom before it took Steve Job’s radical new approach that made them the massive success they are today. Is that what needs to happen to non-profit organisations before they change?

Brands such as Red Bull - who embraced technology early on to re-shape their businesses – potentially offer more useful insights: Red Bull originally just made soft drinks, but now it’s recognised as a global media brand with reach and customer loyalty far beyond the consumers of its product. If it stopped making the drink now, would the business collapse? Doubtful. That’s real business transformation.

So who has successfully transcended their original form to deliver greater value within the non-profit sector? Cancer Research UK got a few honourable mentions for their R&D programme - the most recent output of which is contactless giving on their shop windows. But most it is more notable that two of the biggest tech-enabled innovations from the past decade – online giving, and advocacy – have not come from established brands, but from new organisations like JustGiving, Avaaz and Change.org. Could it therefore be the case that the sector is unable to reinvent itself?

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“We put a lot of pressure on the established organisations to change. Maybe it’s the smaller, more nimble organisations who should be leading the charge.”Jon Alexander, Founder, New Citizenship Project

This question came up frequently in discussion, with the New Reality interviewees split almost equally between those who believe the sector can innovate for itself and those who believe that it relies on external forces to act on its behalf. Of those who were firm in their view that innovation was possible, there was clear agreement around an urgent need for better innovation practice to be established.

Throughout this New Reality innovation theme we explore the innovation and best practice examples shared by interviewees – if you currently lead or work for an organisation without a clear R&D strategy the following is designed to provide some inspiration and guidance.

THREE INNOVATION MODELS THAT WORK:

1. Establish an internal r&d lab programme

2. Develop an innovation partnership

3. Create your own startup

1. Establish an internal R&D lab programmeWhat is meant by a lab in this context? The Digital Transformation R&D lab is a space that is separated from the day-to-day work environment where research, rapid idea generation, prototyping and development can happen.

We need organisations to do more R&D. Create an umbrella that protects the team and let them experiment with trying to break your business. You need to justify that to your board and trustees, but that’s the best way of doing it.”Jon Kingsbury, Head of Digital Economy, Knowledge Transfer Network

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Labs can be run as continuous R&D environments or used periodically in a regular innovation cycle. Labs have many variations, but successful ones share these characteristics:

• Focused on one specific problem or goal at a time and getting a version of something live as quickly as possible.

• Protected time and budget devoted to them.

• Audience-led.

• A creative environment - work space that is designed to facilitate creativity and has the tools to help you work rapidly (you may need to use an off-site space to achieve this).

• Small, cross discipline / function teams who, for the duration of the lab, only work on the lab projects - it may also be beneficial to bring in facilitators or contributors from outside the organisation (and wherever possible to include some of your audiences).

• Freedom from the constraints of the organisation (policies, systems, hierarchies).

• Regular sharing of progress with wider organisation.

By focusing on rapid iterations around a specific problem, labs circumvent the paralysis that can set in when organisations try to tackle chunky issues. And Labs don’t need huge budgets and years to deliver projects - they launch ideas quickly and then monitor and iterate. As the Shelter case study shows, a few thousand pounds can deliver substantial achievements.

When set up correctly a lab will offer huge benefits to the organisations that run them: efficient processes that break down unwieldy ideas into a series of manageable tasks, they deliver evidence and outcomes quickly in a low-risk way. Labs can also foster cross-organisation relations, plus a host of side benefits including staff motivation and retention, and good PR.

“Pick a problem, solve it in as cheap and quick a way as possible, set some sensible metrics and see if it works, if it doesn’t then don’t worry because you haven’t spent much and you’ve probably learnt something quite valuable. Do it 10 times and you’ll wake up to find you’ve built the whole new system for a fraction of the cost.”Bob Barbour, Head of digital, Shelter

Whilst labs have obvious and proven benefits, it’s also crucial to be aware of the pitfalls: instead of feeding into the core business operations, labs can languish on the sidelines if they’re lacking board level support. And as missing innovative solutions could be fatal, plan ahead for successful trials and ensure successful practice can be elevated and embedded into the wider organisation with your board’s backing.

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“Set up in a separate part of the office. Pick one service or problem. Then cherry-pick your most adventurous service manager, a developer, an audience rep and get prototyping. Work really transparently and you’ll achieve a lot.”Sarah Prag, Digital Transformation Coach, Quotidian Consulting

This key concern of the New Reality Cohort reveals useful insights. For further useful guidance about how to establish innovation labs as part of organisational culture see Nesta’s Innovation labs practice guide. It is also well worth reading James Boardwell and Joe Roberson’s excellent Learning from the labs report to avoid common pitfalls.

CASE STUDY:SHELTER’S TRIAGE PROJECT LAB

Shelter has recently introduced an innovation labs programme where every three months they put a small, cross discipline team together to work on a specific challenge that the charity faces.

Bob Barbour, Shelter’s Head of Digital explains their most recent lab:

“The one we’ve done recently is working on triage for the helpline to tackle the chronic supply/demand issue that we - and many other charities - face. We need to find a way to make sure that we get people to the right service as quickly as possible and that the highest priority calls reach the helpline.”

This innovation lab process involved:

• A four day innovation lab, bringing together staff from the helpline, face to face services, supporter help desk, advice team, and the digital team.

• Two days of idea generation and persona development around the problem.

• Two days to design and build a working minimum viable product (MVP).

The outcome of this lab has been the development of a triage tool that prioritises calls from people who are about to be made homeless and are in priority need. It uses a simple quiz to take them through self diagnosis, and then offers a callback booking service to prioritise the calls and help users save phone battery and credit. Non-priority cases are referred to a package of web content that explains their options. The developed prototype is launching as a pilot and further iterations are being planned.

Traditionally, in most charities, this sort of challenge would have been the subject of a multiple month (if not multiple year) project process at great expense and significant risk. The new Shelter triage prototype has gone from kick off to launch in less than 2 months.

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2. Develop an innovation partnership

Most of the New Reality’s cohort believe that innovation needs to become part of internal culture to fully succeed. However many conceded that sometimes breaking out of existing structures and cultures is just too hard, and at this point looking outside is a useful option.

“We have these big ideas, but because we don’t have available digital resource, and we’re caught up in so much tactical stuff we never fully realise our bold and ambitious ideas.”Emma Thomas, former CEO, Youthnet

Tasking an external party to deliver product innovation is one part of this model, but to get real transformative value requires giving the partner a connection to the most senior levels of management, and permission to question elements of core strategy. A number of the New Reality’s interviewees highlighted a significant shortcoming in the sector’s current relationship with external suppliers.

“Often clients will come to an agency like ours and ask us to make them a product. That’s fine, and a good basis for the start of a relationship, but actually our real value is in our broader expertise and knowledge. It’s our business to know what other organisations are doing, and what lies ahead in the future.”Jon Davie, UK CEO, Zone

From personal experience, as someone who has worked both in-house and agency-side, I certainly share this view. I’ve worked on numerous projects where the brief was entirely focused on tactical product delivery rather than asking for a broader, strategic answer that might offer more value. Likewise, earlier in my career, I was guilty of limiting the agencies I commissioned and not finding out what more they could offer in terms of innovation beyond the constraints of the original brief.

