After a five-month writing hiatus, I am re-launching my blog with a focus on the practices of building innovation in the social sector of nonprofits, government and philanthropy. This is the first blog in a focused series on nonprofit organizational growth. One of the common inquiries that I receive is from nonprofit leaders who are seeking to create a strategic plan for growth. In my initial conversations with such clients, I often ask, “what kind of growth are you seeking” and for “growth for what purpose?” Not too infrequently, a conversation follows where the nonprofit leader and I work to clarify the organizational needs related to growth. To that end, it is useful to think about models for nonprofit growth.The intention of this post is to think together about the major categories of growth that your nonprofit needs to consider in a strategic planning process (below, I provide some links to additional resources).

Operational Growth: The first growth that your nonprofit needs to ponder related to your existing programs and services and growth that may be required to do the same work more effectively, efficiently, and at  higher quality.  This growth conversation starts with clarifying the true operational costs of your programs, services, and overhead. The fundamental question is to think about your current operations and determine if your agency is actually generating enough revenue to adequately cover the true operational costs. There are a growing number of surveys and studies that document how many nonprofits underestimate the true cost of operations. Often this underfunding of operations works to your organizations detriment. Understanding true operational growth starts with assessing the cost of programs and services, infrastructure investments and staff compensation. Examples of such an internal inquiry might ask to what extend does your compensation of employees include living wages, health insurance, retirement or professional development expenses? This inquiry also asks to what extend your technology infrastructure supports performance? Are your organization computers current, do your databases and networks support productivity and clear, accurate reporting? Probing further might ask if you are investing in resource development, social networks and donor cultivation? Completing this self-assessment should be an objective analysis of financial metrics such as trends in cash flow, net unrestricted assets, and debt burden, among others fiscal measures. Assessing operations may help your nonprofit identify the strategic growth agenda to the guide your organization –namely growth of existing operations.

Capitalizing on an operational growth plan requires carefully considering how to increase revenues. Strategies might include renegotiating contract with funders, building secondary revenue streams to compensate for grants that underfund services, or creating operational efficiencies to reduce other expenses (such as renegotiating lease or lowering IT costs through reengineering systems). A clear operational growth plan also serves as the basis for seeking capacity development grants that bring short-term capital to your organization to assist you in creating new or strengthened long-term operational revenues.

Program Growth: Once fully funding operations, your organization can consider the growth of existing programs and services. Understanding the true cost of services defines the base of the formula for growing existing programs and services. Program growth has the goal to serve more clients, often though expanding hours, opening a satellite office, or adding staff. The program growth strategy has two drivers of  1) a compelling social need that is 2) coupled with strong evidence that your programs and/or services effectively address the needs. Together these twin drivers create a case for program growth. Serving more people with your programs and services that produce outcomes is a compelling argument for program growth.

Growing programs is a strategy that capitalizes on your agency’s existing development strengths. Your organizational donors likely understand your business model and value proposition. Expanding programs becomes the process of deepening and expanding relationships with your current donors and cultivating new relationships with like-minded or similar donors.

Program Expansion: A third model for nonprofit growth is to expand the number and types of programs and services that are offered by your organization. Program expansion takes your organization into new areas of operation. Expanding programs and services is not taken lightly as it often reflects an agency needing to build new program skills, competencies, and systems, as well as creating stable revenue streams to support the new endeavors. Careful assessment, planning, pilot testing, and gradual expansion require time, energy and resources. The calculation, related to the program and/or service expansion, that your organization must make, is how will the expansion of programs and services magnify the social impact relative to the cost of the undertaking?  In the long-term calculating a social return on investment will be required but, at the point of strategy,  it is equally important to think about opportunities created by expansion versus the opportunity cost of pursing expansion.

Expansion is a growth opportunity that requires the development of new revenue streams to pay for the start-up costs and the ongoing operating costs of the program. Thinking about the business model is critical for program expansion. I have known several nonprofit agencies that added programs and/or services without sufficient thought to sustainable revenues need to sustain the expansion.  Subsequently, these agencies found themselves in the precarious position that overt time they were fragmenting their revenue base in ways that stymie the effectiveness and growth of all of the agencies’ programs and services. Program expansion is the equivalent of developing a new business or product line and your nonprofit must  plan carefully to preserve rather than cannibalize the revenues required to sustain the other programs and services of your agency.

Program Replication: A fourth category of nonprofit growth is to replicate a program model outside of one’s immediate geography. Replication differs from program growth primarily based on scale and geography. While some think of replication and “franchising” a program approach, there are actually a number of models for replication and scale. The core of replication is based on your program or service that creates a social impact and that can be implemented in another location and that can produce similar positive outcomes in the new location. The model for growth through replication requires that your nonprofit agency understands the critical characteristics of implementation that leads to success success and how you will exert enough “control” over the process of replication. Control is required to balance fidelity of the core characteristics of the program or service.  with the freedom to adapt the program to the context of the new site. In some cases, replication will require a tightly controlled fidelity model and in other cases, replication might allow for greater degrees of freedom to adapt the critical characteristics of the program implementation.

Planning for program replication is an intensive process that requires a nonprofit to demonstrate a strong foundation of success. Preparing for replication also requires an agency to clearly identify: 1) the process of implementation (including what is critical and what is adaptable in that process), 2) the cost of replicating the program, and 3) how your agency will insure implementation quality of each replication site. The long-term challenge of replication includes developing a consistent brand as well as managing the relationships and fidelity between implementation sites.

Financing program replication are similar to program expansion in that it requires the development of clear cost structures, start-up capital strategies and long-term operating revenue strategies. Replication also requires a nonprofit to think through “licensing” and/or implementation criteria to be required of each replication site. Finally  your agency will need to create an assigned value for the replication model that is based on the criteria. This value can often be monetized  as a revenue stream for your nonprofit.

In the couple of pages found in this blog post, it is impossible to create an in depth exploration of nonprofits growth models. However, it is hoped that by considering the typology of growth that your nonprofit can start the conversation among your staff and board and create the foundation for what growth means to your organization. As outlined above, being clear about how your organization plans to grow will influence your options for strategy, funding and operations. In subsequent blog posts I will explore how to move forward with your growth strategy. Until then, your thoughts, ideas and comments are welcome.

Mark

Facilitation & Process, LLC designs customized approaches that are tailored to your needs. Organizations that benefit most from working with us are those who are tired of the same old solutions and are ready for the fresh, imaginative and objective. We offer a range of supporting services including performance assessments, facilitation, strategic, capacity, business & social impact planning, board & staff development and retreats, and developing meaningful community engagement. Contact us for a free initial consultation.

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5.  develop action steps, timelines, roles and responsibilities, 6. draft a formal plan, 7.  pronounce it very good and 8. repeat the process every three years.

