The Innovation Imperative

I set out to write this month’s column about President Obama’s forward-thinking decision to create an Office of Social Innovation to unleash new approaches to solving problems that have resisted traditional approaches. Even though the office and a related social innovation fund are still in their early planning stages and have not been officially announced, it is already clear to me that they represent a significant opportunity. More »

VPP Elects Distinguished Leader to Board

Earl Stafford, Chairman and CEO of the Stafford Foundation and CEO of The Wentworth Group LLC, has joined VPP’s Board of Directors. More »

The Innovation Imperative

I set out to write this month’s column about President Obama’s forward-thinking decision to create an Office of Social Innovation to unleash new approaches to solving problems that have resisted traditional approaches. Even though the office and a related social innovation fund are still in their early planning stages and have not been officially announced, it is already clear to me that they represent a significant opportunity.

By creating this office and fund, President Obama is giving a clear signal of support for principles near and dear to Venture Philanthropy Partners: that the nation must invest in innovation targeted at the public good, that outcomes and impact matter, that dollars should flow preferentially to those who are having the greatest impact in addressing our growing social needs.

But a funny thing happened on the way to that column. After sharing a draft with others, wiser than I, to test ideas and “poke the system,” it became apparent that I was missing the forest for the trees. There’s no question that shining the spotlight on social innovation is remarkably important. Yet it will require innovation of the broadest possible breadth and depth if we are to solve our most vexing social challenges.

So instead of focusing on social innovation, I feel compelled to lift up a level and talk about innovation more broadly. I am convinced that, amid the many challenges facing our President, nothing is more important for the long-term strength of our nation than driving greater levels of innovation across all sectors of our economy, including the nonprofit sector.

From the halls of Congress to the rural towns in our heartland, we simply have to come to grips with the fact that the rest of the world is no longer ceding the role of lead innovator to America. Emerging powers like China are seriously challenging us in our core competency. As the journalist James Fallows concludes in an outstanding cover story in this month’s Atlantic Monthly, “China [is using the economic downturn] to design innovative products that will get it the high profits and the high-value jobs Americans kept to themselves for decades. And that is very bad news for the United States, unless it uses tough times to reinvent itself, too.”

Existential Urgency
My family and I visited Israel in 2006 as part of an awards program. I remember leaving extremely impressed by the positive attitude toward achievement, the concentration of intellectual talent, and the advanced thinking relative to the reuse and conservation of scarce natural resources.  I also remember that this attitude was present in everyone we met, from top officials and business leaders to the tour guides and shop vendors. In a trip report immediately following our visit, I shared this observation: “Israel is finding solutions to the scarcity of resources in ways we can’t yet comprehend. Their compelling advantage is that as a people and culture they know they have to in order to survive.”

America has a deep, proud tradition of innovation. But we don’t have this existential urgency and, in spite of all we’ve done, we do not enjoy a full cultural embrace of innovation. We desperately need that urgency and embrace.

Through radical innovation in our commercial, nonprofit, and public sectors, we must break the status quo that is too often miring us in mediocrity—from how we manufacture our products to how we educate our children, from how we consume energy to how we provide health care. We have no choice but to discover and deliver new, different, and better ways of dealing with our most vexing challenges. The aftermath of the financial crisis and threats to our global leadership will put America’s spirit of innovation and entrepreneurship to the test of its life!

Yes, We Can
We know we have it in us as a nation to meet this challenge. I witnessed the drive to innovate while growing up in the 1950s, when starting my career in the 1960s, and while riding the wave of information technology through the 1980s as an entrepreneur. But nothing in my experience compared to what I saw in the 1990s, when three forces converged to ignite an exuberant burst of innovation and entrepreneurship.

Motivation. The tumultuous industry shake-ups in the 1970s and ’80s caused a breakdown in trust for a generation of employees, blue and white collar alike. The shake-ups dramatically changed the mindset of millions who lost their jobs as a result of—pick your euphemism—“downsizing,” “restructuring,” “consolidation,” “merger,” “outsourcing,” or “reductions in force.”

I witnessed this in several ways. First, the software firm I co-founded helped a number of Fortune 500 firms consolidate operations, with resultant large, well, reductions in force. And, in our own firm, when I had the bitter task of telling good friends that I was letting them go, one looked me in the eye and said, “I understand what you have to do, but, @%*!, I’ll never work for someone again!” He struck out on his own; many others across our nation did the same.

Less obvious is how their sons and daughters internalized what they saw. When many of them started careers in the 1990s, they became entrepreneurs, embraced “free agency,” or went to work for smaller start-ups. They chased their dreams, drove change, and satisfied their desire for independence and self-actualization.