Finding agencies, or consultants, who can act as genuine strategic partners and who can command enough authority to challenge senior personnel in pursuit of an improved outcome, will be a better use of funds than the current modus operandi of simply outsourcing production.

This will, of course, mean changing the nature of procurement processes to place more weight on chemistry and relationships over documentation. Inherent in this shift is a shared commitment to build stronger relationships between senior leadership and partner organisations so that new ideas can feed directly into central strategy and planning. Given that many senior agency side people have also taken a turn as the client, and vice versa, this approach makes good business sense.

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Finding an agency that is prepared to work transparently and closely with your organisation is therefore crucial. Outsourcing product and service innovation can only work well when the organisation is still heavily involved throughout – to make best use of the organisation’s insight and knowledge of their cause and audience – but also to see and learn new processes that could be adopted internally. The most successful service design agencies place equal value on sharing their process as well as the end result:

“At IDEO it took us a while to realise that the service design process we took with clients, that way of working, was even more valuable to organisations than the products we made”Colin Burns, Executive Creative Director, BBC and former MD at IDEO

Finding the right partner to go on the digital transformation journey with you might not happen overnight, so the sooner you can start, the better. Begin by looking at the external parties your organisation is currently working with and consider and discuss the relationships between the personnel involved. Think about how best to create an opportunity where you can both explore and challenge your suppliers to innovate further in pursuit of your mission.

3. Create your own startupChanging organisational culture is extremely difficult to do and generally acknowledged as a relatively slow process. In the tech world, Silicon Valley startups often feature heavily in innovation conversations and efforts to bring startup-style methodologies to established organisations have had some success. The ‘lean startup’ mindset and process is well respected, but putting it into practice within a well-established working culture is another matter altogether. What if there was a way to gain all the benefits of being a small, nimble organisation without actually being one?

“It’s about creating small, atomised, startups that are spawned by the mothership, but are given autonomy to go and do stuff that the mothership might not necessarily do. Which might even be about disrupting its own business model in some way”. Matt Walton, Head of Product, FutureLearn

The past few years have seen the start of a trend where established organisations are setting up their own challengers.

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In some ways these quasi-startups are a more substantial version of R&D labs – but they constitute a much bolder move and making them work requires the following:

• A mandate to challenge anything and everything.

• A completely separate environment: “There’s a reason that when GDS was started they moved themselves away from Whitehall - and didn’t recruit from the Civil service.” Jon Davie, UK CEO, Zone.

• An incubation period where they are not asked for an immediate return on investment, but are seeking an (at least partially) self-sustaining funding model.

• A clear path to feed both learnings and improved products and practices back into the core business.

CASE STUDY:DIY STARTUPS FROM ESTABLISHED ORGANISATIONS

Two organisations that also have case studies elsewhere in The New Reality report fit this model of DIY startups...

TeamUp is a collaborative economy project from Macmillan Cancer Support. The TeamUp online service connects “people with a bit of spare time to local people affected by cancer who’d like a hand with everyday tasks”. To create TeamUp Macmillan partnered with agency Zone on a strategy to set up the service as a semi-independent startup. The service is currently in beta trial in Brighton, Hove, Adur and Worthing.

FutureLearn is a hugely successful online education platform offering a diverse selection of courses from leading universities and cultural institutions from around the world. FutureLearn was set up as commercial company by The Open University - a large established charity and a world leader in distance learning, For more on the fascinating story behind FutureLearn see Head of Product, Matt Walton’s blog post ‘Innovation through positive disruption’

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Learn to fail

“The sector shouldn’t be afraid to experiment cost-effectively”.Laila Takeh, CMO, Raising IT

The need for non-profit culture to become more accepting of failure when trying new tech-led approaches was frequently mentioned across interviews. Over the past few years the entrepreneurial ‘Lean’ process has gathered momentum, particularly amongst digital technology professionals - and the ability to fail and learn is a key principle.

These methodologies avoid the slow-moving, mass-stakeholder requirement exercises of old in favour of building rapid prototypes and testing with real audiences. Projects run in this way offer participants the ability to learn quickly what works and what doesn’t - and any failures are always cheap! It is easy to see how these low-cost, lower-risk ideas resonate loudly around digital transformation work - where the fear of big, expensive technology failures has been stifling digital progress.

One example of the right kind of failure was provided by Anna Rafferty, Director of Product, Creative & Content at Pottermore, and former Digital MD of Penguin books:

“We invested in a small experiment in Second Life when that was big. We thought we were going to set up a virtual Penguin bookshop and we had William Gibson do a virtual reading. But after a while we found out that it wasn’t what people used Second Life for. It was interesting and we learnt a lot so it was a valuable failure.”

Not all projects can or should be run in this fail-fast-and-learn way, but bringing colleagues and trustees on board with these ideas can only help to drive a culture of innovation.

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Conclusion

“Funding R&D is good and if you label it R&D people understand that it might be OK to take some risks.”Jon Kingsbury, Head of Digital Economy, Knowledge Transfer

Network

The 50+ senior sector experts who have contributed to the New Reality believe that we need to move faster and challenge ourselves more in these extraordinary times.

This is a change process and that means we need some new ideas. Tried and tested isn’t going to cut it anymore - so start feeling confident about experimenting - and accept that failure will be part of that process. Take heart! The right time to be doing things differently is now. This is, after all, the New Reality.

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete”Buckminster Fuller

Recommendations

• Start experimenting: choose an innovation model and commit to it – get buy in from senior management and trustees and commit to it financially and intellectually. Don’t wait for someone else to disrupt your business - disrupt it yourself!

• Start small and grow: start with one problem at a time and put enough effort in to find a solution to that before moving on to the next challenge

• Choose your words carefully: If your organisation is nervous or doubtful about innovation don’t call it innovation! R&D is less frightening as a label

• Get facilitation: You need someone who has experience of running an innovation process to make it a real success. If you don’t have someone within your organisation with this experience find a facilitator from outside. There are a host of great independent consultants, or your existing agencies may be able to help

• Collaborate: Often challenges are shared across the sector so see if mutual benefits - and cost efficiencies - can be achieved by collaborating with organisations facing the same challenge

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THEME: FUNDING

Funding digital transformation

“One major funder admitted to me that they are twice as tough on digital projects in terms of sustainability than on offline projects” Anonymous charity director

Conversations about change programmes inevitably turn to the need for investment at some stage. Lack of funding has often been blamed for the slow rate of (truly transformative) digital progress in non-profits, but whilst the scars of the punishing recession years remain visible, the sector has proved its resilience through a tenacious capacity to do more with less, And now, in 2015, there are tentatively optimistic feelings emerging around sector finance.

The creation of organisations like Big Society Capital have led to a proliferation of new funding providers and they’re looking for projects to fund… so, problem solved? Not quite… it’s never that straightforward! As the sector knows, what there aren’t more of is grants: the grant funding model that so many organisations relied upon has been decimated.

The money that is increasingly available instead is social finance - the use of repayable finance to achieve a social, as well as a financial, return. The New Reality’s funding experts, and contributors from organisations who have sought funding, made it clear that the sector is still struggling to make the best use of this new bounty. Similarly, the funding organisations within this space and are not always finding it easy to match the money to the right initiatives, or to balance the need for core funding with financing new products.

