Charity

Why are charities struggling to build and launch digital products?

NESTA audience

NESTA audience

This week I was privileged to keynote at the NESTA Impact Investment team’s Going Digital launch with NESTA’s Katie Mountain and Isabel Newman. Katie & Isabel asked me to speak because of my fairly unusual perspective – a tech entrepreneur who’s actually worked recently on a revenue generating digital project launched by an established charity. Earlier this year I was lucky to spend 4 happy months at vInspired, working with Sam Sparrow, Hannah Mitchell & Damien Austin-Walker getting awesome microworking platform Task Squad finessed and launched.

This blog covers the key elements of my NESTA talk without the personal anecdotes and side stories I included on the night. I should also just add a point of clarification here. This blog is about charities/CICs/social enterprises launching revenue generating digital products and services; it isn’t about making charity core business more digital. You won’t be surprised to hear that I have a view on that as well, but that’s for another day. It’s also not about my specific experiences at vInspired – it’s more generic observations across the whole sector. I’ve been a charity trustee myself for well over 10 years.

NESTA's Katie Mountain

NESTA’s Katie Mountain

At first glance, established charities appear to be ideal environments from which to launch digital products. They are crammed full of bright people with tons of good ideas, despite what they say they have more money to invest in product development than most startup businesses, they have a deep understanding of their target market and there’s lots of goodwill towards them, there’s existing infrastructure in the charity for the project to draw from (finance, office space, marketing & PR, etc) and they have easy access to politicians. So what’s making it so hard?

It’s unfamiliar territory…and there’s baggage

The best startups are said to be those that are “scratching an itch”. The entrepreneur sees a gap in the market and develops a product or service to SELL into that gap. The entrepreneur begs, borrows and steals seed funding and assembles a team focused on getting that product or service built and to market as quickly as possible. Money is frequently the key driver but money also qualifies early market interest in the product. Private sector success is often determined by getting to revenue in lightning speed & “owning” that niche before anyone else does. The founder or co-founders have probably had to put their houses up as collateral to raise the seed funding. The team eats, sleeps and breathes the project. Everyone’s under a lot of pressure. Often an unhealthy amount. Despite this, 80% of tech startups fail in their first 18 months according to Forbes (we’ll return to the 5 top reasons for failure at the end of the blog for anyone that’s interested). Charities simply do not work at this pace – but the private sector SMEs they’re competing against do. That’s a challenge.

The second part of this point is that the startup begins with a blank sheet of paper. For charities, many are creating digital projects to diversify away from dependence on government grants or to simply boost their income when other sources are drying up. This is a different type of driver. They are trying to do something that’s well outside their core business. They say that building a tech startup is like jumping off a cliff and assembling the plane on the way down. You need your team to be focused and on it. In charities, the digital project is often something people in the team are doing as an addition to their original day job. Working on projects part time is far from ideal and just doesn’t work. One of my conditions upon joining vInspired was that I would only undertake activities where I added value to the Task Squad project and did the things that other people in the team couldn’t do at that time. I stayed away from all-staff meetings, writing reports for trustees and so on.

The environment is risk averse…and no-one has any skin in the game

In my experience, many charity CEOs are very entrepreneurial. They’re also swamped with a million different things. Senior teams and trustees can be very risk averse. Back to that 80% failure thing – this is a high risk and uncomfortable place to be where you have to allocate money and time to something that probably won’t fly. Many charities are only engaging with this process because they are desperate to generate new income. Funders and sources of finance like NESTA, the Nominet Trust, the various social angel groups, will invest in certain projects but they expect to see the charity provide match funding, especially if it has reserves. This puts constant additional pressure on the startup project team as they are under non stop scrutiny and find themselves fielding questions from people in their own team unfamiliar with this territory and expecting to see results fast. For the people in that startup project, the “us” and “them” is very tricky. At least in a private sector startup you’re all working on the same project.

Mary McKenna

Mary McKenna

Too much investment can be a curse

In my view the best digital products start out on a shoestring budget. That way the team is more creative and it’s less of a big deal if the project fails.

