HOW WE WORK TOGETHER:

Philanthropy and

The role of team processes and organizational climate in nonprofit innovation

TANIA CHENG and JUNIPER GLASS

August 31, 2015

Nonprofit Leadership

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This publication is also available at: www.carleton.ca/mpnl A short video summarizing the results of this study is available to the public at: https://youtu.be/guSm821JvWA Copyright © 2015 by Tania Cheng and Juniper Glass All rights reserved. No part of this document or any of its contents may be reproduced, copied, modified or adapted, without the prior written consent of the author(s), unless otherwise indicated. For permission, please contact: Tania Cheng | tania.cheng@carleton.ca Juniper Glass | juniper.glass@carleton.ca or Dr. Amanda Clarke amanda.clarke@carleton.ca Faculty Advisor

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ACKNOWLEDGEMENTS

This project was made possible by the contributions of 18 inspiring organizations that are doing exceptional work to benefit Canada and their communities. It was a privilege to speak with leaders from these organizations, and we are grateful for the time they took to share their honest insights and experiences with us. We would like to thank Vani Jain, Mary-Rose Brown, Chad Lubelsky, John Cawley and the team at the J. W. McConnell Family Foundation for supporting us as a community partner on this project and for inviting their networks of nonprofit organizations to participate in the study. We are extremely grateful for the research methods training we received from Dr. Paloma Raggo as well as the ongoing support and feedback from our advisor Dr. Amanda Clarke, expert reader Dr. Greg Sears, and fellow students in the Master of Philanthropy and Nonprofit Leadership program, all at Carleton University. Thank you to Dr. Clara Cheng for assisting with statistical analysis of survey results. Lastly, thank you to our colleagues for allowing us flexibility in our work schedules to undertake the research and our family and friends for their support and encouragement.

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TABLE OF CONTENTS

List of Figures And Tables.............................................................................................................. 4

Executive Summary ........................................................................................................................ 5

Introduction .................................................................................................................................... 9

Background ................................................................................................................................... 12

Results .......................................................................................................................................... 23

Recommendations ....................................................................................................................... 44

Conclusion .................................................................................................................................... 47

References .................................................................................................................................... 49

Appendix A. Methodology ............................................................................................................ 57

Appendix B. Interview Guide ........................................................................................................ 66

Appendix C. Survey Questions ..................................................................................................... 68

Appendix D. Interview Results: Frequency of Climate Elements & Team Processes ................. 72

Appendix E. Interview Results: Areas for Improvement for Organizational Innovation ............. 74

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LIST OF FIGURES AND TABLES

Figure 1. The Competing Values Model of organizational effectiveness ................................... 13

Figure 2. Proposed model of relationships between leadership, team processes, climate, and

innovation ..................................................................................................................... 22

Figure 3. Primary activity areas of participating organizations .................................................. 23

Figure 4. Average age of employees at participating organizations .......................................... 24

Figure 5. Concurrent triangulation design ................................................................................... 57

Table 1. Internal consistency of organizational climate scales .................................................. 25

Table 2. Ratings on organizational climate in support of innovation ......................................... 25

Table 3. Classification of organizational climates for innovation .............................................. 26

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EXECUTIVE SUMMARY Purpose of the study

Building the capacity for innovation within Canadian nonprofit and charitable organizations could help the third sector respond to several simultaneous challenges it faces, including resource constraints, expectations to take on a greater role in delivering public services, and increasingly complex social and environmental problems. This study adds to a small but growing body of research on innovation processes within third sector organizations. By examining two factors that are within the control of leaders and team members—organizational climate and team processes—this research sheds light on promising practices to increase internal innovation capacity. Methodology

The leaders of 18 Canadian charities with between 3 and 20 full-time employees participated in the study. Data collection occurred via open-ended semi-structured interviews followed by an online survey. The survey drew on existing measures (Patterson et al., 2005; Schippers et al., 2007) to elicit respondents’ perceptions of three elements of their organizations’ climate for innovation: flexibility, outward focus, and reflexivity. During interviews, respondents were asked to describe in detail examples of innovation in their organizations, including what steps and processes their teams undertook. Respondents were also asked what their teams did well and what they could improve upon to further support innovation. Interview data generated key insights on team processes that support a climate for innovation. Findings

All leaders participating in the study expressed a desire for their organizations to be innovative in order to ensure relevance and effectiveness. Three elements of organizational climate associated with innovativeness—flexibility, outward focus, and reflexivity—were confirmed to be significant in the innovation processes of nonprofit organizations in the sample. Each innovation scenario described indicated the presence of these elements of climate, validating previous literature on their relevance in fostering organizational innovation. Flexibility was most often manifested as organizations’ ability to respond quickly to opportunity, to try new things, and to create or revise their programs and strategies. Participating organizations revealed a particularly high level of outward orientation, and their scanning of and responsiveness to the external environment played a prominent role in generating program improvements, new funding, and partnerships with other stakeholders.

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Reflexivity, the intentional reflection by teams on objectives, strategies, and work processes, occurred formally and informally within participating organizations, most commonly taking the form of reflection during meetings and evaluation and data analysis. All of the leaders interviewed identified several team processes used in their organizations while developing and implementing innovations. Informal conversations played an important role in facilitating idea generation in several organizations. Most of the team processes cited, such as brainstorming, discussion, problem solving, learning, and reflection, occurred during meetings that supported innovation generation. Leaders described how they strived to create an environment conducive to innovation through honest and open communication, affirming the ideas and contributions of all staff, and encouraging the questioning of concepts and assumptions about the organization’s work. Collaboration across departments or functions and engaging staff in shared decision-making—cited by a majority of respondents—also appeared to be important in creating a climate for innovation. Findings suggest that team processes that facilitate open dialogue, collaboration, and reflection among staff are powerful levers by which leaders can improve organizational climate, which in turn fosters innovation. The study also validates previous research on the role of transformational leaders as facilitators of team processes that support innovation. Leaders frequently cited the use of participatory processes, which demonstrates that they were intentional in their efforts to foster trust and cohesion and to provide supportive supervision. Two additional factors, beyond the scope of the study but worthy of note, emerged as prominent in nonprofit innovation processes: organizational structure, or how roles and responsibilities were arranged within the team, and the individual-level qualities and skills found within the team composition. Recommendations

The study indicates that team processes and organizational climate are levers that can be used to move an organization in the direction of its innovation goals. Based on our findings, we offer the following recommendations to leaders of nonprofit and charitable organizations seeking to build capacity for organizational innovation. 1. Develop staff and leaders’ understanding of the distinct aspects of organizational climate

that support innovation by: Discussing and generating a common understanding among the team of what it

means to “be innovative”.

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Separating out distinct elements of an innovative climate such as flexibility, outward focus, and team reflexivity.

Inviting all staff to complete the Organizational Climate Measure or comparable measure to identify strengths and weaknesses, which can help teams to identify areas to improve a climate for innovation.

2. Seek to strengthen and balance flexibility, outward focus, and reflexivity among the whole

staff team by: Setting explicit goals to improve flexibility in structures and roles, attention and

responsiveness to external inputs, and practices to support reflection about the organization’s programs, mission, and processes.

Paying attention to building these capacities within the entire team, rather than just senior staff.

Encouraging staff to generate creative ideas and initiatives that might advance the organization’s goals.

Developing collaborative action plans during staff retreats to increase organizational innovation and review progress together periodically.

Being aware of and openly addressing tensions found to sometimes arise between these three climate elements, for example, between being quick to act on opportunity and engaging in thorough team reflection.

3. Recognize the important role that team processes play in organizational innovation by:

Reflecting upon how certain team processes may contribute to, or hinder, an organization’s ability to be flexible, attuned to the external environment, and reflexive.

Articulating the purpose of specific team processes so that the team knows why they are doing what they are doing.

Building in time during regular team meetings and staff retreats to discuss the team processes that contributed to success or failure of an idea or innovation. Key questions include: “How did we work as a team? How can we work better together?”

4. Implement team processes that emphasize open communication, collaboration, and

reflection by: Adjusting existing team processes or experimenting with new processes to reflect

these behaviours. For example, if staff meetings are simply a review of what team members are working on, but do not strengthen outward focus, adjust the format to incorporate creative reflection on trends in the external environment.

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5. Anticipate and mitigate common tensions within organizations during innovation processes by:

Saying “no” when necessary to new opportunities or risks can help avoid over-extending staff.

Recognizing when to speed up the pace of innovation processes and when to slow down.

Communicating frequently and frankly with staff even when decisions must be taken quickly by the leader or management team.

Distinguishing when to direct or facilitate a team process themselves and when to delegate authority to staff.