As strategic planning models became routine and accepted as a standard of practice, those who excelled in project management and repositioning content developed a consultant industry of strategic planners who emerged to bring expertise to “help” organizations create high impact plans.  The secret that few consultants want to admit is that strategic planning is often reduced to a cookbook that illustrated with overused “fill-in-the blank” prescriptions that result in an unimaginative plans.  Quite often, strategic planning is a simplistic reordering and renaming of existing strategy and approaches. Such a focus diminishes the value of strategic planning. This premise of the declining value of traditional strategic planning was identified over a decade ago in the seminal Harvard Business Review article titled, “The Fall and Rise of Strategic Planning” by Henry Mintzberg.  Mintzberg’s main criticism is that strategic planning often stymies strategy. He argues that “sometimes strategies must be left as broad visions, not precisely articulated, to adapt to a changing environment” (p. 112).

Since the appearance of Mintzberg’s article (and subsequent text that reverses the title ), strategic planning has been broadened somewhat to include the concepts loosely termed adaptive planning, opportunity management, or “real-time” strategic  planning.  In essence, the “innovation” of the adaptive strategic planning models is to build into the process  strategies that allow organizations to be responsive to sudden shifts in the operating environment.  Yet the methods employed to get to this more “flexible strategic plan” still reflects the pedestrian process described above.  In other words, the revamped strategic planning model looks more like this:

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5). develop action steps, timelines, roles and responsibilities, 6.  insert opportunity matrix 7. draft a formal plan, 8.  pronounce it very good and 9. repeat the process every three years.

The economic meltdown of recent years that still haunts many nonprofit organizations has been a wake-up call is that business in no longer usual.  The rapidly changing environment require more than a strategic planning process focused on rearranging the deck chairs and adding one more lifeboat christened “opportunity management.”  As Mintzberg suggested over a decade ago, we must liberate strategy from the confines of a constrained and defined planning process and foster a culture that encourages strategic thinking at every level of an organization.  Strategy needs to be unbound from pedestrian and conventional thinking, which many strategic planning consultants fail to recognize and build into their practice.

Let me illustrate.  I was recently reading the retreat notes from what was billed as an adaptive planning process that written by a consulting group, which a nonprofit agency had contracted with.  It is stunning how pedestrian the results were.  Day opens with the typical icebreaker, pages of brainstorm lists are then sequenced and the conclusions are listed as key….yawn…. findings.  these included …yawn… diversify your funding, increase your communications, and invest more in …yawn…(excuse me)…  capacity…  No wonder strategy and strategic planning are undervalued, if not ridiculed by so many nonprofit leaders.

Force marching an organization through a strategic planning process is not the same thing as stepping back and asking the hard questions related to how nonprofit operations are organized around solid business thinking that is resilient and tenable over the long term.  For example, going back to the …yawn… adaptive strategy notes review, one of the most non-strategic statements of the document was this:

“Key Finding #2 – Financial stability/funding is the greatest challenge facing XYZ agency as it plans for its future.” Open-ended answers provided by staff and board focused on identifying XYZ’s greatest challenge included, long-term sustainable funding, limited funding resources, identifying alternative funding sources, lack of diversity in funding.”

This statement is non-strategic on two levels.  At face value, this key finding lacks any basis for action. Every nonprofit’s greatest challenge is to develop long-term sustainable revenues.  So what.  Where is the strategy?  Second, pulling up the most recent IRS Form 990 for the agency shows a revenue pattern that is represented in this graph. This agency not only weathered the downturn but doubled revenues in five years. Indeed, portraying revenue as the greatest challenge for an organization with this revenue profile borders on malpractice.

To me, strategy would be to ignore the economic angst of the board and staff and build on the organizational strength of the funding model.  Indeed, during a period where many nonprofit agencies were hammered by steep revenue declines, this nonprofit held its own. As a facilitator of such a process, I would be asking the questions, how do we replicate, or at least maintain, the stable revenues patterns that we held through the economic crisis.  How do we build upon the revenue spike of 2009?  What drove the break-out revenue for that year?  What lessons can we learn from how we brought in the additional revenues?

I almost titled this post, “What is Needed Now?” because I am convinced that this is the single most important question that nonprofit leaders must be asking today. For me, the answer to the question, “what is needed now” is not strategic planning but strategic thinking that is supported by clear and strategic program plans. The fact that strategy needs to be a cultural value does not negate the need for strategic planning and the development of clear strategic written program plans. The shift that needs for agencies to think strategically and support strategy with programmatic planning.  This is not a mere nuance but it means abandoning the two million images of a senseless strategic planning model and embrace, focused planning based on strategic thinking.

Elsewhere I have written about the layers of planning and approaches to nontraditional strategic planning and will not belabor the point here. Rather I want to point to three areas where focused planning needs to occur.

Core Social Impact Strategies: A clear and focused organizational model and theory of change, leverage, and scale is the core strategy for an agency.  Without a shared conceptual approach to how an organization fulfills its mission nothing else matters.  Previously, I have explored social impact (here) and social innovation (here) in more detail.

Revenue Strategies: There has been a tremendous amount of recent research that goes beyond the irrelevant and oversimplified model that all agencies need diversified revenue streams and that the board of directors should play a major role in revenue development.  Revenues  strategy should include a customized strategy carved from the careful study of autonomy, reliability and the opportunity costs of diversification. Such strategy planning also includes thinking about investment capital, earned income, and policy approaches to revenue development. Having a clear revenue plan is a second core document (more here).

Operational & Capacity Strategies: Often undervalued in strategy is a clear articulation of the operational capacity that is really required for successfully creating significant social impact. Such strategy requires the consideration of capital investment, breaking the tyranny of starving overhead costs, investing in technology, staff development, building outcome measurement systems, and expanding key staff and external partnerships (more here).

Other common areas that require strategic thinking and planning  include communications and marketing, program evaluation, and board development, to name a few.  The point of this post is not to list every possible strategic planning focus but to point out the fallacy of trusting the arcane strategic planning process while missing the opportunities for strategic thinking and focused programmatic planning.  As the current year ends, and a New Year opens with equal uncertainty, the role of strategy becomes more important than ever.

As Mintzberg, concluded, “Three decades of experience has taught us about the need to loosen up the process of strategy making rather than trying to seal it off by arbitrary formalization (p. 114).”  We are yet a decade and a half beyond Mintzberg’s words and yet many nonprofits continue waste time and resources executing ill-conceived strategic planning sold to us by some book or consultant group. As we reflect on the year past and look forward to the year future, let us commit to thinking strategically first and allow formality to unfold driven by need.

As always, your thoughts are welcome.