A few people when they heard I was giving this talk lobbied me to say the issue for charities in building and launching digital products is lack of money and resources. I’m afraid I disagree. A large budget can lead to laziness, excessive outsourcing and maybe a “build it and they will come” product.

Back to the trustees. Often they meet infrequently but they’re the people who approve and sign things off. This doesn’t sit well with agile development, pivots and product iteration. All startup projects pivot. Getting the trustees into a place where they are comfortable with the risk involved and buy into the match funding element is definitely a challenge, but without it projects are not investor ready.

There’s a lot of meetings and governance

I understand the reasons why charities do this but it’s an additional overhead that other startups just don’t have to deal with. In an early stage private sector startup, decision making sits in the hands of one or two people. They have authority to do what they like. It’s their money. Decisions are made quickly and based upon imperfect data and information. Things move at pace. There are no reports to write, the list of KPIs or metrics monitored in the early days is short or non existent, there’s no-one else to keep in the loop, social impact isn’t measured. A charity tech project has to do all of these additional tasks on top of build and ship.

Pace is the single most frustrating aspect of working in a charity that I experienced. That and having to book meetings with people you can see across the room & who you just want to speak to for two minutes – because that’s how things are done. The structured environment slows everything down.

NESTA Panel - Isabel Newman, Mike Dixon, Kieron Kirkland, Emma Thomas and Shreenath Ragunathan

NESTA Panel – Isabel Newman, Mike Dixon, Kieron Kirkland, Emma Thomas and Shreenath Ragunathan

The team is any organisation’s most valuable asset

Charities have great people. Sam Sparrow who leads vInspired’s Task Squad project is one of the most impressive and talented people I’ve ever worked with in any business. There’s been a terrific drive to get a lot of charity team members onto and through accelerator programmes. What charities are bad at doing is allowing their newly trained intrapreneurs to be responsible and accountable and just to get on with things; especially with people that are considered to be “junior”. Structures are hierarchical where they need to be flatter and more matrix or project driven. In a tech startup, the most appropriate person is allowed to get on with what they’re good at within clear and agreed parameters. I’ve found that in charities, the decision making boundaries are sometimes unclear and this is one reason why the CEO and trustees end up as bottlenecks.

On top of this, there’s a Europe (world?) wide shortage of digital skills, developers and people with good commercial skills and there’s a great deal of competition to attract the best talent. Because these skills are in short supply, the people taking important decisions may not be properly equipped to do so – especially about digital. This results in poor commissioning and bad management of suppliers.

Here’s my presentation slides from the night:

I’ve probably just scratched the surface here and am very conscious that I’ve put forward an awful lot of challenges without many useful solutions. Fortunately, on the night there was an expert panel present (Kieron Kirkland of Nominet Trust, Mike Dixon of CAB, Emma Thomas of YouthNet and Shreenath Ragunathan of Google) all of whom were able to voice their own very practical advice on how the sector can improve in this space.

For anyone who’s wondering about the top 5 reasons startups fail – here they are:

  1. Lack of deep market knowledge – know your audience!
  2. Lack of USP or the ability to properly articulate it – market test your idea, work on your messaging and remember that some ideas are just bad ideas.
  3. Failure to communicate and lack of clarity
  4. Leadership issues – not so much for a charity – this one is more to do with flaky founders or personality clashes amongst co-founders that lead to the startup imploding
  5. The business model is wrong or underdeveloped – this one is KEY – spend as long as you need to getting your business model right

As always I am very much looking forward to your comments on this rather long blog. I hope we can have some useful and positive narrative about what we can all do to make this better because frankly, we really need to. If you have any questions for me about any of the above then please get in touch with me or post your questions up in the comments section for everyone to read and I’ll do my best to answer them.

