Charity Financials Insider

Leading Innovation

13 June 2013

Radical or incremental? Ruth Lesirge and Hillary Barnard look at the challenges of innovation in the third sector.

Leaders in third sector organisations are often exhorted to innovate but it is often not clear what is being asked of them or why. All too often the exhortation to innovate when examined more closely seems more like a demand to abandon all you know how to do well in favour of trying something untested but very exciting and new. 

Most third sector organisations know that some change is unavoidable in these unsettled times; but many leaders also know that radical innovation – implementing that bright star of startling new practice – may well be neither practical nor desirable. This article is designed to help leaders in third sector service delivery organisations engage more with incremental innovation, those changes in working practice and delivery that need to be a continuing part of any effective organisation.
There is of course a place for more transformative change in the third sector[1]. Equally, there are third sector leaders who consciously opt for a more human scale innovation and change that builds on existing organisational competences, strengths and opportunities. The early quick win with an incremental innovation does wonders for organisational confidence; and there are usually benefits to being an intelligent ‘fast follower’ of those who are able to pioneer more major change.
Much writing on innovation is dominated by the enthusiasts for radical innovation. There is an accompanying unreal expectation, certainly for third sector leaders, that the greatest contribution to innovation that the Board and Chief Executive can make is to get out of the way. But accountability for delivery and oversight of charity income cannot be swept away in a cavalier manner. Moreover, the practice of dispersed leadership should be about intelligent delegation, not an abdication by the ‘top team’.
Change that creates a new dimension of performance
Incremental innovation will often be change that is not exclusively technological, tackling those ‘wicked issues’ of social change through shifts in process, business models and organisational structure.   Where technology is involved, it will be more a case of application than admiration. One commentator’s assessment was that the success of Olympics 2012 organisation ‘came through a conscious limit on innovation[2].’ On the sporting level, British Cycling’s success at the games owed a lot to their constant focus on doing things at every stage just a little bit better. In this, they were guided by Matt Parker’s role as their Head of Marginal Gains. 
The June 2013 Comprehensive Spending Review will bring even tighter public resources for third sector organisations.  With the economy flatlining, too many third sector organisations face the prospect of their income and activities being ‘salami sliced’. It will be harder but no less essential for organisations to access ‘patient capital’, long term capital that works with the grain of the organisation and its capacity to take on and implement necessary change. Climbing the hill rather than scaling the mountain may not excite the enthusiasts, but it is the stuff of organisational survival and the ability to deliver valued services to beneficiaries.
Having said that, we are undoubtedly in a period where typical solutions often do not work. Assumptions that have underpinned traditional approaches to third sector organisation, resourcing and development are rapidly dissipating and the best leaders recognise that change delayed may lead to change subsequently hurried and probably fumbled. It may therefore be necessary to unlearn some existing precepts and move beyond habitual patterns of thinking. Innovation (and reduced resources) offers an opportunity (and poses a challenge) to call time on increasingly ineffective ways of working. 
Leadership of executive and Board
Given these conditions, it is essential to focus on the leadership and collaboration on innovation provided by both the senior management team, and the Board of Trustees. Each with their discrete roles, the quality of their interactions will shape the conditions for incremental innovation. When at their most effective, the executive team connects the strategic and the operational, understands the service user’s journey, and has a direct concern with making and taking efficiency gains[3]. It is for the Board to substantially inform thinking about the future, guard against ethical drift, and share with the executive a concern for effectiveness. They are all aspects of its strategic and generative roles standing alongside its fiduciary duties[4].
The best innovation oriented leadership brings a sense of vision, the skills to navigate through the internal organisational structure, and to use external networks and relationships to work across organisational boundaries.  It cultivates an environment where improvement, adaptation and invention are encouraged, fostered and rewarded. It uses tools which can scope for the ambition for innovation[5] to focus on developing existing services for existing and potential service users. Without substantially changing activities, work on incremental innovation can stretch the organisation’s identity to more powerfully underline its contemporary relevance.