Creating formal structures and processes that actually support greater for flexibility and creativity

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INTRODUCTION Many scholars have posited innovation as imperative to the survival of nonprofit organizations (Allen et al., 2013; Beekman et al., 2012; Dover & Lawrence, 2012; Jaskyte & Dressler, 2005; Jaskyte, 2011; Sarros et al., 2011; Seelos & Mair, 2012). Innovation—the adoption and integration of a new product, process, service, structure, or system—contributes to an organization’s competitive advantage and economic growth (Damanpour & Schneider, 2006). Innovative organizations, both for- and not-for-profit, are more nimble and flexible, thus able to respond quickly and creatively to changing conditions and better meet the needs of clients or constituents (Jaskyte & Dressler, 2005; Beekman et al., 2012). Indeed, an increasingly unpredictable environment is pushing nonprofit and charitable organizations in Canada towards greater innovation. Since the 1990s, government funding for social services has been dramatically reduced, and nonprofit organizations have faced increasing demands for their services due to changes in Canada’s demographic makeup and the recent recession (Hall et al., 2005; Imagine Canada, 2010; Mulholland et al., 2011). Funders and stakeholders are also demanding greater accountability, efficiency, and impact from third sector organizations (Jaskyte & Dressler, 2005; Phillips, 2013). Third sector organizations in Canada have begun to reframe these external challenges as opportunities, responding to the call of leaders such as Tim Brodhead, former CEO of the J. W. McConnell Family Foundation, who stated, “It is time to re-think our operating models, our function, and our contribution to Canadian society, embracing innovation and re-asserting our role as catalysts, community builders, and creative problem-solvers” (Brodhead, 2010). There has been a growth of initiatives meant to stimulate and celebrate innovation in the Canadian nonprofit sector, such as Social Innovation Generation1, Innoweave2, Collective Impact Summits3, and the Tides Top 104 awards that honour creative initiatives solving social and environmental problems. The Framework for Action for the Nonprofit Sector summarized the context for increased emphasis on innovation, stating:

Nonprofit and charitable organizations are realizing that they need to determine how to sustain and enhance their activities with less certain assistance from other sectors, while simultaneously moving to address emerging and long-standing economic, social, cultural and environmental issues in a collaborative way. (Imagine Canada, 2010, p.1)

1 http://www.sigeneration.ca 2 http://www.innoweave.ca 3 http://events.tamarackcommunity.org/collectiveimpactsummit 4 http://tidescanada.org/about-us/tides-top-10/

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Some have suggested that nonprofit and charitable organizations are inherently innovative because they tackle societal challenges on a daily basis and hold values that drive them to ‘do better at doing good’ (Frumkin, 2002; Imagine Canada, 2010). However, empirical research has failed to corroborate this assumption (Seelos & Mair, 2012). In fact, scholarship has yet to produce much knowledge about innovation within nonprofit and charitable organizations or the public sector (Jaskyte, 2011). Most existing research focuses on for-profit organizations (Allen et al., 2013; Dover & Lawrence, 2012; Jaskyte, 2011), and it is unclear whether findings of such studies are transferrable to nonprofit organizations, considering the unique characteristics of nonprofits such as dependence on external funding (Jaskyte, 2009), reliance on volunteers, accountability to multiple stakeholders (Dover & Lawrence, 2012), the pursuit of goals for public rather than private benefit, and typically risk-averse behaviour (Hull & Lio, 2006). This study aims to contribute to knowledge about how innovation can be supported within third sector organizations. A wide range of factors has been shown to influence organizational innovation, including the external environment, availability of resources, organizational structure, and individual personalities (Anderson et al., 2014). Anderson et al.’s (2014) extensive review of the innovation literature identified several questions for further study, including: “To what extent do team processes determine climate that in turn influences innovation?” This question serves as the foundation for our research, which explores how leaders of medium-sized Canadian charities use team processes to foster an organizational climate in support of innovation. The two factors we focus on—climate and team processes—are determinants of organizational innovation that can be intentionally altered by leaders; thus, their study can inform recommendations that can be applied in practice. The first determinant, organizational climate, is defined as the aggregate of team members’ perceptions of organizational practices and procedures and their resulting patterns of behaviour (Allen et al., 2013). Climate has been found to influence organizational innovation in both for-profit and nonprofit organizations (Patterson et al., 2005; McMurray et al., 2013). We specifically examine three elements of climate—flexibility, outward focus, and reflexivity—and explore the role they play in the innovation processes of charitable organizations. These three elements were selected because of their link to the Open Systems model of organizational behaviour, which is associated with functioning in an adaptive manner for effective performance and has been found to be closely aligned with organizational innovation (Patterson et al., 2005; Damanpour et al, 2009; Imran & Anis-ul-Haque, 2010; Naranja-Valencio et al., 2011). Open Systems is one

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of four models within the Competing Values framework for organizational analysis (Quinn & Rohrbach, 1983), which provides the theoretical underpinnings for the study. The second determinant of organizational innovation we examine is team processes. Teams are becoming the favoured functional unit of organizations in the 21st century as management practices are shifting towards more participatory processes and shared leadership (Curral et al., 2001; Sarros et al., 2011). Teamwork enables organizational learning, cross-functional interaction, and the pursuit of superordinate goals, which have been shown to correlate with high levels of innovation (Curral et al., 2001; Hűlsheger et al., 2009; West & Anderson, 1996). Team processes are defined as the interdependent actions that members of a group engage in to organize their work to pursue collective goals (Marks et al., 2001, p.357). Distinct from tasks and their content, team processes refer to how teams engage in the work together. Hűlsheger et al. (2009) suggest that the study of relationships between team processes and innovation would produce the most reliable and hands-on advice for leaders and managers. Nonprofit and charitable organizations stand to benefit immensely from research on team-level factors since most rely on small teams to fulfill their mandates. Of Canadian nonprofit organizations that have paid staff, 74.5% employ fewer than ten people (HR Council for the Nonprofit Sector, n.d.). Thus, this study focuses not only on what factors lead to innovative thinking and behaviour (i.e. organizational climate), but also on how that climate for innovation is created (i.e. team processes). By shedding light on both of these dimensions, the study contributes knowledge that can increase the capacity for innovation in the third sector. The paper is organized into four parts. We begin with our literature review and theoretical framework. Part two describes in detail the findings and implications of the study. In part three, we present recommendations for leaders of nonprofit organizations seeking to increase their organizations’ ability to innovate. Finally, the appendix includes a description of our methodology and data collection tools.

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BACKGROUND Organizational innovation

Organizational innovation is defined as the introduction, adoption, and integration of new products, services, processes, structures, or systems in an organization (Damanpour, 1991). Novelty is a relative, but necessary, property of innovation; that is, the product, service, or process must be new to the adopting organization to be considered an innovation (Damanpour et al., 2009). Although innovation and creativity are sometimes used interchangeably, the two should be distinguished. Creativity is considered the generation of new ideas, whereas innovation also encompasses the implementation of these ideas (Amabile, 1996; Anderson et al., 2004). In other words, innovation begins with creativity, but creativity alone is not enough to produce innovation. Innovation can be conceived as both a process (i.e., the process of introducing something new) and an outcome (i.e., a new product, service, or procedure) (Crossan & Apaydin, 2010). The literature has produced many distinctions between types of innovation, including product and process innovation (Utterback & Abernathy, 1975; Beekman et al., 2012), technical and administrative innovation (Damanpour et al., 2009; Jaskyte, 2011), and radical and incremental innovation (Gopalakrishnan & Damanpour, 1997). Scholars have also explored the various stages of the innovation process, which can be grouped into three general phases of initiation, adoption, and implementation (Damanpour & Schneider, 2006). Seelos and Mair (2012), in studying nonprofit organizations, developed a model for continuous innovation consisting of four processes: internal idea creation and/or accessing external ideas or innovations, interpreting and evaluating ideas, experimenting and consensus building, and formational and routinization. While our research includes a cursory exploration of team processes at various stages of the innovation process, an in-depth analysis is beyond the scope of the study. For a more in-depth discussion of team processes at various stages of the innovation process, see Dover and Lawrence (2012), West (2002), and Yusuf (2009). Organizational innovation and the Competing Values Model

The positive relationship between innovation and organizational effectiveness is a central assumption underlying innovation research. Although effectiveness is generally a desired goal of organizations, it is an ambiguous construct that could include many criteria, sometimes contradictory, such as stability, growth, productivity, or the development of human resources (Quinn & Rohrbaugh, 1983). This study draws upon the Competing Values Model (CVM), a theoretical framework developed by Quinn and Rohrbaugh (1983), which organizes the most

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central concepts that have emerged from research on organizational effectiveness along two dimensions: focus (internal versus external) and structure (flexibility versus control). Numerous subsequent studies have since affirmed the CVM as a well-founded framework for research on organizations that is applicable across a variety of scholarly disciplines (Bernstrom, 2009; Patterson et al., 2005). By mapping effectiveness criteria along the two dimensions of focus and structure, Quinn and Rohrbaugh (1983) developed a quadrant that identifies four models of organizational behaviour: Human Relations, Internal Process, Rational Goal and Open Systems (Figure 1). These models represent organizational paradigms which shape an organization’s climate and underlie its decision-making and actions. For example, the Open Systems model values flexibility and external focus, defining effectiveness as growth, resource acquisition, and external support. An organization operating from this perspective would demonstrate monitoring of and responsiveness to the external environment and readiness to respond to change and opportunity. Conversely, under the Internal Process model, which values internal focus and control, an effective organization is one that maintains its current position and activities through internal systems that are consistent and efficient.

Figure 1. The Competing Values Model of organizational effectiveness

Adapted from Quinn & Rohrbaugh, 1983.