• Economic Restructuring: It almost seems like stating the obvious to write that we are in the middle of one of the most dramatic restructuring of our economy that  we have seen in decades.  One only needs to look at the growing disparity gaps that is creating a tsunami of declining wealth, as evidenced by double digit real unemployment, increasing poverty, and growing housing and food insecurity. The damage is evidenced most profoundly in already marginalized communities and is driving unprecedented demands for the basic services that the nonprofit sector provides. Coupled with this economic decline and stagnation is the failure of our elected officials, at all layers of government, to create rational public policies that adequately sustain the physical, social, and cultural infrastructure of our county. The fiscal stability of many nonprofit agencies is additional collateral damage caused by the restructuring.  To survive and thrive, many nonprofits are fundamentally rethinking the way programs and services are funded and sustained.  The economic threat requires all nonprofits to invest the time and energy into creating, not just a fundraising plans, but a revenue development plan, which focuses on the total capital requirements required to support agencies and builds tenable long-term funding models.

• Political Indifference:  The second threat that faces nonprofit organizations is political indifference. We are facing a radically polarized political environment where there is a relentless pressure to cut domestic spending with little tolerance for increasing tax revenues.  In this environment, domestic spending is slashed repeatedly in a “death by a thousand cuts” scenario.  If there was ever a time that demanded political engagement from the nonprofit sector, it is now.  As nonprofit leader turned congresswoman Donna Edwards was recently quoted as saying, “This is not a time for sitting on your hands. It’s a time to be involved and be active and to care about what’s happening, not just in your community, but what’s happening in our country.”  Nonprofit leaders have the moral obligation to advocate for the communities they serve as nonprofits know, from the day-by-day experience, the human impact that are in the faces and stories  connected directly to budget cuts. It is no longer acceptable for nonprofit leaders and board members to hide behind the false, sweeping generalization that acting politically  jeopardizes the legal status of their nonprofit agency. These times, demand a politically engaged nonprofit sector.

• Community Fragmentation: In this hostile environment, there is also a tendency for community fragmentation.  At the surface, this fragmentation can bee seen in the polarized political debates that are pitting those with resources against those without.  On a secondary level, fragmentation can be a seen within the nonprofit ecology. Many organizations talk about coordinating services, collaborate on projects, and often serve together on issue-focused community coalitions. However, when the conversation nears the waters of service efficiency, duplication and effectiveness, collaboration tends to fragment. Such fragmentation threatens to undermine the sum total of services provided to the community.  Without thoughtful discussions related to providing high quality services, with high efficiency and measuring our collective impact, we do a disservice to our clients, communities, and donors. It takes courage to build nonprofit community because it forces us to look at sharing resources, consolidating programs and services, and perhaps even restructuring organizations through partnerships and mergers.  Such courage is needed now more than ever.

• Unfocused Message: A fourth environmental threat to the nonprofit sector is that we tolerate an ambiguous and unfocused message about our work and our collective impact as individual agencies and collectively as a nonprofit sector. Polling data repeatedly demonstrates that the community has an unclear understanding about the nonprofit sector.    In part, this ambiguity is tied directly to the nonprofit sectors’ struggle to  communicate a clear message about the critical role that nonprofit organizations play in contributing to the social, cultural and economic health of our communities. As we move forward in coming years, most nonprofit agencies will find success to the degree that they develop and execute a clear, intentional, and visible, communication strategy.  In short, if the community does not know your agency or what you contribute to the quality of life in the community then why should they care about your success?

• Lack of Meaningful Impact Data: In my opinion, the lack of meaningful impact data is the greatest threat to any nonprofit agency.  The clarion call for accountability and performance is a call that is becoming louder on from foundations, government grantmakers, and even individual donors.  We now live in an emerging context of “impact funding,” where decreasing resources are aggregated and targeted to address significant needs that can be leveraged and scaled (external link). In this environment, nonprofit agencies need clear and compelling data to compete, thrive, and effectively serve their communities.

These five threats create an environment that fuels public skepticism of the work of nonprofits.  In an environment of scarcity, a politically indifferent and fragmented network of nonprofits, with an unfocused message and a lack of demonstrative impact, will slide from relevancy towards irrelevancy. Yet turning this page upside down, a new image appears.  It is an image of nonprofit organizations with a strategic opportunity to dismantle these environmental threats.

While economic restructuring may feel like standing on the shifting ground during an earthquake, nonprofits engaged, with a collective political voice, carrying a focused and clear message about the needs and values of a strong  sector, can take limited control during the disaster and take the lead in the rebuilding effort.  From this aspirational viewpoint, I personally believe that better days are ahead for nonprofit organizations. With vision, focus, discipline and strategy, nonprofit organizations have the opportunity to seize the day, even in the midst of environmental challenges.

As always, your thoughts are welcome.

m

Postscript: It is to this end of creating smart strategies and lasting impact that I began my consulting practice nearly two years ago.  Since that time, my firm has partnered with a number of agencies to create and operationalize bold strategic directions in a hostile environment.  I invite you to learn more about us and our services and should you need a partner in success, contact us for a free consultation.

In a recent blog that appeared on the Chronicle of Philanthropy ‘s website titled: Bankruptcy Isn’t a Solution to Nonprofit World’s Woes, the Philadelphia Orchestra was held up as a “poster child” of an agency where bankruptcy was the wrong solution to a fiscal crisis. In this article, the author argued that debt restructuring rather than bankruptcy was the correct and more appropriate solution to the crisis.  The point of the article was to declare bankruptcy as bad strategy.  However by focusing myopically on the debt of the orchestra, the author  oversimplifies the complexity of the crisis.

In the case of the Philadelphia Orchestra, a cursory Google search reveals a number of articles and commentaries suggesting that along with debt, there were other internal and external issues contributing to the crisis that included tension with the musicians who opposed the bankruptcy,  ticket sale declines dating back to last season, fiscal pressure caused by pension obligations, as well criticisms of a lack of leadership accountability.  One thing is clear, the fiscal crisis of the Philadelphia Orchestra did not appear “ex nihilo” but was years in the making and it is an oversimplification of the crisis to suggest that the solution was simply choosing the best option for debt restructuring.

I would argue that, similar to the orchestra, that  most organizations in fiscal peril are in that place because of a composite of internal and external factors in the social-citizen sector ecosystem. With the exception of grassroots and small nonprofit organization, fiscal crisis is rarely caused by a single event. Rather, fiscal crisis is often the culmination of ongoing failures in the organization’s strategic capacity. In the case of the Philadelphia Orchestra, publicly leading with bankruptcy rather than strategy was just one more  organizational leadership failure. Leading with bankruptcy rather than strategy was the self-inflicted cause of intense public criticism leveled at the Orchestra’s top decision makers.

