NFP innovation: What is it and how can we do it well?

Mike Davis uses the Sinek golden circle model to add some clarity around what we mean when we talk about innovation culture.

How innovative is your not for profit? If you are anything like me, this question is equally exciting and perplexing.

Asking how good your innovation is, is like asking how good your strategy or impact is. You know it is critical to your organisation’s success, but it is hard to conceptualise, articulate and measure due to its intangibility!

But it is increasingly a question being raised in the NFP sector. Most recently by the Give Easy Innovation Index, which recently launched the fifth year of its sector-wide survey.

Despite performing a number of Google searches and deep dives into academic articles, I’ve struggled to find a good working definition for innovation. So I’ve outlined how it operates using the Sinek golden circle model to add some clarity, starting with why!

The Why

Innovation can help you create or strengthen your competitive advantage or unique value proposition (UVP) in your industry. Research from the Boston Consulting Group found that out of 1,500 global senior executives surveyed, 75 per cent reported that innovation is amongst their top three organisational priorities.

In an environment of internal resource scarcity and high levels of external competition for funding and service delivery, innovation can be a powerful point of difference in culture, practice and outcomes. An innovation culture should drive better performance, ideas and outcomes.

A 2018 Commonwealth Bank report found that the not-for-profit sector is leading all industries in innovation practices, with 95 per cent of not for profits implementing an innovation or improvement strategy versus a national average of 82 per cent of Australian organisations across all sectors.

These strategies are yielding a clear and positive annual return on investment with an average of $379,000 in revenue growth or cost savings each year.  

The What

Innovation is defined by the Merriam Webster dictionary as “the introduction of something new, a new method, idea or device”.

Director of strategic innovation at Cisco Systems Stephan Monterde considers it “turning new ideas into widely used practice”.

A recent blog by Dominic Price, work futurist at technology innovation leader Atlassian, provided a good working definition of innovation culture, including some of its key elements:

1. The defining feature of an innovation culture is the belief that innovation is every employee’s job, not the domain of a few PhDs or top executives.
2. Company leadership have to give people the autonomy to create something new.
3. Failure-while-innovating can’t be a punishable offence – in fact, it should be celebrated.
4. Finally, a culture of innovation reflects a certain restlessness. A hunger. A disdain for the status quo. If you wait to start innovating until your momentum peaks and levels off, you’re already too late.

Some key aspects of this worth highlighting are that all staff should be empowered and encouraged to innovate. It should be part of the way things are done around here (culture). Failure should be celebrated (or in the least, not discouraged). Innovation should mimic a beautiful ongoing struggle to be better every day, week, month and year.

No discussion of innovation would be complete without mention of Clayton Christensen’s seminal classic, The Innovator’s Dilemma, which also provided some key insights for managers.

I’ve highlighted a few here, as most poignant for the for-purpose sector:

1. Managing innovation mirrors the resource allocation process: only innovation proposals that receive sufficient funding and manpower may succeed.
2. The information required to make large and decisive investments in the face of disruptive technology simply does not exist. Markets that do not exist cannot be analysed.

Some key aspects of this worth highlighting are that innovation must be funded and resourced. Understanding organisational expertise is key to driving successful innovation.

Innovation in the not for profit setting doesn’t need to be resource intensive and transformational. Following the Japanese approach, Kaizen philosophy or a commitment to small incremental and continuous improvement can yield the greatest impact.

Innovation requires a leap of faith, backing in instincts and intelligence to make strategic moves (without complete information).

The How

A key issue for not for profits is how to appropriately fund innovation in a resource-scarce environment. However, this does not have to involve financial investment or demand excessive time or resources at first instance.

Here are a few examples I’ve seen recently of good innovation practice that are not expensive:

1. Holding regular all-staff days and more targeted strategy days

These all-staff days should include a strong emphasis on clear communication across and between all levels of the organisation, with specific time carved out for new project ideas and innovations that may be worked on.

This will ensure new ideas are being rewarded and spread throughout the organisation. It is also a great forum to reward good idea generation and related practices. Be sure to list follow up actions and responsible people, as well as follow up dates to check-in on progress.

2. Co-design pairing front-line workers and bigger picture thinkers

Give license to those closest to the problem to lead ideation of potential solutions. Pairing front-line workers with strategic operators or bigger picture, systems-thinkers can give you a great recipe for innovation and strong program development. This will give you solutions that are well catered to clients but also consider the wider organisational and sectoral context.

Where possible bring one of your clients along to assist with idea generation, to test your logic or to provide a user perspective. Integrating your clients’ knowledge and experience into the planning and design process yields significant improvements; can drive much stronger and more harmonious client relationships; and also strengthens organisational culture.

3. Create protected time for innovation or special projects

Why not set one or a number of organisational challenges around key areas for improvement and set aside up to 10 per cent of work time each week dedicated to solving any of these challenges?

This is less than the 20 per cent that Google sets aside and should be manageable for all organisations, perhaps three hours per week.

Peg this to a monthly presentation meeting, where people can showcase what they are working on. As this enables more autonomy, purpose, and meaning, it should drive greater employee collaboration, engagement and performance.

Australian not for profits are committed to innovation and are amongst the most dynamic organisations. This is likely due to fierce competition, resource constraints and a fast-changing legislative and operating landscape.

The challenge going forward is to build lasting systems that make innovation a core part of our not-for-profit organisations, operations and culture, so that it can be adequately funded and be supported by adequate investment into IT and technology.

“The best leaders begin with an environment that embraces and rewards change and innovation.” – Lynne Doughtie.