What is digital transformation?

I’ve pondered this question over the last few weeks and months, moving between meetings with brilliant pioneers in digital technology, and events and articles on its role in the social sector. The consensus seems to be that digital transformation is about digital, and about transformation. That’s about as clear as it gets—though I’m not sure that matters (I’ve spent too long either observing or mired in definitional debates about impact measurement, impact investing and social enterprise to care too much for definitions).

However, I do think the current discussion about digital transformation in the social sector is missing a trick—and a huge one at that.

Things started to click into place when I recently came across a Harvard Business Review article on the roots of thinking about digital transformation. It referenced the 1979 HBR article written by Daniel Bell—Communications Technology, for Better or for Worse—that predicted, 25 years earlier, many of the transformations we’ve now seen through the internet: from online shopping to remote working.

It made me realise that the internet truly disrupts not just business models, but information. And when we keep this in mind we see how powerful digital technology can be to transform the social sector. Information underpins search, customer interaction and feedback in the private sector. But it also underpins the way that different businesses work with each other to create products and services—value chains and supply chains.

These all have parallels in the social sector—nonprofits don’t create impact in isolation, but need others to be delivering work that links with theirs: a youth mentoring organisation, for example, needs other interventions to be delivered by schools, employment agencies, and youth workers. Throughout these value chains, information is needed on the specification of products and services, and on the outcomes and social value they deliver to recipients.

Much of the current discussion about digital transformation in the social sector is about transforming individual nonprofits and social enterprises from the ground up. This is fantastic—I couldn’t be more excited about where that will get us. Like RunAClub, for example—a digital platform that allows anyone running a local club in the UK to manage the club’s key functions, communications and data efficiently and effectively.

But the transformation I’m most interested in—and where NPC wants to play a role through a forthcoming programme of work—is rooted in value chains. An example in the financial advice field is someone being offered a chat about their financial situation when they search for a payday loan—potentially avoiding the problem debt that other debt advice nonprofits would usually pick up months down the line. Or in the health field, a nonprofit being able to support a patient to manage and integrate a pathway of health and care services themselves, so it’s personalised, efficient, and connected.

So, as I started to sketch out in a previous blog, I see the true potential of digital transformation in its ability to reshape and build links between nonprofits’ and social enterprises’ products, activities and services. It can create user journeys or pathways between different organisations’ services in a way that reflects the complex and messy reality of people’s lives. It doesn’t respect the siloed approach that project-based and output-based funding demands of organisations. And it isn’t a fan of the standoffishness between nonprofits’ boards that so often prevents them from working better together.

In other words, I believe digital technology holds the key to unlocking value chain thinking in the social sector.

Our plan is simple to lay out (but admittedly hard to deliver on): we will scope out the opportunities to use digital technology at a ‘field’ level, sector by sector, and bring together digital and social experts to exploit the opportunities identified.

It’s undoubtedly possible to do this in purely technical terms; we’ve already started to find opportunities in advice provision, from joining up previously isolated pockets of advice, to using predictive analytics to offer people help proactively based on what the system thinks they probably need. The question at this point is can we attract investment to help realise the transformative potential of digital technology in the social sector?

I’m an optimist, so of course I believe we can. We have to.

This article was originally published by Markets for Good here.

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