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Of particular interest in this study is the Open Systems model, as it is most closely linked to innovation due to its emphasis on adaptive functioning. Adaptation is both a driver and outcome of innovation: ongoing adaptation in the form of incremental improvements can lead to disruptive innovations, which can then help organizations to respond to changing conditions in their environments by maintaining or improving performance (Damanpour et al., 2009; McDonald, 2007). We suggest, then, that innovative organizations would tend to reflect an Open Systems approach in their values, climate, and behaviour. It should be noted, however, that the four models are not exclusive and that most organizations and leaders draw upon more than one of the four models (Quinn & Rohrbaugh, 1983). A number of empirical studies have confirmed a link between innovation and organizational performance, especially among for-profit firms (Jiménez-Jiménez & Sanz-Valle, 2011; Bowen et al., 2010; Subramanian & Nilakanta, 1996). Indeed, Crossan and Apaydin (2010, p.1154) contend that “innovation capability is the most important determinant of firm performance.” Innovation improves effectiveness by helping organizations maintain or gain a competitive advantage and adapt to changing conditions in the external environment (Damanpour & Schneider, 2006). Regarding the effectiveness of nonprofit organizations, McDonald (2007) suggests that innovation can enable such organizations to better serve their constituents and fulfill their missions. Determinants of organizational innovation

The literature reveals a lengthy list of variables found to influence organizational innovation. Several reviews (e.g., Anderson et al., 2014; Crossan & Apaydin, 2010; Anderson et al., 2004; Damanpour, 1991; Denti & Hemlin, 2012; Hűlsheger et al., 2009; Sears & Baba, 2011) offer helpful syntheses of the research on antecedents, mediators, and moderators of innovation within for-profit, nonprofit and public organizations. These reviews affirm that innovation is the result of a wide range of factors and that any study of innovation must take into consideration the level of analysis (i.e., organizational, team, or individual). Below, we briefly summarize the existing literature on organizational-, team-, and individual-level factors that influence innovation in organizations and provide additional background to the three factors that form the multi-level conceptual framework that underpins our research design: organizational climate, team processes, and leadership. Organizational-level factors: The role of organizational climate in innovation

At the organizational level, structure, strategy, size, resources, climate, and culture can all influence innovativeness in organizations (Anderson et al., 2004). For example, a positive correlation has been found between organizational size and innovation (Camisón-Zornoza et

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al., 2004). Employee diversity in education and gender can increase the likelihood of introducing an innovation (Østergaard et al., 2011), while absorptive capacity—the ability to recognize, integrate, and apply new knowledge—and organizational learning can affect the adoption of innovation (Seelos & Mair, 2012). This study focuses on climate as the organizational-level factor of interest and explores how specific elements of climate can be leveraged to support innovative outcomes. Organizational climate is “an intervening variable between the context of an organization and the behavior of its members” (Patterson et al., 2005, p.379). Climate is measured at the organizational level as an aggregate of team members’ perceptions and actions (Allen et al., 2013). While there is often conceptual overlap or confusion between culture and climate (McLean, 2005; Patterson et al., 2005), this study works from the distinction provided by Svyantek and Bott (2004): culture is made up of the predominant shared values, assumptions, and norms within an organization, whereas organizational climate is constituted by team members’ perception of practices and policies and their resulting patterns of behaviour. As collective patterns of behaviour in an organization, the climate reflects and impacts what actions are taken, what is deemed possible, and how team members interact with each other and with new ideas. Several dimensions of organizational climate have been related favourably to innovation (West & Anderson, 1996). For example, a climate that provides psychological safety for team members appears to positively influence innovation by making it acceptable to take risks without negative consequences and encouraging experimentation (Anderson & West, 1998; Baer & Frese, 2003; Madjar et al., 2002; West, 2002). In a study of 47 mid-sized firms, Baer and Frese (2003) found that when innovations were accompanied by climates that supported employee and group initiative, companies tended to perform better. Sears and Baba’s (2011) model posits that team-level climate affects work group members’ motivation to innovate, while the organization-level “climate for implementation” influences the adoption of new inventions. Furthermore, an innovation orientation appears to be supported by an organizational climate in which creativity is encouraged and learning processes are the norm (Baker and Sinkula, 2007; Bharadwaj & Menon, 2000; Martins & Terblanche, 2003; McLean, 2005). As noted earlier, we propose that innovative organizations would tend to reflect an Open Systems approach in their values, climate, and behaviour. Thus, this study defines an organizational climate through the lens of the Open Systems model. To operationalize a climate for innovation, we drew upon the Organizational Climate Measure (OCM) (Patterson et

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al., 2005), which was designed to measure aspects of climate related to each of the four styles of organization within the Competing Values Model. The three dimensions of climate that reflect an Open Systems approach are flexibility, outward focus, and reflexivity (Patterson et al., 2005). Flexibility is defined as an orientation towards change (Patterson et al., 2005). Flexible organizations tend to readily accept new ideas, adapt structures as needed, and respond quickly to changes. The literature provides contradictory findings on the role of flexibility in innovation. On one hand, autonomy afforded to team members and an ability to shift organizational structures have been posited to support idea generation (Naranja-Valencio et al., 2011). The earlier literature tends towards the view that organizational values such as control, stability, and predictability—often found in very hierarchical structures—will limit the development of new ideas and adaptation (Martins & Terblanche, 2003). More recently, it has been suggested that formality in procedures and rules may actually strengthen innovation in organizations as long as other elements of a climate supporting innovation are present; this is likely because of the importance of teamwork (Naranja-Valencio et al., 2011) or of adequate structure for team members to develop new ideas and carry them through to realization (Imran & Anis-ul-Haque, 2010). An organization that demonstrates outward focus is responsive to the needs of its constituents and its external environment (Patterson et al., 2005). Being aware of the needs of clients and of changes and opportunities in the external environment places an organization in a position to develop new and proactive programs and products. The literature on for-profit firms generally supports the link between market orientation and innovation. A firm’s learning orientation, directly related to the reflexivity component of climate, interacts with external focus to produce an effective mix of “adaptive-incremental” and “generative-radical” innovation while minimizing the firm’s dependence on copying the innovations of competitors (Baker & Sinkula, 2007). Thus, firms with high outward focus are more likely to foster innovation-oriented versus imitation strategies (Baker & Sinkula, 2007; Naranja-Valencio et al., 2011). Reflexivity refers to the extent to which groups reflect intentionally upon their objectives, strategies, and work processes (Patterson et al., 2005; Schippers et al., 2015). Reflexive teams are characterized by communication about group functioning, attention to long-term consequences, proactive adaptive behaviour, and detailed planning (Schippers et al., 2007). Reflexivity lends itself to strategic thinking and planning; when an organization is engaged in a

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critical reflection of ideas, it is better equipped to be discerning and make the right decisions (Schippers et al., 2015). By reflecting on and gathering insights from failures and successes, reflexivity also contributes directly to team and organizational learning (Schippers et al., 2014). Schippers et al. (2014) found that teams working under either high work demands or poor physical work environments were highly innovative if they used strong reflexivity practices. Collectively, flexibility, outward focus, and reflexivity—the three climate dimensions of an Open Systems approach—indicate an organizational climate supportive of innovation. Since the measurement of actual innovation levels is beyond the scope of this study, we use organizational climate as a proxy measure for organizational innovation, an approach validated in the literature (e.g. Sarros et al., 2008). Team-level factors: The role of team processes in innovation

Team-level factors that influence organizational innovation include team structure, composition, and work processes (Anderson et al., 2014; Anderson et al., 2004). In a meta-analysis of team-level variables, Hűlsheger et al. (2009) found that support for innovation, vision, and task orientation within teams were among the strongest predictors of creativity and innovation in organizations. West and Anderson (1996) identified team processes—specifically, support for innovation, participation, and task orientation—as the best team-level predictors of innovation in top management teams. Our study includes an examination of the team processes used during innovation scenarios within nonprofit organizations. Team processes are defined as "members’ interdependent acts that convert inputs to outcomes through cognitive, verbal, and behavioural activities directed toward organizing taskwork to achieve collective goals” (Marks et al., 2001, p.357). Distinct from tasks and their content, team processes refer to how teams engage in the work together. Goal setting, participation in decision making, and the management of competing perspectives are examples of common team processes that occur in organizations (Curral et al., 2001; West & Anderson, 1996). Hűlsheger et al. (2009, p.1128) have suggested that the most practicable advice for organizations would be generated by investigating the linkages between team processes and innovation, since “it is of course the case that within organizations new ideas will usually be proposed and pursued toward implementation by work teams”. Studies of organizational innovation focused at the team level of analysis are relatively uncommon, although team processes are often cited as one of many broad categories of factors influencing innovation

