Ground Work’s Innovative Business Model

Ground Work’s Innovative Business Model

Executive Summary

This article discusses the business model of a charity organization called Groundwork. While Groundwork has numerous trusts established and functioning across the United Kingdom, this article mainly discusses Groundwork Northern Ireland. A business model helps companies to operate the business successfully. The model identifies the customer base, products or services, details of finances, channels of distribution and sources of revenue. Opportunities and threats evaluation through situational analysis help in business model innovation. Groundwork NI is adapting its business model through incremental innovations. For instance, the charity organization has introduced bonfire beacons in replacement of regular beacons. The bonfire beacon is an environmentally friendly and sustainable option. In addition, the current pandemic has restricted social gathering, and therefore, Groundwork NI cannot host events to teach horticultural skills like before. Hence, the charity organization has done its best to exploit the opportunities present in the current situation and undergo business model innovation. Groundwork NI provides services in several industries such as the public sector, housing sector, health sector, education sector and businesses. Analysis of Groundwork NI’s business model reveals that its strongest building block is ‘partner network’, while the weakest is its ‘distribution network’.

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Introduction

Groundwork is an environmental organization established in the United Kingdom. The organization is registered as a charity and is situated in Birmingham (Groundwork NI, 2020). The countryside commission initiated a project known as UFEX80 which was rebranded later to ‘Operation Groundwork. The first groundwork trust was developed at St. Helens and Knowsley in 1981. Since then, the organization has been referred to as the ‘Groundwork UK (Groundwork, 2020a).

The organization emphasizes on enhancing the quality of life throughout the United Kingdom. Groundwork focuses on establishing stronger and better communities by prioritizing on places, people and prosperity. Some of the main agendas of the Groundwork UK are to tackle the issue of unemployment, encourage environmental sustainability, to bring the awareness regarding climate change, flourish the local economies and promote the wellbeing and health etc. Groundwork makes sure that these objectives are met by partnering up with private, public and volunteering individuals (Groundwork, 2020b).

Overview of Groundwork NI

The case study discusses that Groundwork was developed as a result of the radical experiment aimed to bring together government, communities and organizations to improve the quality of life in places that have been neglected. The organization has numerous trusts established around the United Kingdom (Groundwork, 2020b). However, this paper discusses the ‘Groundwork Northern Ireland’ as the case study is based on it. The case study claims that till now, the Groundwork Northern Ireland has distributed grants of about £6, delivered 100 beacons for community celebrations, and converted four areas into Meanwhile Gardens. The Meanwhile Gardens are community gardens that are endorsed by the Groundwork NI. The charity organization has also helped around 65 Men’s Sheds in Northern Ireland. In addition, the case study mentions that Groundwork NI has introduced the ‘grow box’ consisting of labels, gloves, planter box, compost, seeds for vegetables and instructional videos during the Covid-19. Similarly, in 2008, the charity organization established and installed an unlimited number of bonfire beacons (Groundwork, 2020b).

An innovation strategy consists of a set of activities that ensure the future growth and development of the organization (Pisano, 2015). The current innovation strategy of Groundwork NI appears to be focused on incremental innovations. The organization already sets agendas for the next three years as it develops its corporate strategy. The incremental innovations allow Groundwork NI to improve the existing services by adding and removing features from them as needed (Souto, 2015). As a result, this enhances the value proposition delivered by the Groundwork NI. The case study explains that the primary services of the Groundwork NI include corporate responsibility, sustainable business, empowering young individuals, instilling life skills in people, promoting employment, providing landscape services, ensuring grant management and diminishing waste generation. The organization meets these objectives by innovating incrementally. For instance, with time, the Groundwork NI has transformed the regular bonfires to bonfire beacon. The case study claims that the bonfire beacon is an environmentally clean alternative and better serves the communities.

