By Kris Putnam-Walkerly, Putnam Consulting Group, as featured in 5 Best Practices of Extraordinary Grantmakers
Recently I read a book called The Innovation Formula by business gurus Michel Robert and Alan Weiss, and I was inspired by the lessons there and began considering how they could be applied successfully to the field of philanthropy. Foundations are, of course, not private businesses, nor should they be. But the concept of innovation definitely isn’t limited to one field, and the best practices for innovation apply across the board.
Too often foundations request “innovative ideas” from their grantees but fail to accomplish the same thing internally. My first job in philanthropy was at the David and Lucile Packard Foundation. I recall my boss explaining to me that we were looking for “innovative” ideas to fund. It made sense, except for the fact that no one could define what we meant by innovation. Fast-forward 16 years, and “innovation” remains a ubiquitous buzzword in this field.
While noble, funders’ insistence on funding “innovation” brings up problems.
- Few funders have defined what they mean by innovation. And if you haven’t defined it, it is difficult to communicate this expectation to grantseekers.
- The onus of innovation is almost always on the grantees. Philanthropists rarely expect themselves to be innovative. In many cases, I am sure that thought never crosses their minds.
- Funders give little to no thought about how they expect grantees to be innovative. Most efforts to fund nonprofit organizational capacity, for instance, don’t include building capacity for innovation.
Lacking a clear definition of innovation or an understanding of how to build one’s innovation muscle, the implied assumptions are that innovation “just happens.” Further, lack of clear definition has come to imply that innovation must be a dramatic, game-changing, disruptive new idea or practice: the iPhone of early childhood education, the Post-It note of economic development.
The expectations for innovation are so high that most people naturally feel intimidated, not realizing that they too can create innovations and that innovation is not the exclusive domain of those who are smarter or more creative. The reality is the opposite. Most people, in a supportive environment and with proper supervision, can generate, vet, test, and implement innovative ideas.
Extraordinary funders cultivate four key conditions that are necessary to support innovation in organizations, and they follow a four-step process to help innovation flourish.
First, you must create an environment that fosters innovative ideas and processes. That environment grows when:
- Top leaders — especially the CEO — serve as champions for innovation.
- The foundation believes that everyone can become innovative.
- The foundation is willing to regularly identify, test, pilot, and implement innovative ideas.
- The foundation adheres to prudent risk tolerance (not every innovative idea is a good one!).
Once these conditions are in place, there are four steps that your foundation can take to generate innovations. It is critical that these steps not be one-off activities but that they are conducted regularly, over time. The practice of innovation should become a regular way of doing business within the foundation, in much the same way that monthly financial reporting, annual performance reviews, and periodic strategic planning are part of the ongoing routine. The four steps are:
1. Regularly search for innovative ideas. There are many sources of innovation that foundation staff and trustees can review and discuss to generate ideas. These could include unexpected successes (outstanding evaluation results from a grantee, a recent policy win), unexpected failures (high school graduation rates declining despite significant investments to improve them), unexpected events (a natural disaster, merger of two local companies or nonprofits), process weakness (your grantee survey identified dissatisfaction with application process), changes in industry (the Affordable Care Act, changes in charitable tax law), or changes in demographics (influx of migrants into the community, growing elderly population).
The goal is to search for changes that can produce opportunities. Feed group discussions with questions that help mine opportunities, such as: What has surprised us lately — what grantee successes? Which failures (our own or others’)? What traditional partners have unexpectedly declined? Have any unanticipated internal or external events occurred recently? Where have bottlenecks arisen in our processes? What major changes are happening among our grantees? Where are other funders scaling their efforts? What technologies are changing? How are demographics changing in our region?
Once you’ve generated some raw material, you can ask yourselves: What specific opportunities or ideas can we develop from these changes, challenges, and successes? What new approaches, products, or services can we create to take advantage of these opportunities or to address these needs?
2. Assess innovative ideas. Once you have identified possibilities for innovation, the next step is to assess them against four criteria:
- Cost — What investment will this require in terms of grants, staff, outside expertise, new technology, etc.? What are the potential risks?
- Benefit — What are the benefits, do they outweigh the risks, and how long until we achieve results?
- Strategic fit — Does this opportunity fit with and advance our mission and strategy?
- Implementation — What are the processes and approaches we’ll need to make this work?
By assessing the opportunities against these four criteria, you can determine your highest-potential opportunities.
3. Develop the innovation. The next step is to fully develop each opportunity prior to implementing it. This is done to prepare the foundation for implementation, but also to surface any additional challenges with the innovation idea (or possibly eliminate it from further consideration). This involves intentionally evaluating the opportunity, assessing pros and cons, creating best- and worst-case scenarios and the critical factors that lead to each, and identifying risks and rewards. Once you have put the innovative opportunity to the test and agree it is worth pursuing, it’s time to move to implementation.
4. Implement the innovation. This step involves formulating an implementation plan and beginning to act on it. Here you identify the factors and actions that will support the implementation, as well as those that will work against it (and what you can do about them). It also involves creating a detailed action plan for implementation, which includes identifying activities, deadlines, and responsible parties.
Innovation can take many forms, depending on the community, the foundation, and the opportunities at hand. But perhaps the most inspiring aspect of innovation is that one innovative action often breeds another, and then another. In fact, the only limits to innovation are the ones we place on ourselves.
Kris Putnam-Walkerly, MSW, founder of Putnam Consulting Group, is a philanthropy expert and author of the book Confident Giving. Follow Kris on Twitter @Philanthropy411.
