Transformation through experimentation (and why there's no need to bet the farm)

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Intro  |  Set up an R&D lab  |  Innovation partnerships  |  DIY startup  |  Learn to fail  |   Conclusion   |   Recommendations  |  6 slide summary

Nobody is going to confess to being anti-innovation, but non-profit organisations are rarely the first that spring to mind when thinking about who’s pushing the boundaries. 'Innovation’ is a broad concept, but in relation to digital transformation it's all about introducing new methods, ideas or services which change the status quo. This theme is about the kind of experimentation which will help us to find better ways of doing things to achieve better outcomes; it is not about chasing an impossible Willy Wonka style vision that can never be implemented.

Across the course of the 50+ interviews carried out to investigate the New Reality, the conversation around technology regularly blurred with the question of innovation in the sector. Opinions on the extent to which non-profit organisations could - or should - be at the cutting edge of new products and practices varied. However, the majority of the cohort agreed that the changing landscape would make it both necessary and beneficial to actively seek out new approaches to both business practice and service delivery.

When discussing barriers to innovation interviewees were critical about the lack of commitment to tech-led initiatives in the past:

Many felt that funding for experimentation (whether internal or external) was either inadequate or focused almost exclusively on idea and product development rather than more sustainable and fundamental service or core business evolution.

Where innovation is happening many cited an over-reliance on ‘band-wagonning’ rather than investing in development which might lead to genuine breakthroughs. Many blamed a lack of strategic planning as well and recognised that, as a direct result, ideas were tending to fall flat before they had been given a chance to come to fruition.

Few organisations have formalised innovation or ‘R&D’ staff and teams. Where specific innovation job roles exist, these are usually assigned to Fundraising. Macmillan Cancer Support is one of the few examples that also has an innovation team within Services - and Leukaemia & Lymphoma Research have recently made innovation a core part of digital, creative and marketing team remits.

Of course this is not just a non-profit sector problem, the Dysons and Googles of the world remain few and far between and the context here is that the UK invests significantly less in R&D than other nations: just 1% of GDP in comparison to 4% in the US.

Apple is the tediously repeated exemplar of companies who have achieved a transformative shift through innovation - What most people don’t note is the circumstances that led Apple to innovate and change so substantially. By the early 90’s Apple’s business was in serious decline. Apple almost reached rock bottom before it took Steve Job’s radical new approach that made them the massive success they are today. Is that what needs to happen to non-profit organisations before they change?

Brands such as Red Bull - who embraced technology early on to re-shape their businesses – potentially offer more useful insights: Red Bull originally just made soft drinks, but now it’s recognised as a global media brand with reach and customer loyalty far beyond the consumers of its product. If it stopped making the drink now, would the business collapse? Doubtful. That’s real business transformation.

So who has successfully transcended their original form to deliver greater value within the non-profit sector? Cancer Research UK got a few honourable mentions for their R&D programme - the most recent output of which is contactless giving on their shop windows. But most it is more notable that two of the biggest tech-enabled innovations from the past decade – online giving, and advocacy – have not come from established brands, but from new organisations like JustGiving, Avaaz and Change.org. Could it therefore be the case that the sector is unable to reinvent itself?

This question came up frequently in discussion, with the New Reality interviewees split almost equally between those who believe the sector can innovate for itself and those who believe that it relies on external forces to act on its behalf. Of those who were firm in their view that innovation was possible, there was clear agreement around an urgent need for better innovation practice to be established.

Throughout this New Reality innovation theme we explore the innovation and best practice examples shared by interviewees – if you currently lead or work for an organisation without a clear R&D strategy the following is designed to provide some inspiration and guidance.

Three innovation models that work:

1. ESTABLISH AN INTERNAL R&D LAB PROGRAMME
2. DEVELOP AN INNOVATION PARTNERSHIP
3. CREATE YOUR OWN STARTUP

What is meant by a lab in this context? The Digital Transformation R&D lab is a space that is separated from the day-to-day work environment where research, rapid idea generation, prototyping and development can happen.

Labs can be run as continuous R&D environments or used periodically in a regular innovation cycle. Labs have many variations, but successful ones share these characteristics:

• Focused on one specific problem or goal at a time and getting a version of something live as quickly as possible.

