How could applying modern business strategies, data and technologies transform social giving?
Enabling philanthropic decision-making for greater social gains
With approximately 260,000 foundations worldwide, of which three-quarters started in the last 25 years, philanthropy is considered to be a young, emerging sector (Johnson, 2020, pg 10). ?Over the last decade disparities in societies have widened - it’s estimated that there are 15 million millionaires and 2000 billionaires, and ~10% of the world’s population still live in poverty (Johnson, 2020, pg 12). ???
In 2010, Bill Gates and Warren Buffet launched the Giving Pledge in an effort to rally the world’s richest people in philanthropic work using large-scale events to educate, share, and raise funds via their community. Although Bill Gates has proven to be systematic in solving real-world problems (Economist, 2021), the Giving Pledge hasn’t gained as much traction as hoped and there is a lack of visibility as to whether members follow through with their pledges (Albrecht, 2022).?
Despite the rising popularity of social giving, according to Rob Reich (2018), philanthropic work does little to address the causal problems. A study by Greenhalgh & Montgomery (2020) evaluating how philanthropists and charity CEOs make funding decisions suggest there are several barriers preventing more rigorous decision-making, as shown in table 1.
Of course, the local government holds an incredible responsibility when it comes to dispersing funds for impacting social change and addressing inequalities. According to the London recovery board (2022), 780,000 people earn below the London living wage.?Could social enterprise support so-called levelling up in areas that affect communities the most?
As a product manager, I work to understand which problems engineering teams should solve and provide evidence to back up any recommendations for investment. There is a real sense of responsibility, not only in representing the people that experience these problems but also to investors in ensuring funds are deployed and value is created and captured in the process. What if we could apply this level of prudence to help donors select which causes to support and why? Would it result in resources being pooled and distributed in a more impactful way? And what role could technology and data play in transforming philanthropy?
Design-thinking for the project
ThinkBig represents the culmination of ideas for transforming how philanthropic efforts could be channelled. The vision is simple:
Help philanthropies remove societal inequality
When we talk about philanthropy, we tend to think of wealthy individuals giving millions of pounds to a cause through their independent foundations. However, philanthropy is not defined by wealth - it can be someone who gives money, time, or knowledge to a cause. Although the premise is simple, a great deal of human coordination is needed to make a difference, which involves many different actors across the ‘giving’ ecosystem. Some of which are:
As part of the transformation, we need to consider which business model would be most effective at meeting the needs of users while driving growth towards the vision.
A product-based model
In a product-based model, value is created by developing solutions that address specific customer pain points, along with value captured through monetisation of the offering?(Zhu & Furr, 2016). ?Naturally, this leads to increased focus and reduced complexity, both in terms of deploying staff and making investment decisions. According to research, starting with a defensible product with a critical mass of users is a best practice for ensuring success when moving from a product to a platform business (Zhu & Furr, 2016, pg 74).
A platform-based model
In a platform-based model, a social enterprise could leverage network effects to drive value by enabling people to connect and exchange with each other based on their complementary needs (Zhu & Furr, 2016, pg 75). In the long run, this helps build a competitive advantage and could lead to a winner-takes-all outcome.
Bridging gaps and operating in a central role could be advantageous in conveying legitimacy as the broker of information (Gregorio, 2013, pgs 44-45); a key advantage as an intermediary, particularly one building philanthropic connections.
Consistent with Gregorio’s perspective (2013) inter-organization value appropriation and use of relation-based power are essential for exploiting networks and extracting additional value from actors (in this case, users of the platform). Following Lurch and Vargo’s view on service-dominant logic (S-D) the premise “is to service itself by serving others”, where customer-centricity and co-creation form a primary purpose for the firm (Lusch & Vargo, 2014, pg 17). Does this suggest that value co-creation and appropriation could be an important driver of network effects, and would it be more effective with a platform-based business? I would suggest so.
However, it is important to note that a platform strategy does not negate the need for products that deliver value (Zhu & Furr, 2016).
A hybrid business model
A study by Zhu and Furr (2016) proposes that a hybrid of product and platform models provides the best mix when transitioning from a product to a platform strategy. Firstly, the hybrid model recognises that products require continual focus throughout their lifecycle to remain attractive, while a platform can help drive adoption, create, and capture additional value, and depending on the cost base, take advantage of economies of scale. Secondly, a hybrid model allows the business to have a paralleled focus on product differentiation, take advantage of same-side and cross-side network effects and discover new value from the demand side (Zhu & Furr, 2016, pg 76).
Understanding opportunities for growth
As a market-leading fundraiser for charities worldwide, Giving.com (trading as JustGiving.com) will be used as a benchmark on which learnings can apply to address philanthropic barriers in the sector. Although there are nuanced differences in which user types they serve (mass market crowdfunding vs the issuance of large grants), as a platform business, there are similarities that could apply to scaling philanthropies. ?
