Innovating for impact

By Dana O’Donovan, managing director, Delicia Jones, senior manager, and Joanna Burleson, managing director (Deloitte LLP)

The private sector has long used innovation as a tool for growth and competitiveness, building effective strategies that are powered by an innovation mindset as well as management systems that support their execution. Unfortunately, the same has not held true for the social sector. We believe that innovation, done intentionally, holds enormous potential for the sector, and can propel organizations towards significant impact. Our work with New Teacher Center offers insights on the power of innovating for impact to align an organization towards its “true north,” focus scarce resources where they will have the highest impact and catalyze growth.

New Teacher Center (NTC) is a national nonprofit that helps improve student learning by accelerating the effectiveness of new teachers, experienced teachers, and school leaders. Over the past 20 years, it has created a powerful model of engagement with school districts and educators, and established a significant footprint, reaching 250,000 teachers and coaches, and over 15 million students across the country. As part of a strategic planning exercise, NTC had updated its theory of change based on what it had learned from the field over the years and was seeking to align its strategy with this new thinking.

What we did

As part of Deloitte’s longtime collaboration with national nonprofit venture philanthropy fund New Profit, NTC engaged us to help them refresh their product strategy (or what others might refer to as program strategy) and align it with their revised theory of change. After years of expansion, NTC found itself with a large portfolio of products delivered across the organization, the scale and scope of which limited organization-wide understanding of all they delivered. Given this, our work began with a focus on developing a shared understanding of the current state, using data to peel back the layers of what was happening across the organization. We went deep to gain the full picture—mapping the complete product portfolio, understanding the time and cost to deliver it, and associated revenue streams. While this would be a standard product rationalization exercise in the private sector, focused on margins and the bottom line, for this mission-driven organization we also had to understand the impact created by each product and its role in NTC’s theory of change.

With this understanding of the current state, we introduced an innovation lens to help NTC make choices around their product portfolio today, and in the future. To meet NTC’s mission-driven context, we adapted Deloitte’s Innovation Ambition Matrix, which categorizes innovation activity into three categories:

• Core innovation: Optimizing existing products or services for existing beneficiaries

• Adjacent innovation: Expanding from existing products or services to “new to the organization” products or services

• Transformational innovation: Developing breakthroughs for markets that don’t yet exist

We then mapped NTC’s products onto the matrix, and what we found was stark—a disproportionate number of products in the adjacent and transformational categories that didn’t fully align with NTC’s impact ambitions. While every organization is different and there is no “right” allocation model, it was clear that NTC needed to bring its portfolio into greater alignment with its updated theory of change. This meant phasing out many of its fringe offerings while increasing focus on the products most critical for achieving NTC’s desired impact.

To enable choice making, we worked with NTC to develop a decision-making rubric, which they used to objectively and systematically evaluate their entire portfolio. Ultimately, this exercise led NTC to cut a long tail of products that were low on both impact and revenues, freeing up almost $6.5M to invest in higher impact products, while rebalancing the portfolio with more intentional investments in adjacent and transformational innovations.

To help maintain a well-balanced product portfolio, we also helped NTC develop an innovation management process—identifying the functions, structures, and resources needed to aid ongoing decision-making. Putting this into practice, NTC created a dedicated innovation function with a 3-year focus on an emergent product line. This ensured that more ambitious innovation efforts would focus on their highest priority areas, and not once again result in product proliferation.

What we learned

While the breadth of NTC’s reach and product portfolio is far from typical, their experience in using an innovation mindset to evaluate and evolve their programs has implications for any organization looking to become more intentional in their approach to innovation.

In order to manage innovation effectively, it is necessary to:

1. Set your anchor: Clarifying your organization’s theory of change and then building staff’s understanding provides the foundation for future choices. The clearer you are on how your organization desires to drive impact, the better you can assess how well your program(s) are delivering.
2. Define what innovation means for your organization: The innovation ambition matrix describes three levels of innovation: core, adjacent, and transformational. Mapping your existing efforts against these levels and how well aligned they are with your theory of change helps build an understanding of where your organization has (intentionally or not) invested in innovation to-date and how you should define innovation going forward, for example, building out a single high potential adjacent program innovation.
3. Get serious about making choices: Once you decide what innovation needs to look like for your organization, it is time to make decisions about what to start, continue, and stop, doing. This begins with developing clear impact criteria, based on your anchor (above) and using data to objectively evaluate current efforts. Get clear on the criteria that are important for your organization, use data to make the choices clear, and commit to making them stick.
4. Provide the necessary supports: Given its own innovation ambition, NTC explicitly embedded innovation into their organizational structure, governance systems, and processes. While many nonprofits don’t need this level of innovation management, in order to drive intentional innovation, every organization should explicitly define the who, what, and where of how innovation happens.

As a result of this work, NTC realized that innovation had been happening across the organization, but it was borne out of client need and not necessarily aligned with their theory of change. By taking a closer look at their current efforts, making choices about where to invest–or not–and then creating an organizational structure to manage their innovation efforts, NTC was able to take charge of their innovation agenda and align their resources to reach their goal of improving the learning of hundreds of thousands more students each year.