Situational Analysis

Groundwork UK is a federation of charities and operates in the charity and voluntary sector of the United Kingdom. The charity and voluntary sector is one of the most crucial sectors of the United Kingdom and is called ‘the third sector’. The third sector is a part of the economy that is formulated by non-profit and non-governmental organizations such as community groups, trusts, charities, volunteers etc. (Bennett, 2003). The UK civil society Almanac 2019 reported that in 2016/17, this sector contributed around £17.1 to the United Kingdom’s economy. Moreover, the industry employs 870,000 paid employees. Out of the 168,000 charities operating in England and Wales, most of them are based in England (Brammer and Millington, 2003). The north-east of the UK has the lowest while the south-east has the highest number of functioning charities. Small, medium and large scale charities and NGOs are operating in the charity and voluntary sector of the United Kingdom (Anheier and Kendall, 2012). The competitors of Groundwork NI include Age UK, Childline, The Princes Trust, The Salvation Army, UNICEF, Wellcome Trust, British Heart Foundation, Barnardo’s, UNICEF, the British Red Cross, Amnesty International, the Salvation Army and many more. All these trusts and charity foundations are making attempts to improve the standard of living and promote the wellbeing of people. The focus of all these charities, including the Groundwork NI is on human rights, education, community development, medicine and health, housing, human rights, conservation and environment (Swain, 2020).

Opportunities and Challenges faced by Groundwork NI

The third sector faces numerous threats and opportunities. Two of the main opportunities offered to the third sector include the availability of the government-backed funds and capacity to get public sector contracts (Macmillan, 2020).

Unlike profit-making organizations, charities like Groundwork NI have a split focus. On the one hand, they have to provide services to the customers who are homeless, the ill, the environment and the general community. While, on the other hand, they also have to cater to the requirements of supporters, including government agencies, donors, volunteers and charitable trusts. This creates an intense dilemma for charities like Groundwork NI who have to cater to two sets of customers. Fundraisers have a hard time generating income while meeting the requirements of both beneficiaries. Hence, one of the biggest challenges of charities like Groundwork NI is ‘income generation’ (Stride and Higgs, 2014).

Brexit is also believed to impact charities like Groundwork NI negatively. Immigration policies post-Brexit have had a severe impact on the volunteers and workforce of the Groundwork NI. Between June 2016-June 2017, the European volunteers decreased by 20% even though a rise in the number of workforce in the charity sector was observed, hence indicating that the EU nationals are leaving post-Brexit (CAF, 2019).

Another issue faced by the Groundwork NI post-Brexit is economic uncertainty. Such uncertainty is leading towards lower wages of people which in turn decreases their disposable income and donations. Furthermore, as disposable income shrinks, people tend to focus on other revenue streams. This reduces their leisure time due to which they volunteer less (Morris, 2018).

Finally, as the third sector gets funding directly by the European Union institutions, these fundings might be heavily affected post-Brexit. One of the most important goals of the Groundwork NI is regeneration and community building which are the beneficiaries of EU funding (Charities Aid Foundation, 2019). It is estimated by the Directorate of Social Change (DSC) that the third sector would experience £250 million loss in funding while social enterprises will experience a loss of £500 (Alcock, 2014).

Covid-19 has also severely affected the Groundwork NI in terms of funding, the number of volunteers and services provided (Groundwork, 2020c). The case study mentions that Groundwork NI used to teach horticulture skills to individuals in one location pre-Covid-19. However, Covid-19 led to lockdown and social distancing due to which Groundwork NI had to bring incremental innovations in its services provided. Now, the charity focuses on supplying individuals with the seeds and support through videos (Hoeber, Doherty, Hoeber and Wolfe, 2015). The case study depicts that this is how Groundwork NI helped individuals working at home. While this way of instilling horticultural skills in individuals is undoubtedly a challenge experienced by the Groundwork NI, the case study also mentions that it has the potential of becoming a viable economic business model. As a result, corporate and business organizations can also be targeted.

Trends in the sector

Charity organizations generate income from two sets of beneficiaries. One is through earned income which is gathered through funds raised by selling goods and services. The other one is donations. The consumer analysis of the third sector in the UK suggests that donations will decrease in 2020-2021 as the earned income is expected to drop dramatically. This is because the government has urged the closure of non-essential retail shops. In April 2020, it was claimed that the UK government would grant a package of support of £750 million to the charity organizations so that they could continue working (IBIS world, 2020).

On the other hand, sector trends suggest that social media like Twitter, Instagram, Facebook and Information and Communication Technologies (ICT) are revolutionizing the third sector as well. These trends pose an opportunity for Groundwork NI to expand its business operations to social media as well. Social media can help Groundwork NI to engage with its stakeholders, attract donors and volunteers, raise money and fortify the public trust in the charity organization (Garkisch, Heigdingsfelder and Beckmann, 2017).