JustGiving.com was founded in 2000 and aims to position itself as “the world’s most trusted platform” (JustGiving.com, 2022, About us). As a for-profit business, the firm has come under scrutiny for its business model. A recent campaign led to JustGiving.com receiving £308,000 in fees from Tom Moore’s foundation, which, during Covid-19 raised £39M for NHS staff (Speare-Cole, 2020). The media’s response to JustGiving’s business model demonstrates the social tensions caused by profiteering from charitable work. ??
To create ThinkBig as a valuable, differentiated service, I have chosen to use the four actions framework (Kim & Mauborgne, 2005). This will allow us to establish which aspects of JustGiving’s service we could eliminate, reduce, raise, and build on to create a service that meets the needs of philanthropists and charities alike.
Plotting the inputs from the four actions framework onto the strategy canvases framework (Kim & Mauborgne, 2005) illustrates the relative comparison between JustGiving and ThinkBig across the factors identified in table 2.
Profit strategy canvas
Establishing a low-cost base will be key to maximising the use of revenue to facilitate value creation for users of the platform. By utilising open innovation strategies, we can reduce operational overheads via volunteers contributing to the app and data marketplace and build project awareness via social and search marketing. This coupled with contract tendering will provide suppliers with an acquisition channel for winning business and ThinkBig with a source of revenue.
From a feasibility standpoint, the biggest unknown would be the assumption that suppliers would want to use the platform and the right projects would exist to capture value. ?This would need validating upfront.
Value strategy canvas
The main value proposition will focus on overcoming philanthropic barriers to decision-making and providing a marketplace in which projects can be researched, funded, and contracted. This includes providing quality, evidence-based information related to a cause, measurement tools for showing the impact of funding, and transparency of how funds are used. The aim here is to enable economies of scale for large-scale funding, providing confidence and visibility through data insights and integrated supply chains.
The approach of using volunteers carries some risk regarding software quality and usefulness and would require significant internal governance. However, establishing strategic partnerships with external suppliers and software vendors could present sensible mitigation.
领英推荐
‘People’ strategy canvas
From a people perspective, the main benefit of moving to a non-for-profit firm is eliminating the tension between growing profit on behalf of investors versus raising funds to invest in social good. An approach that would create increased focus and credibility among different users and contributors of the platform.
One aspect that this process fails to illustrate is the complexity of affecting social behaviour, which is polarised across different socioeconomic groups. Figure 3 assumes that the value created by the product would provide a strong basis for attracting the communities.
Innovation strategy
The approach to innovation follows that of the value spaces framework (Henfridsson et al., 2018, pg 92) loosely based on Schumpeter’s (1934) observation of innovation recombination. I have chosen to focus on creating new value paths from existing digital resources due to the sheer number of complementary resources available, both in terms of content and services. This approach is consistent with design recombination (Henfridsson et al., 2018, pg 92).
As shown in figure 4, the assumption is that contents would be obtained through a combination of open data from government and census surveys, and partnerships with trusts and charities in co-creating and appropriating value through the collaboration on evidence-based projects. Geographical mapping services could also be used to contextualise the data. The value paths shown in figure 4 move vertically to power services, and horizontally to recombine digital resources in the creation of new value (ThinkBig augmented data).
For services, the ThinkBig marketplace would be centre stage for value paths, brokering philanthropic projects that leverage augmented datasets and allows donors to send funds. The marketplace software development kit (SDK) and data platforms use open standards and modularity to enable flexible contributions from volunteers, whether it’s a software engineer, data engineer, marketeer, or journalist. Providing a strong valuation proposition for developing a volunteer model could deliver a low-cost base and foster same-side and cross-side network effects.
To provide transparency to donors, charities, trusts, and contractors, all financial and contractual transactions could be stored in blockchain, providing immutable, tamper-proof, and decentralised records. This level of transparency will help prevent fraud. Smart contracts would also be considered to help automate actions based on predefined rules for both executing contracts, transferring funds, and dealing with disputes (IBM, 2022).?
Concluding thoughts
The exploration of design thinking demonstrates a product-platform business model centred around a marketplace of data insights and applications has its place in supporting philanthropic decision-making and brokering collaboration. The recombination of government open standards on grant investments and the use of deprivation modelling using census data demonstrate the general feasibility of this approach.?However, what philanthropists deem credible evidence-based data (as shown in table 1) requires a deeper understanding.
In contrast, there are some views that the use of quantitative data has limits and philanthropy requires a more holistic approach to understand and affect change in social behaviours (Economist, 2021).?
