Discussion

Identifying commonalities between charities

Taking the case studies of individual charities from the previous chapter, this cross-case analysis draws out similarities and differences (Mathison, 2005) and uses abductive reasoning to reach the most likely explanation for the similar concepts and patterns that are revealed. From these emergent themes tentative hypotheses are constructed and compared with literature for validity. The building of theory then attempts to shed light on how the constructs relate to one another. Broadly defining theory as “any coherent description or explanation of observed or experienced phenomena” (Gioia & Pitre, 1990), and attempting to explain the variables; in this case the motivations for charities to innovate, the implementation of innovation processes, and the ways in which charities judge the success of innovations, the theory attempts to create a comparative positioning for innovation in charities. Theory building from case studies is a particularly relevant method for this type of research due to its likelihood of generating novel theory and being empirically valid (Eisenhard, 1989).

Income and innovation

Some patterns emerged across the four charities involved in this study which when reasoned about abductively suggest the simple explanation of how income affects the ways innovation is utilised within these charities. The higher income charities direct their innovation function more widely across the organisation rather than within a single directorate, whereas the innovation teams in the two lowest income charities were more focused on innovation within the specific activity of income generation. The longer standing teams also appear to have more mature approaches in place with greater certainty around the use of techniques and methods. The higher income charities have had an innovation function for longer than the lower income charities, suggesting that income may be a factor in funding innovation teams but also that lower income charities may be beginning to recognise the value of an innovation team.

Motivations for innovating

All of the charities in this study had similar motivations for innovating. The efforts of the innovation teams were focused on incremental improvements within the structures of the organisation and the existing ways in which the charity tackles social issues. Innovation teams created new ways to fundraise in order that the charity could use those funds to tackle whatever issues were within the charity’s purpose in the same ways that the charity already tackled them. None of the innovation teams were focused on developing radical innovations that resulted in new ways of tackling issues. Similarly, the innovation teams with an organisational change aspect to their role were focused on how to make the charity more innovative.

The earlier analysis of articles in not-for-profit journals demonstrated the degree to which fundraising receives more academic interest than any other aspect of research into charities and how innovation received very little research focus. This focus appears mirrored within how charities use innovation, also focusing it predominantly on fundraising and income generation activities. The counter insight that arises from the same analysis is that of the fifteen articles that did discuss innovation, two thirds (10) of them were about social innovation. Within the charities in this study, none referred to social innovation or mentioned their use of innovation to tackle social issues. Although social innovation is not unique to the nonprofit sector, and is often characterised by spanning multiple sectors (Mulgan et al, 2007), the lack of a social innovation approach in charities raises interesting questions for future research.

Innovation process implementation

Direction

Alignment to organisational strategy and strategic objectives ranged from innovation being closely aligned and seen as means for organisational change and improvements, to being aligned with a directorate level strategy, to not having aligned strategies. The breadth of strategic alignment is directly related to how long the innovation team has been established within the charity with the more established innovation teams having their approach to innovation more closely linked to organisational strategy. The blanket use of organisational strategy and directorate boundaries as direction setting is counter to Rogers’ and Cooper’s recommendation of ‘recognising a need’ (Rogers, 1983) or ‘preliminary assessments’ (Cooper, 2001) and could limit the potential of innovations to achieve success.

Discovery

The majority of innovation teams saw partnerships with other organisations as a means for looking for new opportunities and ideas outside of the organisation. Far greater focus was placed on incremental innovation within the organisation with new ideas for improvement being suggested by other teams and departments. Primary research for idea generation was the least used discovery activity.

Definition

All charity’s innovation teams played a role in selecting and assessing ideas within the innovation process. And each described different approaches, including the use of techniques such as ‘Validity, Feasibility, Desirability’, an Innovation Board to assess and support a new innovation, and approaching the assessment from multiple viewpoints within the organisation, e.g. technology, fundraising or strategic alignment.

Design

Project teams were described as multidisciplinary, involving the skill sets required for the problem or opportunity the team was working on. These teams made use of techniques such as Design Thinking and Five Whys in designing the innovation.

Development

Three of the four charities described having internal development resources, including web developers, technical architectures, etc., in order to support in building new products and services, and one of those three also said that they could bring in external support to work on an innovation. Only one charity reported not having access to the skills and resources necessary to develop a new product. 

Delivery

All charities in the study made use of the delivery phase of the innovation process to test and validate an innovation or new product and service with potential users. Some referred to the delivery phase when speaking of a year-long incubation period during which the innovation was iterated on in order to improve it and prepare it for full-scale launch.

Diffusion

The innovation teams of all four charities played a role in the full-scale launch of an innovation and it’s diffusion across the organisation or in the market as part of handing-over the innovation or new product/service to a business-as-usual team. In the cases of these charities the scale of that diffusion may range from a new process change within a team to a nationwide fundraising campaign or new fundraising product within a new market.

All charities utilised the innovation process as a map to guide how innovations are taken from idea to launch, applying various innovation techniques such design thinking, agile software development and five whys, designed for use in a commercial setting but none of the charities discussed the use of social innovation approaches.