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capacity (Anderson & West, 1998; Anderson et al., 2004). A meta-analysis of 525 papers on organizational innovation found that only six percent investigated teams (Crossan & Apaydin, 2010, p.1162). Nonetheless, a growing number of scholars have demonstrated the crucial role of team processes in contributing to innovation (Anderson & West, 1998; Bharadwaj & Menon, 2000; Corner & Ho, 2010; Lee & Kelley, 2008). For example, a longitudinal study of hospital management teams found that group processes predicted the overall level of team innovation better than other variables such as group size, available resources, or the proportion of innovative team members (Anderson & West, 1998). Another study found that stronger team-level creativity mechanisms, such as procedures for creative problem solving and a formal idea generation program, resulted in significantly superior innovation performance even when the individual creativity of team members was low (Bharadwaj & Menon, 2000). Explicit processes that demonstrate support for creativity such as rewards and recognition also encourage organizational innovation (Hűlsheger et al., 2009; West, 2002; West & Anderson, 1996; Martins & Terblanche, 2003; Amabile et al., 1996). Relatedly, team processes that involve experimentation during work tasks as well as learning from failure have been found to foster innovation (Martins & Terblanche, 2003). Another team process that appears to influence organizational innovation is the management of conflict within teams (Martins & Terblanche, 2003; Marks et al., 2001; West, 2002). Shared leadership, participatory decision-making, and staff engagement have also been found by many scholars to be powerful processes that facilitate innovation (Hoch, 2013; Martins & Terblanche, 2003; Somech, 2006; West, 2002; West & Anderson, 1996; Jaskyte & Dressler, 2005; Shier, 2014). In this study, particular attention is being paid to the team processes that contribute to flexibility, outward focus, and reflexivity—three dimensions of organizational climate related to innovation (as per the Open Systems Model). Team processes that contribute to organizational flexibility could include adaptation of responsibilities in response to new opportunities, creative problem solving in response to task conflict, and “letting go” of previously maintained concepts or procedures when warranted (De Dreu, 2006; Vera & Crossan, 2005). Vera and Crossan (2005, p.207) have demonstrated how principles from improvisational theatre, such as “agree, accept, and add” and “be present in the moment,” shed light on what it takes to be flexible and innovative as a team. Team processes that manifest an external orientation in an organization include systems monitoring as a group to observe and track what is occurring in the external environment such as trends in their field, the experiences of constituents, or changing social, political, or economic conditions (Marks et al.,

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2001). According to Schippers et al. (2007), reflexivity is supported by two main processes: reflection and adaptation. Discussion and overt exploration of challenges and opportunities constitute reflection, which can relate to any time scale—from a short- to a long-term view—and can take place after a task has been completed, but also before and during implementation (West, 2000). Adaptation is the process of putting changes into action that were identified through reflection (Schippers et al., 2007). Individual-level factors: The role of leadership in innovation

When it comes to individual-level traits, employees’ tolerance for ambiguity, self-confidence, openness to experience, independence, proactivity, intrinsic motivation, determination to succeed, personal initiative, and managerial tolerance to change have all been demonstrated to influence organizational innovation (Anderson et al., 2004). Leadership style, in particular, has garnered much attention and is often linked to innovative outcomes (Allen et al., 2013; Sarros et al., 2008). Although individual-level factors are not a primary focus of this study, nonprofit leaders are our primary source of data and leadership is recognized as a key element in our conceptual framework. Leadership is integral to fostering innovation in organizations, and in turn, their success. Leaders “encourage intrinsic motivation, facilitate problem solving, and establish and maintain high quality work relationships with team members” (Denti & Hemlin, 2012, p.2). Various studies have shown that senior executives can spearhead innovation by creating climates in support of innovation (Damanpour & Schneider, 2006; Damanpour, 1991; Allen et al., 2013; Imran & Anis-ul-Haque, 2011). Leaders can also promote innovation in their role as managers by directing resources and setting goals towards innovative outcomes (Denti & Hemlin, 2012). Crossan and Apaydin (2010) identified two main mechanisms through which leaders foster organizational innovation: managerial levers and business processes. In our framework, organizational climate is seen as a managerial lever that leaders can shift and adjust through their use of team processes. Leadership style can affect the type of team processes implemented and climate created in an organization. The transformational leadership style, in particular, is often linked to innovative climates (Allen et al., 2013; Sarros et al., 2008). Transformational leadership includes four groups of behaviours: intellectual stimulation, charisma or idealized influence, inspirational motivation, and individualized consideration (Gong et al., 2009). According to Oke et al. (2009, p.65), transformational leaders “act as change drivers, actively involved in creating an environment and culture that foster change and growth.” Transformational leadership has

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been found to foster climates for change and for creativity through supportive supervision, articulation of clear goals, and building trusting relationships (Allen et al., 2013). This leadership style also leads to the adoption of a shared vision within a team, which is associated with team reflexivity (Schippers et al., 2007). As well, there is evidence that transformational leadership encourages teamwork cohesion, which promotes organizational learning (Montes et al., 2005). Somech (2006) found that, in functionally heterogeneous teams, a participative leadership style —in which decision-making is shared—was positively associated with team reflection. Several studies have found that leadership style and organizational climate can reinforce each other to foster greater organizational innovation. A study of 50 companies identified a direct and positive relationship between CEO’s transformational leadership and organizational innovation, which was greater when there was a strong climate of support for innovation (Jung et al., 2008). Similarly, Eisenbeiss et al. (2008) found that when there is a climate for excellence, transformational leaders foster support for innovation, which leads to team innovation. Imran & Anis-ul-Haque (2011, p.193) confirmed that “transformational leadership facilitates the open system model of organizational climate characterized by flexibility and external focus that in turn positively affect the innovative work behavior.” The need for research on multi-level innovation

A prevailing theme emerging from the literature on innovation is the need for approaches, in both research and practice, that holistically take into account individual-, team,- and organization-level factors simultaneously. As Sears and Baba (2011, p. 367) cogently state, “A multi-level approach to studying innovation will enable more systematic and synergistic research and greater cross‐fertilization of ideas, and should pave the way for a more convergent and progressive innovation literature”. Bharadwaj and Menon’s (2000) study of mechanisms that facilitate both individual creativity and organizational creativity as well as Denti and Hemlin’s (2012) review of the factors that affect the relationship between leadership and innovation are examples of the emerging multi-level research on innovation. By exploring the linkages between leadership, team processes, and organizational climate, this study seeks to contribute to the growing understanding of the multiple levels of innovation determinants. The need for research on nonprofit innovation

It is important to note that few studies have examined or modeled the determinants of organizational innovation specific to nonprofits, as private sector firms have been the subject of most innovation studies (Allen et al., 2013; Dover & Lawrence, 2012; Jaskyte, 2011).

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Considering the numerous differences between the two sectors regarding their objectives, values, sources of funding, labour force, and stakeholders, insights from the private sector are not readily transferrable to nonprofit and charitable organizations (Dover & Lawrence, 2012; Hull & Lio, 2006). Meanwhile, public sector innovation has garnered increasing attention among scholars in recent years; however, it is unclear whether findings from the nascent field can be simply ported to the third sector (Bloch & Bugge, 2013; Agolla & Van Lill, 2013). Scholars are only beginning to address this gap in the literature and produce research on third sector innovation. For instance, Beekman et al. (2012) propose a positive relationship between the entrepreneurial orientation of key staff and board members and the level innovation in a nonprofit organization. In a study of social service organizations, Jaskyte and Dressler (2005) found that a cultural consensus on values such as stability, security, and predictability was related to lower levels of innovation, whereas values such as willingness to experiment and risk taking led to more innovation. Dover and Lawrence (2012) suggest different forms of power come into play at each stage of the innovation cycle in nonprofit organizations. While these developments appear promising, few studies focused on nonprofit organizations address the multiple levels of innovation determinants and specifically the link between team processes, organizational climate, and innovation. The relationship between leadership, climate, and organizational innovation may be especially salient for nonprofit and charitable organizations, given that they typically feature some degree of shared leadership among the board of directors, executive director, and senior executives. Further research can produce insights into how nonprofit organizations and the sector as a whole can continue to build capacity for innovation. By focusing our sample on nonprofits, specifically registered charities, this study helps to fill the gap in research on third sector innovation.

Conceptual framework: Linkages between leadership, team processes, climate, and innovation

This study focuses on how nonprofit leaders use team processes to create organizational climates that support innovation. Figure 2 illustrates a framework describing the relationships we hypothesize between these key concepts. This framework identifies leaders as important facilitators of team processes within an organization. Team processes that encourage flexibility, outward focus, and reflexivity can contribute to a climate that supports innovation, which in turn, leads to organizational innovation.

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Summary

In summary, the literature on organizational innovation, while rich, lacks theory and evidence specific to the nonprofit context. The Open Systems approach to achieving organizational effectiveness has been confirmed to support innovation through its emphasis on adaptation and growth, and this study contributes to this body of literature by investigating how elements of organizational climate associated with the Open Systems approach are manifested in nonprofits. In addition, the literature reveals growing scholarly acceptance of the wide range of individual-, team- and organization-level factors that impact an organization’s degree of innovativeness. This study, with a view to practical applications, aims to help answer the question: How can leaders, managers, and teams work better to foster innovation? Specifically, we identify team processes used by Canadian charities during their innovation processes and explore the role of leaders in fostering a climate of flexibility, outward focus, and reflexivity.

Figure 2. Proposed model of relationships between leadership, team processes, climate, and innovation

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RESULTS Summary of research design

To explore how leaders of medium-sized Canadian charities use team processes to foster organizational climates in support of innovation, we used a concurrent triangulation mixed methods design that included both qualitative and quantitative data collection. Qualitative data were collected via open-ended semi-structured interviews with 18 participants conducted in spring 2015. Quantitative data were obtained via an online survey completed shortly after the interview. In addition, interviewees were asked to forward the survey to colleagues who could complete it voluntarily. See Appendix A for a full description of the research design. Participating leaders and organizations

A total of 18 registered charities from across Canada participated in the study: 15 organizations were based in Ontario, one in Alberta, one in British Columbia, and one in Quebec. As shown in Figure 3, the organizations’ primary activity areas spanned several focal areas from social services to volunteerism. In terms of geographical scope, nine organizations worked on a national scale, two on a provincial scale, and seven on a local scale. A wide range of organizational structures was reported across the sample, from relatively flat to hierarchical with several levels of supervisory relationships among staff. In keeping with the focus on medium-sized charities, participating organizations employed an average of 10 full-time employees, ranging between 4 and 17 full-time staff at the time of data collection. Participating organizations had a relatively young employee base. For most organizations (n=11), the average age of employees was estimated at 35-44 (Figure 4).

