Comfort Does Not = Innovation
If I had a dime for every time I heard an organization or an agency talk about innovation I would probably be very rich by now. I realize that we have an industry that typically follows what is working. We have also had success in resurrecting strategies used years ago that stopped working and after retesting — voila! — they work once again.
Let’s be clear — we are the masters of testing. We track every element. We take very few risks with our time, energy and donor dollars. But I believe that behavior, which is admirable, is also preventing us from true innovation. The definition of risk is pretty straightforward — “the possibility of loss or injury; someone or something that creates or suggests a hazard; the chance that an investment will lose value.” Based on how we typically manage nonprofit fundraising and marketing, risk is a bad thing. The definition of innovation is not as straightforward – “the introduction of something new; a new idea, method, or device.” The concept of coming up with something new, a new idea, a new method for fundraising inherently has risk written all over it.
In the corporate world it has set aside money for innovation and the risk is understood; it's called research and development — novel concept, eh? For the nonprofit world, this simply does not exist because donor dollars are tight and sacred. But in a time of necessary change for the industry — the need to integrate, the need to get closer to our constituents, the need to go from single channel to multichannel, the need to raise more money — staying true to yesterday’s strategies is safe but will not create the change needed.
So, let’s roll the dice and say, “We are going to innovate!!!” Great, what the heck does that mean?
Now enters the next challenge — “innovation” is hard to define within an organization and an agency and therefore hard to manage. Let’s break this down between creating innovation as an agency versus a nonprofit.
If you’re an agency, innovation can represent financial and operational changes. If you have had strength in single-channel fundraising for a long time (i.e., direct mail), it is highly likely that innovation will be driven by the introduction of team members with different points of view and/or experience. There must be an evangelist around innovation, but in the end it requires new skill sets and new ideas to back up the vision of innovation. Innovation also takes an investment — one that should be kept separate from other budgets. By approaching it that way, the return on investment is viewed in a different manner than the budgets identified for the proven products and services already in the marketplace.
How does your agency reward innovation? Does it create an expectation around innovation? For many agencies, the teams are hands down meeting client needs and doing what is expected to achieve client goals. Every agency should ensure it is carving out some time within the schedules of its teams to focus on creating innovation in their particular areas of expertise.
Furthermore, performance management should include goals around innovation development. Be realistic; you cannot expect a creative person to come up with an analytic innovation (at least not on a regular basis, that is), but agencies have some of the best talent in the industry so make sure you are giving those great brains the opportunity to think outside of the box. That means your managers have to give permission to these staff to brainstorm and become visionaries and inventors. But, perhaps most important is the approval to not have only winning ideas. Failure is a critical part of innovation.
Also, don’t forget innovation within agencies can be centered around processes as well. It’s not always going to be a strategy, a new creative approach or a new way of using information or understanding information. An agency can develop an innovation that creates efficiency, enabling a lower cost to do work, a way for a client to get to market faster, achieve results faster, etc.
But one thing is clear — from the executive level down — individuals in the organization have to be held accountable for innovation and associated goals. But don’t only track things on the surface like expense savings, ROI and efficiency. Rate your agency on its ability to drive innovation. Create goals around the introduction of new products or services over a specific period of time (i.e., two or three years), create goals around the amount of time staff are spending toward innovation through time tracking and outcome tracking, and last but not least create goals around the percent of revenue growth that is coming from the introduction of new products and services.
In a world where success is often defined by how much better you are than your competition, not innovating is the fastest way to fail.
After spending 2.5 decades in the nonprofit industry, I still really dislike the word “nonprofit.” Let’s face it — profit is net revenue after all expenses are covered, right? Nonprofits want net revenue and try to improve net revenue every day. They just spend their “profits” differently than the commercial world. They invest that profit into their missions. Yet, while in pursuit of profits, their philosophy around driving greater profits is very different.
Most nonprofits do not find it easy to accept the commercial philosophy of “invest to grow.” But, it’s not totally the fault of the nonprofit. With the watchdog environment and media just waiting to jump on a story about how a nonprofit’s fundraising ratio has gone up or how it spent $XX in a specific campaign to only raise $YYY, can you blame an organization for not taking risk or allowing donor dollars to be spent on innovation that has a high likelihood of not succeeding? In the marketplace’s goal to hold charities accountable for how they spend money, the marketplace may be actually stifling the ability to drive greater funds to achieve the mission faster or better.
Years ago, I had the privilege of working at a nonprofit that attempted to drive innovation internally. It spent several years allowing the creation of “Learning Labs.” The budget assigned to these “labs” was viewed differently than other budgets but classically when the recession hit — as with many companies, budgets like these were not able to stick around. But, it was the right idea.
Nonprofits invest in research around their missions — be they health-related, social services, environmental, etc. They provide grants to third parties to find new ways to further the mission or fight the particular cause.
If you’re a nonprofit, why aren’t you providing grants within your organization? Why aren’t you providing grants to teams to find new engagement ideas, new fundraising techniques, new donor-services processes to drive greater loyalty, new ways of gathering donor insight and input to make you smarter in marketing and fundraising?
Peter Drucker, a major influence on nonprofit management and models, said that “innovation is the process of turning opportunities into new ideas, adopting these ideas within the organization and the successful application of the resulting novelties such that they provide value to the organization.” That’s a mouthful, but it couldn’t hit the nail on the head better.
If you are a nonprofit executive, why don’t you want to drive a competitive advantage through innovation? You say you do? Great, put your money where your mouth is and similar to the advice above for agencies: Create a budget for it, and create goals and assign accountability to staff that can drive it.
If you’re a nonprofit marketer or fundraiser, why aren’t you forcing this conversation? Force it with your agency, force it with your executives and by all means, force yourself to be what you studied and trained to be. To be a fundraiser is to be a marketer with a specific purpose, and to be a marketer who’s not looking for the next big idea or the next opportunity is to fail. Sorry for the harsh words, but as a nonprofit marketer/fundraiser, I hold myself to the same thinking. You certainly don’t want to lose your job by being a pest, but if your executives won’t listen keep trying to have the conversation. If your agency won’t listen, fire it and find one that will. In fact, I would go as far as saying your agency should have yearly goals around innovation. I’m not talking about a new ask string, a new message strategy — I’m talking about real game-changing ideas.
And don’t forget about your data folks. Push the conversation internally around insight innovation. Ask the people who are closest to your data to help you brainstorm new ways to use the information they watch and track every day. Not everyone can think outside of the box, but as a marketer it is your job to drive the conversation across the fundraising program and the support areas to have everyone thinking as often as possible how to separate your brand from the competition.
With the competitive charitable landscape and donor dollars that are hard to come by every year, the fundraising team and support teams (analysts, donor services, agencies, etc.) should be trying to deliver something every year that further separates your organization’s fundraising and community engagement.
In the end, it’s not about creating a new goal; it’s about creating a better way to achieve that goal. Marketing innovation helps you keep your current constituents and helps you find new constituents faster and more efficiently. Aren’t those your goals already? So, why isn’t innovation a formal part of the plan? Ask yourself that … and then ask your executives.