Disruptive Innovation: Nonprofits Ready to Fail?

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The newswire that I thought was most fascinating in today’s NPQ lineup was the one about the Center for Public Integrity, written by Rick Cohen.

The story is notable for its business model drama, which is always at a constant roar in publishing these days—but then sometimes we in the field amplify the roar into a shriek as we try new things. And we all experiment with nearly everything: the pace and style of our content; our delivery systems; our graphics; our partners, community building, and funding strategies. It is a full-on melee.

And the situation is that many publications must take risks and fail from time to time to keep up and find the right approaches to serve their markets. BUT if you are a nonprofit, this is hardly what investors want to hear. So you try to take controlled risks, but when things don’t move quickly enough, sometimes you just go for broke.

This is the reality of entrepreneurship—especially in a field that is in such tumult. But we know that many organizations of all types are reworking their “business” models. Some have lost staff and eroded cash reserves, and that is not a great position from which to experiment. But experiment we must, and do.

NPQ would love to hear about any risks you have taken or major adjustments to your program/business model you have made in the past year. Have you tried something new that failed or succeeded and that feels like it gives you a window into the future?

We’d love to hear from you (email: editorinchief@npqmag.org)! Let me know if you might be willing to write a piece about risk/innovation/failure and the future. But no puff pieces, please (you know that—“ain’t we grand” stuff!).
Help us learn along with you.

  • Gordon Goodwin

    It’s a lot easier to use the “going for broke” analogy when it’s resources that belong to you – or to others who have funded an enterprise with “at-risk” capital (first-in / last-out money from Friends, Family and Associates for a small business, for example). With a small business, If you go for broke – and broke is what you get – then FFA investors should understand that their money was always at risk of being lost due to the vagaries of the market (incomplete information / timing / etc.).

    Most nonprofits don’t have a lot of discretionary dollars, so going for broke usually happens with dollars intended for another purpose. It’s a bit harder to justify a “going for broke” failure when resources that are considered to be public and intended for another use are lost. Then everyone has something to say about it – and there is always a good deal of post-failure scrutiny that will be applied to a decision.

    If it makes sense to “go for broke”, perhaps it makes sense to find some private donors and institutions to participate in a “special opportunity fund” so that all who want to walk the high stakes path of on-the-vanguard innovation are well-informed about the opportunity and risks, and can indicate their support for the untried strategy or concept by voting with their investment dollars. Doing this step would take time, but the process of explaining hat the “going for broke” opportunity is might also introduce some basic discipline that sometimes eludes those of us who simply like to take risks because “drastic times call for drastic action.”

  • Kate Barr

    Gordon hits on a crucial challenge faced by nonprofits if and when they are ready to make big adjustments or turns in their business models – appropriate capitalization. Another obstacle that is self-inflicted, though, is the general aversion to risk at most nonprofits. While individual leaders and board members may be ready to take some chances or “go for broke” there seems to be a boundary that’s created once the discussion or plans move to a committee or the the board. Obstacles are erected, often by continuous delay or deferral of decisions. Some of this is because of the kind of second guessing that Gordon describes. No one wants a failure on their watch. Business owners have a very different accountability so comparisons to private enterprise entrepreneurs are not useful. Great leaps require gutsy leadership. Behind any big “go for broke” risk are a few brave souls (maybe only one) who made it happen.