Business Model Innovation

A business model describes how activities and things are done to deliver value to customers by a company, how to perform the functions of a business for the survival and sustainability of the company and how to operate and manage the company. It is crucial for organizations, be it profitable or non-profitable to have a business model to function appropriately (Joyce and Paquin, 2016). Business models help in the articulation of how value for the customers is created, delivered and captured. A business model is considered to be a system-level holistic approach in defining how a business operates. Business models have three crucial elements called value, resources and transactions. The nine building blocks of a business model canvas are called as key activities, value proposition, customer relationships, customers, key partners, costs, key resources, channels and revenues (Hong and Fauvel, 2013). These nine building blocks are mainly associated with four major areas of a business referred to as offer, customers, financial viability and infrastructure.

Customer segments are referred to the people or groups of people that the organization is targeting to sell its products and services to them. Organizations must be able to segment their customers based on geographics, behaviour, preferences, age, gender etc. Developing proper customer segments allow companies to understand their needs and wants better. This, in turn, ensures that they are provided customized services and products (Muhtaroglu, Demir, Obali and Girgin, 2013). Customer relationships define how companies aim to interact with the customers throughout the journey. Various types of customer relationships such as co-creation, automated services, communities, dedicated personal assistance and self-service are available (Coes, 2014).

Similarly, channels describe how a company reaches out and communicates with its customers. Channels help the companies in generating awareness regarding their products and services. Owned and partner channels are considered to be the two types of channels (Ojasalo and Ojasalo, 2018). Revenue streams are described as the sources through which a firm generates money as a result of selling its services or products to the customers (Turko, 2016). Key activities are the set of activities that are necessary to be fulfilled to make the business model work properly. These key activities mainly focus on communicating with the customer segments, creating value propositions, generating revenue and establishing positive customer relationships (Rytkonen and Nenonen, 2014). Key resources are the necessary inputs such as human resource, finances, intellectual property and physical resources. These resources are crucial for conducting key activities of an organization (Bonazzi and Zilber, 2014). Key partners are the significant suppliers, partners, companies and government bodies with whom an organization needs to partner up to perform efficiently. Cost structure explains all the costs associated with operating a business. Lastly, a value proposition is the building block of the canvas model as it shows the unique solution towards a problem faced by the customers (Sparviero, 2019). Social innovation is referred to as the latest social practices that aim at developing products and services that better serve society. Groundwork NI also focuses on social innovation. The case study mentions that the charity organization does it by providing community services, instilling life skills in people, providing employment, reducing energy, waste and water, ensuring sustainable business, supporting young individuals etc. Hence, the business model of Groundwork NI is based on social innovation.

The business model is considered to be extremely significant for an organization as it allows to understand many crucial aspects. Such as what problem the organization’s market offering aims to solve, how will it ensure customer value, how the firm will stay ahead of the competition, how all the costs and revenues will be anticipated to perform efficiently (Ladd, 2018).

While the business model is developed pre-start stage of the business, however, it is transformed periodically for the established company which is referred to as the business model innovation. Business model innovation is a mechanism for improving the value creation by changes in the organization’s underlying business model (Chesbrough, 2010). Business model innovation is crucial as it corresponds to the changing internal and external environments. Moreover, it helps in developing a competitive advantage for an organization (Lindgardt, Reeves, Stalk and Deimler, 2009).