New Capital. Although wealthy individuals had invested through venture capital for a long time, the volume of capital exploded in the 1980s and ’90s as a result of changes in the Tax Reform Act of 1986 and an influx of large institutional investors. This vast source of capital funded many aspiring entrepreneurs and emerging business opportunities through the turn of the 20th century.

Disruptive Technology. Early in the 1990s, the Internet, previously the domain of the Department of Defense and academic researchers, went mainstream. It gave the Davids of the world the power to compete with corporate Goliaths. Suddenly, an entrepreneur working from his or her basement had the power to access the world’s resources—anyone, any place, any time. The price of basic business technology plummeted.

The Tailwinds Today
Great crisis and disruption can lead to important new inventions, as discoveries often emerge out of a period of economic collapse. I have a sense that something totally new and really big is going to emerge out of our current crisis. An innovator—or, more likely, a group of innovators collaborating across great distances—is going to create something that will fundamentally change the way we live. I haven’t a clue what it might be and, if past experience holds, I wouldn't even recognize it if it were in front of me.

What I do know for sure is that I’m picking up the early signs of a new convergence.

Influx of Talent. The carnage in big corporations is going to drive millions of additional people—especially the young people who grew up in homes hit by corporate layoffs in the 1980s—to explore the entrepreneurial route. Clearly, the conditions are once again ripe for bright young minds to pour their energies into bootstrapping their own entrepreneurial ventures rather than tethering themselves to big companies.

In addition to young talent, we will also see an influx of seasoned Baby Boomers, the most highly educated generation ever, who are looking for purpose through an “encore career” rather than retirement. Not all encore careers are entrepreneurial in nature, but the potential for innovation is enormous. Just take a look at the remarkable winners of the Purpose Prize, sponsored by Civic Ventures. I love the story of the former lighting director who built a $28 nut sheller that has made a huge impact on the lives of farmers in West Africa!

In addition to these talent infusions, we will also see huge contributions from New Americans. A key ingredient to American success in innovation and invention has been its openness to new people with new ideas. A disproportionate number of innovators in America were born outside the United States, just as literally millions of small businesses were created by immigrants over the years. This is a vibrant source of talent for our future.

New Mindset. With youth setting the tone for this talent, a new mindset is emerging. Compared with previous generations of entrepreneurs, a far greater proportion of entrepreneurs today seek to do well by doing good. From engineering students at MIT developing an inexpensive shock absorber that harnesses previously wasted energy and uses it to improve fuel efficiency to Stanford grads selling hundreds of thousands of solar-powered LED lights in poor communities in Africa and Asia, the new entrepreneurs are rejecting the greed and ethical lapses they’ve witnessed in their young lives. They have been heavily influenced by macro events like Katrina, global terrorism, growing threats to our climate, and the meltdown of our global financial system. They are much more socially conscious, inherently global, more concerned about the state of our planet, less enamored of traditional political-party orthodoxy, United Way, apple pie, and Chevrolet. YouTube, Stephen Colbert, and the Smart Car are much more relevant.

New Network Technologies. Thanks to an entire new class of social networks, resource-matching and open-source models, and other innovations of the second generation of web development and design (Web 2.0), the Internet is becoming the ultimate tool, not just for connecting but also for organizing and coordinating across a broad and diverse continuum of resources—with a speed, ease, and effectiveness we’ve never witnessed before. The cost of coordination is falling to zero.

If you had a good idea in 1970, it was incredibly hard to move it forward and bring it to market; it was often one man or woman against the world. In the 1980s, the arrival of the PC allowed the little guy to look big and compete in new ways. When the Internet arrived in the 1990s, one man or woman could suddenly sell to the world. Now, thanks to the newest Web-based tools, it’s not just about selling to the world anymore. The next wave is collaborating with the world. The time from idea to result will—again—shrink dramatically.

We’ve only seen the first glimpses of this potential. For example, Barack Obama would still be the junior senator from Illinois if not for the online tools 20-something Facebook co-founder Chris Hughes and other innovators put into action. With a modest budget and small team of developers, Hughes and others created community-building tools for the Obama campaign website which made it far easier than ever before for motivated volunteers to organize themselves and mobilize others.

Even when the vast majority of the Obama campaign’s staff and budget were focused in the critical early-voting states of Iowa and New Hampshire, the Obama website was giving volunteers in every corner of the nation the training, talking points, images, databases, and other tools they needed in order to find supporters and get them to the polls. When it became clear that neither Obama nor Hillary Clinton was going to land a quick knockout, “all of a sudden it made a difference that we have 60 really organized groups in Kansas, a caucus state,” Hughes told Fast Company.