There is already a huge body of literature about fundraising - and more recently about digital fundraising (the Digital Fundraising Handbook is an excellent starting point) – but here we’re going to focus on the state of external sector funding and potential new models for finding investment. Exploring what’s holding organisations back from both getting - and giving - investment to support tech-enabled transformative work, this funding theme reviews the available options put forward by the New Reality’s contributors.

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Fund core operations

Across the New Reality’s interviews there was a resounding call to funders: in order to achieve digital transformation programmes organisations need funding to support core operations, not for novel ideas.

Contributors suggest that getting funding for individual products and services is rarely easy, but that getting funding for digital change programmes and core tech capabilities is nigh on impossible – and it appears that established organisations are the least likely to garner support:

“It’s hard to have proper digital capacity in charities. I think it’s prob-ably because it’s much harder to fund good digital people from core funding than it is to get funding for specific project ideas. It needs to be the other way round because one often comes from the other.”Jess Abelscroft, Digital Communications Officer

If more funding doesn’t become available to support building a digital skill and talent base within organisations (either through hires and / or training), then digital transformation programmes could stall. Funders and organisations know that core costs aren’t immediate donor-builders, and they are often harder to track in terms of impact, but many of the organisations involved in the study believe that funders are not doing enough to provide support in this area.

Grant making organisations like Esmee Fairbarn clearly do support this type of core funding, but can only afford to support a fraction of the bids they receive. Perhaps the answer is for organisations to stop looking for grants when social finance might be a workable option.

Another funder pointed out that digital transformation programmes may pay for themselves through efficiencies, so a loan might be as useful as a grant in the short term and may even come with fewer strings attached:

“Anyone who tells you that there isn’t money to support a digital trans-formation programme maybe hasn’t asked for it in the right places. It’s a no-brainer for us in comparison to some other areas - most digital transformation projects will ultimately make that money back through efficiency gains.”Daniel Wilson, Director of Funding, Big Issue Invest

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So if this is a numbers game, should organisations keep fighting for grants when social finance might be a workable option for some? The sector is in the early stages of the debate right now, but given the funding parameters, it’s hard to see how this option can remain on the fringes for long - and all of the funding organisations who contributed to this study believed that a blended approach to social finance would become increasingly common.

In light of these developments - and particularly where non-profits are ignoring the winds of change and failing to adjust to new and increasingly hybrid investment opportunities - awareness raising is critical. By way of response, Esmee Fairbarn have recently merged their social investment and grant making teams in order to facilitate this change:

“What we have done here is merged our grant making and our social investing team so it’s one team. Now when an organisation comes in we can look at them and say over the next 3 to 5 years we’ll help them transition. What you start off with might just be a grant, but by year 3 it’s a grant and a loan so you can start learning about how this affects your cash flows, your balance sheets, your business operation. And by year 5 it’s actually just a loan, because now you have a track record and some experience behind you.”Caroline Mason, CEO, Esmee Fairbarn

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Plug the knowledge gaps

“I’d love to speak to some of the funding organisations and ask them “why are you funding some of these things?” One funder was notorious for giving out tremendous sums of money for projects that barely lasted a year”Sophie Walpole, Director at Blue Amber

Although the sector is still in the early stages of trying out and understanding how funders can and should invest in digital-for-good projects, there are examples of tech-enabled projects getting funding and going on to be highly successful (see the Nominet Trust’s Social tech 100). However, there is a much longer list of projects that had potential, but never succeeded in attracting the funds they needed to get off the ground.

The New Reality contributors, on both the funder and the funded side, suggest that there is a systemic issue beyond the normal cycle of success and failure for ventures seeking funding. And when it comes to digital initiatives both those giving funding and those seeking it identified an apparent shortfall in the required level of technical knowledge needed to produce and assess a successful and sustainable digital service bid.

GAP 1: LACK OF DIGITAL TECH EXPERTISE AMONG ORGANISATIONS SEEKING FUNDING

Many small and mid-sized organisations are not yet set up to create and support tech-enabled projects even when they have the impetus and desire to do so. Funding experts highlighted this as a flaw that they regularly see in proposals that have a digital tech element:

“There’s a magic to digital that blinds organisations from undertaking the normal level of scrutiny involved in structuring a funding bid. When it’s an established organisation wanting to do a digital project they seem to apply less rigour, and it’s often more a leap of faith.”Daniel Wilson, Director of Funding, Big Issue Invest

“We sometimes see naivety of people seeking funding for digital ideas - they jump into making something without questioning how it can become sustainable.”Billy Dann, Comic relief

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It’s apparent that there are great ideas out there built on solid tech knowledge, but which lack a clear vision for how those projects might become sustainable in the future. This indicates that for many organisations (particularly smaller ones) the level of digital knowledge and skill is not yet good enough to support the scale of associated ambition. This misalignment will continue to create a stalemate between those awarding and those seeking funding until the knowledge gap is plugged.

“The funders that get it are picking holes because they can see that maybe organisations themselves don’t have good enough digital capability.”Emma Thomas, former CEO, Youthnet

CASE STUDY:A COMPARISON BETWEEN TWO SOCIAL CARE ORGANISATIONS SEEKING FUNDING FOR DIGITAL TRANSFORMATION

Big Issue Invest is a funding provider that helps scale-up social enterprises and charities by providing social finance. They provided The New Reality with a stark example of the difference between organisations who are ready to get funding on tech initiatives and those who are not:

Doing it right

Cornerstone is a charity in Scotland that provides care and support services for adults, children and young people with disabilities and other support needs. They came to Big Issue Invest with a funding proposal to help support a major 3 year digital transformation programme that would overhaul and connect up all areas of their business from service delivery to safeguarding to central accounting. In advance of the funding bid Cornerstone had commissioned external consultants to help rigorously scope the project, and had fully engaged the board, their staff, and customers in the plans. They also brought in someone who had already delivered a systems transformation process to be part of the core team. Cornerstone has been granted the funding and is working in partnership with Big Issue Invest on the project roll out.

Doing it wrong

Around the same time another mid-sized care charity came to Big Issue Invest with a proposal. This charity needed over £1million for a tech-led extension of their core business. The fundamental idea was sound enough, and well within their expertise in terms of audience and topic. So what was wrong? Even though the main focus of the project was the creation of a major technical infrastructure system, the only person with technical experience that had been involved in the investment proposal process had been a mid-level day-to-day IT support worker from the charity – and he had not even been made part of the main project team. The funding bid was rejected on the basis that the charity was unlikely to create the platform in a way that was robust or sustainable enough to fulfil its ambition.