Conversely as Rosabeth Moss Kanter[6] has shown, the scope and power of leadership has great potential to stifle innovation – suspicion of the new, invoking history as an argument against change, keeping staff really busy, encouraging cut-throat internal competition, insistence on the highest level of advance proof of the worth of innovations, restricting participation in strategy discussions, publicly punishing any failures, complaining about poor quality of staff in the organisation, and constantly underlining the knowledge of the existing leadership about the organisation’s work.
Engaging innovation
Innovation does not amount to a strategy but its pursuit should be integral to formulating and refreshing strategy. It requires organisations to scan for trends and technologies, looking for partners in fostering innovation, and re-examine how best to use resources to invest in the future. Leadership will need to work hard to shape a positive organisational culture that fosters a collaborative practice internally and externally, one that accepts some risk and uncertainty, and learns from failures when they arise. This will have to be integrated with pursuit of strong performance, underpinned by reliable data. 
Wherever new goals or new ways of working arise anywhere in a third sector organisation, the role of leadership remains key and leaders need to contribute at all four stages of innovation – initiation, discussion, implementation and routinisation. In so doing, effective leaders will locate and enable ‘creative slack’ (or incubation) within the organisation to secure the space for small steps of continuous improvement (kaizen[7]).
A new practice
Effective organisations have to be ambidextrous, sustaining current activities whilst pursuing innovation and change. This is a challenge for organisational design and systems that will need to flex and require extended skillsets. A few large third sector organisations may have the luxury of innovation specialists but irrespective of size, third sector organisations seeking to innovate must aim to: 
·         communicate permission to innovate through supervision, websites, intranets, staff conferences;
·         develop ways of working that remain open to unplanned opportunities;
·         find ‘early adopters’ within their organisations who are sufficiently senior to effectively champion new systems and processes;
·         stretch the talents and thinking of existing staff and volunteers to develop discovery skills, and value those who develop these skills;
·         identify internal (and external) coaches for incremental innovation;
·         support selective job redesign and professional development that have incremental innovation at the heart;
·         ensure organisational recognition and ‘reward’ for incremental innovation;
·         use external advice and work with partners to facilitate a new practice.
Making it happen
1.    For Board and executive team to ask themselves how well equipped are they to consider good ideas (and reflect on recent developments and innovation in order to answer that question).  
2.    To think of Boards as clusters of expertise. Does the Board have members with expertise in innovation? Are Board members ‘allowed’ to have good ideas?
3.    Encourage Board and executive team to work together using of tools that can help reframe choices, such as scenario planning and Six Thinking Hats[8]
4.    Agree what the role of leadership in the organisation is in bringing diverse perspectives to bear
5.    Consider who can help and facilitate in posing questions and look for new ways to tackle old problems or help the organisation apply existing resources differently
Innovation is essential to make the best use of resources in hard times and must be integral to strategic planning.
Incremental innovation will retain and strengthen the mission of the organisation and show its current and continuing relevance.
Strong and effective leadership is required at all levels in the organisation, including in governance, to encourage and support the development of innovative solutions and practices.
Working collaboratively within an organisation and with new and existing partners is vital to successful incremental innovation.

[1] H. Barnard and R. Lesirge - Rethinking Your Organisation, Caritas, August 2012
[2] P. Riddell, Financial Times, 22 January 2013
[4] R.P. Chait, W.P. Ryan and B.E. Taylor – Governance As leadership: Reframing The Work of Non Profit Boards 2004
[5] See for example, B. Nagji and G. Tuff – Managing Your Innovation Portfolio, Harvard Business Review, May 2012
[6] R.M. Kanter- Nine Rules for Stifling Innovation, 15 January 2013
[7] Kaizen: Japanese for ‘improvement’ or ‘change for the better’; a philosophy and/or practices that focus upon continuous improvement of processes.
[8] E De Bono – Six Thinking Hats 1985
Share this article


Leave a comment

Your Name:
Your Organisation:
Job Title:
Email Address:
Your comment:

Unless you state otherwise, we will publish your comment on the website
Don't publish my comment

Type the letters you see in this picture to verify that a person is creating this email and not an automated program.

The letters are all lowercase