Food critics and bloggers are constantly rating what is in and what is out. (In case you are wondering, sour is in, bitter is out.) The social sector is having the same discussion – trends show that innovation is out and impact is in. While this dichotomy brings attention to an important conversation facing the sector, it does little to explain the rationale behind the trend – or the balance that is needed to really make a difference.
- For community-based organizations, balancing the tension between innovation and impact means knowing the difference between the two and focusing on impact when enough research is available to guide the implementation of best practices. Organizations should focus on programs where best practices are well-established and customize them for the community to maximize impact, but they should also implement programs for which best practices are virtually non-existent or unclear and where impact measurement is key to figuring out what could work. Think of it like baking a cake. When you use a great recipe, you know that your cake will turn out well. The same is true of research-based programs yielding impact. But, when you don’t have a recipe, you have to experiment and measure your results to determine what works best and keep improving the recipe. When you’re operating without a recipe in the social sector, it pays to follow lean startup carefully to adapt your program as new information and research emerge to increase your chances for impact.
- For funders, balancing the tension between innovation and impact means developing a funding portfolio with at least 60-75% of funding going to impact-driven solutions (similar to private equity) and 25-40% going to innovation-driven works similar to an R&D fund (similar to venture capital). Think of it like sugar in your diet. Innovation, like sugar, enhances your culinary experience. But, like sugar, it’s easy to go overboard with innovation. When you overdo it, too much focus on innovation leads to unhealthy and unwanted outcomes, such as ineffective programs and unnecessary funding competition that relies on innovation for innovation’s sake. As a community of funders, it is imperative to have meaningful and regular dialogue among funders to create a proper balance between innovation funding and impact/scale funding.
- For accelerators, such as Social Venture Partners or Innovation Labs, balancing the tension between innovation and impact means being clear about which type of solution is your sweet spot. Are you better with innovative startups or with growth strategies for impactful programs? Think of it like the difference between cooks and bakers. It is difficult to be good at both because each requires a different skillset. The same is true for accelerators and other social venture groups. We recommend accelerators focus on the area in which they have the greatest strengths.