Sharing the risks and rewards
Charities exist to change something for their beneficiaries. Making that change happen is challenging, and if an initiative is new then it is also often assumed to have a far higher chance of failure than something that has been tried and tested.
Given that the job of charities, more than perhaps other types of organisation, is to drive change for the better – a mission which inherently involves managing risk of the unknown – it is ironic that charities are prone to risk aversion.
Working with ten large national charities as part of the Nesta and Cabinet Office backed Open Innovation Programme, we confirmed it was a big challenge to get agreement for innovation projects. In one instance a pilot had just a 2 per cent chance of gaining negative publicity, but still required considered internal negotiation to get the go ahead green light.
The lesson for the sector is the great need to get better at communicating, managing and actually taking real risks if it wants to reap real rewards.
Sharing the risks and rewards
A great way of starting to assess and take risks more effectively is to share risk and reward with partners, and that’s where an open innovation approach can bear fruit. Working with partners can be perceived as risky, but the reality is that a more open approach to innovation enables both the risk and the reward to be shared and because stakeholders are involved from the beginning the risks are in fact minimised.
Developing partnerships and networks that share risk and reward is essential for open innovation to be successful. These are partnerships built on clear benefits for all involved, relationships with a high degree of trust and understanding. However, this can be more complex and strategic than it might appear on the surface.
It’s worth observing one of the characteristics of open innovators; they are exceptional networkers. They approach their networking from the perspective of how they can add value to others. They are also looking for connections that can help them solve their problems, or introduce them to someone else or another organisation that can help, but their fundamental question is ‘how can I add value?’
During the Open Innovation Programme many relationships morphed into more traditional supplier/client relationships where the more collaborative part of a relationship comes second to a lead partner’s requirements. If you are paying someone to deliver projects and services without collaborating with them it is just a contractual agreement that usually doesn’t allow the space for creativity and innovation to bubble up through the relationship. Having said that, there are many suppliers who are working in partnership with the charity to help them engage more supporters or raise more money; it is still a contractual agreement.
Open innovation is essentially a form of partnership with all parties bringing different skills and knowledge to the table to achieve a shared goal or goals. There may be an agreement or contract setting out how different parties are going to work and what they bring to the project, but there is no exchange of payment for sharing these skills and experiences. And to be really clear it is also different to decision by committee.
There are many risks around a project not working, but from the Open Innovation Programme the biggest barrier for charities to being successful at Open Innovation is fear.
- Fear of being criticised for not having the answers.
- Fear of being seen to waste donor’s money.
- Fear that any negative press will mean donors stop giving.
- Fear of a new and different way of working that might not deliver results.
You simply cannot be successful at open innovation unless you experience some degree of fear. Somehow you have to find a way to move beyond the fear and manage the risk.
Minimising risk and maximising awards for all partners
The Open Innovation Programme very deliberately brokered relationships between the charities involved as well as charities not taking part in the programme, entrepreneurs, social innovators and corporates with an interest in increasing the market for giving – whether money, time or resource.
The importance of building networks before you need them quickly became apparent. Many of the initial introductions failed to develop because they were networking with a view to building a funding application for the programme in a relatively short timescale.
Many of the initial open partnerships in the programme were either scaled back or defaulted to old-fashioned contractual relationships during the development stage or fell through because the relationship and the joint objectives were not robust or developed enough. The Children’s Society had hoped to work with a big entertainment company to develop real time feedback, the National Trust's corporate partner pulled out and by the end of the programme the majority of charities were working contractually with suppliers.
The partnership between Scope and WWF was a brave project involving the application of social psychology insights to mobile giving. This is a high risk and high reward partnership because Scope is asking its donors to support WWF and WWF is asking its donors to support Scope.
This cross-sell of each other’s cause is counter intuitive and challenges many assumptions that charities make about donors. If donors give to the other charity as well as the one they currently support, this could have a huge impact in the sector to grow the market for giving. If it doesn’t work both charities are effectively giving away their donors; that could have a big impact on their income and the work they are able to do, whether it’s helping people with disabilities or working to protect wildlife on the planet.
Time spent face-to-face at the beginning of the project, ensures clarity, builds trust, buy-in and the opportunity to refine and share learning along the way.
Through the projects in the programme a great deal has been learned about the importance of face-to-face meetings and being really clear on roles, responsibilities and expectations up front. This may sound obvious but with multi-disciplinary projects involving a large number of people from different backgrounds speaking different jargon, time spent face-to-face at the beginning of the project, ensures clarity, builds trust, buy-in and the opportunity to refine and share learning along the way.
The complexities of the projects also set out the importance of keeping all partners focused on the end goal. The shared goal for all projects was an aspirational step change in giving. The detail of operational conversations often meant the inspiration and excitement around ‘if this works what it could mean for the sector’ became lost.
Build networks to innovate
If you are going to do open innovation, you should start building your networks now so you can explore opportunities and options when you need them. When the project becomes active, you have to be really clear on roles and responsibilities and agree a project plan and timescales up front. Sometimes those conversations will be difficult. Sometimes they may result in a project not going ahead if they cannot be agreed, but that is preferable to a disjointed project with disgruntled teams that will lack both momentum and inspiration.
Finally, everyone underestimates the capacity needed to develop new ways of working and new ideas. When it comes to open innovation, allow time at the outset and throughout the project to ask 'are we working well as a team' and to have the difficult conversations and build relationships because when you encounter setbacks (which you will) your network will be ready to work with you to get back on track.