7 innovation essentials for community organisations.

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Not for profit organisations can benefit greatly from taking an innovative approach to facing the many challenges present in today’s society.

7 innovation tips for NFPs

  • Be clear on why innovation matters.
  • Create a culture where innovation can thrive.
  • Find people who are passionate about innovation.
  • Empower your people with leaders who encourage innovation.
  • Be clear about your organisation’s innovation ambition to achieve strategic goals.
  • Find and maintain balance in your organisation’s innovation portfolio.
  • Understand and measure the vectors of innovation.

The challenges we face across society today cannot be solved with yesterday’s thinking. Addressing the challenges requires courage, innovative thinking and collaboration from leaders across institutions, including those from the social sector.

Community organisations in Australia’s social sector operate in a rapidly changing environment. Changes in technology, demographics and structural shifts in our economy are creating opportunities and challenges for people and organisations across Australia. Those that capitalise on these shifts and are nimble will be best placed to succeed and better serve our community. Here are some tips to help your organisation to build its innovation capability.

Tip 1: Be clear on why innovation matters.
Whilst many community organisations have implemented innovative policies to help them achieve tangible, often long-term goals, to effectively serve their community other organisations have not taken steps to build their innovation capabilities.

Having clarity and agreement on why innovative practices matter for your community organisation is important. A couple of key reasons that should resonate with the decision-makers at a management and board level are:

  • it helps to drive the organisation’s mission. Innovation is critical to solving some of society's most pressing challenges.
  • it helps work towards financial sustainability. There is a high correlation between innovation with both competitive positioning and financial performance.

Tip 2: Create a culture where innovation can thrive.
Many organisations have policies and processes designed to optimise for efficiency not innovation.

There is no ‘one-size fits all’ culture of a customer-centric, nimble and collaborative organisation. There are, however, values and capabilities related to innovation including diversity of thought, curiosity, and trust that can guide your organisation from where you are now to moving closer to embracing innovation as an important organisational capability. For example, what has proven helpful across all sectors is a spirit of curiosity, a test and learn approach, and openness to outside ideas.

A higher order question to consider might be how to introduce new behaviours into your community organisation. Innovation is a process that requires behavioural change at an individual and organisational level. The iterative nature of innovation requires people to work in ways that may be different from what they are used to, and there is likely to be a great need to accept that uncertainty may be part of the process. Creating safe spaces for the development of innovative behaviours and using organisational leaders to model them are two ways organisations can start introducing new norms they want to see.

A question for your board and management team (and even funders) to consider is, “Is failure an option?” Failing fast tends to be cited as a key element for organisations that embrace innovation. So, the question for consideration by organisations is “Are the board, team, and funders ready to accept the ‘failing fast’ paradigm?” If not, maybe a more palatable option is to ‘think big, start small, act fast’.

Tip 3: Find people who are passionate about innovation.
The challenge is to enable innovation to flourish within well-run, well-established, risk-averse organisations.

A solution to this challenge is having skilled and able people who embrace innovation across all functions of your organisation. So, what should you look for when you seek out these change-makers?

Ideally, they:

  • Demonstrate sound judgement about what creative ideas may work.
  • Can estimate and articulate how ideas may work in the marketplace.
  • Can manage a creative process from ideation to fruition.
  • Are good at bringing creative ideas of their own or others to market. 

Tip 4: Empower your people with leaders who encourage innovation.
A focus on three leadership fundamentals may produce the building blocks of an innovative community organisation.

First, formally integrate innovation into the strategic-management agenda. A way to enable this is by managing, tracking, and measuring innovation as an essential element in your organisation’s growth aspirations.

Second, create an environment that allows innovation networks to emerge and flourish. Effective networks facilitate people with different knowledge and experience to combine their ideas and find new ways of tackling problems. Innovation networks enable leaders to capture more value from the existing people and resources in your organisation.

Third, take steps to foster an environment where people understand that their ideas are valued and trust that it is safe to express those ideas.

Leaders of organisations that encourage innovation often share certain key characteristics:

  • they are committed to clear and open communication,
  • they value accountability, and
  • they promote creativity.

Tip 5: Be clear about your organisation’s innovation ambition to achieve strategic goals.
Innovation is a means to achieve strategic goals. However, it’s important that the organisation is clear on whether it wants to be in the:

  •  fast lane: a leader of change.
  •  middle lane: a fast follower that adopts innovation from others.
  •  slow lane: choosing incremental continuous improvements and drive safe reliable services.

Tip 6: Find and maintain balance in your organisation’s innovation portfolio.

Once you embark on innovation as a process in your organisation, it is important to have visibility of all the dispersed initiatives by managing an ‘innovation portfolio’. When considering the balance for an innovation portfolio, your organisation could divide innovation into three types of initiatives:

  • Core - improvements to current programs for current beneficiaries.
  • Adjacent - expanding from existing programs for beneficiaries to new programs for current or future beneficiaries.
  • Transformational - creating new offers to serve new customer needs.

Organisations with a clear innovation ambition strike the ideal balance of core, adjacent, and transformational initiatives across the enterprise, and have put in place the tools and capabilities to manage those various initiatives as parts of an integrated whole.

Best practice from the Harvard Business Review suggests that outperforming organisations typically allocate about 70% of their innovation resources to core initiatives, 20% to adjacent efforts, and 10% to transformational.

In contrast, overall returns on innovation investments tend to follow an inverse ratio, with 70% coming from the transformational initiatives, 20% from adjacent, and 10% from core. The ideal balance differs depending on industry and organisation.

Tip 7. Understand and measure the vectors of innovation.
Organisations can measure their capacity to develop and deliver innovation according to eight key vectors.

Westpac partnered with Give Easy to develop the Innovation Index for the Not for Profit Sector. The index identifies the vectors your organisation could measure:

  • Culture: creating an organisational environment where separate ideas and perspectives can collide regularly.
  • Technology: using technology to foster collaboration and take ideas to market through new channels.
  • External Collaboration: building and maintaining diverse networks and partnerships with outside suppliers, service providers, organisations and thought leaders.
  • Internal Collaboration: enabling individuals and groups to connect and work together within an organisation.
  • Innovation Focus: strategic innovation requires a vision, goals and metrics.
  • Rewards & Recognition: encouraging innovative behaviour through an active program of acknowledgement including peer recognition, promotion or financial reward.
  • Stakeholder Centricity: deep engagement and empathy with donors and beneficiaries to engage with them in the most relevant ways.
  • Organisational Velocity: achieving exceptional levels of performance, relentless focus on improvement, quick to respond and adaptable to change.

Organisations who nurture a culture of innovation and actively look for new ways to solve the ever-increasing, always changing challenges faced in our communities today are better placed to achieve their mission and improve the world we live in.

 

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice. ©Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.


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Lali Wiratunga

Lali Wiratunga believes in encouraging positive financial behaviours to boost people’s financial confidence. He also advocates for the role of innovation, creativity and entrepreneurship in helping people and organisations deliver social impact and financial sustainability. In 2016, Lali was recognised for creating a positive impact through Pro Bono Australia’s Impact 25. Following a career as a corporate lawyer and management consultant in the UK, he's had 14 years experience in roles across financial services in Australia. His volunteer roles include a seat on the Board of TAD, a disability services organisation, and is a member of the Alumni Advisory Board at UNSW Business School, where he mentors students and advocates for the value of business education.

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