Innovation, it seems, is easier said than done.
Despite growing interest in applying innovation methodologies to social sector challenges over the past decade, more often than not, philanthropic efforts to support innovation fall short.
That’s because the processes, strategies, and structures that funders need to deliberately seek out and support innovation are often quite different from the ones they use for traditional grantmaking—a lesson many funders learn the hard way.
In our SSIR article “The Re-Emerging Art of Funding Innovation” last year, we highlighted many specific approaches that innovation funders are now using. But we find that many grantmakers still end up falling into one or more “innovation traps”—common mistakes that can prevent them from succeeding as they try to find and fund breakthrough social change.
Some of these traps are challenges related to execution and implementation; others are more conceptual, rooted in the way organizations think about what innovation is and what it can achieve. As you read through the eight common innovation traps below, ask yourself whether your organization has faced one or more of these problems, and consider sharing your experience in the comments.
- The “underestimating what it takes” trap occurs when funders miscalculate how long innovation takes and the scale of investment required to create real transformation. Breakthrough innovations can take many years, but most funders want to see progress quickly, and typical foundation governance structures often preclude long-term, multi-year commitments. One venture capitalist we spoke with candidly advised funders: “Think longer-term and plan on spending more than you think. Oftentimes you need to double the time and money that an entrepreneur thinks they need.” Funders can try to avoid this by thoughtfully mapping out a path to implementation (even if it requires multiple revisions); planning up front for follow-on support; and even deliberately finding other, later-stage funders that can help an innovation scale.
- The “misaligned incentives” trap happens when foundation staff are explicitly or implicitly discouraged from taking real risks as they pursue breakthrough innovation. Staffers are often judged as successful only if their grants are successful (however that success might be defined). But experimenting with untried approaches is an uncertain business, and many grants will fail to achieve desired outcomes. If program staff perceive that foundation leaders will judge these failures harshly, risk-taking and “innovation aspirations” can shrink. Successful innovation funders try to build deliberate systems for learning from failure; craft incentive structures that reward taking smart risks, however they may turn out; and hire staff who are comfortable with uncertainty and risk.
- The “coming to consensus” trap appears when an organization seeks innovation but tries to build group consensus about which new ideas it should support. Consensus-based decision-making can lead to funding only the clearest, safest, or lowest-common-denominator ideas; truly radical projects may raise too many eyebrows to pass through a collective filter. Put simply, consensus can kill risk. Therefore, many innovation funders establish systems that trust the intuition of individuals, while building in feedback loops that can help refine their judgment over time.
- The “who is responsible for innovation” trap emerges when funders get stuck trying to figure out how to structure the innovation function within their organization. Some organizations attempt to embed innovation into regular staff work, but out-of-the-box thinking can be difficult amidst the pressures of a program officer’s day-to-day job. Special innovation units, on the other hand, can end up disconnected from the rest of the organization’s work. And since these units are specifically tasked with innovation, there is an implicit suggestion that the rest of the organization is not innovating, creating the impression of a set of “cool kids” that then have trouble integrating new ideas with the core of the organization. According to our Deloitte colleague Chris Ertel, “It’s a lot like the challenge of finding the right orbit for a satellite around a planet. If the satellite is too close to the planet, it ends up getting pulled in by the larger body’s gravity and crashing. But if it’s too far away, the satellite can lose its connection to the planet and drift off into space.” Each funder should determine the right orbit for its own innovation activities.
- The “just around the next curve” trap comes about because the path to innovation is rarely linear. Breakthroughs often progress through repeated trial and error, and success can emerge from the learning of earlier failures. But this makes it extremely hard to differentiate wrong turns from dead ends. As a result, funders can often continue to support unproductive efforts, always hoping that success is “just around the next curve.” Knowing when to allow for adjustments if things don’t go as planned, and when to stop funding because an effort simply isn’t working, is more an art than a science. But innovation funders should find a balance between allowing for flexibility and experimentation, while at the same time developing clear benchmarks to make sure that ideas continue to move forward, even if final destinations shift.
- The “everything is innovative” trap results from the word “innovation” becoming so over-used and under-defined that we can call almost anything innovative. Too often, announcing that you’re looking for innovation means you end up getting back the same proposals you’ve always received with the term “innovative” added into the description. But if funders use this loose definition and call everything innovative, they may find themselves disappointed when so-called innovations turn out to have less impact on transforming systems than they hoped. It is important for funders to have an internal conversation about how to judge whether something is actually innovative—defining their goals based on characteristics such as how transformational, original, unconventional, or disruptive an idea may be.
- The “we fund innovation, so we must be innovative” trap emerges from a confusion between being innovative and funding innovation. To use a for-profit analog, venture capital funds are structured rather traditionally; their core roles (raising funds, evaluating companies, making early-stage investments, etc.) have remained unchanged for decades. But using this traditional structure, VCs have managed to fund countless innovative start-ups. In the same way, traditional foundations can fund breakthrough innovation, while funders using innovative processes such as pay-for-success or crowdfunding may end up supporting more-conventional activities. Using innovative funding approaches isn’t necessarily better for supporting innovation, but it’s important to be clear whether you are looking for innovation in the field or looking to be innovative in your own processes.
- The “innovation is the holy grail" trap occurs when innovation is elevated to an unattainable level. As Christian Seelos and Johanna Mair explained in their SSIR article "Innovation Is Not the Holy Grail," some organizations view innovation as a sacred but elusive object that, when found, will solve the problems they care about. But no single innovation can address complex issues like poverty, education reform, or health, and it would be a quixotic quest to look for one. Innovation isn’t a solution to a problem, but rather a process for finding new solutions. Successful efforts look beyond the breakthroughs themselves and also account for learning captured from experiments, the spread of new insights, networks of problem solvers that develop, new technologies or strategies that emerge, or other positive changes that accrue beyond the innovation itself. Often, the stronger “innovation ecosystem” that results from a funder’s efforts can be as valuable as any single new idea.
These are just some of the common innovation traps that funders can fall into if they don’t craft deliberate strategies, structures, and processes for funding innovation. Once triggered, they can bog down funders and slow their ability to affect the types of transformative change they aspire to achieve. In fact, the most dangerous innovation trap of all may be to not think about the traps explicitly.