The purpose of this blog is not to dissect the bankruptcy decision of the Philadelphia Orchestra but focus on the what it means to lead with strategy in a time of crisis.  To this end I would suggest the following attributes of leading with strategy:

• Lead Beyond Crisis Thinking: Over a year ago, I wrote a blog about crisis thinking where I outlined the importance of focusing on mission, vision, outcomes as well as participatory leadership as the keys to moving beyond crisis thinking. My contention was (and is) that collectively reflecting on the core of an organization’s purpose and achievements is the prerequisite step to unleashing transformative creativity.

• Lead Systemically: Managing from strategy requires a systems view of the nonprofit agency and the local “ecosystem” in which the agency operates.  In other words, by mapping the patterns of the external ecology (i.e., local economy, grant-maker funding patterns, the political landscape) and the internal ecology (i.e., employee moral, program quality and innovation) directly effect an agency’s ability to design broad solutions to a crisis.

• Lead with Transparency: The most critical attribute in managing in a crisis is to be relentlessly committed to transparency.  Internal staff and the external community deserve absolute transparency and honesty. Transparency discloses how the agency got into the crisis with candor and responsibility.  Without transparency a crisis in confidence linger as a cancer even if the presenting problem is resolved.

• Lead Restoratively: The concept of restoration is a causal chain.  First and foremost, restoration presents a wholistic solution to manage and prevent recurrence of the crisis.  Crisis requires leadership repair, which, in turn leads to the repair of confidence.  Crisis evokes fractured relations with board, staff, community, funders and clients.  Leadership repairs. Without a focus on restoration, the crisis ripples to a secondary “confidence crisis” that can cast a lasting shadow over an organization.

While this post has been written from the perspective of managing while in crisis, the principles outlined are perhaps best understood as a primary or secondary prevention strategy applicable to a broad cross-section of agencies.  The leadership qualities described in this post, applied as prevention are diagnostic and beg the question, “how durable would your strategic leadership be in the time of a crisis?”  For most, the answer lies in the degree to which the agency actively cultivates the qualities of strategic leadership in the absence of crisis.  After all,  leading with strategy is simply the discipline of good leadership.

As always, your thoughts are welcome.

At the same time while conservation may temporarily preserve the status quo, in the face of an every growing demand for nonprofit services and solutions, a conservative strategy is untenable in the long-term.  Senior nonprofit executives and nonprofit boards engaged in operational planning may find comfort in budgeting to “known” revenues but “revenue-driven” budgeting may undercut growth and undermine the long-term health of an agency.  Under-investing in administration and infrastructure, leveling or reducing salaries and benefits, underfunding reserves, or a host of other conservative fiscal moves, can amount to the proverbial “death by 1,000 cuts,” where the cumulative effects temporarily deferred, may suddenly manifest as an organizational crisis or  an  inability of the agency to meet the organization’s mission.

This post is part of an ongoing series related to strategic planning.  As a precursor to strategic planning, I believe that an agency needs to cultivate a culture of courage.  So here is one take on the outlines of  principles that embody organizational courage.

Be Authentic: More than once I have interviewed an executive director or board chair who has confided that the constant adapting to changing funding streams shapes and reshapes in subtle (and not so subtle) ways, the organizational mission and vision. One exasperated director shared, “Some days I’m not even sure if I am walking into the right building.”  While mission-drift often starts unintentionally, such incremental creeping is prevented by a myopic focus on authenticity.  Every program, every funding decision, every grant application,  must be guided by a clear mission and vision in the context of the compelling need(s) it seeks to address.  Authenticity provides the focus an agency needs to envision a future that is greater than the current economic reality.

Be Intentional: Too often boards of nonprofit organizations get mired down in the operational details of the current agency operations.  The mundane and immediate, such as a year-to-date 10% revenue shortfall, adding a new policy or procedure to the organizational canon, or figuring out how to improve the computer network, while all important, can impede and intentional strategic focus.  When a focus on the operational becomes a cycle routinely eclipsing the strategic, it becomes harder to be intentional about the future.  To be successful an agency needs an intentional focus on strategy that is clearly palatable throughout the organization.

Be Large: With a conservative mindset, many nonprofit organizations are constantly engaged in fundraising, grant writing and trying to keep together a patchwork of revenue streams.  Messaging to the community and potential funders is “we are worthy of support because we are doing good things on virtually no overhead.”  Large, turns such thinking upside-down.  Large re-frames the message from “we are worthy “ to “there is a compelling community need and we are catalysts to effectively address that need.”  Fundraising becomes resource development and in a coordinated strategy, an agency seeks investors interested in creating a social return on investment. Being large supports the  assertions of being a catalyst with clear and measurable outcomes as well as benchmarks for quality and continuous improvement.  There is little question about the presence and leadership of the organization in the community.

Be Radical: While being conservative can preserve the core, being radical can expand the core.  Yet, radical needs to be defined.  While radical may carry the perception of risk or polarization, radical is simply the ability to ask the hard and profound question “what if?”  The “what if” questions spawn radical ideas that can be translated into strategy and action.  Questions like: “In the context of the compelling need, our mission and vision, what if we could do things differently to create a larger impact?” or “If we were to fundamentally rethink our relationship to our community and our supporters, what new models for service delivery would emerge?” need to be asked. Creating a culture that thinks radically is one that expands the agency’s horizon even if when the current economic clouds partially obscure the view.

Authentic, intentional, large, and radical are four terms that illustrate a strategic organizational culture that is applied rather than an abstraction.  Such terms provide a base that an executive team and board can use to measure progress and be accountable to. By operationally defining a strategic culture, an agency enters into the process of strategic planning from a position of strength, opportunity and aspiration, which are prerequisites of a results-driven process.  So it bears repeating – Be authentic, intentional, large, and radical.

As always, your thoughts are welcome.

• Multiyear Funding: When the strategic plan is finished does it outline a clear pathway for developing an integrated approach to multiyear funding that provides stability to the organizations programs and infrastructure?

• Capacity Building: When the plan is implemented will the capacity of the agency be strengthened?  Have we considered the operational systems and support required to ensure a healthy and growing organization?

• Risk Taking: Does the plan lead us outside of a business as usual scenario in ways that challenge us to excel? Is the plan bold enough to encourage the agency take calculated (yet protected) risks to increase the impact of our programs and services?

• Movement Building: Programs and services change lives while movements change communities.  Does our strategic plan reflect movement building that has the potential of leveraging change at the community level?

• Making a Difference: Does our plan outline a pathway to demonstrate a clear and compelling impact? Will we be able to answer the question, “do we make a difference?”