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GAP 2: LACK OF DIGITAL TECHNOLOGY EXPERTISE AMONG FUND MANAGERS

A contrasting but equally concerning issue was raised by contributors around whether tech-enabled projects are being adequately and fairly assessed by funders:

“I think we may be missing opportunities, or that maybe we might be turning things down because we think it’s just a technology play when actually it’s not, and it could deliver major social impact. We see the word technology and hold back, because we’re not familiar enough yet.”CEO, Major funding organisation

The relative new-ness of digital service provision means that grant and investment makers are playing catch-up with the required knowledge to judge funding bids. Even Nominet Trust – a tech-first funder – highlighted that they have to proactively work to keep their staff up to speed with the pace of technology change:

“We place a big emphasis on personal development and making sure we’re being outward looking. We have internal processes to make sure this happens including weekly meetings where people report back what they’ve seen, what they’ve been surprised by, what they’ve learnt, so that we keep our knowledge agile and dynamic.”Annika Small, former CEO of Nominet Trust

Funding organisations in the sector who have understood this gap are developing strategies for plugging it. Esmee Fairbarn - one of the biggest funders in sector, and primarily grant-giving - is answering this challenge by developing a programme of training for grant managers:

“One area we’re developing is skilling up grant managers to cope in this tech world that’s changing really rapidly. Otherwise how on earth - as technology gets used more and more - do you judge whether they are using the right technology or not? We don’t quite know fully what that looks like yet but we have started to do it”Caroline Mason, CEO, Esmee Fairbarn

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Big Issue Invest, a smaller funding organisation that provides loans and capital to help established social enterprises scale up, are taking a different approach:

“There aren’t that many social funders like us, and we’re not a huge team so we can’t afford to have specialisms in all areas. We get round that by bringing in experts to make those assessments. If we’re buying a building we rely on the reports of a surveyor. If we’re assessing a tech-led bid we bring in a digital expert. What is needed for organisations like us is a network of reliable, objective advisors.”Daniel Wilson, Director of Funding, Big Issue Invest

These kinds of approaches are a significant step towards a fair and equal playing field for social investment in projects that have a strong tech element. However, for many funders there is still some distance to go:

“The sad thing is I’ve seen many funders who will still choose a physical school project over a digital service. There isn’t enough understanding of the real and tangible value that digital services provide, especially to young people.”Emma Thomas, former CEO of Youthnet

Until more sector funders have a strong grasp of both the potential impact of tech-enabled initiatives, and the ability to assess the nuts and bolts, it is likely that digital transformation progress will keep stalling.

Finding new paths to sustainabilityCommercial tech start-ups increasingly seek venture capital to grow, often with an exit strategy to sell to the highest bidder, but non-profit organisations don’t have this option at their disposal. The challenge of keeping digital initiatives running beyond the initial investment that got them off the ground keeps many non-profits awake at night. If we accept that we are already at a point where digital is – quite literally – the New Reality, then we must also understand that there may need to be ongoing changes in the way this reality is supported.

A hefty dose of criticism was levelled at some funders for not supporting the sustainable development of digital-led initiatives. The criticisms revolved around short-sighted attitudes where funders are too focused on seed funding, leaving projects without support beyond year one – or unrealistic expectations that new initiatives would or could be self-supporting within an improbable timeframe.

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“Start-up loans with no follow up isn’t good. What should happen is that funders look for 7 or 8 areas in the market where there’s real growth potential, and real social value, and then target infrastructure support and innovation support for those.”Nigel Kershaw, Executive Chair, Big Issue

Some of the New Reality’s contributors predicted a further blurring of the distinction, in funding terms, between “charity” and “social enterprise”, with new initiatives designed to be self-supporting through revenue generation streams:

“Everything should be built with some sort of revenue model - even micro amounts. We didn’t do that early enough with some of our products, but now it’s in every brief. At a macro scale you should also look at how you can take your organisation’s expertise (e.g. youth trends) - and package it up.”Emma Thomas, former CEO of Youthnet

“We’re seeing many more social enterprises and organisations who are recognising that it is possible to make a difference and make money. Those aiming for greater sustainability rather than limping from one grant fund to another are doing well.”Annika Small, former CEO of Nominet Trust

Some felt that the slow uptake of revenue-generating opportunities is due to a gap in strategic expertise within the sector, and others that non-profits are only just starting to be able to think of themselves in commercial terms without wincing! High profile successes in this area are still thin on the ground but a few examples were given:

Young Advisors was one of the few examples given of an organisation generating revenue around their core services. They help community leaders and decision makers understand how to engage young people in local decision making and improving services - and were praised for their white-label service which lets organisations pay to use the same model.

CharityClear the payment gateway service set up by Epilepsy Scotland was another example of an organisation diversifying their revenue models through digital services. CharityClear operates in the same way as any other secure payment service but 100% of it’s profits go to the charity.

At the bigger end of the scale British Heart Foundation have created a successful new revenue stream based on their existing offline retail business, simply by using eBay to sell some of the more rare items donated to stores.

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“We’ve started an eBay part of our retail business. It helps us raise funds from niche items that arrive in our individual stores that won’t sell for much there. By using digital services like eBay we get a national audience where collectors of those items can find them. Last week a standard, 35mm camera made £100 because there’s not many of those model left. It would have made £5 in a store. If you replicate that over and over - there’s a new way to support the charity thanks to a pre-existing digital service.”Chris Thorn, Head of Digital, British Heart Foundation

One of the ways that bigger funders are now seeking to ensure that the digital services they fund will be sustainable going forwards is by asking for them to be more fully substantiated up front. Some of the big funders, including Nominet Trust and Comic Relief, require digital projects to be at least at the prototype / alpha stage:

“The new Comic Relief Tech for Good fund sets the bar quite high in terms of know-how. You need a prototype, you need to have given some code to an open repository. NOT “I’ve got an idea for an app.” Billy Dann, Programme Manager, Comic Relief

CASE STUDY:FUTURELEARN - FINDING AN ALTERNATIVE BUSINESS MODEL

FutureLearn is an online learning platform set up by the Open University, and based at the British Library.

Matt Walton, FutureLearn’s Head of Product explains how their ‘freemium’ business model works.

“We needed the initial investment from the Open University, but the idea is to become self-sustaining longer term.

Revenue generating ideas we’re trialling include asking Learners (service users) to pay for accreditation and certificates if they want them (but all courses are free).

We have the best of both worlds in that we have the commercial imperatives, which means we’re pretty efficient, but we have a benevolent owner who is interested in our mission as much as the profit. Some of the competitor platforms are owned by VCs so they’re going to have to make some interesting decisions in the future”.

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Finding internal investment when budgets are tight

A number of contributors who have already embarked on digital transformation processes offered advice on how they had sought internal funds and buy in to support their work:

“In my experience at Amnesty it wasn’t always about asking for money, but about spending it differently. It’s as much about getting what you need by stopping doing stuff that isn’t core”Owen Pringle, Director, Therein.org

“It’s not always about investment - sometimes it’s the opposite. At Unicef there were legacy ways of doing things that by stopping investment on those, and accepting the bump on the way, there was a bigger prize that didn’t cost more overall.”Laila Takeh, CMO, Raising IT and former Unicef Head of Digital Engagement

There is clearly both a need and a benefit to using the current flux as a prompt for reassessing performance of existing activities, and working out what really is – or isn’t – a sacred cow. Ceasing those functions that aren’t delivering may help to streamline working practice, or existing services, and create more efficiency in the process. However, organisations need to be alive to the possibility that diverting funds from one place to another may not be enough.

As we’ve explored in other areas of the New Reality, change can’t succeed without a foundation of support at senior levels. Interviewees identified that board support is a further critical factor in securing internal funding and many stressed the need to help board members understand why financial support is pivotal in digital transformation.