22%

22%

22%

17%

11%6% Environment

Philanthropic Intermediaries and Voluntarism

Social Services and Community Development

Education and Research

Health

Arts and Culture

Figure 3. Primary activity areas of participating organizations

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Each of the 18 interviewees was a senior-level employee at their organization, with 10 as the most senior-level employee (i.e. Executive Director, Chief Executive Officer). In addition, the sample included six directors and two managers. Three respondents identified as male (17%) and 15 as female (83%). The average length of time they had worked at the organization was six years, and their average number of direct reports was five. The age of respondents ranged from 29 to 66 years, with one third of leaders aged 34 years or younger. The average age of respondents was 44. Survey results

Each of the 18 interviewees completed the online survey on behalf of their organizations (see Appendix C for survey questions). In addition, five other staff from two of the participating organizations completed the survey, for a total of 23 respondents. Quantitative data obtained from the survey were used to corroborate interview responses and determine whether respondents perceived their organizations to have a climate that supports innovation. For organizations with more than one survey respondent, the average of the responses on organizational climate measures were used in analysis. Perceptions of organizational climate

The survey drew on existing measures of climate (Patterson et al., 2005; Schippers et al., 2007) in order to examine respondents’ perceptions of three elements of their organizations’ climate for innovation: flexibility, outward focus, and reflexivity. Respondents rated their organizations on 16 items, including statements such as, “If we are successful as a team, we take the time to analyze how we achieved this,” (reflexivity) and, “This organization is quick to

Figure 4. Average age of employees at participating organizations

6%

65%

29% 45-54

35-44

25-34

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respond when changes need to be made” (flexibility). Items were measured on a 5-point Likert scale, anchored by “1 - strongly disagree” and “5 - strongly agree”. The direction of the scales were reversed for some items to prevent acquiescence bias, for example, “This organization is quite inward looking; it does not concern itself with what is happening in the field” (outward focus). It is important to include some negative statements to help counteract the general tendency of survey respondents to agree rather than disagree. Cronbach’s alpha (α) was used to check that the internal consistency of items within each of the three scales (flexibility, outward focus, and reflexivity) met a minimum reliability of 0.60 before they were combined (Table 1). This test helps confirm if multiple items in a set are closely related or not and therefore if a scale in a survey is reliable. In this study, responses to one particular item in the flexibility scale were so different from the other items that the item was removed from analysis.

Table 1. Internal consistency of organizational climate scales

Number of items Cronbach’s Alpha (α) Flexibility 5 (one item removed) 0.624 Outward Focus 5 0.664 Reflexivity 6 0.723

Of these three elements of a climate supportive of innovation, respondents rated their organizations highest on outward focus and lowest on reflexivity (Table 2). Most organizations (78%) perceived themselves to be very strong in their awareness of and responsiveness to the external environment.

Table 2. Ratings on organizational climate in support of innovation

Average score of organizations

# of organizations rated very strong (≥ 4.5)

% of organizations rated very strong

Flexibility 4.1 4 22% Outward Focus 4.6 14 78% Reflexivity 4.0 3 17%

The average score of each of the three scales were then summed to create a single “innovation score” out of 15. Scores ranged from 10.1 to 14.3. To allow for comparative analysis, organizations were classified as being perceived as having “very strong”, “strong”, “moderate”, and “weak” climates for innovation based on their innovation score (Table 3).

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Table 3. Classification of organizational climates for innovation

Score Perceived Organizational Climate # of organizations

% of organizations

13.5 - 15 Very strong innovation score 6 33%

12 - 13.4 Strong innovation score 7 41%

10.5 - 11.9 Moderate innovation score 4 24%

9 - 10.4 Weak innovation score 1 6%

As a self-reporting tool, the survey and the above classification by perceived strength of innovation climate served to inform our understanding of this sample of leaders. Survey results established that the majority of leaders in the sample rated their organizational climate as strongly supportive of innovation across the three measures. We therefore assumed that their opinions and team processes, which were the basis for the study’s insights into best practices, are worthy of analysis. We recognize the limitation of self-reported measures, however, and recommend that future studies include an initial external evaluation to identify a sample of ‘leading innovators’ in the sector. It should also be noted that, for each of the two organizations where multiple staff completed the survey, the team average of the overall “innovation score” was lower than the leader's individual responses, moving one organization to a lower category of climate for innovation. This result, while based on a small sample, indicates that aggregate team scores would be a valuable measure and comparisons between leaders’ and other team members’ perceptions of organizational climate would be a fruitful topic for future studies. Interview results

During interviews, respondents were asked to describe examples of innovation in their organizations, including those that were successfully implemented and those that were explored but not implemented or tried but not sustained. Respondents were also asked what their teams did well and what they could improve upon to create an organizational climate that supports innovation. See Appendix B for interview questions. The 18 interviews were coded for the presence of team processes and climates of flexibility, outward focus, and reflexivity. In addition, other factors that emerged as important to organizations’ innovation processes were extracted. In total, 6 main themes and 41 subthemes emerged during analysis. The main

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codes were “flexibility”, “outward focus”, “reflexivity”, “other innovation factors”, “team processes”, and “challenges”. Appendix D lists the full list of codes used in analysis. Evidence of flexibility in organizational climates

All of the interviewees cited instances or evidence of an organizational climate supportive of flexibility in their responses. Flexibility is demonstrated by an orientation towards change and the ability to adapt organizational structures and processes as needed. In describing their innovation scenarios, the majority of respondents mentioned the creation or revision of programs and strategies (n=15), while fewer cited changing their team responsibilities and structure (n=6).

“If you put too much structure on things it can be overwhelming. Elastic is best, sometimes stretched and other times a bit more slack. There is a fine line between being too slack and too stretched.” (Leader, volunteerism & intermediary organization with a moderate innovation score)

The most commonly cited indicator of flexibility was that their organization was “willing to try new things” (n=17). When sharing examples of innovations that had been successfully implemented, leaders often spoke of openness within their teams to new ideas, approaches, and/or methods to solving problems or addressing needs. These organizations tended to be open to failure and to embrace trial and error approaches.

“We just try something. If it sucks, we go back, no big deal. There is no decision that can be unmade. Fail fast, fail better!” (Leader, volunteerism & intermediary organization with a very strong innovation score) “The tone that is set within the organization...is that we have never shied away from taking on challenges. We always had the gumption to do big things and not be hindered by the risk of failure because that is part of it.” (Leader, environmental organization with a very strong innovation score)

However, three organizations also identified the need to balance the desire to say “yes” with a willingness to say “no” and to be strategic in the adoption of new ideas.

“We tend to seize opportunities and say yes first – maybe sometimes more than we should. We have to find a reason to say no to something than to say yes to something.” (Leader, health organization with a strong innovation score)

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In organizations that demonstrated a propensity towards taking risks, leaders also described the climate as one in which staff felt comfortable suggesting new ideas. Leaders worked to foster this innovative climate by encouraging idea generation at team meetings, asking questions that challenged the status quo, and empowering staff to “run with an idea”. As one leader remarked, building a climate of flexibility is not always easy and requires intentional efforts:

“Sometimes, experience and age put you in a mindset that can shut down innovation because you have seen things fail or have an idea of where you want it to go… I have to work to open myself up and say, ‘Any idea, put it on the table.’” (Leader, environmental organization with a strong innovation score)

Another type of flexibility that emerged in the majority of respondents’ innovation scenarios (n=10) was the ability of the organization to respond quickly to challenge or opportunity. Often in response to external conditions, such as sudden changes in funding or policy, leaders described how their organizations were able to bring key staff together and gather information in a short period of time to expedite problem solving. Leaders associated their organizations’ ability to act quickly with a small organization size, flat structures and few bureaucratic processes, a pre-existing orientation toward seeking new opportunities, and/or having a clearly articulated mission and vision that facilitated decision making. As three participants noted, there can be a tradeoff between moving fast and ensuring that other staff are involved in the process.

“When timing is right, we can go quickly… Sometimes we have to give up informing everyone… We have a clear vision so it’s easy to be quick because we know what we want.” (Leader, social services and community development organization with a moderate innovation score)

Evidence of outward focus in organizational climates

Organizations in the sample demonstrated a strong orientation towards their external environment, corroborated by both survey and interview data. Each leader mentioned at least one instance of outward focus when describing instances of organizational innovation. Leaders indicated a high level of attention to their primary audience: the participants or public they serve (n=16). Innovation was often driven by a goal to make an organization’s programs more effective and impactful and in a few cases by direct requests from participants.

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“Most of our projects evolve out of people asking us for help or assistance – people interacting directly with us from the public. Then we figure out programs or tools to meet that need or fill that gap.” (Leader, environmental organization with a moderate innovation score)

“The staff team and the ED heard from community that they need to do it”. (Leader, volunteerism & intermediary organization with a strong innovation score) “It started with looking at what was going on with the clients. Our clients’ mental health wasn’t well-managed in the community.” (Leader, social services and community development organization with a very strong innovation score)

Consultation with stakeholders was also frequently cited during the exploration and development phase of a new program or service.

