Engines of Change Have Many Parts

By Duncan Rein
May 1, 2005

The World is Flat

In his bestseller, The World is Flat, Thomas Friedman references a 1989 essay by economic historian Paul David entitled “Computer and Dynamo: The Modern Productivity Paradox in a Not-Too-Distant Mirror.” At the time, pundits were puzzled because computers had been introduced into the office environment several years before in the early 1980’s, but the economy as a whole had not yet seen significant productivity gains that had been expected. As economist Robert Solow wryly remarked, “Computers are everywhere – except in the productivity statistics.”

In his essay, David drew an interesting parallel between the introduction of the PC in the 1980’s and the invention of the electric motor in 1879, which over time would come to replace the steam engine. David observed that while the electric motor eventually brought incredible productivity gains to factories around the world, as well as tremendous benefit to society as a whole, it took over 20 years for these gains to be realized.

Why did it take so long? Well, it wasn’t enough for an exceptional genius to invent an electric motor. For the new invention to actually become useful, knowledge and information about the electric motor and the new potential it represented needed to be disseminated across the country and around the world. Business owners, especially in the field of manufacturing, needed to be educated as to the potential of this new technology for making their businesses more efficient. Even though doubtless they were overwhelmed trying to keep their steam-powered factories running smoothly, they needed to be educated as to the need for change, and they needed to find the capital to make the investments required to convert from the old to the new technology.

While business owners developed plans for re-calibrating their priorities and re-allocating their capital, new expertise needed to be developed in parallel. The new field of electrical engineering needed to be developed from scratch, so that innovation and new invention would be accelerated as demand required. New complementary technologies and new systems needed to be designed around the electric motor. New processes then needed to be designed around these new systems. New buildings needed to be constructed, as the factories of the 1870’s were large, multi-story structures due to the size of the old steam-powered systems, and the need to brace the large belts that were necessary to drive the steam engines. As smaller, electric-powered systems were introduced, factory architects needed to adjust their designs accordingly, bringing a wave of newer, single-storied factories that were cheaper to build and required a lower cost of maintenance.

This new technology also brought about change on the factory floor. Factory workers needed to develop new skills, or their positions would be filled by younger workers who understood the new technologies. Equipment operators needed to learn how to maintain and repair the new machinery. In short, the new technology was so revolutionary that everything around it had to change. People needed to learn a completely new way of doing things, and this took time. In the case of electricity, it took more than 20 years.

The Information Technology Revolution

While the computer brought very little in the way of productivity gains in the 1980’s, this started to change in the 1990’s, as more people learned how to use word processors and spreadsheets, and more people developed a comfort level with computers in general. But in many respects, we are still at the tip of the iceberg in the information technology revolution, and we have only seen the beginnings of the productivity gains that will result. The browser was invented by Netscape less than 10 years ago, and the Internet and email didn’t become a mainstream part of our day to day lives until very late in the 1990’s. As a society, we are only just beginning to learn how to take advantage of the incredible potential that is generated when all of our PCs are linked together, creating the World Wide Web.

As Friedman points out in The World is Flat, the business world has been adjusting quickly, becoming much more horizontal, just as his title suggests. Five years ago, Hewlett Packard was a company with eighty seven different supply chains, each managed vertically and independently, with its own hierarchy of managers and back-office support. Today, HP has consolidated its $50 billion business all the way down to five supply chains. Furthermore, all accounting, billing and human resources functions are now handled centrally through a company-wide system.

According to Carly Fiorina, HP’s former CEO, “We have gone from a vertical chain of command to a much more horizontal chain of command for value creation. How you collaborate horizontally and manage horizontally requires a totally different set of skills.” As the structure of how businesses are organized changes in a fundamental way, employees of those businesses must learn new skills and new ways of doing things.