Judging the success of innovations

The charities that took part in this study judge the success of innovation in three broadly separate ways: organisational change, learning, and commercially-oriented key performance indicators for each innovation or new product/service, and notably not by impact on the social issue that each charity tackles. They did not regard the full scale launch and diffusion of an innovation as essential to considering the innovation a success. This aligns with the Humanitarian Innovation Guide, Design Thinking and BSI innovation process descriptions which do not specify activities in a diffusion phase, and perhaps leads us to consider that the ‘missing middle’ referred to by Obrecht (2016) to describe the gap between delivering a new product or process and the wider diffusion in humanitarian innovation, also exists in the wider charity sector.

Organisational change to support other departments within the charity to be more innovative and creative was considered an indicator of the success of the innovation teams within the charities. Theories on organisational creativity either consider the individual as the source of creativity or the organisational environment as the enabler, and the interplay between the two as resulting in creative behaviour (Kao, 1989). Amabile’s (1997) theory on organisational creativity and innovation describes this interplay as a cyclical motion whereby the work environment impacts individual and team creativity, which in turn feeds organisational innovation. Innovation activities within charities that succeed in fostering a more innovative organisation can be judged as meeting the goal of organisational change, however, a creative organisation should not be considered sufficient alone to result in successful innovation. Innovation needs to be viewed as a management process in order to be managed effectively (Trott, 2017) and not simply as being creative and trying new things.

Achieving validated learning was considered a sufficient outcome for an innovation to be judged successful by the charities. In a modern knowledge-based economy where an organisation’s ability to generate new knowledge and ensure continual organisational learning (Nonaka, 1991) “enables an organisation to adapt and survive discontinuous environmental change” (Pervaiz & Shepherd, 2010), innovation can be viewed as a means for generating new knowledge. Essential to the knowledge management outcomes of innovation is the facility for learning from failure in a systematic way as well as learning from success, although this was less prevalent in the charities studied.

The use of Key Performance Indicators for innovations and new products/services is widely used among the charity innovation teams. This is unsurprising given that “measurement in innovation is somewhat of a necessity” as “without measurement a company would not know if it had achieved its goals.” (Pervaiz & Shepherd, 2010). Pervaiz and Shepherd go on to question how effective organisations are at measuring the performance of innovations at a tactical or strategic level, but to attempt to interrogate that further would be outside the scope of this study. Suffice to say that the charity innovation teams that took part in this study utilise commercially-orientated metrics in judging the success of innovations.

None of the charities studied referred to the innovation function tackling the same social issues as the charity but in different ways. Social innovation can be defined as “new solutions (products, services, models, markets, processes etc.) that simultaneously meet a social need (more effectively than existing solutions) and lead to new or improved capabilities and relationships and better use of assets and resources. In other words, social innovations are both good for society and enhance society’s capacity to act.” (Social Innovation Community, 2018). The aims of social innovation are not the aims of innovation in the charities that took part in this study.

No standardised measures exist for measuring the success of innovation, but in the commercial sense innovation is generally regarded as an engine of growth (Trott, 2017), an idea that goes back at least to Schumpeter in the 1930s. Growth, then, can be considered an implicit measure for the success of innovation. This view is mirrored in Rogers’ (1983) and Cooper’s (2001) innovation processes, which are arguably the more commercially-orientated of the innovation processes. Antadze and Westley (2010) argue that the success of an innovation does not have to be as a result of growth, and that growth occurs via market exchange mechanisms that do not apply to social innovations as these are often developed under conditions of market failure. Here we uncover a potential paradox in how charities consider the success of innovation. A new product or service is measured by commercial key performance indicators but lacks the imperative to scale in the way that a commercial innovation does. Charity innovations are not developed as social innovations to tackle social issues in new ways but also not as technological innovations in the way multinational corporations might develop innovations for application in wider markets (Woodcraft et al, 2008). Does charity innovation exist in a middle space somewhere between commercial and social?

Building a theory for innovation at charities

Constructs

In building a theory for innovation in charities the theoretical constructs that have emerged throughout this paper require clarification. Theoretical constructs cannot be directly observed, which as Yin (2012) points out, makes them difficult to define, but through their relationships with other things that they can be considered. In discussing how the charities in this study have approached innovation four distinct and existing innovation constructs have emerged: incremental, radical, strategic and social innovation. The research analysis has demonstrated how charity innovations are most often incremental and strategic, which provides opportunity to explore the relationships between all four constructs and how they can be applied to charity innovation.

There is a considerable body of research into the relationship between incremental and radical innovation and whilst these are almost universally recognised as existing on spectrum (Tidd & Bessant, 2018), there is currently no agreement on where along the spectrum an innovation moves between being incremental and radical. Given the difficulty in defining this it is not surprising that researchers choose to focus on the two extremes (Dewar & Dutton, 1986). This paper shall adopt the same approach, referring to incremental and radical innovations as two distinct, mutually-exclusive categories. 

The relationship between strategic innovation and social innovation has far less research and therefore shall be defined by their differences and considered as two extremes in the same way incremental and radical innovation are.