Opportunity and threat recognition leads to ‘business model innovation’. Opportunities can be identified by observing trends in the economic, social, political, regulatory and technological environments (Schneider and Spieth, 2013). For instance, according to the case study, the Groundwork NI has introduced the ‘bonfire beacon’ as an alternative to the bonfires. These bonfire beacons have been designed and manufactured by the Groundwork NI as a result of shifting social trends and increasing environmental sustainability laws. Communities are becoming increasingly aware of these environments in which they live. Hence, the introduction of Groundwork NI’s bonfire beacon will act as a sustainable and eco-friendly alternative to traditional beacons. Such trends can provide new businesses and product opportunities. Companies can innovate their business models by adopting different theories. Innovation diffusion theory, concerns-based adoption model, technology acceptance model, the chocolate model are all the theories that can be used to innovate the business models (Mitchell and Coles, 2003). For instance, the case study explains how Groundwork NI executed business model innovation by introducing ‘Grow Box’ during Covid-19. The five attributes of the innovation diffusion theory explain how the innovative grow box by Groundwork NI is adopted. The relative advantage of the grow box is high as it supports the vulnerable people in aid while keeping in consideration the isolation requirements of the Covid-19. The grow box has proved to be extremely compatible to use and perfectly fits the existing process or workflow of the users. Thirdly, the complexity of the grow box is not perceived to be high as the case study mentions that vegetables can be easily grown at home. Moreover, support and instructions are also being provided through videos. The trialability explains the ability of users to test the product before adopting it. Groundwork NI allowed people to test it, and the case study illustrates that positive feedback has been received. In addition to that, the official Facebook website of the Groundwork NI shows the eagerness of individuals to adopt this innovation (Groundwork NI, 2020). The grow box has entered the ‘observability’ stage of the innovation diffusion theory as individuals who had not previously adopted this innovation have begun to do so.

Groundwork NI’s current business model

Below is Groundwork NI’s current business model:

PARTNER NETWORK

Tesco

High speed 2

Marks & Spencer

Barclays

Britvic

Cadbury

Greater London Authority

Jones Lang LaSalle

Experts like Rex Kellett, David Barnard, Anna Martin etc.

Donors

KEY ACTIVITIES

Gardening and horticulture sessions

Environmental education seminars

Volunteering and on-off social action events

Training courses for enhancing work experience

Support programmes

Job creation through teams e.g., green teams

Short traineeship courses

Personal development programs

Outdoor learning programs

Energy efficiency and fuel poverty

Real life community projects

Partnership programmes with various businesses

Grant programmes

Accredited training courses

Sustainable business accreditations

VALUE PROPOSITION

Decrease unemployment by creating jobs

Community services

Life skills and employment

Supporting young people

Energy, water and waste reduction

Corporate responsibility

Grant management

Landscape services

Sustainable management

CUSTOMER RELATIONSHIPS

Co-creation relationships

CUSTOMER SEGMENTS

Donors

Beneficiaries

Supporters

Volunteers

KEY RESOURCES

Reputation

Networks

Licenses

DISTRIBUTION CHANNELS

Social media presence

Networking

COST STRUCTURE

Both fixed and direct costs associated with per beneficiary will be calculated

REVENUE STREAMS

Loans from government

Optional donations

Value proposition and Key activities

The ‘community service’ value proposition is delivered through several key activities. Some of these critical activities include ‘Meanwhile Gardens’, the gardening sessions that ensure community engagement, environmental education, health and wellbeing. ‘Life skills and employment’ value proposition is delivered by key activities such as accredited training courses, personal development programs. These programs help in employability, embedded learning, instilling green skills, adult learning and personal development, thus leading towards delivering ‘life skills and employment’ value proposition (Groundwork, 2020b).

Figure 2: The Gryphone Programme of Groundwork NI (Facebook, 2020)

The above image advertises ‘The Gryphon Programme’ of Groundwork NI focused on enhancing the horticultural skills of individuals.

Customer segments

One of the essential customer segments of Groundwork NI is donors’. Groundwork NI helps corporate donors in their corporate social responsibility. Some of the biggest donors of Groundwork NI include Target, Aughrim Landfill Ltd etc. Aughrim Landfill Ltd. allocated Landfill Tax Credit funding to the Groundwork NI that helped in the promotion and conservation of the biodiversity projects. Supporters include individuals like ‘Green Doctors’. These are health experts that help vulnerable households (Groundwork NI, 2020).

Another crucial customer segment of Groundwork NI is volunteers that help in delivering its value proposition. Groundwork NI always tries to attract individual and corporate volunteers. Volunteering programs catered to the specific requirements of various organizations help Groundwork NI attract volunteers.

Cost structure

The direct costs that Groundwork NI must consider include salaries of executives and directors, utilities, office rents, contracting fees. On the other hand, examples of indirect costs include benefits and bonuses of executives, number of staff working that can vary etc. (Dees, Emerson and Economy, 2002).

Figure 2: Cost structure of a general charity organization (Dees, Emerson and Economy, 2002)

Customer Relationships

Groundwork NI develops co-creation customer relationships with its donors, beneficiaries, volunteers and supporters. The charity organization centres its marketing proposition around the responses of their customer segments (Groundwork, 2020a). The case study mentions how Ulster University and Groundwork NI co-created ‘Grow Box’ to improve the communities.

