Hunting growth in the third sector

Girls in STEM Mentor jan Choudhury

by | 19 Sep, 2019 | Untapped Thinking

At Untapped, we are passionate about giving back, and ensure that we donate our time to good causes and third sector groups every year such as SportInspired, The British Science Association and WISE (Women in STEM).  We think innovation is important in every part of society. As this month’s guest blog coincides with World Charity Day, we have invited our new associate, Heather Newton, to share her deep experience in how best to innovate in the third sector. She explores how the tension of innovating in a climate of risk aversion has taught her lessons that are super-relevant beyond the third sector. Happy reading and thanks to Heather!

It’s not new news that innovation demands both an element of risk-taking in trying new things, and a willingness to accept that some of those new things won’t work. Innovation in the third sector, where fear of failure is magnified, sits in an unusual space with inherent tensions.

Developing and launching new ideas requires a chunk of budget, and in all charities there is a right and proper desire to ensure that funds are well spent. Behind the scenes, a charity’s employees usually care deeply about the cause and are reluctant to be seen to ‘gamble’ valuable funds on unknowns, meaning caution is a cultural status quo, often right up to board level. Externally, supporters view any perceived wastefulness as a breech of the trust they have placed in the organization to which they’ve donated.

As the value exchange when making a donation is less tangible than, say, buying a Snickers, trust in the charity brand is hugely important and can directly impact income – and thus a charity’s ability to deliver its core purpose. Launching new products (often in the form of fundraising propositions) can open a charity up to criticism, so many are understandably cautious when doing anything new.

It’s this landscape of risk-aversion that offers tricky terrain for risk-inherent innovation to take root. Even the most eloquent innovation team can struggle to make a case for action and investment, and just one ‘failed’ project that didn’t deliver as hoped can be a nail in the coffin for future bravery and optimism.

Curiously, however, the steps taken to avoid risk of failure can sometimes inadvertently increase risk of failure. Here are my top 4 take-outs for success.

1. Know What You Want

‘Innovation’ has become increasingly fashionable over the last 10 years, especially in the third sector, where many traditional methods of fundraising have steadily declined. Innovation teams have been set up or expanded, with big ambitions – but not always a clear strategy that really fits with the organisation.

For example, I’ve seen leadership teams send their innovation colleagues off to deliver ‘radical’ or ‘game changing’ innovation, when in reality the organization simply didn’t have the appetite for the levels risk and disruption that sort of innovation demands – resulting in wasted effort and worn morale.

Perhaps the hope was that keeping an open brief would give a greater chance of success, as everything was in scope. Perhaps the hope was that aiming to catch really big fish would increase the chances of catching any fish at all.

Success isn’t proportionally related to how ambitious you are – you don’t have to ‘shoot for the moon to land among the stars’ as the motivational posters would have you believe. A clearly articulated strategy is far more valuable than an open brief with punchy income targets – this is where Innovation needs to work hand in hand with Strategy to make sure they’re barking up the most promising tree.

Having a clear brief not only gives your team a meaningful place to start, but is also invaluable in the tricky stages of decision-making. It allows an idea to be assessed in a useful and reasonable way, and for risk to be weighed alongside the strategic benefits that the organization has already determined it wants. A clear brief also empowers the team to keep an idea true to its strategic intent. Ideas naturally evolve, but in a risk-averse climate, it’s likely ideas will get watered down to make them more comfortable to those who have to sign their name to the budget. And if the proposition isn’t true to its strategic intent, chances are it may not succeed in market.

2. Be Inspired, Not Smothered, By Process

As ‘Innovation’ gained traction, a number of charities aspired to adopt the classic stage-gate processes used in large, for-profit corporations. Perhaps this move was made in the hope that more structure would deliver greater accountability and better results, de-risking the innovation endeavor through governance and a formal decision making framework.

I’ve seen some fantastic fundraising products come through classic stage-gate processes, but I’ve also seen the dark side. I’ve seen teams investing time, energy and budget to give futile CPR to an idea just to get it to the next stage-gate – all because they were tasked with delivering the processof innovation, rather than having the autonomy to deliver against the brief in the way they believed genuinely best suited the brief.

This may sound heretical, but I believe the most valuable output from mastering a classic innovation process is the confidence to know when that process is serving you, and when it isn’t.

It might feel counter-intuitive, but striving to keep control through a set process doesn’t necessarily reduce risk. It may feel a little wild, a little scary even, but I’d argue the better investment is to put your challenge in the hands of a team you trust, and then give them the authority to spend time, energy on budget on solving that challenge. (Of course, they’ll still have to demonstrate that the organisation’s investment in innovation was well-made, but income won’t be the only metric of success.)

3. Make It Real

Research is catnip to decision-makers, especially quant, which feels somehow elementally true and gives a welcome confidence boost.

In reality we know that it’s impossible to research an idea into perfection, or to research out all elements of risk. And yet, often the effort and budget that is spent on research to ‘prove’ an idea before further investment is made can end up costing more than you’d spend building and trialing the idea and learning for real. Then you essentially find yourself spending money in an attempt to avoid the risk of spending money.

To add further complication, as humans, we like to think well of ourselves, and are liable to overestimate our generosity and good nature. Thus the gap between claimed and actual behaviours widens when we explore charitable giving. The quant-powered business model that looks super robust could actually act as a lighthouse positioned a bit too far inland on a stormy night – giving a feeling of confidence where confidence isn’t necessarily warranted. That’s even after you’ve adjusted your scores to account for over-claim.

This isn’t antispending money on research, but proopen, explorative forms of research that make the nuts and bolts of the idea real, put it in consumers’ hands, and try to learn as much as possible. Making something real – even if it’s held together with paperclips and optimism – can also have a magical effect of energising the organization (where care is taken to make the purpose of a prototype clear).

If you’re trying to reduce risk, I’d argue that it’s better to spend your money on research that gives you a rich qualitative understanding based on actual rather than predicted behaviours (even if it leaves you with the heavy lifting of decision making), than to spend your money on research that gives you robust-looking outputs based on claimed behaviours (despite that coming with the illusion of easier decision making).

4. Don’t Just Talk About Bravery…

Yes, bravery is an innovation cliché – but bravery is actually rather curious. There’s no lack of belief in the importance of bravery, but even the best of us can struggle to deliver it – especially in a culture of caution. But bravery is what unlocks a tight and brilliant brief – the confidence to say no to the 99 things you could be doing in favour of the one thing that will make the biggest difference. Bravery (along with its sidekick trust) is what enables senior stakeholders to hold the reins loosely and allow an innovation team autonomy to deliver to that brief – without inviting a kitchen-full of cooks to give the broth a stir. Bravery is what enables that team to break free from the ‘safety’ of a set process, where the brief warrants it, and to tackle the challenge with gusto and self-belief.

At first glance, the more cautious you are, the more risk you avoid; the braver you are, the more risk and uncertainty you welcome. But avoiding risk is not the same as courting success. If innovation is about doing new things, or doing things differently, then bravery is in its DNA. Caution-in-the-name-of-risk-aversion could well increase the risk of failure to achieve your growth ambitions through innovation.

Deirdre Walters

Deirdre Walters Deirdre is fascinated by the diversity of Untapped clients, and enjoys working with them to reduce innovation uncertainty, translating complex consumer and technology insights into actionable business recommendations.

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