Research

Case study on charity A

Classification and context

Charity A can be categorised within the ICNO framework (Salamon & Anheier, 1996) as ‘Emergency and Relief’, indicating that it spends the majority of its income funding projects responding directly to humanitarian crisis situations. It has the largest income of the charities studied at £247m and is in the top twenty most popular charities (YouGov, 2021). Charity A has the longest running innovation function of all the charities surveyed at more than five years and is the only charity with a director-level responsibility for innovation. 

Motivations for innovating

The innovation function within Charity A, whilst also responsible for new product and service development, has a focus on culture change and mindset shift within the organisation. The “aim is to drive an innovative culture and embed agile and product approaches within the organisation” (Charity A, 2021). The motivation and rationale for the charity to be innovative appeared unclear with different parts of the organisation considering innovation and the need for it in different ways. The goal of creating an innovative culture takes precedence over utilising established innovation processes. When asked about the mandated scope of innovation activities, Charity A stated that it included developing new business models within and outside of existing functions, new product/service development within existing functions, and process improvement within existing functions. This broad scope appears to align with the aim of creating a culture of innovation as it suggests that ideas can emerge from anywhere in the organisation and be supported to create a change of product, position, process or paradigm (Tidd & Bessant, 2018).

Implementation of the innovation process

Innovation at Charity A is regarded primarily as a catalyst for change within the organisation, and the innovation function plays a pivotal role in supporting other functions to innovate. Tidd and Bessant (2018) talk of successful innovation being reliant on the correct organisational conditions and core process, and Charity A has a greater focus on creating the conditions than on creating processes to enable developing innovations and new products/services.

Summary of how Charity A approaches the innovation process:

• Direction – The innovation strategy is to drive an innovative culture across the organisation that encourages innovative ideas and activities in various departments, with the support of, but without the reliance on, the innovation function. 
• Discovery – The innovation function looks for opportunities within and outside the organisation. Charity A described the approach to looking for opportunities and exploring new ideas as “not a blanket approach”, suggesting that the innovation function does not have a single and formalised discovery stage but instead researches possible innovations differently depending on the source and context of the idea.
• Definition – Innovation ideas are assessed from a range of viewpoints depending on the source of the idea, e.g., fundraising, technology, product. Charity A suggested that no formal assessment criteria was used in selecting or deselecting ideas to progress through the innovation process.
• Design – Multidisciplinary teams are focused on designing solutions to problems. Multidisciplinary teams are a well established model for innovation functions and multidisciplinarity has been positively related to the quality innovations where the teams also had good team processes (Fay et al, 2006).
• Development – The multidisciplinary team is responsible for building the innovation or new product/service, which may include a software developer for digital products or the use of a development agency where in-house capacity was unavailable, and other team members from different functions across the organisation.
• Delivery – Co-creation and the use of user research to test concepts and solutions with users was described as “core to all innovation work” at the charity (Charity A, 2021). Prototypes and Minimum Viable Products (MVP) are used to validate hypotheses about the innovation.
• Diffusion – The innovation function is responsible for rolling-out successful innovations at scale beyond the MVP stage. This may include launching a new product/service.

“Analysis of the development of innovations across different sectors shows that successful innovation processes are proactive intentional processes, include several common elements, and progress through a number of key developmental stages.” (Ramalingam et al, 2009). All of the key development stages are represented in activities conducted by Charity A although the research did not bring to light how cohesively connected and structured the stages of the innovation process are.

The wide ranging use of techniques is perhaps indicative of how many teams and departments across the organisation are supported to adopt innovative “ways of working and mindset” (Charity A, 2021). Understanding a ‘culture of innovation’ within charities is outside the scope of this study but serves as a useful comparison with charities from the study where innovation is not a cultural imperative and innovation is more focused on process.

Judging the success of innovations

Innovations could be judged to be successful in many ways, including as contributing to the development of a culture of innovation, and not exclusively by the benefits an isolated innovative product or service returns.

