Hire people who make you squirm. Find happy employees and encourage them to fight. And reward failure. Sound like weird management ideas? In some circles, they are. But when it comes to nonprofit innovation, these ideas can be essential.

To innovate, nonprofits must do things that clash with accepted management practices, with common but misguided beliefs about the right way to manage any kind of work. In organization after organization, managers act as if they can keep developing new...

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