“I’ve just secured a substantial amount of funding from our board just by taking the time to share some proper insights from analytics about how our audiences are engaging with us. They’d never seen it explained to them in that way before”Luke Surry, Head of Digital, RSPB

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START SMALL

Those who had been successful in seeking internal investment for digital transformation programmes focussed heavily on starting small: small projects, demonstrating small successes provided a safety net from which to grow. Contributors were adamant that this is the most effective way of both using available funds, and demonstrating the need and benefits of further increased investment.

“You can create digital transformation by immersing people in the process a step at a time. They get comfortable with it, it demystifies it, and they feel invested rather than put-upon”Bob Barbour, Head of Digital, Shelter

Crowdfunding: a tech-led alternative to traditional fundingOutside of traditional fundraising routes, another tech-based alternative was laud-ed by the New Reality’s cohort: crowdfunding is no longer new, but the speed of its growth was noted by many who see it as a viable option for funding and launching social projects:

“We’re just in the nursery slopes of crowdfunding but it’s fast becoming a major alternative. That’s really exciting.”Jon Kingsbury, Head of Digital Economy, Knowledge Transfer Network

“The matching platform philosophy is central to the future way our society is going to function. Kiva is one of the greatest non-profit organisations to emerge in the last decade.”Jonathan Simmons, CXO, Zone

Healthcare services in particular are achieving dramatic successes using crowdfunding platforms – from individuals raising money to pay for specific medical treatment (for themselves or others) to new medical technologies being developed. In the US the crowdfunding platform MedStartr’s average successful project raises more than $13,000 immediately and $405,000-plus in the following six months, according to a company report.

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The crowdfunding opportunity has significant potential to enable people to support and champion the things that are personally meaningful to them. But if people can increasingly fund the projects they want to see directly, why will they need established non-profits to do it for them?

Alongside the excitement building around these platforms, there was also an expressed concern that established non-profits were not paying enough attention to the power of crowdfunding platforms, and missing the risk that these channels, unless embraced, may start competing with - rather than complementing - the efforts of established non-profits.

Crowdfunding is not the answer to everything. As identified elsewhere in this theme it is funding for core costs that is most needed to support organisations’ digital transformation programmes. Crowdfunding is unlikely to be able to offer this, but it does provide a path for supporting project funding in a way that avoids the huge, and often fruitless, efforts required to get finance from established funding bodies. It also provides a way to stay engaged with audiences who may otherwise feel they no longer need a non-profit organisation to act as middleman.

The medical fundraisers page on crowdfunding website Indiegogo

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Conclusion

The options for seeking funds to support digital transformation programmes and for growing digital service offers are changing. Organisations that still hope to survive on grants alone will find the work required to do so increasingly tough.

Those who adjust their funding strategies are likely to reap the benefits. For some this may mean thinking with a more commercial mindset and finding an entirely self-supporting revenue model. Others will be able to manage this transition through reallocation of internal funds. For most it will mean embracing new hybrid models of funding – a combination of any or all of: internal funds, grants, revenue-generation, social finance and crowdfunding.

For funding organisations the pressure is on. Grant makers and social investors need to be ready to support significant digital transformation programmes – by having the knowledge to assess tech-led bids (either in house or in partnership with experts) and in some cases by refocusing funds away from product ideas towards core costs.

The conversation between funders and organisations around investment for digital transformation programmes is best managed before the disruption really kicks in. The non-profit landscape is changing, and the funding structures that exist to support it need to change too.

RecommendationsFor funders

• Choose to fund core. Digital transformation programmes are 90% about internal infrastructure, culture change and people, and only 10% about digital services and products: there needs to be more funding for core costs – can you help? If you decide not to make this a strategic priority, be clear about what the potential outcomes will be

• Have a plan. If you haven’t already got a strategy around funding digital transformation projects, start planning now

• Get the skills. Train your staff or bring in ad-hoc expertise to support your assessment of funding bids - make sure you’re not discriminating against digital / tech-enabled projects through lack of knowledge

For organisations seeking funding

• Know your onions. Until you have an internal person on your team with sufficient contemporary experience - who understands what it will take to both produce a high quality digital service, and to keep it running, don’t approach a tech enabled project

• Consider revenue streams. From the get-go, explore whether there is a revenue model that could cover some or all of the cost of running the service

• Stop doing one thing. Before seeking funding, scrutinise your internal products, services, or infrastructure systems and consider what would happen if they could be cut or reshaped in order to free up both money and resource to work on digital transformation

• Collaborate. Consider the broader landscape and start considering whether you can actively be part of building a positive coalition around digital transformation with other like-minded organisations. What support do you all need? How can you be part of a the shift? What stories are you sharing internally and externally to support positive change?

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THEME: SERVICE DELIVERY

Mission-Driven Digital

“This is really about service transformation enabled by digital - not digital transformation”Sarah Prag, Digital Transformation Coach, Quotidian Consulting

To date the sector’s vision of digital has been blinkered by a sharp focus on digital fundraising and digital marketing. Arguably non-profits have been ignoring their peripheral vision - where the real potential of technology to deliver social good is sitting - currently just out of view. This limited viewpoint is restricting the sector’s ability to rise to the challenges the New Reality represents:

“To have digital be about something as singular as marketing. It limits crudely what digital can do for an organisation. It misses the point entirely”Owen Pringle, Director of Therein.org

The sector’s relationship with digital is currently largely rooted in these two disciplines. To date this has been cast as a two horse race: in order to score any investment at all over the previous decade, digital had to prove its worth. Fundraising and marketing clearly offered two routes to demonstrate ROI: money and eyeballs. Even better, they have only caused limited disruption to existing business practices: legacy giving, offline donations, direct mail and print-based advertising still account for the biggest slice of the pie.

In this context it’s no wonder that the role of digital technology has been sidelined by leadership, or that digital teams are rarely based within service directorates (Breast Cancer Care is the only exception found to date - its digital department sits within ‘Services’).

Yet it’s been over twenty years since we started surfing. People of all ages and backgrounds now expect to be able to self-serve: to do their banking, shopping, booking, TV watching - and everything else besides - through digital channels. The rapid adoption of all of these online services demonstrates that, in many situations, we would rather do it for ourselves - and at our own convenience - than have it done for us.

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The saturation of internet-based devices in our homes, offices and pockets has made self-service an omnipresent reality for most, changing cross generational behaviour forever - and the brands who have made that possible (including those born digital) are reaping the benefits. In this context it’s astonishing that existing business practices in non-profits remain dominant and persist unabated, with only small incremental change in evidence.

The hugely successful GOV.UK relaunch provides the benchmark for reinventing service delivery through digital. It is now time for the non-profit sector to follow suit and seize the huge opportunity to do more for more beneficiaries – and to do it in new and inventive ways thanks to digital.

Putting aside all the challenges that the next few years might entail, this theme is all about the excitement - and the results - a renewed focus on digital service delivery can create.

Start with the fundamentals, not the peripherals. Be audience-led.

