The impact of stable income for tech, innovation and people
- Steve Thorlby-Coy
- Jul 19, 2022
- 7 min read
I recently spoke with Andrew Armitage, founder of A Digtal as a guest on The Clientside podcast. What started as a general conversation about my career led down some interesting pathways which I thought I would explore more here on my blog. Links to the podcast and transcript are below. Have a listen and tell me what you think.
I’m a modest sort of a person so I still find it a bit strange to talk about myself and my career outside of a job interview. Thankfully, it wasn’t all “me me me”. We talked about the different operating environments and cultures of the organisations I’ve worked for, and how these impact on technology, innovation and change. We talked about non-profits in particular.
I’ve worked with different types of non-profit organisations. I've noticed that how they’re funded and governed has a massive impact on their ability and willingness to invest in tech, digital and their risk appetite for innovation.
Organisations with a relatively stable and secure income stream can make longer term investments. I definitely experienced this in the social housing sector. Others, such as the charities I’ve worked, for have much less stable funding. They rely on shorter term contracts, perhaps 3 to 5 years at best, or donations from fundraising. I know many excellent fundraising teams work wonders to maintain some sort of stability and predictability, but fundraising income can fluctuate wildly.
What does this mean for risk appetite?
Your income directly impacts your risk appetite. There are other factors of course, particularly the attitude of the Board and senior team because they set the strategy, policies and culture. If your income is secure and stable, you can afford to take more risks because you have more confidence in the future. You can try things out, and importantly, you can afford to fail. There's always a limit of course, but relative to organisations with less stable income streams, you can fail. And failure is an important part of success, particularly in the digital and technology world. The 'fail fast, fail cheap' mantra is a good one for those organisations with less stable income, but even a small, cheap failure for an organisation with unstable future income can seem like a catastrophe. I've definitely heard of projects in those more stable organisations which have taken years with eye-wateringly high costs. And I expect you have too. Public sector organisations might find their failures in the media, and those are usually pretty risk averse organisations with multiple layers of governance and oversight. We probably don't hear as much about failures in non-profits unless it results in bringing the whole organisation down, but I'd suggest that there are plenty out there which are hardly 'fail fast, fail cheap'.
What does this mean for people?
If your income is secure and stable, you can build larger, permanent teams who learn and grow together. You can attract and retain people with good salaries and benefits, cool modern offices, all expenses paid learning experiences and good quality equipment. Who doesn’t want to work somewhere like that? If your income is less secure, you might struggle to attract and retain talent. You probably have to make choices and trade-offs. Reasonable salaries or cool offices, but not both. Recent research by ThirdSector seems to support this, citing a widening pay gap between charities and businesses. I would argue there's a gap between non-profits with stable incomes and those without. Where charities have tended to have a recruitment advantage is their purpose. The outcomes for people and society are a massive motivator for the majority of the people I’ve worked with in charities. Good people doing good things for others.
Increasingly, I've noticed younger people specifically citing this as a career objective. Though in my experience, this is not as prominent in technology jobs. It's a generalisation, and not something I've researched, but older tech colleagues will talk about being motivated by the purpose, whereas younger tech colleagues talk about hygiene factors (salary etc.) and wanting to work on interesting projects with modern technology.
For a few years now, for-profit businesses have invested in activities that make their mission or purpose more ethical, more environmentally friendly, more supportive of different communities, more caring. Some organisations have been accused of using this to mask or cover up their bad practices, we‘ve all heard of “green washing” or “sports washing” and even "charity-washing" where brands partner with charitable causes. Of course, when it’s genuine and making a difference then of course a this is a good thing. I know the charities I've worked for benefitted significantly from partnering with well known businesses and I know smaller local charities benefit from their partnerships with local businesses. When businesses emphasise these charitable/activities when hiring, it means that the recruitment advantage for charities is diminishing.
What does this mean for tech?
