Most nonprofits have one thing in common: They’re mission-driven. Whether it’s preserving the environment, searching for a cure, or empowering people as they age.
But according to Andy Miller, SVP of Innovation at AARP, the Washington, DC-based nonprofit, “Social mission is great, but we often say ‘No money, no mission.'” So how can nonprofits make the case to create or scale their innovation teams with both funding and social mission in mind?
We asked Miller to share how the innovation team at AARP, with about $1.6 billion in revenue, has grown, and what advice he has for other innovators at nonprofits.
Innovation at AARP
AARP innovation labs has been around now for three years. It grew from three people to over 20. And in that time period, it grew from being just focused on training employees on human-centered design, to being a function that now does basically four things.
We have an internal design thinking consultancy that is focused on providing the organization with the tools necessary to equip each and every employee to be an everyday innovator in aging.
The second thing we do is we have a full-blown product development shop here, where we are building our own startups. … We have capacity right now to run three startups at any given time. We have our own in-house engineers, our own in-house designers, quality assurance folks, in-house marketing — we basically created a small little sort of incubator. … We launched in the last two years. … One of our concepts has gone through and made it into a real business. And we have two others right now that are that are fairly close to being real. And then we have a pipeline of about 30 ideas that we’re chasing.
We’ve created something called Hatchery Ventures. Hatchery is the name of our space, we have a 10,000-square-foot innovation lab in Washington, DC. Hatchery Ventures is part of the labs that is focused on finding the best startups in the world for us to work with. One [of the ways we do that is] we do our own pitch events. … We invite our AARP members to be part of the audience and the members get to vote on who wins.
[We’re also working on] Hatchery Ventures as a service. … The biggest problem is the startups that we see are not “enterprise ready.” And the enterprises that we see…are not startup ready. … How can we leverage the convening power of AARP to get the right people in the room and then give some level of training or support to facilitate this startup enterprise connection to happen in a much more timely fashion than what we see today?
Scaling Innovation Inside Nonprofits
The general roadmap here, or the equation of success, is pretty simple. There’s only so many things you can do as an organization. It is “I can create new products myself,” “I can work with the startup ecosystem,” or “I can drive internal innovation.” And to be successful, you have to do all those things. But you can’t start with all of them. If you start with all of them, you’re done. Because you’re going to be a mile wide and an inch deep, and no one’s going to see value.
What I did here is to look at the landscape and go, “What’s going to have the most impact the fastest?” And at AARP, it was around knowing our CEO’s desire to have everyone trained [on design thinking]. We are primarily an organization that is not product-centric. So, how do we start to get people to be product people? It was simple. It was, I have to start with the culture aspect. I have to start with human-centered design training back into the core business. And then how do I sort of amp that up a bit by providing an additional service, in the case of our internal consultancy. You have to have those wins. And the faster you can get those wins, you can help others.
Then the second thing we did — our CEO is really [interested in] creating new products. She wants AARP to have its own products. So the second thing I did to make sure we scale this was look at all the things that we had been working on as an organization and said, “Is there anything out there, any ideas or any projects that could really work that maybe were overlooked, or people didn’t know how to execute?” There was this idea around creating a curated wellness box. So we went all in on this box idea, [and were] successful in getting the business off the ground — the speed at which we did that, and the…lack of money that we spent was sort of anti to how things are done here. Within six months, we launched a product that was doing six figures in revenue.
Each time we had a success, I would sort of leverage that a bit to say, okay, we can do more, I just need more resources. As long as we kept showing that, we were able to continue to scale the team.
Advice for non-profits
[Regardless of where your funding comes from,] I wouldn’t run the innovation program any differently. I think you have to think like a startup. We’re a nonprofit. But we’re an enormous nonprofit, one of the largest nonprofits in the United States. So it feels like a corporation, not a nonprofit.
If you’re a small nonprofit, that means you’re probably scrappy by nature. You have to go out and — especially if your funding is coming from donations — you have to be scrappy, you have to figure out how to create enough value that people want to keep writing checks. And so you probably have that scrappy gene already in your DNA.
Continue to leverage that scrappy gene, but understand what your goal is. My goal is both revenue and social impact. If your goal is just revenue, as a nonprofit, you probably don’t win, you probably aren’t going to be successful. Because at the end of the day, you’ll be creating products, services, programs, whatever it is you’re creating, that may go against the grain of what your organization stands for.
I also would advise people, social mission is great, but we often say, “No money, no mission.” So can you create products, services, programs, whatever the innovation teams are doing. Just remember — no money, no mission. So it doesn’t mean you have to be a for-profit, a greedy organization trying to make a million dollars. But you shouldn’t lose money. Try to at least operate at a break-even, if not a slight margin.
If you’re going to get into the product business, use this to your advantage. We’re building our own products. I’m often competing with for-profit organizations, and in many cases, publicly-traded for-profit organizations. I have a huge advantage. I don’t have Wall Street pressure, or revenue targets that Wall Street’s going to punish me for if I don’t hit. So from a price perspective, I just have to make sure I’m not losing money.
Understand what you’re building and who you’re building it for. That social mission really, really matters, and don’t deviate from it. In fact, use that to your advantage.