• Protected time and budget devoted to them.

• Audience-led.

• A creative environment - work space that is designed to facilitate creativity and has the tools to help you work rapidly (you may need to use an off-site space to achieve this).

• Small, cross discipline / function teams who, for the duration of the lab, only work on the lab projects - it may also be beneficial to bring in facilitators or contributors from outside the organisation (and wherever possible to include some of your audiences).

• Freedom from the constraints of the organisation (policies, systems, hierarchies).

• Regular sharing of progress with wider organisation.

By focusing on rapid iterations around a specific problem, labs circumvent the paralysis that can set in when organisations try to tackle chunky issues. And Labs don’t need huge budgets and years to deliver projects - they launch ideas quickly and then monitor and iterate. As the Shelter case study shows, a few thousand pounds can deliver substantial achievements.

When set up correctly a lab will offer huge benefits to the organisations that run them: efficient processes that break down unwieldy ideas into a series of manageable tasks, they deliver evidence and outcomes quickly in a low-risk way. Labs can also foster cross-organisation relations, plus a host of side benefits including staff motivation and retention, and good PR.

Whilst labs have obvious and proven benefits, it’s also crucial to be aware of the pitfalls: instead of feeding into the core business operations, labs can languish on the sidelines if they’re lacking board level support. And as missing innovative solutions could be fatal, plan for successful trials and ensure successful practice can be elevated and embedded into the wider organisation with your board’s backing.

This key concern of the New Reality Cohort reveals useful insights. For further useful guidance about how to establish innovation labs as part of organisational culture see Nesta's Innovation labs practice guide. It is also well worth reading James Boardwell and Joe Roberson’s excellent Learning from the labs report to avoid common pitfalls.

Shelter has recently introduced an innovation labs programme where every three months they put a small, cross discipline team together to work on a specific challenge that the charity faces.

Bob Barbour, Shelter's Head of Digital explains their most recent lab:

"The one we’ve done recently is working on triage for the helpline to tackle the chronic supply/demand issue that we - and many other charities - face. We need to find a way to make sure that we get people to the right service as quickly as possible and that the highest priority calls reach the helpline."

This innovation lab process involved:

• A four day innovation lab, bringing together staff from the helpline, face to face services, supporter help desk, advice team, and the digital team.
• Two days of idea generation and persona development around the problem.
• Two days to design and build a working minimum viable product (MVP).

The outcome of this lab has been the development of a triage tool that prioritises calls from people who are about to be made homeless and are in priority need. It uses a simple quiz to take them through self diagnosis, and then offers a callback booking service to prioritise the calls and help users save phone battery and credit. Non-priority cases are referred to a package of web content that explains their options. The developed prototype is launching as a pilot and further iterations are being planned.

Traditionally, in most charities, this sort of challenge would have been the subject of a multiple month (if not multiple year) project process at great expense and significant risk. The new Shelter triage prototype has gone from kick off to launch in less than 2 months.

Most of the New Reality’s cohort believe that innovation needs to become part of internal culture to fully succeed. However many conceded that sometimes breaking out of existing structures and cultures is just too hard, and at this point looking outside is a useful option.

Tasking an external party to deliver product innovation is one part of this model, but to get real transformative value requires giving the partner a connection to the most senior levels of management, and permission to question elements of core strategy. A number of the New Reality’s interviewees highlighted a significant shortcoming in the sector’s current relationship with external suppliers.

From personal experience, as someone who has worked both in-house and agency-side, I certainly share this view. I’ve worked on numerous projects where the brief was entirely focused on tactical product delivery rather than asking for a broader, strategic answer that might offer more value. Likewise, earlier in my career, I was guilty of limiting the agencies I commissioned and not finding out what more they could offer in terms of innovation beyond the constraints of the original brief.

Finding agencies, or consultants, who can act as genuine strategic partners and who can command enough authority to challenge senior personnel in pursuit of an improved outcome, will be a better use of funds than the current modus operandi of simply outsourcing production.