“We had an initial meeting with our stakeholders to see if [the new program] would be an appropriate fit.” (Leader, social services and community development organization with a strong innovation score) “We talked to communities to see if they really wanted to do [the new program format].” (Leader, volunteerism & intermediary organization with a very strong innovation score)

The other most common type of outward focus cited by leaders was paying attention and responding to funding opportunities or changes (n=16). In some instances, a reduction in funding was a major factor that led the organization to develop a new program or approach. In other cases, the emergence of a funding opportunity prompted organizations to develop new projects. In two cases, a funder or benefactor approached the organizations with an initiative in mind, which was then pursued and implemented. Organizations also appeared to be paying attention to new ways to finance their activities, as the innovation examples provided by three respondents involved the development of fee-for-service and social enterprise initiatives. One leader remarked that there is a complex relationship between the external funding environment and nonprofit innovation:

“We have to drum up funds just like a project every year for our expenses. That constrains processes and implementation of innovation. Financial pressure and accountability to funders can really throw little chinks into people’s ability to think freely, act freely, respond, initiate and stimulate change processes. At the same time, working without a lot of

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resources, you are constantly innovating to figure out how to do something; that can stimulate a lot of creativity.” (Leader, arts & culture organization with a moderate innovation score)

Many organizations also demonstrated that they paid attention to nonprofit field trends and the actions of other organizations (n=12), non-client stakeholders and experts (n=6), policy and government priorities (n=6), and technology and availability of new tools (n=4). Some organizations got ideas for new programs or approaches from observing other organizations. Several leaders described changing or rethinking their programs to avoid duplication by organizations in the same field. Many of the innovations cited came about in response to large-scale socio-economic changes, such as worsening environmental conditions, a strike, reduced public awareness of an issue, massive industry layoffs, or a natural disaster leading to new community needs. Three leaders described how, when a change in government policy was introduced, their organizations rethought their entire strategy, as opposed to only programs or activities. Several organizations also scanned the external environment while assessing an idea to see if a need was already filled by public agencies, evaluate similar programs being undertaken by others, and get feedback from non-client stakeholders. As one leader stated, “outside drivers can change things fundamentally.” Evidence of reflexivity in organizational climates

Evidence of reflexivity was found in each of the 18 participating organizations. Reflexivity, or the intentional reflection by teams on objectives, strategies, and work processes, occurred formally as well as informally within participating organizations. Teams reflected on a variety of subjects during innovation processes, including organizational goals and strategy (n=14), program implementation (n=13), and internal processes (n=10). In some cases, new problems or areas of need emerged while the team was reflecting on the progress and delivery of their current programs, resulting in idea generation. In other instances, reflexivity was practiced during the idea exploration phase. For example, one leader facilitated a decision-making process with staff to determine whether to meet a funder’s request to implement a new program; she wrote the organization’s values on a whiteboard and asked staff to discuss the question, “If we didn’t care about resources, would we be doing this?” Building in the time to reflect during regular operations appears to be especially important in creating a climate of reflexivity. Unlike organizational flexibility, which requires being quick to respond, reflexivity calls for pausing and taking a step back. Most organizations in the sample

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used staff retreats and strategic planning sessions to create space for reflection. Many leaders had also integrated reflection into their regular group meetings, while others aspired to this use of team meetings. One leader noted that creating space to think deeply sometimes requires pausing conversations with: “Let’s all think about this and we’ll talk about it next time”.

“There is an ongoing conversation about how we can do more and be more helpful to people. This is quite healthy, I think, the constant quest to do better. That idea of constant innovation and change is built into everything we do, right down to the work that our summer students are doing.” (Leader, environmental organization with a moderate innovation score)

Interview responses aligned with existing research on the link between reflexivity and organizational learning. Reflecting upon an unsuccessful innovation, one leader from an organization with a strong innovation score remarked, “In the spirit of entrepreneurship, this was a huge failure. So what are we learning from it? Our team talked at every meeting and created a space where we could be honest about how hard it was.” Several organizations identified professional development as important to reflexivity, as well as mechanisms to transfer individual learning to organizational learning.

“We are a learning initiative and approach things from a curious place—appreciative inquiry versus a more performative process. We are just always asking a lot of questions. Instead of ‘Oh this didn't go well,’ we ask ‘What can I learn? What can we learn?’” (Leader, arts and culture organization with a moderate innovation score)

“This culture is really good at learning from itself. We do quarterly team reflections where people talk about what they’ve tried, and how it has worked, to make explicit all the things that are being learned.” (Leader, environmental organization with a strong innovation score)

The use of evaluation, research, and data analysis was the most commonly cited indicator of reflexivity (n=16), and it occurred throughout the innovation process to guide idea initiation, adoption, and implementation. Organizations mentioned different research and evaluation approaches, including developmental evaluation, cost-benefit analysis, market research, and policy analysis. Organizations that engaged in primary research collected data through focus groups, interviews, and surveys of stakeholders and through online metrics (e.g., website traffic).

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“We try to incorporate data in a lot of our decision making and not be precious about our own ideas on what we think is right. For example, if we have published an article that we think is great, we will see if people are responding well and if it is getting traction – not just responding to our gut or what we believe is good.” (Leader, environmental organization with a moderate innovation score)

The ability to identify and measure success helped leaders and boards make decisions strategically. One leader described how their organization decided to let go of certain activities because “there were no metrics to measure impact.” Leaders created a climate of reflexivity by making research and evaluation a priority and by building internal evaluation expertise.

“Originally we had an external consultant come in to help embed evaluation, but we only got serious about this when someone in-house had the expertise and had my backing to take it seriously… Now we have a rigorous evaluation process that is guiding decisions. We have meetings every month with the programs team to learn about evaluation.” (Leader, health organization with a strong innovation score)

“We are data nerds, constantly taking in key data points about the programs and analyzing the data. We often make data-driven decisions.” (Leader, volunteerism & intermediary organization with a very strong innovation score)

Other factors related to innovation practices

In addition to the three focal elements of organizational climate—flexibility, outward focus and reflexivity—some non-climate factors were cited by respondents when discussing their organizations’ innovation processes. The most common non-climate factor was organizational structure (n=12). Participating organizations represented a variety of organizational models, including, in respondents’ words, “hierarchy,” “horizontal,” “hybrid flat structure,” “a lean structure with not a lot of hierarchy”, “no management team—the Executive Director works with everyone,” and “we are not a hierarchy—we are all one big team.” One leader described the organizational structure thus: “It is not really a top down approach. We know who’s reporting to who and who’s collaborating with who, but we keep it as flat as possible.” Leaders frequently referred to the organization’s structure—including accountability lines, decision-making roles, and linkages across departments or practice areas—when explaining both successes and challenges with innovation. A number of respondents also mentioned that restructuring processes took place recently or were in progress. The findings suggest that many leaders perceive a relationship between how roles and responsibilities are arranged and

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the success of the organization in being innovative or, more broadly, fulfilling its mandate. Team composition (n=11) was the second most common non-climate factor of innovation discussed by leaders. Seven of the 18 organizations mentioned the importance of having people on the team that possessed individual-level qualities and skills oriented towards innovation, including:

“able to identify opportunities and potential”

“[able to] step back and ask, ‘Where are we going?’”

“big picture thinkers, willing to step out on a limb, willing to try something that has never been done before”

“have the capacity for thinking about big ideas and be able to sell the big ideas, to pitch them [to potential funders and partners]”

“skills and character to reflect and share what they are learning as well as follow through” Other respondents mentioned specific types of skills, including evaluation, subject matter expertise, and business backgrounds, that helped the organization to develop new programs or approaches. Several leaders talked about the importance of recruiting staff that would help to create or sustain the culture and climate they aspire to:

“We are seen as an organization that is open to innovation and trying new things. We need to continue to attract board members and staff that have that same organizational culture and thinking.” (Leader, environmental organization with a very strong innovation score)

“This team is who has helped build this organization... We hire for fit with the team over education. All of our team have lived experience, either themselves or their family, with [the social challenges addressed by the organization]. That is first and foremost. Then we will look at their experience along with their fit – that is why the whole team interviews [when hiring new staff]”. (Leader, social services and community development organization with a very strong innovation score)

Other innovation factors mentioned by multiple leaders included the board-staff relationship (n=8), drawing upon external expertise such as consultants and facilitators (n=8), the layout of their work space and getting out of the office for individual and team reflection (n=5), and

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internal systems for knowledge and information management (n=3). Team processes used during innovation

All of the leaders interviewed identified several team processes used in their organizations in the process of developing and implementing innovation. Informal conversations (n=11) played an important role in facilitating idea generation in several organizations. According to one leader, informal discussions between small groups of staff are “where most things happen” and can be more effective because they “happen without anyone having to force them through.” Another leader remarked that informal conversations helped to ensure that their work remained relevant by allowing an unstructured space where staff could share ideas that they may otherwise feel uncomfortable sharing in a structured meeting. Most of the team processes cited occurred during team meetings. Leaders shared instances of both small-group meetings (n=11) and all-staff meetings (n=15) in their examples of organizational innovation. Some leaders seemed to rely more on meetings with their main work groups, such as a management team, whereas others favoured meetings with the entire staff.

