Listen to or read almost any commentary on the state of our sector, including Sir Stephen Bubb’s recent Third Sector interview, and at some point you’ll hear the ubiquitous phrase "demand for our services is increasing, but the funding to provide them is reducing". There are big trends behind that statement that aren’t stopping any time soon, and the need for us to constantly find better, faster, cheaper, more scalable ways to do what we do will only ever increase.
On top of that, both in charities and across the philanthropic community, there seems to be an increasing level of commitment to tackle some of our biggest, most deep-rooted and most complex societal issues. Solving those problems will, likewise, depend on our ability to develop new approaches, create new tools and ideas, and to innovate and scale up those innovations to deploy them wherever they’re needed.
The problem is that coming up with innovative ideas and taking them to a scale that can create real change are two very different things. Big organisations are great for scaling things up, but most of them find it really hard to innovate. Small organisations tend to be much more innovative, but find it really hard to scale up their ideas. But there are solutions. Here are three proven models that can help big organisations innovate better and potentially help small ones scale up faster.
The temptation for big organisations that want to innovate is to start a big, top-down innovation programme – a structured process for finding, evaluating and prioritising a few big ideas to invest in and develop. But few organisations actually have the resolve to make a success of it. The global consultancy McKinsey recently did a great piece of analysis on what makes the difference between those that do it well and those that don’t, and it all boils down to a single question: "Do you believe that innovation is absolutely critical to your future success?" If the answer is yes, it’s worth investing in outside expertise to get a top-down approach up and running. If not, it isn’t, because it will never get the focus it needs to really succeed. Thankfully, top-down isn’t the only way large organisations can innovate.
Bottom-up innovation is where the people on the front line are explicitly given the freedom and support to work out better ways to do things. A "quality circle" is the most common way to do it; that’s where groups of people, who are all doing similar roles, are deliberately and regularly brought together to work up their own ideas for improvement. Those ideas are then presented to their management and implemented across their operations. Toyota pioneered it, almost every manufacturer uses a version of it and any charity that operates in more than one place can use it to help it innovate.
A third and increasingly popular way for large organisations to innovate is outside-in. It’s what consumer goods giants such as Unilever and Procter & Gamble have been doing for decades: investing in or buying small outside companies with interesting ideas and technologies that they can bring in, put into their brands and deploy on a global scale. More recently, the tech sector has taken it further, with the likes of Microsoft, Google and Facebook spending billions of dollars a year incubating and buying up interesting start-ups. In the same way, large charities facing large challenges could do a lot worse than appointing specific people to actively go out and seek partnerships with innovative social entrepreneurs whose ideas they could incubate, develop and scale.
The unique benefit of outside-in innovation, when it’s done well, is that smaller organisations get their ideas taken to scale far faster than they ever could alone. It’s not always easy on the ego, but in a mission-led sector, if you’re small, innovative and have great ideas, partnering up with a bigger, forward-thinking charity, might just be the single best way you can make the greatest difference.
Martyn Drake is the founder of the management consultancy firm Binley Drake Consulting