Again, the list of “meta ideals” might differ from organization to organization but the common thread is that they are anchored to the core organizational values and aspirations. These ideals answer the question, “What do we as an agency want to become?” While the mission of today may be clear, the ideals drive the focus of the mission for tomorrow.  One agency might be ready to become a “game changer” while another agency’s big idea might be to reinvent their funding model to ensure sustainability.

If, in practice,  the use of BIG ideas is tackled at the front end of the planning process then the principles can then serve as the compass points during the planning process and sometimes, more importantly, revisiting  the ideals at the the end of the planning process can become useful final evaluative criterion to check the plan’s completeness. As I have worked with numerous teams on strategic planning, the process often (and ideally) starts large, aspirational and almost dreamy. As teams work to prioritize and define with some specificity, the end of the process is often mired in details — “now should be be projecting a .5 FTE or .8 FTE development associate?”  When the final copy is produced. the board has likely seen five or six iterations of the plan and the final vote is often, “yes. let’s be done with this monster.”  Rather than that sort of unceremonious end to a large investment of time, energy and passion, reflecting on how well the plan addresses the “big ideas” related to what an agency wants to  become can give energy and vitality to the approval and implementation of a strategic plan.

While this post may seem like it is discussing a tiny facet of strategic planning (and I agree it is), I am writing about it because it is a facet that it often overlooked.  By intentionally including reflection about “big ideas” in the strategic planning process, it can help frame, reinforce and energize a process. For any agency committing to a thoughtful strategic planning process the “Big Ideas” are critical tools to build and maintain focus and give a point of reference by which an agency can judge the authenticity of the finished strategic plan.

As always, your thoughts are welcome.

Stepping back to a few posts ago, I used Google’s Ngram Viewer to illustrate the idea of nonprofit program accountability. I again wanted to again use the tool to create a visual of an idea. Inset is an graph showing the growth in the use of some philanthropy terms including: public-private partnerships, strategic philanthropy, venture philanthropy, and social return on investments. While I will disclaim that the graph is not scientific, it visually suggests that somewhere in the mid-nineties there was dramatic parallel increase in the use of all of these terms. The disconnect that emerges is that many nonprofits are still talking about “finding resources to support programs” while the world of philanthropy is increasingly talking about “philanthropy as investing.”

As I am coming back to typing this post, midday through the ReVV2011 conference, I am sitting in a conversation about nonprofit revenue streams and the contrast is startling. While the conversation is about thinking about revenue expansion, the discussion has degenerated into “Does anyone have any additional ideas for fundraising that are less intense than…?” Another comment, “I maintain small bank accounts with several local banks so I can hit each one of them up for $200-500 donation each year.” Disconnect. Asking for small random amounts of money from multiple sources is not investment thinking. So the question remains, how do we create a strategic shift in thinking at the nonprofit organizational level? I would like to suggest the following actions.

Informed thinking There are a number of contemporary philanthropic books and articles that should be on the library shelf of every nonprofit executive director. Three basic texts include the following (external links) Essence of Strategic Giving, Money Well Spent, and Driving Social Change. Coupled with these resources are a series of articles and monographs referenced below that will help in creating a deeper understanding of capital nd philanthropy.  Together, they are a critical starting place for reframing the conversation of nonprofit resource development.

Taking stock The next stage of shifting thinking is to create a basic profile of your organization’s current and historic revenue and cost model. Along with defining the cost structure of programs and services, a nonprofit also needs assess the variables of revenue reliability, autonomy and revenue concentration (see resources below). Taking stock is a strategic conversation that, depending on the size of the group, might involve such methods as scenario planning, assumption-based planning, or even open-space technology. The goal of the ‘taking stock exercise’ is to create a shared understanding of the organizational financial baseline, its strengths and weaknesses and how well the “load-bearing” fiscal assumptions might hold under a variety of scenarios.

Understand Your Capital Needs Related to the “taking stock exercise” is the next step, which is creating a clear understanding of your capital needs. Oversimplifying the discussion a bit, capital needs can be sorted into three buckets:

Operating Capital: Most nonprofit organizations focus on operating capital almost to the exclusion of any other forms of capital. Operating capital is the revenue required to support the organizations programs and services. Clearly this is the major focus of nonprofit organizations as it represents the capital required to keep the doors open.

Infrastructure Capital: Less common as strategy is an organization’s Infrastructure capital needs. When it does appear, it is most commonly related to bricks. When a nonprofit seeks to build or buy a building, the infamous capital campaign is launched and the entire focus of the organization is on soliciting financial resources to pay for building, construction or renovation. However, I would like to suggest that nonprofits need to think infrastructure capital beyond bricks. Beyond buildings, nonprofit agencies need to consider infrastructure from the standpoint of evaluation systems, databases, technology infrastructure as well as resources to enter into meaningful collaborative relationships with other nonprofit organizations (such as shared space or shared back-office functions). By identifying infrastructure as separate from operations, it creates opportunities to bundle capital needs differently. Infrastructure capital might be sought as major gifts, restricted capital grants or low (or no) interest loans.

Expansion Capital: The third bucket of capital is that used for growing programs and services. I intentionally placed infrastructure capital in between operating and expansion capital because there is space in between the two. Unfortunately in seeking operating capital, many nonprofits blur sustaining existing programs and services and developing new ones as a way to create stable revenues.  All programs are lumped together and funding is sought for a bundle of related programs and services, some established, some new and some sorta new. However, sustaining existing programs and expanding or creating new programs are distinct functions and imply different motivations and risks for the funder. Ideally operations and expansion should be viewed as separate functions.

When an organization goes through the exercise of exploring capital needs, the connection between capital and strategy becomes clear. Indeed, I would argue that without a clear strategy that the exploration of capital is challenging. Conversely, by connecting strategy with capital needs an organization not only can categorize capital needs but also begin to think about staging capital needs.

Assessing the Capital “Market:” The next step is to begin to assess you options for capital. It is critical for nonprofits to understand the capital sources available to them and the drivers for accessing capital. Most nonprofits have figured out the basics of where financial resources come from, primarily: a) grants and contracts, b) donations, and/or c) earned income. However, as an advanced understanding, nonprofits would do well to study the subspecies of philanthropy. While texts referenced above offer clear outlines as to different funding vehicles, as recently as last week, philanthropists and advisors (external link) were still discussing the taxonomy of philanthropic giving (as if there are still significant questions about the subject). While the difference between a heartfelt connector and a venture philanthropist may seem a bit esoteric in reading the back and forth of a blogger and respondents, an understanding of the different values and motivations attached to philanthropy will assist the savvy nonprofit in aligning their capital needs with the right markets.

Creating a Resource Development Plan: I would argue that it is only in the context of understanding your capital needs and the capital “market” that a truly useful resource development plan can be created. In other words, it is only as an agency strategically “buckets” and “stages” their capital needs can they begin to create an investment plan. From that strategic vantage point, a nonprofit can then intelligently have a conversation with potential investor/donors who have been matched by their motivation and strategic philanthropic intent.