5 immediate improvements we can make in the charity sector

 

At #UKGC14 - my first outing in a vInspired t-shirt telling the Task Squad story (Photo by David Pearson)

At #UKGC14 – my first outing in a vInspired t-shirt telling the Task Squad story (Photo by David Pearson)

Friday marked the completion of my first 4 weeks working in a charity – ever.  In the course of my long and varied career I’ve so far worked in local and central government, been a freelance consultant, temped in a trade union, spent time in countless (and many pointless) private sector organisations, done a bit of quango-hopping and I’ve worked in or founded 5 start-ups.  On 20 January I joined Task Squad as its first ever CEO.  Task Squad is a brand new social innovation project from national well known volunteering charity vInspired.  Our mission is to get young people into paid employment by matching them to entry level micro working opportunities.

I thought 4 weeks in might be a good time to reflect upon and write down my experiences so far before I lose them.  It would also be good to get feedback from others at this early milestone – if I’m truthful I’m seeking reassurance that I’m progressing in the right direction and haven’t missed or misinterpreted anything.

Some of you will know me as a tech entrepreneur and one of Learning Pool’s co-founders.  Many, many people have asked me why I’ve chosen to work in a charity at this time instead of rushing off to start another private sector business.

The reality is that charities and social enterprises are doing a lot of innovative and interesting things.  In the past 4 weeks I’ve been introduced by Task Squad team members and funders to loads of wonderful projects bunged full of enthusiastic and motivated people who work hard and are as committed as any startup team.  What the projects I’ve been interacting with so far have in common is they’re all using tech for good and they’re all being run by teams of social entrepreneurs.

Anyway – it goes without saying that charities and social enterprises exist for good reasons and to do good things.  However, these are the 5 things that have bugged me a bit in my first month.

1.       There’s so much duplication within the sector.  What I mean is there’s so many projects doing what appears to me to be the same thing.  Government and the big funders are partially to blame by funding similar projects in isolation instead of forcing teams to merge and work together.  It would be useful if there was a matching service for small charities or social innovation projects that want to merge to save money and cover more ground.  Maybe there is?

2.       The entire sector is gripped by “accelerator” fever.  The prevalence of and participation in social accelerator programmes is reaching epidemic proportions.  Every which way I turn I uncover another one.  There has to be a better way for the sector to learn.  Also – who is paying all for all these growth accelerators and is that a good use of money.

3.       The working environment seems very formal and structured to me – even in a charity that’s relaxed and informal in many ways.  A lot of internal meetings take place and a lot of time is spent on governance type activities…what I describe as doing things the right way rather than doing the right things.  I wonder if there are ways to improve productivity whilst preserving integrity and just getting on and doing more “stuff”.

4.       Trustees appear to me to be underutilised by many charities and I don’t know why this is.  I’m a trustee of a couple of not for profit organisations.  I joined because I wanted to help them make a difference and they were looking for someone with my particular skill set.  I want to be useful.  I don’t want to be distant and see only the senior team at quarterly board meetings.  I’m sure this must work better in some places and I’d be interested in finding out who does this well and how they’ve made that happen.  Please send me any good examples you have of charities or not for profits who’ve got a great relationship with their trustees and who are getting the best out of them.

5.       Why isn’t there a central directory of all social funders and investors where they publish all their live funds?  This would make it easier for charities and social innovation projects to find and compare them and it would also significantly improve their dealflow.  Again – maybe there is and if so I would be grateful if someone can point me to it.

Apologies if I’ve dwelled upon too much of the negative in this first blog on this topic.  I don’t mean to be harsh as there’s so much good work happening generally and I personally feel completely elated to be working at Task Squad.  My interest is in helping everyone help each other to cover more ground with the limited resources we all have at our disposal.

I need your comments more than ever.  Let’s get some conversations started!

Harnessing the power of the newbie

I’ve recently (in the last month) joined the Board of SCIE (Social Care Institute for Excellence) as one of the new trustees and I’m very much in the mode of newbie at the moment, trying to learn as much as I can about UK social care.  It’s an unusual feeling for me to be so far out of my comfort zone.  Last week I attended a SCIE workshop in York with 50 or so people from across the health and social care sector.  Everyone was very friendly, welcoming and keen to answer the (many) questions I asked colleagues at my table but with all the jargon that’s used in the sector I did feel a little bit like a fish out of water.

