Beyond faster horses: charity market insight
If you drop in on the fundraising and volunteering offices of charities across the country, you might see the furrowed brows of senior management weighing up the risks and rewards of investing in new giving initiatives, the dilemma of using donor funds to experiment.
Furthermore, when these donors tell you charities should have low overheads and that year on year Return on Investment (ROI) needs to be improving not fluctuating, finding the comfort zone to invest in innovation and take risks can be exceptionally difficult. Thinking and acting on innovation in the charity sector therefore comes with a moral price tag. So when the time does come to bravely venture into a new idea, it’s important to know which audience to target and to know that group well enough to give the idea a fighting chance of success.
Experience working with large charities over the last 18 months through the Open Innovation Programme, showed us that charities are well versed in running market research. Indeed, many of the organisations carried out research to gather insight on their innovative initiatives. The results however, sometimes provided such unexpected insight or challenges that they left people stunned, wondering how to respond - with one more furrow on the brow.
The Children’s Society was one such organization, happy to share their experience, so others can learn. Focus groups in Newcastle tested the theory that different donor groups, both warm and cold audiences, wanted more immediate and transparent communication of exactly what their donations would be funding. Expecting to hear excited responses to their new media and technology ideas, they were told by their focus groups to keep communication as simple and minimal as possible; a real disappointment for a team energised to create innovative new ways of showing donors the impact they were having.
Responding to market research
Like many other charities, the Children’s Society realised that if your target market tells you their opinion it should be taken on board. The moral burden of the innovation price tag just got heavier.
So what are the options when your research suggests you shouldn’t run with your initial idea, and how can open innovation help? Three responses from the programme are highlighted below:
1. Head back to the drawing board
Heading back to the drawing board may well be the right option to begin with. Mencap, another of the charities we worked with as part of the Open Innovation Programme, looked in to increasing online giving in schools to raise money. Market feedback was very strongly against developing the idea further, the decision to hold off development was taken, in the long run saving time and money, and freeing up resources to divert into new options discovered during the research process.
2. Test the waters
Age UK, another one of the charities we worked with, also faced push-back from users during the market research period. The potential users were looking for greater (and more costly) identity checks on volunteers which challenged the original business model for the skills donation concept that Age UK wanted to test. In this instance, as the concept itself was still considered to have potential, a smaller, cheaper test project was set up to work through the new cost model rather than the larger scale pilot that was originally planned.
3. Perform a pivot
Market research shouldn’t dictate to a project, but rather inform its development in new directions perhaps the most dramatic example of this happening is when a project ‘pivots’ their offer in a new direction. In other words, charities can run insight sessions with the objective of going in to their project delivery with ‘eyes wide open’, aiming to use feedback to improve or shift the proposal rather than gathering a verdict on their final concept.
The Children’s Society worked with external partner The Giving Lab in such a way – through responding to project feedback, the team developed one of the themes that did resonate with their user groups, and moved away from those that did not. They found a way of demonstrating locally donated funds going directly to local causes, tapping into regional identity in Newcastle. They merged pop-up street magic to creatively hook observers to the idea of child disappearances and followed up with tailored, location-specific emails. The project may be complex, but the principles are simple. They created a hybrid experience combining concepts from their original idea with new insight gained through user feedback. The idea of ‘pivoting’ like this isn’t always appropriate, as the earlier examples show; but an open innovation approach can be used to apply newly gained insight in unforeseen ways.
Through our work on the Open Innovation Programme it also became clear that funders, sector bodies, and support agencies working with large charities also have a role to play in alleviating the burden of the ‘moral price tag’ of innovation and helping charities to find the confidence to test new ideas. Three ways in which this seems to be ripe for exploration are highlighted below:
- Making experimentation OK
Innovation has a financial cost as well as the moral price tag. But while everyone wants innovation, few people seem willing to fund it. The charities taking part in the Open Innovation Programme reported that funding and partnerships provided helped absorb some of the risks that they would have found hard to justify if they tried to develop their innovation project within their organization alone. Being given permission to fail didn’t mean failure, it meant being given permission to be flexible on what the final product looked like.
The business emphasis is not on simply throwing out the imperfect product ideas, but transferring ideas across departments, bringing external partners in to work with internal ideas until there is an evolution of concept and something likely to excite their customers.
- Planting seeds before harvesting the benefits
Structurally, there are challenges to donors and charities; a gap in the market that needs closing. Funders often ask charities to submit evidence in application forms that they have consulted their target markets before starting a project. For many charities without dedicated resources this could be the first time they stop to think about user insight. Or they struggle to answer the question because they won’t commit research spend to a project without the security of it being funded in full. Creating funds that support research, ideation and market testing before funding a tested proposal, is one way of encouraging charities to take managed risks and focus on developing products that are more closely tailored to evidence gathered from the market.
- Being Real About Success: Honest About Failure
Charities involved in the Open Innovation Programme reported that there was no pressure to be perfect and that this in turn made them feel more comfortable about opening up to challenges they faced and creating new solutions without being seen to ‘fail’. One participant noted that it was one of the first times they had seen charities being really open and honest, allowing other charities to actually learn something valuable, instead of less helpful comparisons of success. In the private sector, companies like Proctor and Gamble openly talk about how success rate targets of more than 50 per cent for their product ideas would be detrimental to their overall approach. Their rationale is that pressure to be more successful than that would stop their teams taking risk, stop them stepping bravely beyond market research expectations and stop them innovating.
The question for charities is how to adopt the best of these practices in ways that are right for their own organisation and its aspiration for change. Part of this is around resetting expectations around charities should act –for example; investing in bold ideas; giving themselves permission to fail and learn; and to collaborate openly with partners. More of this type of behavior is certainly a good place to start and as the Open Innovation Programme charities found it creates exciting new prospects.