I have worked with many organizations where the starting point for resource development planning is next year’s budget. However, a “seeking support for programs” approach to resource development is an increasingly less durable way to raise revenues that support programs and program growth and an abysmal way to consider infrastructure needs. As I have been arguing in my recent posts, strategy is increasingly important to nonprofit agencies. Strategic planning needs to include strategic resource development planning as well. By aligning nonprofit strategic planning with impact philanthropy planning, there is the potential to create more rational and sustainable funding models for nonprofit organizations.

As always, your comments are welcome.

Resources

• Ten Nonprofit Funding Models
• Analyzing the Dynamics of Funding: Reliability and Autonomy & Excel Spreadsheet Autonomy & Reliability spreadsheet
• Maintaining sufficient reserves to protect your not-for-profit organization
• Cutting Costs, Keeping Quality: Financing Strategies forYouth-Serving Organizations in a Difficult Economy
• The Nonprofit Starvation Cycle
• Indirect Costs: a guide for Foundations and Nonprofits

“If only those nonprofits had the luxury to speak the truth to those upon whom they rely for money, they might say something like this: “The last thing we need right now is to devote yet more time to gathering data that won’t affect your decision one way or another—even if you bothered looking at it, and that cannot be used anyway to build up a coherent or useful body of research for grant making.”

As anyone with preteen and adolescents will immediately understand, this nonprofit rant demonstrates a clear external locus of control. In case your unfamiliar with the concept of locus of control, it is a theoretical construct that suggests an individual (or organization) can be externally oriented –seeking approval, guidance, direction and –well, control from the outside. The converse, an internal locus of control is where an individual or organization is self-directed, with self-mastery and an internal sense of power and control. Indeed, the parenting task of the early adolescent years is to help kids grapple with (and hopefully master) an internal locus of control and independence, rather than clinging onto childhood dependence on external caregivers. Unfortunately, the fundamental flaw with the article about the futility of measurement is that it gets the locus of control all wrong. While I agree with the premise of the author that it is detrimental for an organization to merely collect program level accountability and evaluation data to simply meet external requirements, it is at this point that my agreement with Schambra parts way. As I stated in my last post, program evaluation planning is an internal strategy that is peer to strategic planning and resource planning. Until an organization is clear on this point, and creates an operating culture that values program evaluation as strategy, data collection will remain an externally controlled and driven process with limited relevance.

So the question that remains is that “When an organization decides to treat program evaluation as strategy, what exactly does that mean?” I would suggest that the answer is in being intentional about addressing three fundamental domain questions: 1) What did we do? 2) How we did we do it? and 3) Did it matter? Implied in each of these questions is strategy that can be summarized by the table insert. As you can see, each of the evaluation domains has a related metric, audience & purpose and should be aligned with your program approach, logic or social impact model.

Creating an evaluation table forces an agency to think about the strategic questions related to the internal and external ecology of its program. The evaluation grid is not intended to tell you what to think rather it is intended to suggest how to think about program evaluation.

I personally believe that if the three macro questions and supporting strategy questions can’t be answered by an agency, then it will be increasingly difficult for the organization to retain its place in the social-citizen sector. We are in the early stages of what will be an endemic underfunding of social services. With demand for social programs and services continuing to be high and resources stagnant and, in some cases, rapidly regressing, a new “survival of the fittest evolution” is at hand. In this new evolution fitness will not be determined by the size of one’s reserves or endowment but fitness will be determined by the ability of nonprofit to be evaluative, transparent and networked. All three of these attributes are connected to evaluation strategy and become the points of an organizational internal locus of control.

Evaluative: Increasingly, relevant nonprofits are focusing their strategic intention on performance improvement and developing a culture of organizational learning. It is impossible to have a twin focus on performance improvement and learning without commitment to evaluative thinking and acting. For those organization striving to be on the leading edge of impact through systamically learning and improving will embrace evaluation as having ongoing evaluative data is the only meaningful way to support how well an organization is doing in meeting its mission.

Conversely, one only needs to look at the Federal Department of Education’s Student Mentoring program to see the folly and peril of resting on “no evaluation” or equally detrimental, relying on “historical evaluation data.” While youth mentoring has long been ascribed the status of an “evidence-based” youth intervention, the Department of Education lost its entire $47 million budget for the student mentoring program, when the impact evaluation found the initiative to be ineffective and that the program was deemed to be duplicative of other Federal programs.(1) This incident left dozens of youth mentoring programs with lost revenue and some programs ceased to operate. Such data-oriented decision-making foreshadows a move towards a more disciplined “performance-based” grant making model that dramatically increases the need for nonprofits to think strategically about evaluation.

Transparent: If the first internal motivation for developing and evaluation strategy is for performance improvement and organizational learning, the second motivation is to strengthen transparency. Elsewhere I have written about organizational transparency but at the program level, transparency also matters. Take, for example, the model of transparency set by the Northwest Area Foundation (NWAF). In a recent published report, the NWAF takes a brutally honest look at its programs and practices of a decade and reflects on both the successes and failures of their strategy, programs, and services. Transparency opens the opportunity for dialogue, support and change. Adapting the ideas expressed NWAF’s President & CEO Kevin F. Walker, I would like to suggest that “sharing lessons learned – not just trumpeting success stories, but also examining missteps and false starts – has yet to become one of the [social sectors] core strengths.” Government, philanthropy and nonprofits are increasingly looking for ways to examine and discuss data and such transparent conversations generate ideas for the improvement of the entire sector. And, as Walker concludes, “given the difficulties facing our society in this decade, philanthropy is duty-bound to evolve toward ever-greater effectiveness.”

Networked: A third internal driver for evaluation is considering the network in which an agency operates because the “unit of change” is rapidly moving away from the nonprofit organization to the local nonprofit network or ecology. Just last week I was sitting in on a dialogue between a nonprofit and a potential funder. The questions being asked by the potential funder were less about the individual nonprofit and more about the nonprofit’s relationship to others working on the same social issue. “How do you fit in with others?” “Where are the points of intersection?” Leverage? Scale? “What do you know of others successes and challenges and what do they know about yours?” Such a network and shared understanding is created in the context of data. A network is not simply a group with a shared passion for a cause, rather, a network is defined by the collective and tangible action in the direction of change. It is action and not affinity that causes change. As such, program evaluation plays a central organizing role in defining actions and the results of the action.