Incremental innovation

Incremental innovation can be summed up by the phrase “doing what we do but better” (Tidd & Bessant, 2018). It is characterised by building on existing knowledge and making small improvements to existing products and processes.

Radical innovation

Generalised as innovation that is “doing something completely different” (Tidd & Bessant, 2018), radical innovation creates new knowledge and can create new markets and disrupt existing markets (Bessant & Tidd, 2013). Trott (2017) points out that “incumbents struggle to deal with radical innovation both because they operate under a managerial mindset constraint and because strategically, they have less of an incentive to invest in the innovation if it will cannibalise their existing products”

Strategic innovation

Strategic innovation refers to an organisation making shifts in products, processes and business models in order to achieve its strategic goals (Pervaiz & Shepherd, 2010). It implies an internal focus of innovation efforts, including organisational restructures as well as product and process innovations.

Social innovation

Social innovations are “new solutions that simultaneously meet a social need and lead to new or improved capabilities and relationships and better use of assets and resources. In other words, social innovations are both good for society and enhance society’s capacity to act.” (Social Innovation Community, 2018). Mulgan et al (2007) recognise that there are big differences between commercial innovation and social innovation, and that sufficient social innovation methods have yet to be developed and matured.

Hypothesis

In theory building case studies such as this one, a hypothesis emerges only after the research data has been analysed and compared with existing literature and constructs (Eisenhardt, 1989). The research conducted and analysed for the motivation for innovation in charities, the implementation of the innovation process and how innovations are judged as successful has identified some non-exhaustive examples of characteristics that occur across the constructs, and which are described in Table 2. 

	Incremental innovation	Radical innovation	Strategicinnovation	Social innovation
Motivation to innovate	Improvements to existing products and processes.	Development of new and breakthrough products and processes.	Innovations occurring within the organisation.	Innovations that are good for society and enhance society’s capacity to act.
Innovation process implementation	Utilises existing knowledge and capabilities.	Creates new knowledge and capabilities.	Relies on internal capacity or in-sourced partnerships.	Cuts across and connects organisational, sectoral or disciplinary boundaries.
Judgement of success of innovation	Increase in existing product and process KPIs.	New (for the organisation) product, process or business model.	Aligned to organisational strategy.	Results in compelling new social relationships between previously separate groups and opens up the possibility of further innovations.

Table 2: Characteristics of innovation constructs.

This comparison allows us to consider a hypothesis: A charity’s ability to produce innovations that are incremental or radical and strategic or social can be compared with other charities by identifying characteristics in what motivates the charity to innovate, the innovation process implemented, the ways the charity judges the success of innovations.

Theory: Charity innovation model

The charity innovation model plots the approach a charity takes towards innovation on a two-by-two matrix (Table 3) by assessing common characteristics in motivation to innovate, implementation of innovation process and the judging of innovation success to indicate whether the innovations produced are likely to be incremental or radical innovation and strategic or social innovation. 

RADICAL	Radical innovations within the charity’s existing approach to a social issue.	Radical innovations with a new and different approach to tackling a social issue.
INCREMENTAL	Incremental innovations within the charity’s existing approach to a social issue A, B, C, D	Incremental innovations outside the charity’s existing approach to a social issue.
	STRATEGIC INNOVATION	SOCIAL INNOVATION

Table 3: The Charity Innovation Model.

Using existing constructs within innovation management studies of incremental or radical innovation, strategic innovation and social innovation, the model defines new relationships between these constructs to enable better understanding of innovation in the UK charity sector.

The independent variables in this theory are the charity’s ‘motivation for innovating’, ‘the implementation of innovation processes’, and ‘the ways success of innovation is judged’. The dependent variables are whether an innovation is ‘incremental or radical’ and ‘strategic or social’. The charities within this case study utilised those three independent variables in ways that suggest the charities are most likely placed in the bottom left box of the model where innovations are incremental improvements to the existing ways the organisation tackles social issues. The theory proposes that where changes in the three independent variables lead to a charity approaching innovation in ways that result in innovations and new products/services being incremental improvements to tackle social issues in ways that meet a social need, then that charity would be placed in the bottom right box at the intersection of incremental and social innovation. To be placed in the top left box a charity would adjust its use of the independent variables to develop radical innovations that do things differently within the organisation’s existing ways of tackling a social issue or cause. A radically new and different social innovation that enables a charity to tackle a social issue in a new way would see the charity placed in the top right box of the model.

Eisenhardt (1989) argues that when theory and data match closely, the theory is empirically valid. Further research would be required to identify charities that exhibit innovation characteristics which place them in other quadrants of the model in order to more fully test the model against data.

This theory allows for practical applications in the charity sector, guiding innovation strategy for the increasing number of charities that are setting up innovation teams, and enabling those teams to consciously choose the focus for their innovation efforts. Charities can choose to focus on only one approach, e.g., well-known problems within a charity such as increasing income, which can only result in incremental innovations that create improvements within the charity, or multiple approaches, e.g. incremental innovations that create improvements within the charity and in the social innovation space to tackle social issues in new and different ways.