BLOG: Strategies to Make Innovation Essential for a Not For Profit

Innovation must be the key ingredient for Not for Profits who are now in the middle of a once in a generation period of growth, writes Doug Taylor the Director for Strategic Engagement at Uniting.

Innovation is the word of the week with the announcement of the Prime Minister’s $1.1 billion Innovation Strategy. There’s lots of innovation candy including and “ideas funds” and great opportunities for CSIRO, universities, corporations and business startups.

In all the hype and commentary about the Commonwealth’s innovation statement, you may have missed a report that was also released with some insights for innovation in the Not for Profit sector.

CPA Australia released a report which found that Australian small businesses lag behind compatriots in Asia Pacific. The survey found that 5 per cent of Aussie small businesses are planning on launching a new product, service or process, compared to between 26 per cent and 46 per cent in other Asia Pacific countries in the 3,000 strong cohort.

The commentary on this report suggested that the strength of the Australian economy in recent years is perhaps an explanation for this divergence in performance. In other words relatively buoyant economic growth, off the back of the mining boom, has made Aussie small businesses complacent.

What does this all mean for the Australian Not for Profit sector? Whilst there are obvious differences between small business and NFP sectors, namely ownership and mission, I do wonder if the Not for Profit sector has a common experience of complacency. The sector has also benefited from the strong economy and is in the middle of a once in a generation period of growth through the outsourcing of government services.

While there may have been a common experience of complacency between the two sectors in recent years, things are about to change for the NFP sector. While there will be continuing outsourcing in Out of Home Care, Disability and the Aged Care sectors, they will be accompanied by increased marketisation. In this new world the client will be the customer and deregulation will open the NFP sector up to increased competition. This will jolt the complacency of many NPFs, if it hasn’t already.

In this context I’m reminded of that great quote that “necessity is the mother of invention”. In other words, innovation only happens when it’s necessary, when there’s no other choice but to find a new way forward.

Given this, what are the three key ingredients to ensure innovation is a central part of a NFPs work?

1. Custodians that enable innovation

The best quote I have ever heard about leadership and innovation goes something like this, “there are two people you need in any organisation to make innovation happen; a disruptor and a leader who gives permission to them to innovate.”’ Yes it’s somewhat over simplified but you get the point – leaders play a critical role in innovation. It’s vital that the CEO and leadership team support and endorse this work, but equally important that the Board, as organisational custodians, have a line of sight to the innovation agenda. For there to be successful innovation there must be failure along the way, and it’s vital that these be transparently shared with the Board, warts and all, although it’s tempting not to do this for fear of eroding confidence with the Board.

As well as focussing on the development of new innovations it’s also critical that organisational custodians continually develop an awareness of the environmental factors that are demanding change. The key question for Boards is how much of their time is spent looking outward or over the horizon to what’s going to happen next in the community and its implications for NFPs. So many corporate boards are taking themselves off to Silicon Valley and Stanford to shift their thinking. This might be a stretch for NFP Boards but you don’t need to travel the world to ensure you are fulfilling your role as custodians for the organisation. At Uniting we’ve held a number of “off sites” with our Board and Executive team where we have been exposed to leading edge thinkers who have stretched our thinking and got us out of the complacency of business as usual thinking.

2. Clients and communities at the heart of strategy

For many years the necessity of innovation has been complicated in the NFP sector by the fact that the customer (funder) is a different person to the client (person with the need of a service). In this context it has taken outstanding leadership within NFPs to work against the forces that shift the focus in service delivery from the needs of the client and community to the needs of the funder and service provider. New funding instruments, such as NDIS, will expose as irrelevant service providers that do not meet the needs of clients. However, many organisations have a long way to go in making this transition and those with traditional block or contract based funding should still commit themselves to aggressively putting the client and community at the centre of service delivery regardless of the funding model. This is easy to say but hard to do in practice.

One of the best ways I’ve seen organisations keep clients at the centre of their planning is through the use of practices from the design thinking disciplines. I’ve seen this in the work of The Australian Centre for Social Innovation who have a fundamental belief that people are the experts in their own lives and that the best innovations come from working alongside the people who face the very challenges we’re trying to solve. One of the most insightful practices in this new way of working is going back to first principles and answering questions by testing assumptions. So the innovation is in rigorously challenging the assumptions in collaboration with the people we are charged to work with. This is difficult and often subversive work because it often challenges the very foundations upon which so many of our organisational strategies and practices are built.

3. A capability focus over and above capacity building

The 2010 Productivity Commission report into the Contribution of the Not for Profit Sector, made one recommendation on innovation that stated, “Government agencies funding community services should establish social innovation Funds,” because, “NFPs lack adequate funding to support research and experimentation.” While it’s true that greater capacity (more resources) are needed for innovation in the social sector I would argue that capability is far more important. I’m reminded of a somewhat mischievous quote from a corporate colleague that, “the two things you need to innovate are not enough time and money.” Yes it’s an over simplification but it does challenge the many organisations who start their innovation journey with an allocation of a large budget to support long and complex projects.

Instead the starting point should be capability. Do you have the people and processes to innovate? Innovation is not something easily done by most people caught up in the day to day of service delivery because it requires a fundamentally different way of thinking. So have you got the right people on team to lead this or can you up skill some colleagues with the potential to lead innovative work in your organisation? I’ve seen many “entrepreneurs” participate in programs like the School for Social Entrepreneurs NDIS Accelerator program which has been a great way to build their capability to lead their organisation into the unchartered waters of reform to the disability sector.

So there are some thoughts on strategies to make innovation essential to your Not For Profit. Timely, given the release of the innovation agenda, but I’m sure you would agree it’s something that’s core to Not For Profit purpose and therefore critical to reflect on strategies to make this work a priority.

About the author: Doug Taylor is the Director for Strategic Engagement and is focussed on strengthening Uniting’s strategic agenda and work with stakeholders. He was previously the CEO of United Way Australia and has built a 20 year professional career in the Social Sector out of this passion as well as an active life in volunteering. These interests are manifest in his membership on the Boards of the School for Social Entrepreneurs, the Australian Centre for Social Innovation, the Centre for Social Impact Advisory Board and as a proud Trustee of the Steve Lawrence Social Innovation Fund.  He tweets at @dougtayloruw and writes a blog.