In both my last post and this one, I have suggested that the bar for program evaluation has been set too low. While foundations and funders might not be using evaluation data consistently or effectively, it is not an excuse for nonprofits to relegate evaluation to a lower-tier organizational functioning. Indeed nonprofits that embrace evaluation as strategy will be driven by internal excellence rather than an external locus of control. Nonprofits that embrace evaluation as strategy with strengthen not only their organizational core but the centrality of their place in solving social needs. Together, strategic planning, resource planning and evaluation planning comprise nonprofit strategy. With such a three-legged strategy. an organization will not only survive as an organization but will demonstrate leadership and be positioned for growth and stability in social citizen sector.

As always, your comments are welcome.

(1) Office of Management and Budget. (2009). Terminations, reductions, and savings: Budget of the U.S. Government, Fiscal Year 2010. Washington, DC: OMB.

As a starting point, I want to create a visual for the concept of nonprofit program accountability. Among the technology assets in the empire of Google is a tool called NGram Viewer. Using this tool, one can enter a word or concept and graph the use of the word over time (using as a reference the database of Google Books). I recently used NGram Viewer to graph the concept of nonprofit program accountability. As you can see in the figure, nonprofit accountability first emerged as a concept in the late 1970’s and bumped along until the early 2000’s. It was at that point that the term began a steep incline with nonprofit program accountability becoming a living, breathing, much talked about idea. Note: please don’t overestimate the value of this word picture as I am not suggesting there is any rigor to the underlying data –its just a illustrating concept. With such a steep growth, one would expect nonprofit program accountability and evaluation to be a priority within nonprofit organizations. Enter conceptual and practical disconnect.

Quick story. I was once talking with a nonprofit board about program accountability and evaluation. At one point in the conversation, a board member sitting back with his arms crossed asked, “is there any reason to think our funders have a problem without performance?” The response was “no, our funders are happy.” The second question of the board member was, “Does the agency staff think we’re doing what we need to be doing?” The response to this question was definitive, “Yeah, we’re doing great work.” The third question began to sound like the case was being built question by question, “So, is anyone asking us for greater program accountability and evaluation?” The third answer was more tentative, “um, no, we aren’t being asked for anything new.” With an air of pronouncement came the board members final rhetorical thought. “So why are we having this conversation about program accountability and evaluation?” Needless to say, program evaluation got little traction that evening.

When we turn to the literature, we fare no better. For example,  a series of articles published by smart academic  Joanne G. Carman and her colleagues, support the notion that the practice of program accountability and evaluation varies tremendously among nonprofits. Abstracting one statement from the studies illustrates the theme of her and her colleagues work.

“The picture that emerges is one that is decidedly mixed, illustrating a range of behaviors that challenges the current perception that most, if not all, funders are asking nonprofit organizations for more evaluation and performance measurement data.”(1) - emphasis mine

Even more recently, The Center for Effective Philanthropy published a report titled, “Grantees Report Back: Helpful Reporting and Evaluation Processes” that concluded, “On average, grantees do not find current reporting and evaluation processes to be very helpful in strengthening their organizations and programs.” In differentiating the use of evaluation and reporting, the study concluded that “Grantees who report discussing their report or evaluation with their funder perceive the reporting or evaluation process to be more helpful — yet nearly half of grantees say no discussion occurred.” -emphasis mine.

The conceptual and practical disconnect between program accountability and evaluation and the perceived usefulness of such efforts is clear. While we talk about nonprofit accountability and evaluation, the practice of such efforts is uneven and inconsistent. If this is the state of field practice, the next logical question we need to ask is “what are the barriers that get in the way of program evaluation?”

First is the wall. Money –or more appropriately the lack of it. Many will say that the disconnect between evaluation talk and practice is directly connected to the lack of resources. “We can’t afford to do evaluation.” is the typical response to the lack program accountability and evaluation data. However, I suggest that you can’t afford not to. I personally believe that the day is rapidly approaching when funding agencies and donors begin to say, “The emperor has no clothes.” I have written before that, at the organizational level, transparency and accountability are becoming increasingly important. Without supporting program level accountability and evaluation data, I also believe that nonprofit organizations will come under greater and greater skepticism. So while at face value the barrier of “no money” may be true, the wall must come down and every organization must make it a priority to dismantle this barrier. A final thought is that the wall of “no money” actually hides the real barriers to program accountability and evaluation, of which, I believe there are three:

Skills, Support, Confidence & Value: I believe that a significant barrier that prevents many organizations from seriously addressing program accountability and evaluation is found in the alchemy of “lacking skills” in evaluation and “lacking the support” to conduct evaluation. Too often the leadership of organizations fails to invest in developing the organizational skills and support to conduct evaluation. Skill development and support does not have to be costly. There are a variety of online resources that are a Google search away. Relationships can be built with local colleges and universities or seek out a qualified consultant.  Finally, if you need money, then raise it. Enough of the excuses.

The second part of this barrier is the lack of confidence and values. Some have labeled these two variables as core motivation. If one understands the value of a task and has confidence that they can do the task then there a greater likelihood that the task will become a priority. Putting these pieces together, to overcome this barrier, an organization should develop an approach to understanding and resourcing evaluation that builds confidence and create a culture and an organizational value that supports evaluation and the use of the resulting data.

Missing or Misaligned Incentives Another barrier to program evaluation and accountability is found in the area of incentives.  To start, ask yourself some inquiry questions such as

• When was the last time that your organization celebrated a data report that demonstrated program effectiveness?
• When was the last time you presented program evaluation results in a public venue?
• When was the last time that your major funder provided you with adequate resources to conduct an evaluation?
• Have you ever been penalized for having or not having evaluation and accountability results?
• Has anyone ever asked for your program accountability and evaluation results?

These are a just a sample of questions that can be used to probe where the incentives for evaluation are (and are not) for your organization. Exploring the incentives, lack of incentives, or misalignment of incentives is another way to, not only identify an evaluation barrier, but to dismantle it. As a result of this inquiry, an agency should clearly be able to identify positive incentives for program evaluation and, if they can’t be identified, they should be created.

Fear that We are the Emperor: Perhaps the largest barrier to program accountability and transparency is the fear that evaluation outcomes would reveal that we are the proverbial emperor. “What if we measure and the results are negative?” can be a paralyzing specter if our mindset is one of fear. However if we want to develop ourselves into a socially innovative nonprofit organization we must dismantle fear and embrace inquiry. We need to understand that program accountability and evaluation is the source of power and empowerment. Without evaluation how can we improve or measure progress? Program evaluation is the stuff that makes program giants, changes things, and disrupts unmet needs.   Conversely the lack of data simply perpetuates the myth of nonprofits as nice organizations doing good in the community.