“What I don’t do is have meetings with [the management team]. My fear is that if I have a team of 10 and I meet with only four, then that means half the team is in the inner circle and half are not. In such a small organization, that would make it a two-tier situation.” (Leader, volunteerism and intermediary organization with a very strong innovation score)

“Simple decisions are made by the directors team – why bring them to a staff meeting and waste everyone’s time?” (Leader, social services and community development organization with a strong innovation score)

Meetings varied in frequency, duration, format, and content and by the organization’s size, structure, and even its location. One effective strategy cited by many leaders was holding high-level team meetings; instead of giving a laundry list of updates, they devoted time to innovation-generating processes, such as brainstorming, discussion, problem solving, learning, and reflection. For instance, at one organization, staff reviewed organizational goals at team meetings and discussed how each person’s work connected to those goals.

“Every Tuesday, we have a standing meeting. Everyone stands in the front foyer and brings forward immediate ideas or areas that need support. They are 20 to 30 minutes and high-

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level. Everyone is free to brainstorm, no matter who they are or what their level. Everyone can think of how can we help each other to reach our goals.” (Leader, education and research organization with a very strong innovation score)

“We have ‘collaboratories’. Once a week, we take an hour, and anyone on the team can present a problem for general discussion.” (Leader, health organization with a very strong innovation score)

“At team meetings, we always go around and share an ‘awesome’ and a ‘failure’ that has happened in the last two weeks.” (Leader, volunteerism and intermediary organization with a very strong innovation score)

“The organizational objectives are focal points for staff meetings. We learn about what each person is doing and talk about the connection to our goals. Across people’s functions, this gives everyone a sense of how different programs fit together. Team members understand what role they can play to amplify the work of others without management having to dictate.” (Leader, environmental organization with a moderate innovation score)

Many leaders emphasized that, for these brainstorms and discussions to be productive and lead to innovation, there must be open and honest communication within the team (n=10).

“We have worked very hard to have a no blame, no failure, ‘question sacred cows’ approach. Any question is on the table. We throw things up for debate just to test them.” (Leader, health organization with a strong innovation score) “The three of us feel we can have an open conversation. The delicate stuff can be talked about… Having that openness in your culture is really important to being effective.” (Leader, environmental organization with a strong innovation score)

“Misunderstandings are fewer because people are willing to make a statement and ask for an explanation.” (Leader, environmental organization with a strong innovation score)

Leaders worked to build a space where staff would feel comfortable sharing and exploring ideas by affirming all contributions (n=11), encouraging the questioning of ideas (n=12), and/or via an open door policy (n=3) in which leaders encouraged any staff member to meet with them when needed. In one organization, all staff completed a strengths assessment and

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discussed each individual’s strengths as a team. This process contributed to a climate of respect and affirmation necessary for innovation.

“You get innovation when people feel valued, feel that their ideas matter, and when they know that they are participating in creating something.” (Leader, arts and culture organization with a moderate innovation score) “I have an 80/20 rule. If the idea [from the team] is 80% fabulous, I try not to comment on it unless I feel strongly it needs to be changed.” (Leader, volunteerism and intermediary organization with a strong innovation score)

Some leaders described setting the tone for idea generation and exploration through careful listening and soliciting and accepting feedback from staff. One leader from an organization with a strong innovation score would set the context before a meeting by asking staff to focus on the positive and reminding them that feedback is meant to be supportive, rather than be critical. She found that this reduced the tendency of staff to take feedback too personally. Another leader from an organization with a very strong innovation score invited staff to intentionally practice how to ask questions and challenge assumptions in a respectful way.

“I believe you have to be prepared to put yourself out there and take hard questions. The best place to do it is in the safety of your own team.” (Leader, environmental organization with a strong innovation score)

“I work from an empowerment model of leadership... I want staff to think outside of the box and I don't want to shut them down each time they have these type of ideas. I expressed my doubts [about a team member’s new program idea] and we talked about how to reduce barriers to the success of the program.” (Leader, social services and community development organization with a very strong innovation score)

Collaboration across departments or functions, cited by a large majority of leaders (n=15), also appeared to be crucial to creating a strong innovation score within organizations. In many of the examples shared, leaders played a significant role in fostering cross-departmental collaboration by including different groups in team meetings, ensuring that roles were clearly defined and communicated, and by encouraging departments to support each other. One organization even made it mandatory for the leadership team to be directly involved in the program so that they would know what it was like on the ground.

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“We meet very much across departments because what we find really helps is the different perspectives that are brought forward from other departments and other areas of focus.” (Leader, education and research organization with a very strong innovation score) “The staff who work here don't work in silos. Even though you might be focused on a program, we are always clear that we are a staff team that supports each other. The organizational culture supports innovation.” (Leader, environmental organization with a very strong innovation score)

Many leaders viewed the staff as one team where each person had a role to play regardless of status or position. A majority of respondents cited staff engagement in shared decision-making (n=14) when they described their innovation scenarios. These leaders believed that consensus, delegated authority, and other participatory processes contributed to team members’ sense of ownership over their work and created more buy-in to changes.

“Nobody wants to read the manual and execute it. If they are part of creating it, they will believe in what they are doing. We involve the people who work on the ground to own the tools we use and change them.” (Leader, social services and community development organization with a strong innovation score)

“Everything here is done as a team, from major decisions to hiring; we even do team interviews. My job would be a lot quicker and easier if I just did things myself and told staff about it later! But it would not make a very good work environment for the team.” (Leader, social services and community development organization with a very strong innovation score)

Other leaders expressed challenges with finding the balance leading and facilitating innovation and participatory processes.

“Sometimes to the detriment of our decision making, our management team is too consultative of our coordinators. We need to learn to trust in the fact that we [the management team] are carrying processes forward.” (Leader, arts and culture organization with a moderate innovation score)

One third of the organizations mentioned the use of staff retreats (n=6), where the team would meet off-site for one day to one week. These retreats contributed directly to a climate of

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reflexivity by providing a dedicated space and time for staff, and sometimes the board of directors, to reflect on successes and challenges, realign with the organizational mission, and plan for the future. For example, one organization took this opportunity to map out the organization’s programs using Holling’s adaptive cycle5 to understand where each program was situated and next steps for adaptation. Another leader mentioned the use of Art of Hosting6 processes and liberating structures7, such as world café8 and open space9, to facilitate open dialogue and collaboration. Other strategic planning processes cited by leaders included setting goals and themes for the year, scenario planning10 to visualize and evaluate different strategies, and discussing conditions in the external environment that would affect their work.

“We have typically had a summer incubator where we close for one week and have a full organizational reflection on what’s been happening and where we are at with our strategy. We just had ours recently and we realized, oh my goodness, we are growing [as well as other external factors influencing the organization].” (Leader, arts and culture organization with a moderate innovation score)

“During a strategic planning session with the board and staff, we saw what activities were having most impact short term and long term results on teachers and students. We saw that our outdoor programs were where people returned as participants and stayed involved with [our organization].” (Leader, environmental organization with a very strong innovation score)

Four leaders cited the use of play, creative activities, and fun time together with staff as supporting innovation. These can occur during regular meetings as well as at team retreats. 5 Holling, C. S. (2001). Understanding the complexity of economic, ecological, and social systems. Ecosystems, 4, 390-405. Retrieved from http://www.esf.edu/cue/documents/holling_complexity-econecol-socialsys_2001.pdf 6 http://www.artofhosting.org/ 7 Kimball, L. (2011). Liberating structures: A new pattern language for engagement. OD Practitioner, 43(3), 8-11. Retrieved from http://c.ymcdn.com/sites/www.plexusinstitute.org/resource/resmgr/files/odp-kimball.pdf; and Lipmanowicz, H., & McCandless, K. (2014). The surprising power of liberating structures: Simple rules to unleash a culture of innovation. 8 Brown, J., & Isaacs, D. (2005). The world café: Shaping our futures through conversations that matter. Oakland, CA: Berrett-Koehler Publishers. 9 O’Connor, D., & Cooper, M. (2005). Participatory processes: Creating a "marketplace of ideas" with open space technology. The Innovation Journal: The Public Sector Innovation Journal, 10(1). Retrieved from http://www.innovation.cc/peer-reviewed/oconnor_open_space_tech_innovate2final_v10i1a8.pdf and Owen, H. (2008). Open space technology: A user's guide. 10 Shell International BV. (2008). Scenarios: An explorer’s guide. Retrieved from: http://s05.static-shell.com/content/dam/shell/static/public/downloads/brochures/corporate-pkg/scenarios/explorers-guide.pdf. and Meinert, S. (2014). Field manual: Scenario building. Brussels: European Trade Union Institute. Retrieved from https://www.etui.org/Publications2/Guides/Field-manual-Scenario-building

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“When our organization runs well, there is an affirmation of silliness, play, loosening up, and stimulating creative thought. We use the arts in our meetings structure and evaluation. They are actual arts education exercises that generate energy and help us recognize the power that is created when we are together.” (Leader, arts and culture organization with a moderate innovation score)

Several leaders mentioned the role of professional development in fostering organizational innovation (n=6). In particular, two leaders questioned the traditional format of professional development and pushed their staff to expand their learning in creative ways. Some leaders actively encouraged staff to engage in professional development and provided opportunities for staff to share their learning with the team. One leader from an organization with a very strong innovation score worked to ensure that staff felt comfortable taking the time to engage in professional development by being vocal about their own learning activities. For instance, she would say out loud in the presence of staff, “I am taking this book and going across the street to the coffee shop to read.”

