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The Big Ideas: Checking the Authenticity of a Strategic Plan

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One of the dominant themes in my blog posts this year has been outlining dimensions of nonprofit strategy and, in my conversations with clients and potential clients, strategy is still the major theme.  A question that I have recently been man with binoculars pondering was asked by a colleague who had just gone through a strategic planning process.  His question was simple, “Okay, when you are all done and are looking at the final approved strategic plan, how do you know it is a good one?”  Unfortunately, while the “Checklist Manifesto” may be a popular business concept right now, I do not believe that there is one right answer to this question. However, one off from the checklist, is my belief that a team developing a strategic plan should establish external “ideals” against which they can reference their work. These ideals are the BIG ideas that frame the process and yet can sometimes get lost as planning teams wrestle with tactical objectives and operational details.  A working list of meta ideas might look like these:

  • 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.

 

 

Strategic Nonprofit Resource Development Planning

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As I write this post I am sitting in the main session of a two-day ReVV2011 conference (here in Portland) dedicated to exploring the themes of social innovation, enterprise and impact. As I think about this conference in the context of two recent strategic plans that I completed, I am struck at the disconnect between nonprofits and potential funders around the language and ideas related to resource development. While there is this growing number of thinkers, funders, and policy makers using terms like social innovation, impact investing, and venture capital, the average nonprofit continues to think about resource development from the perspective of “seeking support for programs.”  While many nonprofit agencies can likely tell you what percentage of agency revenues come from grants versus donations, there are not enough nonprofit leaders who can discuss resource development as strategy.

graph of growth of philanthropy word useStepping 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


The Role of Strategic Evaluation in Nonprofits

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In my last post I began a discussion of program level accountability and evaluation and framed some of the issues that create a “disconnect” between the discussion of program evaluation and the actual practice of program evaluation. I also overviewed some common organizational barriers to program evaluation. Since writing that last post, an interesting opinion article by William Schambra appeared in the Chronicle of Philanthropy titled “Measurement Is a Futile Way to Approach Grant Making.” The article is rhetorical and almost caustic about the disconnect between the talk and practice of evaluation. Typifying the tenor of the article is the following mythical diatribe:

“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.

table of evaluation questionsSo 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.


The Critical Need for Program Accountability & Evaluation

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Lately, I have been doing a lot of thinking and reading about nonprofit evaluation. As part of an evaluation team for a project, I have also been working directly with a range of nonprofits, providing coaching and guidance on evaluation design. I have come to believe that program accountability and evaluation is an area of conceptual and practical disconnect both within nonprofit agencies and between nonprofit agencies and the government and philanthropic organizations that fund them. In this blog I want to begin a conversation about the role of evaluation & program accountability in nonprofit organizations and in the next blog discuss how nonprofits can (and should) use evaluation to achieve greater social impact.

nonprofit accountability word trendAs 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.


Dimensions of Social Innovation

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At the cellular level, innovation is about change. Innovation is about finding efficiency, converting knowledge and ideas into better ways of doing business or into new or improved programs and services. There is not a single organization in existence today that isn’t searching for innovation as a way to improve organizational efficiency and effectiveness.

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

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