The most blindingly obvious thing here is that investment in technology is easier when you have a larger, more stable income. Under-investment in tech often increases risk in a number of areas: security, stability, maintainability, employee productivity, skills, staff recruitment and retention. These less visible costs can add up and in my experience lead to the need to make a significant step-change investment to bring everything up to date. The old model of one-off capital investments every 4 or 5 years has been replaced with an ongoing continual spend, partly because technology is increasingly provided "as a service" with a subscription model. This is a challenge for organisations with less stable income, but I would argue that those organisations probably spend a similar amount over the long term with either investment approach, but crucially, the revenue model means reducing those risks I mentioned.
Of course, having less money to spend also drives creativity. Fortunately, there are loads of software tools that are open source or free. Non profits often benefit from significant discounts on paid-for licenses and services. The challenge with free or open-source becomes about skills and interoperability. Larger organisations need tools for collaboration but many apps are aimed at individuals or only work in isolation rather than as part of a suite of tools. Microsoft Office is still the leading productivity suite for organisations and it’s the default for most schools, colleges, and universities, so switching to Google docs or OpenOffice means investing in training and skills development. (You have to admire Microsoft’s business model. I once heard it described as being like a drug dealer’s approach - give something cheap or free to get people hooked and then ramp up the price later.)
What does this mean for innovation?
I think having a stable income stream can actually be a barrier to real innovation and transformation. There's nothing quite like a crisis to make you change quickly e.g. COVID. If you're faced with a genuine 'burning platform', you're more likely to take a chance by leaping into the murky sea below. A lack of stable income can certainly be a driver of innovation. This is where the charities I've worked for have been good examples of innovation and change. They generate ideas to change services, to engage funders in different ways, and they mobilise quickly because they have no other option. When they can't afford to employ people, they seek out volunteers, who are motivated by the cause of course, and they build connections, sharing networks and they collaborate to survive and thrive.
If your income stream is stable, you don't need to consider the really radical options that could transform the services you provide or you might be slow to react because you can wait for others to take the bigger risks. Kodak and Blockbuster are the cautionary tales here. And you probably don't need to engage with others because you can afford to have expertise in-house. Where those with stable incomes do network and share it can feel superficial. I've been to conferences and networking events and had enthusiastic discussions, but when I've followed up afterwards there's been little appetite for actually doing anything. You can pay some expensive membership fees for networks in some of those non-profit sectors with more stable incomes. For those running the networks, encouraging collaboration is a for-profit pursuit, which I'm not criticising. If I were really cynical, I’d say it’s in their interests to keep talking about those problems. But, I know people running these kinds of networks and I know they are genuinely looking to contribute to improving people’s lives too. The networks for those with less stable incomes tend to be driven by enthusiastic volunteers and events are far less glamorous or non-existent. This is something I will be actively working on in the coming months. I'm looking to establish a network of tech, innovation and change people in the hospice sector. It will need resources so I'll be looking for funding to help make this sustainable so we can deliver real change in the long term. In the short term, we might be launching with enthusiastic volunteers.
Don’t just take my word for it
These are my opinions informed by my own experiences and conversations with others, but they are supported to some extent by research such as The Charity Digital Skills Report 2022. The report found that larger charities are more likely to be further ahead with digital than smaller ones. It states that smaller charities would benefit from more funding and support to help them with digital. The report categorises ‘large’ and ‘small’ based on income, and I would argue that larger charities have more stable income. 70% of charities are concerned about the sustainability of funding for digital and 40% of charities say they urgently need funding for devices, software and infrastructure. Funding and skills are the top two challenges around digital. I highly recommend this report and would love to do a similar report focusing on the hospice sector.
As a qualified coach, I can help you to be more self-aware and confident in your abilities and address work challenges. Reach out if you'd like to discuss coaching with me. I offer career/work coaching for people in any role. I am able to offer a blend of coaching and mentoring for people in IT and change roles, particularly managers or aspiring managers.
I am currently able to offer sessions free of charge - contact me via LinkedIn or Twitter
Commenti