What I am arguing for this is post is the need for nonprofit organizations to consider their relationship to program accountability and evaluation. The literature and practice might suggest that the field of the social-citizen sector talks about accountability and evaluation but at the same time, also suggests that we have been less than successful at operationalizing that talk with any consistency. However, I would argue that this is case where field practice does not matter. I believe that socially innovative nonprofit organizations are those that invest in the development and implementation of a solid plan for program accountability and evaluation. As illustrated by the Venn diagram, organizational strength and impact is more durable in the presence of a solid evaluation and accountability approach that is connected to strategic and resource planning.

Program accountability and evaluation strengthens internal practice as a focus of continuous improvement and serves as an external benchmark to proclaim an organizational commitment to excellence. As nonprofit agencies continue to look for ways to innovate in a resource-constrained environment, building and implementing strong strategic plans, resource plans, and evaluation plans will position agencies well to effectively meet compelling community needs.

A always, your thoughts are welcome.

(1) Carman, JG. (2009). Nonprofits, Funders, and Evaluation Program Accountability in Action. The American Review of Public Administration 39: 374-390.

Linking compelling social needs to the ideas of innovation creates the construct of of social innovation. Social innovation is the “holy grail” of nonprofit, philanthropic or government in search of finding new ways of creating community level solutions for social needs. As a contemporary overused buzzword, social innovation writers, consultants and scholars emphasize social innovation as the process of inventing or creating novel approaches to social change. Unfortunately, we too often hear words such as “catalytic” or “disruptive” to magnify the scale of the implied change. This “shiny new object” focus only on disruptive or catalytic social innovation distorts social innovation because it emphasizes only one point on a four point matrix.

In this blog, I want try and bring dimensions to social innovation to remove it from the abstract buzzword category. In this way, I hope to offer the starting point for strategic conversations within and across organizations about innovation.

It is not a new thought to think on innovation across two continuum (see reference 1). So if catalytic or disruptive innovation is at one end of a change continuum then the other end of the spectrum is process innovation that day-to-day work of continuous improvement for organizations. Positioning social innovation as adaptive or disruptive/catalytic is a very useful way of anchoring the basic dimensions of the social innovation concept.

Process innovation and disruptive/catalytic innovation need to be considered against the continuum of leverage or scale. For example, the Obama administration has developed a new partnership between government and philanthropy heralded under the banner of the Social Innovation Fund. The purpose is described as targeting millions of dollars in public-private funds to expand effective solutions across economic opportunity, healthy futures and, youth development and school support. The approach is to “create a catalog of proven approaches that can be replicated in communities across the country.” (see reference 2) The Social Innovation Fund clearly provides leverage by aggregating philanthropic and government dollars and uses that leverage to scale programs. However, given that the Social Innovation Fund requires grants to be based on existing programs and services that meet an “evidence-base” criteria, some have argued that true innovation is missing from the initiative. For example, one can read in various opinion blogs, statements such as this one:

“The central mission dissonance of the Social Innovation Fund has always been the question of what its real objective was. Was it meant to be a fund that really pushes an experimental agenda and deploys capital in favor of new approaches to social change that have both high risk and high reward? Or was it alternately a chance for the government to get a hand in on organizations whose models started as innovative and who were reaching an inflection point where new resources and government support could help them achieve the scale their proven model demanded.” (see reference 3)

So considering the larger context of social innovation, we can see that the two dimensions of the construct include the dimension of continuous verses discontinuous innovation and the second dimension of leverage and scale. Placing the two dimensions across each other, the concept of social innovation can be represented as four typologies as illustrated in the figure one.

The patterns and practice describing innovation that emerge when we consider the degree of change coupled with the degrees of leverage and scale can be described as follows:

Process Innovation: When the degrees of change are low (as in consistent and continuous) and the resources available for leverage and scale are inadequate, social innovation is largely consists of process improvements. This category of change is not simply trying “doing more with less,” but it is the sum total of the intentional, systematic, and strategic efforts of an agency to improve its processes largely within its existing structure, programs, and services.

Growth Innovation: When an organization is focused on innovating within its existing structure, programs, and services, in the context of collaborative relationships or increased financial resources (leverage and scale), the innovation results in program growth. Typically this growth is driven by intentional program expansion, program replication, or program dissemination. It is in this quadrant that innovation might be opening branch operations in a new geography, training others in an affiliate or dissemination model, or expanding service hours. Innovation is typically about about scaling systems to serve more people, creating value chain efficiencies, or creating rigorous evidence-base that encourages the adoption of program or service models by others.

Adaptive Innovation: Going back to an operating environment of constraints (in relationship to leverage and scale), adaptive innovators are those willing to move ahead of or beyond its existing structure, programs, and services to achieve a higher degree of social impact. Innovators in this might move out of preventive or secondary program and services and begin devoting limited resources to working upstream on policy or advocacy. In this quadrant, innovators do not simply ask “how can we improve what we are doing” but rather ask, “could we be more effective if we moved outside of our existing strategies, programs and services?

Catalytic Innovation: The final quadrant of innovation is where large-scale change is sought and is supported with ample leverage and scale. It is not seeks to grow and scale an idea but also seeks to amplify innovation by considering discontinuous ideas in addition to continuous ones. As suggested previously, Disruptive innovation is pursed as if it were the holy grail of social sector. Indeed, catalytic change can create powerful change (see reference 4) but giving disruptive innovation an unequal weight compared to the other three quadrants can skew with meaning of social innovation and actually be a disservice to the field. Disruptive innovation is the current concept with cachet and gravitas relative to the “mundane” work of systematic program improvement and hence, there is the potential that solid process, adaptive, or growth strategies might be overlooked.

The point to be underscored is this. We need to create a shared understanding of social innovation as a critical foundation for building a local perspective for social innovation. Common language is essential to creating a local social innovation approach to compelling social needs. In this overview I have proposed a more robust seed bed for considering approaches to innovation. By broadening the dimensions of social innovation, we can now turn our attention to creating a social innovation framework. It is not about catalytic innovation or adaptive innovation as if it were either/or. Rather social innovation is about both/and. The community needs the investments and strategic thinking to create catalytic innovation that disrupts business as usual. The community also needs the skills and tools to engage in process, adaptive, and growth innovation.

Thinking critically about when to focus on innovation from a process, adaptive, growth and disruptive perspective and how to combine such innovations will result in a stronger social-citizen sector addessing compelling community needs. It is my perspective that only with a broader view of innovation can nonprofits, philanthropy, and government organizations can engage individually and collectively in more thoughtful and strategic conversations about social innovation.

As always, your thoughts are welcome.

References

1. For a useful policy overview see:  “Social Innovation”: What is it? Who Does it?

2. Source: Corporation for National and Community Service – Social Innovation Fund

3. Source: The Social Innovation Fund Grants Focus on “What Works”

4. See as an excellent example: Catalytic Philanthropy