Dallas Mavericks owner Mark Cuban just launched a fascinating experiment in what he calls “open source funding.” He has invited entrepreneurs anywhere in the world to post business plans on his blog. He hopes that his open approach will produce not just good investment opportunities for his company but also spark widespread innovation. “I expect other people can and will comment on [your idea]. I also expect that other people will steal the idea and use it elsewhere. That is the idea. If it’s a good idea and worth funding, we want it replicated elsewhere. The idea is not just to help you, but to figure out how to help the economy through hard work and ingenuity.”

Half Full
These three converging vectors—talent, mindset, and technologies—could create the conditions for commercial and social innovation on a scale we’ve never seen before. This is the forest, the iceberg below the surface, the big kahuna. This is why our national cup could be half full even at this time of deep recession. This is what President Obama has a chance to harness.

If necessity is the mother of invention, then this crisis, which has laid bare the depth of our needs, provides us the dramatic necessity to drive innovation and spur entrepreneurs of all types and sizes to find ways to deal with our challenges. The real change makers will be those throughout the land in small and big enterprises, the new and the old, the scientific innovator to the obsessively compelled entrepreneur, across all sectors, who take up this challenge.
 
So while I could not be more supportive of the Office of Social Innovation, I believe this is a chance for the President to systematically foster a mindset in America that is nothing short of a cultural and economic ground-shift. He must broaden the focus across and among the private, public, and nonprofit sectors—to seek and spark the most promising innovations whether they come from commercial or social entrepreneurs, executives or line workers, community leaders, public servants, researchers, or citizens who don’t fit into any of these categories. The real opportunity before the President is to supercharge innovators from all walks of life and make commercial and social innovation our national imperative.

- Mario Morino

VPP Elects Distinguished Leader to Board

Earl Stafford, Chairman and CEO of the Stafford Foundation and CEO of The Wentworth Group LLC, has joined VPP’s Board of Directors.

VPP President and CEO Carol Thompson Cole said, “We are thrilled to have Earl’s support as both an investor in VPP and as a Board member.  His wisdom and guidance will benefit us greatly as we move into our next phase and second portfolio. His commitment to lifting up all members of our community, but particularly those who have been overlooked or marginalized for far too long, is incredibly inspirational.”

Stafford’s foundation provides support and assistance to underserved members of our community.  One of its most visible efforts to date was the People’s Inaugural Celebration which brought many disadvantaged people from around the country to participate in the historic events of President Obama’s Inauguration.

In addition to his foundation work, Stafford is also the Chief Executive Officer of The Wentworth Group LLC, a holding company providing financial and business support services to the small business community.  His experience as the former Chairman and Chief Executive of UNITECH, an award-winning training and simulation technology solutions company headquartered in Northern Virginia, positions him well to offer support and consulting services to the small business community.  

“Earl Stafford brings significant experience, passion, dedication and commitment to the VPP Board. His successful military and business careers, building UNITECH into a multi-million dollar company, recently acquired by Lockheed Martin, is matched and even surpassed by his bold efforts in philanthropy.  We are honored to have him join our Board,” VPP Chairman Mario Morino said.

Stafford also served his community and country with a distinguished career in the US military that included service as the assistant Air Force Liaison Officer to the Federal Aviation Administration. 

He currently serves on the Boards of the University of Massachusetts, Amherst Foundation, and Wesley Theological Seminary and is a member of the Business Executives for National Security (BENS).  He received a bachelor’s degree in business from the University of Massachusetts and an MBA from Southern Illinois University.  He is a graduate of the OPM Executive Program at Harvard Business School.  

Business Planning Process Helps Test Feasibility, Fit

As reported in the article, VPP Begins Work with Year Up, National Capital Region, VPP has selected Year Up NCR to be the first organization whose business planning process is supported in the second VPP portfolio.

The selection of Year Up NCR for business planning reflects many of the lessons we have learned from the first portfolio. First and foremost, we will continue to focus on great leaders, demonstrated performance, and bold aspirations to increase opportunities for children and youth of low-income families in our region.

While our essential selection criteria remain the same, we have refined our analytical tools and processes. We have learned how critical it is to carefully test the feasibility of an investment opportunity and the “fit” between VPP’s high engagement approach and a potential investment partner before making a multi-year investment. To that end, we now consider the business planning efforts we support in a new light.

