Nonprofit Boards Can Drive Organizational Innovation & New Strategic Directions

Nonprofit Boards Can Drive Organizational Innovation & New Strategic Directions

Recently, Marla Capoozzi, Senior innovation Expert at McKinsey Company, provided some guidelines to assist business directors to help drive organizational innovations and lead to new long term strategic planning.* Following are my suggestions how nonprofit boards can adapt her guidelines.

1. Have a Defined mission A mission statement guides most nonprofits. However, few if any, have innovation as an inherent part of that statement. For example, a counseling nonprofit will want its staff to work with the latest treatment modalities. But few boards will want their staffs to actively seek ways to improve on these modalities. Budget constraints, related to staff costs, interfere. However talented staff members may develop new innovative practices within the confines of regular contacts with clients. These can lead to new strategic directions. To drive innovation, boards will need to stay on message to management and staff that innovation is desired outcome to support the mission statement.
2. Rewards Ms. Capozzi reports that research on giving extrinsic monetary rewards for being innovative has had mixed results in the business environment. This finding, indirectly, can support calls for nonprofit innovation. Cultural expectations in the NFP environment tend to arise from a system of intrinsic rewards, such as management/board praise, peer acknowledgement, and publications in professional journals.
3. Role of the Nonprofit Board Innovation must be a core fundamental expectation of the board along with a fair and robust CEO and organizational evaluations. Innovation also can be a fundamental tool to motivate the CEO to seek continual improvement in the organization.
4. Monitoring the Risk Not all innovations are successful, and a nonprofit board will need to carefully choose those projects that might garner foundation support and those that might deserve to be funded by the operating or reserve budgets. These types of risk decisions are not within the typical prevue of many nonprofit boards. If the risks are substantial it would be best to seek outside counsel to be certain that the due diligence on them is as complete as possible.
5. Pushing & Asking While the benefits of innovation are substantial, driving the process in nonprofit organizations requires overcoming the traditional conservatism of nonprofits boards. However the innovative nonprofit board will make time to discuss such alternatives, have some innovative items on board agendas and make certain the CEO has innovation as a priority.

Innovation projects should always be within the reach of smaller and medium sized nonprofits. For instance, I know of one counseling organization that made significant contributions to establishing business sponsored employee assistance programs and enriched housing facilities for the elderly.

* This Week in The Boardroom, February 2, 2013

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2 comments

  1. A critical function of any nonprofit Board member is Philanthropy and once again it is being undersold in this piece! Boards certainly can bring value added by way of innovation, but they too must step up and ensure the capitalization of the proposed innovation!

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    1. I agree. If the organization has an innovation worth funding, it needs to be supported with foundation grants or out of the operating budget. I don’t percive many boards will be willing to fund out of the operations budget.

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