Partner Network

Groundwork NI partners up with companies around the UK and aids them in putting their corporate social responsibility into action. Tesco, High speed 2, Marks & Spencer and Greater London Authority are some of its partners. By partnering up with Tesco, Groundwork NI has introduced ‘Tesco Bags of Help’ (Groundwork, 2019). ‘Tesco Bags of Help’ allow Groundwork NI to deliver its ‘grant management’ value proposition. This program distributed £500 to those organizations that take part in supporting vulnerable people. The grant available through ‘Tesco Bags of Help’ fund programs like children mental health, outdoor activities, young individual’s careers, bereavement counselling, child poverty etc. (Groundwork, 2019).

Distribution Channels

These channels are basically used for communicating the value proposition to the customers. The two most important channels used by Groundwork NI are networking with donors and government organizations. The second is ‘social media’. The charity organization has an official Facebook page with 1,582 likes and 1,806 followers (Facebook, 2020).

The strongest building block of Groundwork NI’s business model is its partner network’. The company has partnered up with many multinational companies acting as crucial volunteers or donors for it. Some of these include High Speed 2, Tesco, Cadbury, Barclays, Marks & Spencer, Greater London Authority etc. On the contrary, the weakest building block in the business model of the Groundwork NI is its distribution channels. Comparing its social media presence with some of its competitors suggests that Groundwork NI has a lesser number of followers, likes and posts. Save the Children has its own Facebook page called ‘Team Save the Children’ with 53,847 likes and 55,304 followers.

Recommendations and Conclusion

Covid-19 pandemic has affected all sectors of the United Kingdom, including the third sector too. A report generated by Groundwork revealed that two-third of the community groups claim that they need charity organizations now more than ever (Groundwork, 2020).

Figure 3: Covid-19 and community services demand (Groundwork, 2020d)

The research conducted above reveals that the donations are gradually decreasing because of lower disposable income during the lockdown. Moreover, an analysis of the business model of Groundwork NI shows that its weakest building block is ‘distribution channels’. The company’s social media presence is not as strong as most of its competitors. As Covid-19 has resulted in lockdowns limiting social gatherings, many profit and non-profit companies around the world are exploiting digital networks.

Hence, it is recommended to Groundwork NI to increase virtual fundraising rapidly. The charity organisation can bring this innovation to its current business model incrementally. For this purpose, a non-linear idea generation process, such as design thinking can be used. The five steps involved in this process include empathising, defining, ideating, prototyping and testing, which help in effective idea generation and implementation (Leavy, 2010).

Feasibility analysis must also be done before implementing an idea. This is the analysis conducted through primary and secondary research and helps in determining if the idea is viable or not. Once a business idea or venture is proposed, it is crucial for Groundwork NI to conduct a product/service feasibility, industry or target market feasibility, financial feasibility and organisational feasibility analysis before proceeding with the business plan (Curie, Seaton and Weasley, 2009).

During the current situation, where the second wave of coronavirus is hitting the world, the UK government is imposing strict social isolating measures. As a result, volunteers and donors are not taking much part in charity work. However, ‘virtual fundraising’ ideas might help the current situation where options for fundraising are decreasing rapidly. Another suggested is to hold online competitions like knitting etc. Such competition will not only keep the older individuals engaged and virtually connected but can also be a source of funds. The knitwear can be donated or sold to raise funds that can be used further (Lake, 2020)

This article is a case study analysis based on a charity organisation established and functioning in the United Kingdom called Groundwork. While Groundwork UK has many trusts, Groundwork NI is the emphasis of this paper. The charity organisation specialises in providing several community services focused on people, prosperity, places and safer communities. The situational analysis of the UK’s third sector reveals that Covid-19 has severely reduced the disposable income of donors. As a result, donations and supporting funds provided to charity organisations like Groundwork NI have majorly affected. This report recommends the Groundwork NI to hold virtual fundraising. Virtual fundraising through competitions like knitwear will not only keep the vulnerable and struggling individuals of the community engaged. But, it will also generate huge funds and donations while keeping social distancing into consideration. This innovation can be incrementally involved in the current business model of the charity organisation.

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