In the afternoon we participated in an ideas gathering exercise.  We were asked to write ideas on cards, stick them on boards around the room and then read everyone else’s ideas – and if we liked one, put a blue sticker on it.  Genius way to collect ideas & feedback in an anonymous and non confrontational way.

As you are all aware and will no doubt have observed in your own place of work, the more senior you become in an organisation, the more difficult it is to get anyone in your team to disagree with you.  This is well documented and really quite frustrating when it happens.  CEOs go to great lengths to find ways around this.  It’s the reason why you should choose non executive directors who will be confident enough to challenge and disagree with you.

I wandered around and put two ideas up on the boards.  By the end of the session they were blue dot free.  No-one had voted for them.

Lloyd Davis at Tuttle Club

Lloyd Davis at Tuttle Club

I thought about this from time to time over the next day or so and then at Friday’s Tuttle club, discussed it quietly with Lloyd Davis and Tony Hall.  Stalwarts of the sensible both of them.  We concluded that my ideas had not been bad ideas per se – they were just completely out of kilter with the way that everyone else in that room thinks and expresses themselves.  They were too “different” for anyone to agree with them or probably even relate to them.  We debated for a while between ourselves and decided that it probably takes about 3 months in a new role for someone to become completely aligned with everyone else in the company or sector.

Once that happens, you’ve gained an assimilated team member but you’ve lost that fresh pair of eyes that you worked so hard to bring in and any new perspective they brought with them.

I’m interested in ways you think organisations generally can better harness the power of the newbie and it would be great if people out there who already do this well can share with the rest of us.  Please add your comments below.

Good to be back blogging again!

How to motivate your team…Lorraine Heggessey style

Last week Paul Webster (@watfordgap to the twitterati amongst you) & I were lucky enough to take a day out to represent Learning Pool at the Skills Third Sector conference.  The headline theme of the day was Our People, Our Skills, Our Future and we were keen to share with others what we’ve been working on for the past few years in other parts of the public sector.

Dame Mary Marsh addressing the Skills Third Sector Conference

Dame Mary Marsh of the Clore Social Leadership Programme was one of the keynote speakers.  Those of you who are familiar with the voluntary sector will be aware that Dame Mary has recently been appointed by the Cabinet Office to lead a review of leadership and skills which is due to be delivered in Spring 2013.  I was very encouraged that she spoke about now being a time for the sector to be bold and have the courage to do things differently and in a more entrepreneurial way.  Indeed, in a nutshell the key strands of the day that everyone kept returning to were:

  • the sector needs to invest in upskilling its people
  • better use can be made of technology to do things differently and in a more cost effective way
  • an opportunity exists to share more stuff both across the voluntary sector and between different sectors.

 

 

Nick Hurd, Minister for Civil Society

We listened to Nick Hurd (a man who has so far been a banker and an MP and who fears he may end up as a journalist or an estate agent) tell us about how he believes the sector must bring in more people with business skills as trustees.  He also made the very sensible observation that everything is always about the people and that leadership is especially important in times of significant change.  I was especially pleased to hear him suggest that the sector should take time to seek what is already out there and make use of it.  I have a dread of organisations or indeed entire sectors reinventing the wheel over & over again, simply because they haven’t taken the time to have a good look at what already exists – let’s face it – we’ve all seen that happen time & time again.

Later in the day Lord Victor Adebowale warned us that 88% of public sector cuts are still to come and he talked about the importance of collaboration and sharing learning across sectors.  Music to our ears.

