Types of Innovation

Two types of innovation are important to your nonprofit. Use sustaining innovations to retain your current clients and use market innovations to serve a new demographic group.

Innovations are original changes that one makes in products or services that create a competitive advantage.  Innovation is important because it reinforces the uniqueness of your nonprofit and creates a hard-to-beat competitive advantage.

Often sustaining innovations are incremental improvements in the products or services.  They often happen in response to what clients say or what someone servicing clients notices.  They help to ensure that clients will be retained and new clients will have one more reason for choosing your nonprofit.

Market innovations are new products or services developed to serve a new group of clients (rather than a marketing innovation, which is a new or novel approach to presenting a product or service).  Market innovations are designed to serve an unmet or undermet need.  By meeting the need, you are opening your services to a new group of potential clients.

Market innovations often originate as a simple or more convenient solution.  When they are successful, they attract a new group of clients.  When the initial market innovation is followed by sustaining innovations and additional market innovations, it is possible to grow a new line of business.  When the new line of business becomes significant and starts to capture market share it is often labeled a disruptive innovation.

Both sustaining and market innovations are important to the sustainability of your nonprofit but only if they are mission centric.  Non-mission-centric innovations are a distraction from the mission and dilute resources.  Since donors give to the mission, non-mission-centric innovation undermine donor trust because from the donor’s point of view the funds were misused.

Some of the best sustaining innovations are ones that allow you to capture clients earlier in their cycle or retain them longer.  A broader offering will provide you with time to find sustaining innovations that add depth to your services.  The longer you serve a client the more durable their outcomes are likely to be.  In addition, the longer the continuum of service is the harder it is for competitors to attract your clients.

Next Step:


Prioritize sustaining innovation over market innovation

Ensure every innovation is obviously mission-centric

Donors have neither the time nor motivation to carefully analyze what your nonprofit is doing.  Their giving is motivated by their hearts, therefore they are comfortable allowing their perceptions to guide their giving.  As a result, every innovation must be easily perceived as mission-centric.

It is important to remember that most attempts at innovation fail.  Anticipated market innovations are especially vulnerable to failure.  The level of knowledge about the new market segment is less than the knowledge about the current segments, which makes it harder to predict the needs and preferences.

Constantly trying to innovate improves the probability of success and makes it easier to separate good ideas from other ideas.

Take It Further:

Apply the same thinking to the other areas where your nonprofit competes (hiring, recruiting board members, fundraising, etc.)

Be courageous and supportive of innovation, experimentation, and failure

Recruit board members who understand that taking risks increases sustainability while playing it safe undermines sustainability in a rapidly changing world


Comments are closed.