This will, of course, mean changing the nature of procurement processes to place more weight on chemistry and relationships over documentation. Inherent in this shift is a shared commitment to build stronger relationships between senior leadership and partner organisations so that new ideas can feed directly into central strategy and planning. Given that many senior agency side people have also taken a turn as the client, and vice versa, this approach makes good business sense.

Finding an agency that is prepared to work transparently and closely with your organisation is therefore crucial. Outsourcing product and service innovation can only work well when the organisation is still heavily involved throughout – to make best use of the organisation’s insight and knowledge of their cause and audience – but also to see and learn new processes that could be adopted internally. The most successful service design agencies place equal value on sharing their process as well as the end result:

Finding the right partner to go on the digital transformation journey with you might not happen overnight, so the sooner you can start, the better. Begin by looking at the external parties your organisation is currently working with and consider and discuss the relationships between the personnel involved. Think about how best to create an opportunity where you can both explore and challenge your suppliers to innovate further in pursuit of your mission.

Changing organisational culture is extremely difficult to do and generally acknowledged as a relatively slow process. In the tech world, Silicon Valley startups often feature heavily in innovation conversations and efforts to bring startup-style methodologies to established organisations have had some success. The ‘lean startup’ mindset and process is well respected, but putting it into practice within a well-established working culture is another matter altogether. What if there was a way to gain all the benefits of being a small, nimble organisation without actually being one?

The past few years have seen the start of a trend where established organisations are setting up their own challengers.

In some ways these quasi-startups are a more substantial version of R&D labs –  but they constitute a much bolder move and making them work requires the following:

• A mandate to challenge anything and everything.

• A completely separate environment: “There’s a reason that when GDS was started they moved themselves away from Whitehall - and didn’t recruit from the Civil service.” Jon Davie, Zone.

• An incubation period where they are not asked for an immediate return on investment, but are seeking an (at least partially) self-sustaining funding model.

• A clear path to feed both learnings and improved products and practices back into the core business.

CASE STUDY: A DIY startup FROM an ESTABLISHED ORGANISATION

See also the FutureLearn case study within the Funding theme for another example of a powerful internal startup.

The need for non-profit culture to become more accepting of failure when trying new tech-led approaches was frequently mentioned across interviews. Over the past few years the entrepreneurial ‘Lean’ process has gathered momentum, particularly amongst digital technology professionals - and the ability to fail and learn is a key principle.

These methodologies avoid the slow-moving, mass-stakeholder requirement exercises of old in favour of building rapid prototypes and testing with real audiences. Projects run in this way offer participants the ability to learn quickly what works and what doesn’t - and any failures are always cheap! It is easy to see how these low-cost, lower-risk ideas resonate loudly around digital transformation work - where the fear of big, expensive technology failures has been stifling digital progress.

One example of the right kind of failure was provided by Anna Rafferty, Director of Product, Creative & Content at Pottermore, and former Digital MD of Penguin books:

Not all projects can or should be run in this fail-fast-and-learn way, but bringing colleagues and trustees on board with these ideas can only help to drive a culture of innovation.

The 50+ senior sector experts who have contributed to the New Reality believe that we need to move faster and challenge ourselves more in these extraordinary times. This is a change process and that means we need some new ideas. Tried and tested isn’t going to cut it anymore - so start feeling confident about experimenting - and accept that failure will be part of that process. Take heart! The right time to be doing things differently is now. This is, after all, the New Reality.

• Start experimenting: choose an innovation model and commit to it – get buy in from senior management and trustees and commit to it financially and intellectually. Don’t wait for someone else to disrupt your business - disrupt it yourself!

• Start small and grow: start with one problem at a time and put enough effort in to find a solution to that before moving on to the next challenge.

• Choose your words carefully: If your organisation is nervous or doubtful about innovation don’t call it innovation! R&D is less frightening as a label!

• Get facilitation: You need someone who has experience of running an innovation process to make it a real success. If you don't have someone within your organisation with this experience find a facilitator from outside. There are a host of great independent consultants, or your existing agencies may be able to help. 

• Collaborate: Often challenges are shared across the sector so see if mutual benefits - and cost efficiencies - can be achieved by collaborating with organisations facing the same challenge.