“Are we just a traditional organisation using digital to do things in a slightly different way and to communicate quicker with people? Or does it change some of the ways we hear what people are saying and respond to that? Can we decentralise? Can we devolve? Can we let go and start doing things in a different way?”Steve Ford, CEO, Parkinson’s UK

Despite the growing wealth of individual apps, trackers and other discreet digital services, the majority of tech-led services coming from non-profit organisations are still being actioned from an individual department level. This automatically means that the scope and reach of any new service is likely to be limited. Across the New Reality interviewees repeatedly pressed the need to start small and scale up:

“Keep your horizons short. Small iterative projects – not an expensive big bang. Plan it, build it, launch and learn from it in less than a year.”Ed Humphrey, Director of Digital, BFI

To be clear; this is the not the same as saying “do it in a silo”. For digital transformation to be truly game-changing it needs to address the heart of the cause, not the bits around the edges.

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In practice this means cross-discipline and cross-department collaboration. This kind of root and branch review might may throw up some difficult questions, but it is equally likely to offer answers to escalating social problems – from housing to healthcare.

Jon Alexander from the New Citizenship Project offered this advice for how to begin this process:

“Do a top level strategy session about your founding purpose and look at what it would really take to achieve this, and whether technology can help do some or all of it… Then look at what it would mean to involve people to achieve this for us rather than us achieving it for them.”Jon Alexander, Founder, New Citizenship Project

The second part of Jon’s quotes neatly segues into the other crucial mindset needed to make digital services truly transformative - audience-led thinking, not organisational-led thinking.

It sounds obvious, but it hasn’t been the foundation of every digital project or technology choice to date – and on a personal level, as a former audience researcher, it was heartening to hear so many of the New Reality’s interviewees stress the importance of starting with audience needs:

“All digital plans must start with the user. It’s incredible how much design online loses sight of who the user is. Organisations must ask themselves: who is this for? How are they going to use it? And how are we going to keep track of how they use it?”Baronness Martha Lane Fox

Co-creation was cited as a productive path to creating audience-focused services. This can take many forms, from collaboration workshops to regular feedback mechanisms. Nominet Trust now insist on co-production for many of the projects they fund, and online education platform FutureLearn continually involve their users in the service development through open online feedback:

“On both our alpha and then beta service we put a thing called Uservoice on every page which is asks how we could improve our product. It’s gives us a real bellwether for feedback and every time we develop something new, it starts going and reading some of the stuff that people have said about the problem you’re trying to solve”Matt Walton, Head of Product, FutureLearn

At it’s most simple being audience-led means getting the people who work closest to and with your beneficiaries and supporters (these might be the people who run the helpline, or your local group leaders) involved in the process.

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The shift towards self serviceThe web has become the starting point for almost every information discovery journey – from health concerns and legal queries, to academic research – and non-profits have stepped up to this challenge (often more effectively than commercial organisations). This transition from offline publications to online information services is a significant step that we’ve already taken on the journey of digital transformation, but audiences are demanding more.

“We’re making progress but digital service delivery is falling behind. With changing audiences we’re only going to see higher expectations of being able to use digital to self-serve.”Sophie Walpole, Director of Blue Amber Consulting

The success of online information services provided by organisations like Macmillan offer a window into the potential scale of demand:

“Of all the interactions that Macmillan Cancer Support has with people affected by cancer, 50% of interactions are online, 30% offline booklets and 20% nurses or frontline staff. So it’s more than half the people we reach.”Amanda Neylon, Head of digital, Macmillan Cancer Support

The wealth of information available online is amazing, but the overwhelming quantity and variable quality across the web means that, at times, it hinders rather than helps people looking for answers. It is all too easy to get lost in an endless spiral of onward links. Organisations who have recognised this are moving rapidly towards self-service-led models which offer people the ability to solve their own problems – or get some way along that journey – without the need to refer to multiple sources, or involve anyone else.

This type of service provision can be as simple as a great online calculator like the ones from Money advice service; it can be a value-added supplement to face-to-face interactions, like the brilliant DocReady; or it can provide a full replacement for a previously offline only need, like the incredibly addictive Unstuck coaching app.

A BCG survey of 12,450 people in 12 countries (including the UK) found that over 90% of people who have access to the internet have used at least one Government self-service tool in the past two years.

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The smartphone app market is building a whole economy around self-service - whether it be sleeping better (Sleep Cycle), learning a new language (Duolingo), getting fit (RunKeeper) or just finding some headspace (Headspace meditation app). All of these – and the hundreds of thousands of others – are engaging and useful self-service tools, designed to offer advice and opportunities-to-do on a topic you’re interested in.

There have been a handful of highly successful charity-led apps including British Heart Foundation’s PocketCPR, Diabetes UK’s DiabetesTracker, and British Red Cross’ First Aid app in healthcare. In youth services, ChildLine’s anti-sexting app Zipit, and Youthnet’s Stressheads and Motimator apps have also led the way. However the New Reality’s contributors highlighted that there are significantly more failed apps than successful ones, so organisations should not rush to create their own without an incontrovertible user need and a clear route to market. A better option may be to seek partnerships in the burgeoning startup app market, where one of the many socially-minded SMEs may already offer a solution to your beneficiaries needs and could benefit from your brand’s credibility and reach.

Mhealth is at the vanguard of this transformative shift to self service – from sensor-based bodily function trackers like X2 Biosystems’ range of head trauma trackers, to pain relief devices like Indiegogo crowdfunding success Quell. It is one of the most exciting areas for digital transformation in services and a recent report by PWC’s Health Research Institute announced that:

“Digitally enabled care is no longer nice to have, it’s fundamental for delivering high quality care.” Daniel Garrett, Health Information Technology Practice Leader, PWC.

CASE STUDY:GOV.UK CARER’S ALLOWANCE SERVICE REDESIGN One of the most frequently cited successes from the GOV.UK relaunch has been the humble Carer’s allowance claim process, where through a digital service redesign the GDS team managed to remove a whopping 170 questions from the claim form, making it possible for carers to successfully apply for this crucial benefit in the precious spare moments they have (often at 2am because that’s the only time they have to themselves).

See this short video about the service redesign of the Carer’s allowance

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Many of the New Reality contributors from health and social care organisations believe that in the next 5 years it will become common place for doctors to prescribe apps and wearables in place of drugs for a wide range of health concerns ranging from obesity to depression. If you’re a healthcare organisation, you may want to be working now to make sure you’re offering – or more likely partnering – with the tools that doctors will want to prescribe.

One other crucial area for a digital transformation self-service upgrade is in advice and support helplines. Across the board charities that have phone and live chat services have hit crunch point. The success of these services has meant that demand frequently outstrips supply, but scaling up is not an option due to the large overheads involved. The only practical answer is to adopt a self-service model and develop or integrate digital tools that people can use to help them both understand and start to solve their problems.

Shelter have used their fantastic innovation labs programme to develop a self-service digital triage system for their telephone advice line. (See case study - pg 44).

In a competitive market, quality and reach of self-service tools will determine the winners and losers. In this context established non-profits already have a head start over start-ups and many commercial brands, both in terms of quality content, understanding of the issues and in large databases of ‘warm’ contacts.