Charity A considered success widely, including considering achieving organisational benefits, e.g. process efficiencies, generating income, and notably, contributing towards tackling a social problem. This fits with the considerable body of literature which shows that the humanitarian sector has made greater use of innovation than other areas of the charity and social enterprise sector. In assessing the success of the innovation processes in case studies of humanitarian innovations Obrecht and Warner (2016) used three criteria: “To what degree did the innovation process produce Consolidated Learning and Evidence? Did the innovation process produce a prototype that was an Improved Solution over current practice? Did the innovation process successfully diffuse the innovation to achieve wide Adoption?”. In comparing how Charity A, which operates in the humanitarian sector, judges the success of innovations, definitions include producing validated learning, creating a prototype or pilot and reaching a full-scale roll-out of an innovation or new product/service. This suggests possible alignment and agreement between a single charity and wider humanitarian sector about how the success of innovation should be considered.

Summary

Charity A approaches innovation from the perspective of creating the conditions for innovation rather than having a focus on the core process of innovation (Tidd & Bessant, 2018) as expressed in the survey using the phrase, ‘creating a culture of innovation’. Less focus is given to managing the process of innovation and the development of new products and services. 

Case study on charity B

Classification and context

Charity B can be categorised within the ICNO framework (Salamon & Anheier, 1996) as ‘Other education’, meaning the majority of expenditure is on providing support and advice services, and has an annual income of £15m, making it the charity with the lowest annual income in the study. It is in the top forty of most popular charities in the UK (YouGov, 2021).

Motivations for innovating

Innovation is seen as essential to the future success of the charity and as such is closely tied to the fundraising and service delivery strategy. Charity B recognised that the charity sector is becoming more competitive and that supporter expectations were increasing, meaning the services provided by charities are often compared with private sector services. They are not alone in this opinion with the UK fundraising market regarded as intensely competitive and placing pressure on charities to “initiate novel fundraising campaigns” (Bennett, 2003. Bennett & Savani, 2011). Against this backdrop of a challenging fundraising environment, Charity B included the need for a significant increase in income as part of its organisational strategy up to 2020. The COVID-19 pandemic resulted in a drop in fundraising income and innovation is regarded as instrumental to increasing and managing a portfolio of fundraising products that appeal to a wide range of supporters throughout their lifetime, thus increasing the lifetime value each supporter brings to the charity.

Implementation of the innovation process 

Charity B spoke of being “audience and insight led” in how innovations are identified and managed, and that the innovation team has a role in supporting other teams in gathering and acting on insight. Selden & MacMillan describe this approach to innovation as ‘Customer Centric Innovation’ involving a “rigorous customer R&D process that helps companies continually improve their understanding of who their customers are and what they need” (2006). Charity B utilises techniques such as surveys and interviews to gain this insight and understanding. The innovation team also supports other teams in understanding and using innovation skills and techniques in order to improve adoption and embed innovation processes and approaches within teams, departments and across the organisation.

Summary of how Charity B approaches the innovation process:

• Direction – Innovations are aligned to organisational departments, e.g., Fundraising and Service Delivery, but Charity B did not refer to any formal initiation processes such as a ”quickie“ study to determine market size, market potential, and possible market acceptance as described in the Stage-Gate process (Cooper, 2001).
• Discovery – Horizon-scanning and trend monitoring are used by Charity B to stay informed about developments in the charity fundraising landscape, and these are regularly shared within the fundraising department. Other teams and departments are encouraged to bring problems and opportunities to the innovation team for support in developing solutions. 
• Definition – Ideas and opportunities are assessed for feasibility (is it possible to build), viability (is it likely to be a success for the charity) and desirability (are charity supporters likely to want it) (IDEO, 2021) and financial forecasting and assumption testing is conducted to inform the decision to progress with the innovation. 
• Design – The innovation team engages with internal teams, e.g., marketing team, digital and design, and outsources if necessary when designing new business models, products/services. Testing is conducted early with supporters using various methods, e.g.,  phone calls, surveys and external testers, and feedback used to validate the design.
• Development – Although in-house software development capability is not available, various other methods of utilising MVPs, e.g., advertising and registering interest, are used to understand supporter’s responses to the new campaign, product/service, etc.
• Delivery – New products/services have a one year incubation period during which the innovation team monitors the performance and makes improvements.
• Diffusion – The innovation team manages the process of handover of a new product/service to business-as-usual teams.