In the same way, many ministries and non-profits have historically organized themselves by function, with each function managed independently. So there was a team set up that was responsible for how the ministry would communicate with its constituents through the mail. Similar structures were created to manage radio programs, magazines and other publications, product sales, events, volunteer management, as well as communication efforts with the people in the field doing actual ministry. For many ministries, this vertical, hierarchical structure has resulted in many different organizational silos. The organizational silos have resulted in data silos, as each group tracked and stored member data independently and oftentimes using different systems. While HP has consolidated its $50 billion business into five supply chains, I recently met with a $10 million ministry, which had 12 to 15 different data silos, each managed independently.

Of course, an organization’s website has historically been yet another data silo for many ministries. Many ministries, even small ones, have organized themselves, so that their web efforts have been managed vertically by webmasters and technology-focused people, who have had very little interaction with people in the organization focused on marketing and communication. This has resulted in a web presence for many ministries that is disconnected from other ministry functions. Historically, the web has not been seen as a strategic communication medium, but as a necessary evil and a headache, a black box which costs the ministry money.

A Powerful Engine of Growth

The information technology revolution now provides ministries with a tremendous opportunity to realize productivity gains, while strengthening relationships with their members and constituents, through the development of an integrated communication and fundraising strategy.

Recent advances in technology make it possible for a ministry to consolidate all of its disparate data silos into one member database, giving every ministry representative a 360 degree view of every constituent and all the different ways that this constituent has interacted with the ministry.

Online interactions can help a ministry to get to know its members better, and this information can be stored and then used to send more relevant and personalized communication to each member, based on who they are, what motivates them, what drives them, and why they became involved with the ministry in the first place. This contrasts to the one-to-many communications that typify the offline world.

In the context of an integrated communication strategy, a ministry’s website and its email communication reinforce and support all of its other communication channels, making them stronger, while also acting as a powerful engine of growth in and of itself. The old days of the website being a separate silo are now behind us. The web must be at the center of a ministry’s overall communication and fundraising strategy.

But like the introduction of the electric motor into factories of the 1870’s, the potential for an integrated communication strategy is not realized overnight. Like today’s businesses, ministries need to develop more horizontal structures to more fully take advantage of the new possibilities for collaboration. Ministry staff workers need to develop skills for collaborating and working together, so that the web works together with all of a ministry’s other communication channels. New expertise needs to be developed, as marketing principles from the offline world are applied to the online environment.

New possibilities for interactivity and personalization through the web and email need to drive the development of new strategies. Individuals in technology departments need to develop a basic understanding of marketing and communication principles, and communication professionals who have typically been technophobes need to take the time to learn and be trained on new tools that can help them do their jobs better.

No 21st century organization can afford to have a separation between its technology and marketing functions. Walls that have been erected need to be quickly torn down. In short, people involved in ministry need to learn how to do things differently. The ministries who are flexible and who can adapt to these new changes will be the ones who will thrive into the 21st century.

Making the Web a Strategic Priority

The key point is that ministries need to do more than invest in new technology. New investments in new technology, without reference to new organizational structures, new processes and new methods for collaboration will not bring about the desired results.

The development of an integrated communication strategy needs to be seen as a strategic priority, and needs to have full support from the leaders of an organization. For every dollar spent on new technology, three or four dollars needs to be budgeted for expertise required to develop and implement the strategies and tactics for taking advantage of this new technology.

A ministry that views its web presence as a strategic priority, requiring sustained investment over several years, will see gradual reductions in administrative costs, better and more consistent communication with members and constituents, growth in new members, improvement in donor conversion and donor retention, growth in online and overall revenue, and expanded ministry impact and reach.

Those that apply Band-Aids and short-term patches will be left behind over time, just as a factory which installed an electric motor in the 1870’s, but did not develop new expertise (or partnered with new companies that did possess this expertise), and did not modify its organizational structure and process to accommodate the new technologies, failed to realize productivity gains and eventually closed.

If you would like to find out more about how to implement these strategies and ideas in your organization, please take a moment to let us know a little about your needs.