Supporting Innovation

Making plans, taking risks, and embracing success (and failure) in the unknown
New, innovative endeavors can offer exciting opportunities to make big changes,
but also carry with them inherent risks. Through careful planning and a thoughtful
balancing of resources, organizations can take steps to support innovation while at
the same time mitigating risks, ensuring positive outcomes, and learning the most
from the process.

The Challenges of Innovation

Whether an organization would like to support more innovation in general, or has
specific internal or external new projects in mind, breaking new ground can be
both exciting and fraught with uncertainty. When pursuing innovative projects,
organizations may not know:

Which elements of the project will be the most beneficial.

 Who will benefit.
 When the benefits might be realized.
 What circumstances might lead to benefits.
 What resources are required to yield benefits.
 Whether the assumed benefits or entirely new benefits will emerge.
 Whether the project will be beneficial commensurate with the effort put into
it.
For this reason, it is important to approach innovative projects thoughtfully and
strategically. Doing so will help teams understand and manage a project’s
potentials and pitfalls as they emerge.

How Much Risk Should You Assume?

If your organization is considering a new, innovative project — or would simply
like to encourage more innovation in general — a good first step is often to
evaluate your current projects and practices. This can help you understand how to
better support original thinking, as well as how to evaluate specific projects,
including what the impact might be on the organization and how you can work to
best ensure positive outcomes.

How do you reward innovative action?

Does your organization view risk-taking in a positive light? How does your
organization view failure? Does your organization respond well to a change in
management? How do external stakeholders, funders, and constituents regard past
innovative initiatives? In the absence of an organizational culture where risk-taking
and even failure are viewed as positive opportunities for growth, you will have
difficulty motivating your team to truly invest in new ideas.

How ambitiously do you fund innovative programs?

Heavily funded projects — especially those expected to generate less of a return on
investment — can leave your organization financially vulnerable. Is funding of
your innovative project predicated on a single grant source only? Are programs
supported with other income streams? What percentage of resources (staff, for
instance) are applied to innovative programs? Will the expected return on
investment lead to more social good, or capital gains? Ensure that your funding
structure can handle a project’s risks, including timeline changes and even failure.

What percentage of innovative projects fail?

The potential for failure is a necessary component of innovation. Assuming good
project management, examine other innovative projects your organization has
undertaken: the existence of many failed projects compared to successes often
indicates an organizational culture with a greater overall appetite for risk; it may
also suggest that improvements should be made in how projects are carried out. On
the other hand, few failures might indicate that the projects you are undertaking are
not truly innovative.

How do you calculate the risk of innovative projects?

Successful innovations balance risk with reward. Does your organization have a
mechanism for assessing new proposals? In examining new proposals,
organizations will want to ask not only whether the project is worth it, but whether
they have the resources to carry it out and a plan to orchestrate it well. It is
important to remember that organizations that are unaware of their projects’
successes or failures — and that avoid defining them as such — may be taking on
the biggest risk of all by repeating mistakes or failing to follow best practices in the
future.

How do you put the brakes on unsuccessful projects?

Organizations that do not have a mechanism for evaluating successes or failures of
innovative projects are taking a huge risk with their investment. Do innovative
projects have clear metrics for success? Are multiple intervals planned for
evaluating success prior to exhausting resources? Is there a plan for when to call a
project a failure and who will make that call? How will a failed project wind down
gracefully?

How are learnings from successes and failures shared?

Organizations that are able to identify failures, but unable to learn or change from
them, run the risk of stymying future innovation. When a project fails, even in part,
does your organization take the time to study why it failed and what the
implications might be for similar endeavors down the road? Are these findings
shared to teams engaging in other innovative projects? Is there any evidence that
this information, once shared, is applied to subsequent projects?

Evaluating Innovative Proposals

Innovative projects should be carefully evaluated following a staged process that
balances investment with risk.

Step #1: The Smell Test

So you have a lot of great ideas! Invest some time in separating the crazy ones
from those with potential. List them out, along with a brief description. Identify
what is most compelling about each idea, as well as a possible champion —
someone with influence over organizational decision-making who is motivated to
sell the idea internally. Develop an Innovation Strategy Team that regularly
reviews this list to filter out those without compelling rewards or a good mission
fit. After a few rounds of review, many great ideas do not seem so great anymore,
while those with staying power will reveal their strengths.

Step #2: Prioritize

Examine the current innovations in progress at your organization, as well as new
projects on the horizon, to determine your ability to pursue ideas that have passed
the smell test. Still too many ideas to choose from? Offer each champion the
opportunity to push one idea with a 15-minute presentation to the Innovation
Strategy Team demonstrating its value and feasibility. Schedule the most
promising for further development and consideration.

Step #3: “Shotgun” a Business Case

Outline your project in a page (or less). Next, pose some essential business
questions to determine fit, value, and feasibility. This phase will involve discovery
and research. Focus on gathering and presenting the information accurately and
plainly; beautifully designed business plans are time-consuming and tend to
obscure findings.

 What are the biggest risks and challenges, and how do you mitigate them?
 What are the most similar models or competitors for this project, and what is
good and bad about them?
 Who is the market, how big is it, and what is it looking for?
 Why should your organization take on this project? What makes you
different and uniquely capable?
 What capacities and resources in your organization can you leverage to
implement this project?
 What are the legal and regulatory risks for this business?
 What partnership opportunities, sector, and industry contacts can we call on?
 What is the financial and social return on investment?
 How much time will the project require, and how many resources, before it
can come to fruition?
 If successful, how will the project be sustained?
 Are there benefits to the project even if the overall goal is not met?
 How quickly can the project be declared a success or (more importantly)
deemed a failure?
If an idea fails to pass this stage, the organization should consider the time spent on
it a good investment, since little has been spent on the idea. Projects with no red
flags or deal-breakers can be advanced to the next stage.

Step #4: Prototype

If possible, design a limited version of the proposed project to help you test the
riskier and most critical elements of the project. Ideally, this prototype will be
small, and flexible enough to be changed (sometimes dramatically) as you learn
from it. Establish a baseline from which you can measure successes and failures
throughout the course of trying out your prototype. Be sure to run your prototype
like an actual project to measure your assumptions about funding, teams, goals,
success metrics, tasks, responsibilities, and more.

Step #5: Finalize Your Business Case and Project Plan

In examining your prototype, analyze what worked and what did not. Evaluate any
unexpected developments that promoted success. Study the resources and time
involved in executing the prototype, using these findings to consider the feasibility
of implementing the project as a whole. Identify information gaps that might have
critically helped increase success, and take some time to do extra research.
Incorporate these learnings into a more formal Shotgun Plan.

Embracing Failure Leads to Success

Organizations that cover up or ignore failures learn less about what it takes to
succeed, and spend more good money on poor projects. This in turn can lead to an
organizational culture unwilling and unable to take on future risks and further
innovation.

The process of conceiving, evaluating, and implementing innovative new projects

allows many opportunities to review success. While most innovative projects fail,
it is vital to recognize failure when it occurs, and apply its lessons to your next
endeavor. A well-executed failure is in fact a success, and the team should be
celebrated for their hard work and contributions — which ultimately will lay the
foundation for stronger future innovations.