Judging the success of innovation

Charity B judges the success of innovation and the innovation team in two boardly different ways; learning and commercial KPIs (Key Performance Indicators), which align to the two roles the innovation team plays within the charity. The failure of innovations is expected and accepted, and used to increase validated learning and insight for future innovations, although not in a systematic way. The innovation team functions to support other teams to adopt innovation practices, techniques, etc., as a means to increase the likelihood of successful products/services being developed. Innovations are measured against commercial KPIs including cost and income, and recruitment and attrition. Although there continues to be a lack of consensus about the most effective measures for charities (Boateng et al, 2015), these return-on-investment metrics align with the fundraising focus of the innovation team.

Summary

Charity B approaches innovation predominantly with a focus on core processes (Tidd & Bessant, 2018) in order to improve existing and develop new fundraising products and services. Given the innovation team’s position within the Fundraising department and the traditional organisational structure of the charity, the focus on incremental innovation appears to fit the contention that a “unique strategy and structure will be required for radical innovation” (Ettlie, 1984). The innovation team manages processes that improve how new products and services are developed by being more insight-led and introducing greater formality to the process than might otherwise be used. They also play a role in encouraging other teams to adopt innovation processes and so promote the benefits of a more innovative organisation.

Case study on charity C

Classification and context

Charity C can be categorised within the ICNO framework (Salamon & Anheier, 1996) as ‘Other education’, meaning the majority of expenditure is spent on providing support and advice services within its particular area of focus, and has an annual income of £73m. It is in the top fifty of most popular charities in the UK (YouGov, 2021). The innovation function has existed for less than one year, making it the newest innovation team in this study, and has six team members with the most senior being the head of the innovation team.

Motivations for innovating

Charity C’s innovation function has a mandate for income generation within the fundraising and retail directorate. Charity C explained how the focus on innovation for income generation has shifted as a result of the impact of the COVID-19 pandemic to have an equal split of playing an essential role in the success of the charity in the present and in the future. Before the pandemic the focus for innovation was 80% on the future and 20% on present success. Innovation is regarded as a differentiator allowing the charity to succeed in a competitive market by providing products and services that attract supporters and increase income. The Charity Benchmark COVID-19 Impact Monitor reported a similarity in the trend across the charity sector of “significantly greater level of organisational support for innovation” (Freeman & Foster, 2020) with charities turning to their innovation teams to find new ways to generate income. Charity C spoke of “not being able to rely on the same old ways” of fundraising and the importance of looking to the future as part of the charity’s motivations for innovating.

Implementation of the innovation process

Charity C described their approach to innovation as very collaborative with stakeholders and as process-driven. 

Summary of how Charity C approaches the innovation process:

• Direction – The innovation team has a strategy but this is not aligned with organisational strategy but has a clear scope to focus on income generation.
• Discovery – Looking for opportunities to innovate within the income generation scope is a core aspect of the innovation team’s activities, and they work with research, insights and data teams to explore and analyse new opportunities for commercial partnerships, and revenue generating products and services.
• Definition – Ideas and opportunities are assessed against predetermined criteria which are aligned with the innovation strategy. Ideas were also considered in light of the Innovation Ambition Matrix (Nagji & Tuff, 2012) to compare to existing innovations and to ensure a balance of investment across improvements to core products/services, adjacent areas of development for the charity and transformational or breakthrough innovations that are new to the charity sector.
• Design – The innovation team supports other teams to design new solutions to problems and uses techniques such as ‘5 whys’ (Toyota, 2006) to understand the causes of problems. The success of this approach depends on when in the product development life cycle the innovation team is brought in and so Charity C identified early testing of ideas as a weakness.
• Development – In developing innovations Charity C often make use of MVP’s to validate new products and services with supporters before moving into full development, either with the support of the internal web development team or agencies. New product development also makes use of commercial off-the-shelf products.
• Delivery – The approach to delivering products and services depends on the nature of the innovation; whether it is virtual or physical, but iterating upon the solution was described as an important aspect of improving the product to get it ready for full launch.
• Diffusion – Innovations that have proven successful against individual KPIs are taken to full scale launch. The innovation team is responsible for identifying the most suitable team and the handover of the new product/service to that team.