However, caution should be exercised before originating - with many thousands of self-service tools and apps already available, many with a social focus, partnership working is the obvious entry point. This is borne out by the reality on the ground. Of the 10 or so 3D printing projects mentioned by the New Reality interviewees, only one was being led by an established non-profit: Oxfam - in collaboration with 3D printing company iMakr - who are working together on 3D printed water sanitation solutions.

From Oxfam’s Emergency Sanitation Researcher Angus McBride:“Our first challenge was to develop a 3D printable, water-saving handwashing device that can fit on any household container. Handwashing can have an enormous impact on preventing disease spreading, but in the places we work people normally have to walk to collect water, so don’t want to use too much washing their hands. By developing something that doesn’t need frequent re-filling and is easy, desirable, and maybe even fun to use, we can make a difference to people’s health in emergencies.”

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Think beyond webThere is still significant room for expansion in socially-motivated web-based digital offers, but there is a broader tech-enabled world of services emerging that are not constrained to the screens in our pockets and offices.

“Digital is not just about websites - organisations need to stop thinking about it like that - it’s the online connected world of tablets, apps, and lots of new technologies”Frankie Wicks, Digital Delivery Manager, RSPB

Wearables, Internet of Things (IoT) devices and 3D printing are generating fervour, not just amongst tech-nerds, but also amongst architects, retailers, town planners and engineering firms – all of whom are getting excited about the potential for new, connected technologies to transform our (and their) world. In amongst the hype there are already some examples of genuinely transformative service delivery, and this is happening at a stage where we have only taken baby steps in seeing how these types of tech can be used to do good. And it’s clear the New Reality’s leaders are excited about the potential:

“Wearables aren’t mainstream for people yet, but they are used a lot in the food supply chain: cows are now tagged with radio frequency iden-tification (RFID) tags, and they swallow thermometers that are Wi-Fi enabled. That means that the farmer can tell if a cow’s got a fever and can treat it early with antibiotics - rather than finding out much later when the cost is much higher.”Jon Kingsbury, Head of Digital Economy, Knowledge Transfer Network

“3D printing is going to be exciting – the notion that you need to raise money for a charity to send out emergency medical supplies will be gone. Communities will print their own.”Nigel Kershaw, Executive Chair, Big Issue

“We can use 3D printing to move away from mass produced things to those that are customised. Given how niche some charity audiences are, that could be incredible.”Laila Takeh, CMO, RaisingIT

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The potential for 3D printing to help us tackle a broad range of social problems and issues came up particularly frequently in interviews. Here’s some of the best uses cited by interviewees:

• 3D printed clean water projects. In the past year a slew of exciting 3D print water and sanitation projects have emerged

• Seattle based bio-engineering company Pembient has created a synthetic 3D printed rhino horn that looks and feels like the real thing. The company want to flood the market with synthetic horns in order to stop the number of endangered rhinos killed for theirs

• 3D printed limbs are being created in war torn areas like Syria and Sudan to help people quite literally get back on their feet and move on with their lives. Particularly amazing are the efforts of Tony Canning who has produced a 3D printed prosthetic for significantly less than £100, in comparison with the

traditional prosthetics which cost anywhere between £1,000 and £20,000

This certainly feels like we’ve arrived at the future, but what does it mean for non-profit sector organisations when there are new opportunities everywhere, but also new pressures too?

Of course this doesn’t mean we all need to rush out and buy a 3D printer, start wearing an Apple Watch or become wearables experts, but we do need to be aware that, yet again, the tech is advancing apace and, yet again, we might need to accept that this is happening before we’re ready, before we’re comfortable and certainly before we’ve got a plan.

Identifying and paying close attention to the opinion former (individuals and outfits) – will be a route to seeking out productive partnerships for the future - and elsewhere in this study we talk about the necessary efforts needed to generate management buy-in, develop or change infrastructure and shift organisational culture to make our current digital services work better and do more for our beneficiaries. We must also recognise that most digital champions within our organisations have had their work cut out just to deliver effective web-based services across devices. If we now accept we need to ask them to broaden their technology view once again, and bring that to the wider organisation, we might also need a plan for how that can happen and how we can support talent so that the ideas and energy are channelled productively and given the best chance of success.

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Join the collaborative economy

“Middlemen everywhere have been removed!”Adam Gee, Commissioning Editor, Channel 4

We’re all now becoming familiar with the concept of the collaborative economy (sometimes called the sharing economy): based on services (usually facilitated online) where people are able to get what they want or need from each other instead of having to use organisations as middlemen. The collaborative economy might apply to products like electric drills or old baby clothes, to services like ride-sharing and to co-production and co-financing.

For a more in-depth explanation Nesta’s Making sense of the collaborative economy report is comprehensive.

The spectrum of organisations covered by the definition above is vast, and the degree to which they offer social value likewise. As with any disruptive innovation, it takes a while to shake out and see the lie of the land clearly. Currently there’s much debate about whether the giants like Airbnb and Uber are really providing a socially beneficial service, but many interviewees highlighted examples of services that clearly are: Casserole, StreetBank and Kiva to name a few.

Interview discussions around crowdfunding platforms like Kiva are captured in the funding theme and this is obviously fruitful territory for organisations seeking project-based investment. Beyond the parameters of crowd funding, there are other potential avenues for non-profit organisations to explore, including collaborative-production, time banking and asset exchange.

This new set of collaboration-based services has yet to significantly impact on the non-profit sector, but complacency carries its own risk. The travel industry thought digital disruption was over for them after Tripadvisor, Skyscanner and Expedia came along, but then Airbnb arrived and a whole new fight is underway.

Some charities have already experimented in this area. In 2012 Nesta funded some trial collaborative economy projects including a partnership between Age UK and Ecomodo to provide a StreetBank-style model for elderly care. The trial demonstrated modest success, but a worrying pattern was observed across the trials:

“It seems to be hard for charities to really form partnerships. Quite rapidly the co-production appetite fell away and projects fell into a client-supplier relationship.”Helen Goulden, Executive Director for Innovation Labs, Nesta

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What else could the sector use collaborative economy models for? Helen Goulden from Nesta has this exciting idea:

“There are plenty of crowdfunding platforms, we don’t need any more of those. What we do know though is that non-profits are increasingly squeezed for resources, and would benefit from more elegant and efficient sharing with other local organisations. Is there a way we can use the collaborative economy principles to create that service. Instead of saying “we need £50k to do ‘X’, why not tell people what you actually need and see if other companies or individuals are happy to offer that?”Helen Goulden, Executive Director for Innovation Labs, Nesta

Useful further reading on asset based community development ideas can be found in “Give and Take: How Timebanking is Transforming Healthcare” and “People Powered Prosperity”, both by David Boyle.

The need for more collaboration, co-production and partnership is one of the themes running across The New Reality. In the context of service delivery, collaborative economy models may provide rich territory for established non-profits seeking additional ways to connect with new audiences, particularly at a local level. The directory on collaborativeconsumption.com may have just the partner to help meet your audience’s needs.

CASE STUDY:HOW A CHARITY CAN USE THE COLLABORATIVE ECONOMY Macmillan Cancer Support’s TeamUp is a collaborative economy service that connects “people with a bit of spare time to local people affected by cancer who’d like a hand with everyday tasks”.