In some cases, an organization may only need business planning support from VPP. In others, the timing may not be right for immediate, long-term investment after business planning. And for some, business planning may reveal that the nonprofit’s aspiration, ability, and/or opportunity for scale does not fit with VPP’s way of philanthropic investing. On the nonprofit’s side, the planning experience may lead the organization to decide the philanthropic investment framework and high engagement approach of VPP is not what the organization is looking for at this time. We look for ways to individualize and tailor our business planning investments and our long-term investments in ways that are appropriate for the stage and goals of each nonprofit with which we work.

Starting with the May Issue of VPPNews, we will present a series of columns that further outlines our lessons learned from the first portfolio and how the lessons will manifest themselves in investments in our second fund.

- Carol Thompson Cole

VPP Begins Work with Year Up, National Capital Region

VPP has selected Year Up, National Capital Region (Year Up NCR) to be the first organization with which VPP will work in its second portfolio. Year Up NCR is the regional site of a highly successful, Boston-based workforce development program that has achieved outstanding results in six sites across the United States. The VPP support will help Year Up NCR develop a comprehensive plan to achieve its aspiration to grow and, ultimately, influence policies and practices, including corporate hiring practices, that will impact thousands of young adults.

Year Up, a one-year intensive training program, provides urban young adults, ages 18-24, with a combination of hands-on skill development, college credits, and corporate apprenticeships. The program aims to put disconnected young adults on a viable path to closing the opportunity divide. Year Up NCR, which opened in the region in 2006, targets the 33,000 young adults in the National Capital Region who do not have access to livable wage employment and are not engaged in higher education.

“We look forward to working with Year Up NCR on their plan to demonstrate and build out their value in their next stage of growth. We believe that our place-based approach and knowledge of how the region works can inform their business planning process and help this outstanding organization produce a successful plan that will ultimately help hundreds more young people in our region move into productive adulthood. With increasing levels of attention on social innovation from the new Administration and Congress, we feel it is an opportune time for organizations like Year Up to gain a strong foothold in the National Capital Region.” said Carol Thompson Cole, President and CEO of Venture Philanthropy Partners.

"We are pleased to partner with Venture Philanthropy Partners on how to best prepare urban young adults for a competitive 21st century workforce. We believe that VPP is a natural collaborator to work with us as we grow our regional platform, expand the career options we offer our students and create a growth strategy to impact the National Capital Region," said Year Up CEO and Founder Gerald Chertavian.

VPP selected Year Up NCR because of its demonstrated performance, outstanding board and executive leadership on both the national and local levels, and its bold aspiration to increase impact.

Year Up NCR has identified several specific areas of program refinement and growth to be explored during business planning, including increasing the number of young people served; building more partnerships in the community to expand the opportunities for young people; evolving its funding model to build sustainable revenue sources; and creating a local communications strategy to build awareness of the program.

"Venture Philanthropy Partners bring a depth of experience and commitment that is critical to ensuring Year Up National Capital Region continues to achieve positive outcomes in our community. What excites us most is that they are truly partners, and, with their help, we hope to build a sustainable platform where even more young adults can earn livable wage careers and higher education," said Tynesia Boyea Robinson, Executive Director, Year Up NCR.

Philanthrocapitalism Author Featured at VPP Event

On March 12, VPP Investors, Board members, and special guests gathered to participate in a dialogue between VPP chair Mario Morino and Matthew Bishop, the author of Philanthrocapitalism and the New York Bureau Chief and Chief Business Writer for The Economist.  The two discussed the changing world of philanthropy and the impact of today’s economic climate on those seeking social change.

“We need to rethink the whole framework for the global economy,” Bishop said as he described the implications of globalization on the economic crisis. “What feels bad in America is far worse in the margins of the world.”

Asked to elaborate on his statement that “This could be philanthrocapitalism's finest hour,” Bishop said, “Organizations with track records need saving….Collaboration may be the silver lining.  If it’s thoughtful, we could address some of the inefficiencies in the sector.”

Announcements of Note

Friendship Connections:  White House to Outer Space
Thanks to Barry Lofton, Director of Corporate and Community Relations, for this update.

Recently, Rydia Wright, John T. Johnson IV, and Erica Foster, three fifth-grade students from Friendship Southeast Elementary Academy, joined teacher Elisabeth LaMotte-Mitchell on a journey most students can only dream about.

On March 24, President Obama was set to make his first call to the astronauts on the International Space Station and the Space Shuttle Discovery and thought it would be great to have school children participate in the “out of this world” call with him.  Three area middle schools and the Boys & Girls Clubs of Greater Washington were selected based on their science and math focus.  The Friendship Public Charter School system maintains a very strong STEM (Science, Technology, Engineering and Math) program that is introduced at the elementary level and strengthened from middle to high school.