Judging the success of innovation

Charity C measures the success of an innovation by the KPIs set for each product/service. No measures of the performance of the innovation process were applied to allow for the reevaluation of ongoing innovation activities (Banu, 2018). The longer-term measure of success for the innovation function is to rationalise the products and services that the charity offers to be able to secure greater future income with lower maintenance costs. Charity C does not focus the innovation team on tackling the social issues and causes of the charity and consequently there is no measure of social impact. 

Summary

Charity C’s innovation function focuses on income generation within the fundraising department, managing and developing products and services in collaboration with other teams. The processes used to develop products and services vary depending on the lifecycle stage of the product and the innovation team’s involvement but broadly include every phase of the innovation process and the use of various innovation techniques and practices within each phase. 

Case study on charity D

Classification and context

Charity D can be categorised within the ICNO framework (Salamon & Anheier, 1996) as ‘Hospitals and Rehabilitation’, has an annual income of £88m, making it the second largest by income in the study, and is in the top twenty of most popular charities (YouGov, 2021). The innovation function has existed for one to two years and has four team members with the most senior being the head of the innovation team.

Motivations for innovating

Innovation is seen as essential to future success of the Charity D, and the charity has an innovation strategy that is described as a key enabler to the organisational strategy. The innovation function has a mandate to explore new business models within and outside of existing functions of the charity, and new product/service development and process improvement within existing functions. Opportunities for innovation outside the charity are often explored through partnerships with other organisations, where Charity D is in the position to integrate the component parts of the innovation such that all partners benefit (Ahmed & Shepherd, 2010). As part of enabling innovation within the charity and implementing the innovation strategy, the innovation team supports a number of ‘innovation champions’ from other teams and departments. The innovation team makes use of lean thinking to remove waste from processes and ensure that all activities within the process are adding value (Poppendieck, 2011) as part of incremental process innovation.

Implementation of the innovation process

The innovation function manages the entire innovation process from aligning the scope of innovations that contribute to achieving the organisational strategy to handing over the new product or service into operational teams.

Summary of how Charity D approaches the innovation process:

• Direction – Innovation is closely tied to organisational strategy and seen as a key enabler to achieving Charity D’s mission.
• Discovery – Discovery work is undertaken in conjunction with agencies and partnerships to develop ideas for new products and services.
• Definition – Charity D utilises an Innovation Board to review ideas and select topics for the innovation team to progress. The use of this kind of review board as part of innovation governance to assess the economic and business quality of the project and commit resources to the next phases of the project (Cooper, 1990) adds a degree of control and formality to the innovation process.
• Design – Innovation design is undertaken by a multidisciplinary project team with access to other function teams within the charity and makes use of the innovation champions to supplement project teams.
• Development – Innovations requiring software development are supported by an in-house development team. New innovations are tested using focus groups and MVPs to understand the potential for success at scale and to inform any improvements prior to launch.
• Delivery – Innovations are delivered by the innovation team using an incubator model and a test and learn approach in order to get the new product/service ready for full launch.
• Diffusion – Innovations that result in new products and services that fit within the scope of an established team will be transitioned into their business-as-usual work.

Charity D was unique among those studied in using a network of ‘innovation champions’ to promote the use of innovative thinking from within the team or department they are part of and act as agents of change (Warrick, 2009). 

Judging the success of innovation

Charity D judges as successful any innovation or new product/service idea that achieves validated learning and maintains a library of lessons learned that informs future innovation and new product development work. Innovation projects have an evaluation which enables the innovation team to assess the way in which the project succeeded or failed and ensure lessons are learned. Charity D was the only charity to speak of this kind of systematic learning as part of the innovation process. Failure of innovation projects, whilst to be expected, has been shown to result in “innovation trauma” and the need for effective management to mitigate the potential negative effects of such failures (Välikangas et al, 2009). Välikangas et al go on to say, “Innovators should be able to learn from their past experiences to hone their skills as advanced innovators”. 

Summary

Charity D’s innovation function and processes have the most structure of the charities studied, including the use of a review board as part of formal innovation project governance and the use of formal learning systems to mitigate the effects of failure and improve future innovation development. The use of innovation as a key enabler of the organisational strategy signals the degree of importance attributed to innovation within Charity D.