Lorraine Heggessey, impressive career woman & role model

 

The speaker I really enjoyed, however, was Lorraine Heggessey, former BBC1 controller and the first woman to ever hold this post (despite the obvious handicaps of not being male, tall or having an Oxbridge background).  Lorraine talked to us about how managers & leaders can motivate their teams and make people feel valued in what they are doing.  These were a few of her suggestions and observations:

  • Think of your people as “talent” in the way that tv does and remember that talent is needy – Lorraine should know as Simon Cowell and Lord Sugar are just a couple of the people she’s had to work with
  • Remember that telepathy doesn’t work as a management tool, you have to rely on communication (Lorraine told us a story about how a colleague used to constantly arrive late for work & then spend 30 minutes chatting to her friend on the phone; her manager tried to deal with the situation by glaring at her & rolling her eyes, hoping she would take the hint.  Eventually the manager lost her temper and there was a big row.  The person simply said “you should’ve said” and from that moment onwards behaved at work in the way expected of her)
  • As a manager your behaviour is observed and noted – people in your team watch who you pay attention to & who you don’t pay attention to – it is noticed so be aware of that.
  • Greg Dyke ran a “cut the crap” programme at the BBC and asked staff what they wanted to change.  They said they wanted to stop tolerating maverick & diva behaviour from people in the team who won awards and critical acclaim.  They became known as the Bafta Bastards.  Greg tackled the issue & some of those people left the BBC.  So – think about who you are rewarding.  Every organisation has its stars but if you don’t manage & reward them carefully, you too could end up with a team of BBs
  • Watch out for people in the team falling out of someone’s favour & becoming “not very good” – it might be because they’ve been badly managed & demoralised.  Lorraine told us about how the BBC had a culture of not confronting poor performance but how managers would instead pass the person on to someone else.  All of us have seen that happen.  Better to address the root cause of any issue.
  • Manage by walking about – if you don’t spend time with your team you can’t manage them
  • Employ the best, not the easiest
  • Always employ people smarter than you when you get a chance
  • Spot when your people need to be challenged – if you don’t provide your team members with challenge they will get bored and leave.

Lorraine left us with a quote that I love “Everybody has a lot to learn from everybody”.  She also told us that she became a much better manager once she was a mother.

Fortunately, most of us are lucky enough not to work in environments like the BBC but still some good learns from Lorraine’s talk that are appropriate to most workplaces and teams.

Lorraine & Lord Victor finished by challenging the conference to start a movement to rename “the Third Sector” and to call it something else.  I’d be interested in hearing any suggestions you have in the comments below.  I know this has been a recurring theme for some years but maybe now is the right time to change to something more positive.

Find Time to Give

Minister_and_martin_and_me

I’m proud to serve my local theatre group in Derry as a voluntary non-exec director.  I find it satisfying to convert some of my free time to serving the local community that Learning Pool is based in and I live in.  It’s also a lot of fun.  The photo above is of me with the Millennium Forum & Derry Theatre Trust’s wonderful and inspiring Chairman, Martin Bradley, & Ed Vaizey (Minister for Communication, Culture and the Creative Industries) – it was taken at the party thrown by the theatre the day after Derry’s success in bidding for UK City of Culture 2013 was announced. 

I only wish I had enough free time to serve as a councillor but my working life is just too demanding right now – maybe later…

So what made me apply in the first place?  My first three years living in Northern Ireland were spent working in one of Belfast’s busy high tech start-ups.  Our customers were based predominantly in the Bay Area & Japan which led to a very long working day – start early to catch Japan before it went offline and stay late to welcome the Californians to their new working day.  By the time the company was sold, I was close to burnout and wanted to be involved in a project that was enjoyable but also included an element of “putting something back”.  I decided to join the theatre board because they were seeking someone with a commercial financial background.  Seven years later I’m still on the board and the benefits I have enjoyed during that time have been many fold:

·         I’ve met lots of interesting new people

·         I’ve been able to satisfy some creative leanings in some small way

·         I’ve helped the theatre flourish by working with the rest of the Board and the executive team to improve governance and financial management – the theatre’s creative direction didn’t need any help as the executive team have always had that side well covered

·         I’ve been able to re-use some specialist experience and that was satisfying

·         I’m proud that Derry is going to be the first UK City of Culture 2013 and glad that our theatre will be a key player in that.

My day job didn’t get any quieter.  Indeed quite the opposite…it got busier.  But I have no regrets about volunteering and figure I must have got better at managing my time.

If you don’t currently put something back, I urge you to have a rethink and consider what you could do for your community, however small.  I promise you it will be fun.