From a technological perspective, there is a role for technologies to help industry actors collaborate. However, it does raise the question of what implications technologies like blockchain may have on the future of platforms. Will blockchain require less from platforms, or even make them obsolete (Weking et al., 2019)? From a transactional viewpoint, there is certainly benefit in the speed, reliability, and trustworthiness of decentralised ledgers, but perhaps not in building social capital, an important part of value appropriation (Gregorio, 2013). For this reason, I suggest blockchain alone would not disintermediate platforms, but would rather strengthen the foundations of mutual trust through increased transparency (H?uberer, 2011).
The use of blockchain for smart contracts could create numerous value paths across the content and service value spaces shown in figure 4, providing positive feedback loops for marketplace projects and enriching upstream data. Conversely, the automation of smart contracts requires some rigour in the verification process, therefore creating tension between the decentralisation of information and information sharing (Cong & He, 2019). Of course, this highlights the privacy and ethical issues which would need further understanding. Due to the lack of empirical evidence regarding the impact of blockchain on business models, again, more research would be required (Weking et al., 2019).
The hybrid strategy hinges on driving network effects by leveraging positive feedback loops and sufficiently handling any negative feedback loops. According to Hagui and Rothman (2016), scaling the firm too quickly, too early can amplify flaws and make pivoting business models much harder, while risking a disastrous breakdown. Consequently, further research and validation of a product-market fit using lightweight experimentation would help reduce risk and supports decision-making for further investment.
References
Albrecht, L. (2022) The Giving Pledge turns 10: These billionaires pledged to give away half their wealth, but they soon ran into a problem. Marketwatch?Available from: https://www.marketwatch.com/story/giving-away-money-well-is-very-hard-the-giving-pledge-turns-10-and-its-signers-are-richer-than-ever-2020-08-08 (Accessed
Board, T. L. R. (2022) London Recovery Board statement on Levelling Up. Available from: https://www.london.gov.uk/sites/default/files/london_recovery_board_-_levelling_up_statement__0.pdf ?(Accessed 22.03.2022).
Cong, L. W. & He, Z. (2019) Blockchain Disruption and Smart Contracts. Review of Financial Studies, 32 (5): 1754-1797.
Economist, T. (2021) The Gates Foundation’s approach has both advantages and limits.
Greenhalgh, C. & Montgomery, P. (2020) A systematic review of the barriers to and facilitators of the use of evidence by philanthropists when determining which charities (including health charities or programmes) to fund. Systematic Reviews, 9 (1): 199.
Gregorio, D. D. (2013) Value Creation and Value Appropriation: An Integrative, Multi-Level Framework. THE JOURNAL OF APPLIED BUSINESS AND ECONOMICS, 15 39-53.
Hagiu, A. & Rothman, S. (2016) Network Effects Aren’t Enough. Harvard Business Review, 94 (4): 64-71.
Henfridsson, O., Nandhakumar, J., Scarbrough, H. & Panourgias, N. (2018) Recombination in the open-ended value landscape of digital innovation. Information and Organization, 28 (2): 89-100.
H?uberer, J. (2011) Social capital theory. Springer.
IBM (2022) What are smart contracts on blockchain? [online] Available from: https://www.ibm.com/topics/smart-contracts (Accessed 22.03.2022).
Johnson, P. D. (2020) Global Philanthropy Report: Perspectives on the global foundation sector. Available from: https://www.ubs.com/global/en/ubs-society/philanthropy/experiences/philanthropy-reports/shaping-philanthropy.html ?(Accessed 20.03.2022). UBS:
Kim, W. C. & Mauborgne, R. (2005) Blue Ocean Strategy: FROM THEORY TO PRACTICE. California Management Review, 47 (3): 105-121.
Lusch, R. F. & Vargo, S. L. (2014) The service-dominant mindset. In: Service-Dominant Logic: Premises, Perspectives, Possibilities. Cambridge: Cambridge University Press:
Reich, R. (2018) Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better. Princeton University Press.
Schumpeter, J. (1934) The theory of economic development. Harvard University Press, Cambridge, MA,
Speare-Cole, R. (2020) Downing Street says JustGiving will want to 'reflect' on '£300K fee' for Captain Tom Moore's fundraiser. Standard?Available from: https://www.standard.co.uk/news/uk/downing-street-justgiving-fundraiser-fee-captain-tom-moore-a4435881.html (Accessed 21.03.2022).
Weking, J., Mandalenakis, M., Hein, A., Hermes, S., B?hm, M. & Krcmar, H. (2019) The impact of blockchain technology on business models – a taxonomy and archetypal patterns. Electronic Markets, 30 (2): 285-305.
Zhu, F. & Furr, N. (2016) Products to Platforms: Making the Leap. Harvard Business Review, 94 (4): 72-78.
Associate Professor (Reader) of Responsible Digital Innovation and Education at the University of Warwick
2 年Hi Terry - Glad that you enjoyed our Digital Transformation module and thank you for having shared your insightful blog!