Cancer rates are rising dramatically and Macmillan - like many other charities - is looking for ways to offer support at scale. By using the collaborative economy model (the first major charity to do this) Macmillan are hoping to be able to help people affected by cancer at a local level. The initial trial is based in Brighton, Hove and Worthing, but if successful the plans are to scale up the service nation-wide.

The strategy was developed in partnership with agency Zone and took early advice from some of the big startup successes in the field like TaskRabbit and Casserole Club.

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Go localIn asking the New Reality’s interviewees about which areas of service delivery they expected to be most impacted by digital technology, many cited increased localisation as one of the chief benefits.

“I think we’re going to see a trend towards tech enabling very local action. Neighbourly is a really interesting example - connecting smaller, unbranded, very local organisations where £700 means a lot, to the bigger brands and mass funders - so that they have access beyond their scale.”David Steadman, Executive Director of Fundraising and Marketing, Action on Hearing Loss

“If we can use digital to focus on local campaigning we’ll be more successful at it. The charity’s role should be to find out what the problem is, to alert people to the problem and then give them tools to act locally. For example no-one thinks they can save the whole NHS, but you can stop apathy and disengagement by giving people campaign tools that help people focus on their local health services.”Gareth Ellis-Thomas, Head of digital, Prostate Cancer UK

The ability to use digital geo-location information, local communication networks and physical location sensors in combination could deliver completely different and surprising services.

A fantastic recent innovation combining all these elements is a pollution badge prototype being developed by Kin design and research studio.

When worn the badge uses an in-built air pollution detector and GPS tracking - so that when a wearer goes into an area with dangerous levels of pollution the badge automatically sends a tweet to the local MP for that area. It’s a quirky idea, and only in early stage development, but it clearly points in a direction that local campaigns could act upon – what if every campaigner wore a badge that actually did something rather than just saying it?

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Local communication networks were also cited as increasingly important channels for digital-minded marketeers in non-profits:

“Blogs on hyper-local areas are essential for charities to use to win hearts and minds in local communities and get people engaged in local campaigning and fundraising. They’re often better channels than blasting it out on Twitter or Facebook. I think the power of those networks hasn’t been fully realised yet.”Zoe Amar, Director of Zoe Amar Communications

In a world where digital is increasingly breaking down international boundaries - and we can buy from Amazon regardless of where we go in the world (almost) - there is also a quieter but no less important revolution that digital tech is facilitating at a local level and it’s crucial that non-profits are alive to what is happening in this space.

Braigo - A DIY braille printerShubham Banerjee is a 12 year old boy who made a braille printer out of lego, and has made it open source so anyone can recreate it.

Big White WallA highly acclaimed online support service for emotional health.

The BBC’s Ebola Whatsapp service Distributing crucial awareness-raising information to impossible-to-reach groups in Sierra Leone via Whatsapp.

Jointly An app that makes communication and coordination between those who share care responsibilities for a person as easy as a text message.

CASE STUDY:A HANDFUL OF INSPIRING EXAMPLES OF DIGITAL SERVICE DELIVERY

There are incredible examples of digital transformation services and products scattered across The New Reality, but here’s a few highlights to reveal the scale of impact that focusing more effort on digital service provision can reap:

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Conclusion

Developing technology-enabled services that really help beneficiaries is something that every non-profit CEO should aspire to make part of their legacy. Despite the number of innovative services out there, the majority are still coming from outside the sector not inside. Yes, we are still only in the early stages of realising digital service delivery’s full potential, but that’s not an excuse for watching from the sidelines.

Collaborate with your audiences to develop service ideas, and think about how they could be empowered to help themselves, rather than you doing it on their behalf. Achieving this requires a shift in mindset, but could offer a chance for both reach and engagement to truly skyrocket.

The New Reality theme about innovation models covers interviewees experiences and thoughts on how new services can be developed, but before embarking on this adventure there is a fundamental question which needs answering: is your organisation ready?

Almost unanimously the New Reality’s contributors believe that digital service delivery is vital for the continued survival of non-profits, but a note of caution was raised:

“We learnt this with GDS. It’s important to want to do great stuff and to have great ideas, but without the infrastructure and culture to make these advances, there is a high risk of them falling flat. The culture change has to come first.”Sarah Prag, Digital transformation coach

Start working out how tech-enabled services can help your organisation deliver its core purpose - but beware, unless you’re also working to digitally transform yourselves as an organisation, you may be trying to run before you can walk.

Recommendations

• Consider all tech possibilities. Make sure your digital champions are able to support the organisation in using the best of all tech, not just web-based platforms (websites and social).

• Focus on the mission: Start with your core purpose or a specific problem.

• Don’t go it alone. Find partners to help you innovate in your service delivery e.g. process partners or partners with expertise in particular kinds of tech.

• Cross-fertilise. Create and support collaborative, cross discipline teams.

• Start small. Don’t try to boil the ocean!

• Don’t duplicate. If it already exists and it’s good - partner with it, white label it, curate it, do not try to recreate it!

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Julie Dodd, author and research lead

Julie is an experienced digital strategy consultant who specialises in helping non-profit organisations use digital technology to deliver social value. Julie has worked with over 60 charities and other non-profit organisations on digital transformation projects.

In a past life she was a Creative director at the BBC and at the UK’s top independent agency Zone. She’s made some fairly well known digital products over the years, and has a deep love of finding out what makes audiences tick.

If you would like Julie to come and talk to your organisation about the New Reality, or you need help with your digital transformation work, please get in touch: [email protected]

Angie Greenham, Editor

Angie has over twenty years experience in editing, publishing and content marketing. Her company Eddepro helps small and medium non-profit sector organisations to maximise their mission and extend their influence through content creation, editing and [email protected]

With thanks to...

All contributors:Adam Gee, Amanda Neylon, Anna Rafferty, Annika Small, Beth Thoren, Billy Dann, Bob Barbour, Caroline Mason, Catherine Howarth, Chris Thorn, Colin Burns, Daniel Wilson, David Steadman, Ed Humprey, Emma Thomas, Erin Hedges, Frankie Wicks, Gareth Ellis-Thomas, Greg Sage, Hannah Scurfield, Helen Goulden, Helena Raven, James Thornett, Jessica Abelscroft, Jon Alexander, Jon Davie, Jon Kingsbury, Jonathan Simmons, Juliet Hillier, Karl Wilding, Kay Boycott, Laila Takeh, Lara Burns, Lucy Semmens, Luke Surry, Martha Lane Fox, Matt Davis, Matt Walton, Nigel Kershaw, Owen Pringle, Richard Craig, Roly Keating, Rosie Slater, Said Dejani, Sarah Prag, Simon Gillespie, Sophie Walpole, Steve Ford, Steve Rogers, Tris Lumley, Vicky Browning, Zoe Amar.

Angie Greenham for making The New Reality a good read; Gemma Fountain for the amazing illustrations; Rich Williams and Martha Paren for making the research analysis possible; Jon, Irenie and Iris at New Citizenship Project and Zone for their ongoing support.

Who’s behind The New Reality?

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Online report available at:

thenewreality.info

THE NEW REALITY

Get in touch

If you’d like to know more about The New Reality please contact Julie Dodd:

[email protected] or 07709 057469