NBC4 News was one of the media outlets covering the President’s call and the maroon blazers of the Academy students immediately behind the President’s chair were easy to spot.

During the first 60 days of the Administration, the President and Mrs. Obama have introduced themselves to children, schools, and nonprofit organizations in the District of Columbia, creating a sense of community and forming a bond that will live with the fortunate participants for a lifetime.

CentroNía Experience Corps Members Rally for Kennedy Serve America Act
Thanks to Brenna Casey, Communications Manager, for this update.

As the Edward M. Kennedy Serve America Act (formerly the GIVE Act) passed through the House and the Senate this month, CentroNía’s Experience Corps members gathered on the steps of the nation’s Capitol on March 18 to show their support.  Experience Corps members Wahidah Abdullah, Helen Rader, Deborah Stewart, Connie Hart, and Harriet Saylor joined Speaker of the House Nancy Pelosi and Representatives Carolyn McCarthy (D-NY) and George Miller (D-CA) to encourage Congress to act quickly on this legislation that will create about 175,000 new service opportunities nationwide. 

Experience Corps members Deborah Stewart, Connie Hart, Helen Radar, and Wahidah Abdullah show their support of the Kennedy Service Act on the steps of the Capitol.

Experience Corps, whose DC Chapter is hosted by CentroNía, offers opportunities for Americans 55 and older, to volunteer in their local communities.  Experience Corps/DC has approximately 80 members placed in public schools throughout the District as literacy tutors and classroom aides, creating myriad benefits for both volunteers and the students with whom they work. 

“I am excited that our members could participate in this event and show their support for this innovative and important piece of legislation,” said Experience Corps/DC Project Director Taffanie Ketema.  “This newly passed legislation will be extremely important for older Americans.” 

Ketema also pointed out that the legislation will increase AmeriCorps positions from 75,000 to 250,000 nationwide and augment education stipends awarded for completed service.  She noted, that for the first time, education awards will be transferrable so that volunteers can reassign them to children, grandchildren, nieces, or nephews. 

“Throughout the country, Experience Corps members have already proven the willingness and dedication of retired Americans to bring their expertise into the classrooms and contribute to the education of young children,” said Beatriz “BB” Otero, CentroNía’s President & CEO.  “The Kennedy Serve America Act and the participation of our Corps members reinforce that commitment and provide resources to support the efforts of individuals who want to volunteer but are limited by fixed incomes or other.  We are extremely pleased that our members are playing an active role in educating policy makers about the value of service programs such as Experience Corps.” 

To find out more about Experience Corps in Washington, DC, contact Ketema at 202-332-4200 or tkatema@centronia.org.

AALEAD, DC Council Promote Community Via Basketball
Thanks to Rick Chen, Manager of Development & Communication, for this update.

On March 29, Asian American LEAD held its “AALEAD’s Got Game?” basketball tournament at Bell Multicultural High School, featuring DC Councilmember Tommy Wells and members of his staff. About 100 people were in attendance to see the towering adults engaged in friendly competition with AALEAD’s high school students.
AALEAD team members celebrate
victory. (Photo by Lan Thomas) During the 5-on-5 game, AALEAD’s team made a surprising early run of 8-0. However, with a few well-placed shots from Mr. Wells himself, the game was tied with only one minute left. In the final seconds, however, AALEAD’s students scored the winning point.

Following the DC Council game, 12 other AALEAD student teams competed in 3-on-3, half-court games for the first place trophy. The competition was intense, yet, students never lost sight of the importance of good sportsmanship. In addition to participating in the games, students also assisted staff in running the concessions stand. The event provided both students and DC Council members a fun and active way of getting to know each other.  

Awards & Recognition

Gomez Receives Minority Business Leader Award
Thanks to Lyda Vanegas, Communications and Advocacy Officer, for this update.

On April 2, Mary’s Center President and CEO Maria Gomez was honored by the Washington Business Journal with the Minority Business Leader Award.

The award was presented to the Washington region’s top minority business leaders and owners who have exhibited outstanding performance within their organizations and companies over the last 18 months.

“Maria’s story was inspiring, and we all agreed that she deserved this recognition,” said Joe Andronaco, one of the judges and winner of the 2008 Minority Business Leader Award.

Maria Gomez was decribed
as "tireless, determined."

The award presentation took place at the Mandarin Oriental with more than 300 guests in attendance, including US Trade Representative and former Mayor of Dallas, Ambassador Ronald Kirk who expressed encouraging words to the 25 honorees.

“The President and I believe in you and what you do, and the more successful you are, the faster America will recover,” Ambassador Kirk said.

Each honoree was also profiled in a special supplement of the April 3 issue of the Washington Business Journal.