“In the spirit of innovation, what is professional development? It can be [working with] a coach, [serving] on a board of directors, joining a play, or getting out of your comfort zone.” (Leader, volunteerism and intermediary organization with a strong innovation score)

Although not directly a team process, some leaders used individual check-ins (n=5) as an opportunity to reflect upon or improve team functioning. For instance, one leader had been working to shift the climate towards more openness by encouraging more feedback and scrutiny on ideas at team meetings. She highlighted the importance of ensuring alignment and positivity on a one-on-one basis as well as within the team:

“Post meetings, I would have one-on-one check-ins with people who had put the [idea] forward, just to check in on how did they feel about it or if they had any concerns. It took a lot of management discussions to get others to trust the process.” (Leader, environmental organization with a strong innovation score)

Challenges in building a climate for innovation

When asked an open-ended question about what they would like to improve in their organizations to strengthen a climate for innovation, all but one respondent were able to identify challenges (see list of challenges and their frequency in Appendix E). Some leaders identified improvements that would support the idea-generation phase of innovation, including more time for visioning and planning ahead, physical work spaces more conducive to sharing

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and discussion, encouraging creativity by all staff, and connecting more with constituents. The most frequent type of challenge mentioned by leaders was related to managing innovation processes once they were in motion. Two respondents wanted to have more structured internal processes to support innovation. There was a sense that during busy periods, agreed-upon steps were sometimes forgotten. The annual budgeting process posed a challenge for one organization because it limited resources that could be devoted to new ideas emerging mid-year. Learning to let go of less strategic or unsuccessful programs in order to avoid overstretching internal capacity was another cited challenge. Some leaders struggled to manage expectations when staff members’ creative ideas could not be pursued. Whereas one leader contemplated the ways to support a team in which staff had varying reflection styles, ranging from immediate processing to needing lots of time to reflect, another felt that their organization would benefit from less, not more, reflection before making a decision. Several respondents also aspired to increasing the capacity of their whole team to support innovation. Professional development, training, and better information sharing among the team and across time were identified as improvements that would equip staff to contribute to innovation. Some leaders felt that more shared leadership and involvement of other staff in developing ideas would improve their organizations’ overall ability to innovate. Three organizations identified opportunities for improvement in the communication from leaders to staff during innovation processes; when leaders felt they had to make decisions or act upon opportunities quickly, new information was not always shared in a timely or effective way with the team. On the other hand, one respondent felt that their organization could improve communication from staff to leaders so that innovative ideas filtered upwards. Some respondents identified additional improvements that could be made to their organizations’ leadership and governance that would facilitate innovation. Two respondents felt that leaders could improve their availability and follow through on commitments to staff. One believed that more frequent management team retreats would strengthen innovation, while another leader saw a need for the board of directors to increase its commitment to innovation and understanding of the organization’s activities. Finally, one leader aspired for their organization to have “courage to change before we are forced to change” (Leader, volunteerism and intermediary organization with a strong innovation score). Discussion

This study sought to understand how leaders use team processes to foster an innovative

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climate in nonprofit organizations. Overall, the findings align with the conceptual framework upon which the study was based, which proposes positive relationships between leadership, team processes, organizational climate, and innovation. Furthermore, this study affirms the link between the Open Systems model of organizational behaviour and innovation. The presence of flexibility, outward focus, and reflexivity in all of the participating organizations’ innovation processes validates previous literature on the importance of these three elements in creating an organizational climate that supports adaptation and innovation (Patterson et al., 2005; Schippers et al., 2007). The three elements often co-occurred in the stories of innovation shared by leaders, suggesting that they may actually enhance each other. For example, the ability to respond rapidly to changing circumstances, a characteristic of organizational flexibility, may be strengthened by regularly scanning the external environment and reflecting as a team during change processes. In particular, the high level of monitoring of and responsiveness to external influences cited by participants indicate that charities are indeed operating in an environment that requires constant scanning. A capacity for change is an asset for organizations operating in a sector characterized by swift moving trends such as reduced government funding, greater demand for services, new models of financing, and the increasing push to work in partnership (Public Policy Forum, 2011). Since small- and medium-sized nonprofit and charitable organizations are particularly impacted by such challenges, it may be especially important for them to strengthen their climates for flexibility, outward focus, and reflexivity (Imagine Canada, 2011). Thus, we posit that changing conditions in the voluntary sector have in fact heightened the importance of flexibility, outward focus, and reflexivity for nonprofit and charitable organizations. Entrepreneurial spirit has been previously been found to be a factor of success identified by Canadian nonprofit leaders (Public Policy Forum, 2011) and this was validated by leaders participating in this study, some of whom conflated being innovative with entrepreneurship. Indeed, a climate of flexibility fosters the risk taking, proactiveness, and creativity that is inherent in entrepreneurial behaviours. As reflected by one leader of an organization with a very strong climate for innovation, “to be an Executive Director today is totally different than even five years ago. Today the ED has to be really business-oriented. How do I grow the funds and be sustainable and employ those people? Recognizing complexities is key to being innovative in today’s environment” (Leader, education and research organization with a very strong innovation score).

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Another noteworthy trend emerging from the stories of innovation was the prevalent use of research, data, and evaluation by participating organizations, mirroring the for-profit sector, where research and development has long been the backbone of innovation (Jain et al., 2010). This trend coincides with increasing demands on charities to measure and demonstrate their impact (Alebon & Barr, n.d.). Growing emphasis on evaluation and use of data within organizations may also be related to the increasing professionalization of the sector, advancements in the field of program evaluation, and improved access to analytics and information sharing tools, leading organizations to realize the benefits of using evidence in decision-making. While data collection and use is uneven across the Canadian nonprofit sector and concerns have been raised about the skills gap in data analysis (van Ymeren, 2015), our study suggests that many organizations frequently use metrics and evaluation tools while developing new and improved services and processes. Team processes were confirmed to be an important means by which leaders can influence organizational climate in order to foster innovation. Leaders had some difficulty immediately identifying or articulating team processes that were used during organizational innovation, as these processes were so integrated into the organization’s regular functioning that leaders were not consciously aware that they were unique to their organization. Upon probing, however, it was evident that team processes were used prominently during innovation initiation, adoption, and/or implementation at each organization. The findings substantiate existing research on the crucial role of team processes as a team-level determinant of innovation (Anderson & West, 1998; Bharadwaj & Menon, 2000; Corner & Ho, 2010; Lee & Kelley, 2008). The study highlights how nonprofit leaders would benefit from improving team processes when attempting to increase innovation capacity in their organizations. Team processes involving open dialogue, collaboration, and reflection were especially effective in creating a climate supportive of innovation. The organizations perceived to have the strongest climates for innovation worked across departments, engaged all staff at key moments in brainstorming and decision-making, created an affirmative space to share and question ideas, and took the time to reflect on the shared vision and plan ahead. These team processes could be directly linked to flexibility, outward focus, and reflexivity. For instance, cross-departmental collaboration and participatory leadership contribute to flexibility by allowing for different viewpoints to be considered and responsibilities to shift as needed to implement new initiatives. The study validates the role of transformational leaders as facilitators of team processes that

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support innovation. Leaders were intentional in their efforts to foster trust and cohesion and to provide supportive supervision, as demonstrated by the frequency of which participatory processes were cited. Leaders recognized that their role was to “inspire”, “empower”, “encourage”, and “listen”. Although the three climate elements were generally mutually enhancing, certain trade-offs were observed. For instance, increasing flexibility by taking more risks and trying new things could lead to a blurred organizational vision or over-extended staff. Knowing when to say “no” can help an organization avoid burnout and mission drift, which are salient issues for the sustainability of Canadian nonprofits (Baines et al., 2014; Barr et al., 2006; Minkoff & Powell, 2006; Tremblay-Boire, n.d.). Secondly, speeding up an organization’s reaction and response time could impact its ability to pause for reflection and engage staff in participatory and collaborative processes. This trade-off suggests that leaders who are able to recognize when to speed up the pace of innovation processes and when to slow down are more likely to create climates supportive of innovation. There is a tension as well between the need for strong leadership and the need for highly engaged staff in organizational innovation. Being mindful of the role they play within their teams can help leaders better distinguish when best to direct or facilitate a team process and when best to delegate authority to staff. Lastly, this study highlighted the tensions within the two dimensions of the Competing Values Model—flexibility versus control and internal versus external focus. While the Open Systems model, which favours flexibility and external focus, aligned with innovative processes in our study, it should be noted that some degree of control and internal focus is also important for innovation. Establishing formal structures and processes, such as regular meetings, can create the space for flexibility and innovation. Focusing inwards at times can help leaders engage staff throughout the innovation process and reflect more deeply on team processes. Finally, our findings indicate that charity leaders in Canada are conscientious about innovation in their organizations. All respondents in our study were easily able to name and describe an innovation that took place in their organization, and most rated their organizations as having very innovative or innovative climates. During their interviews, all leaders expressed an interest and desire to facilitate greater innovation in their organizations. As noted earlier, nonprofit and charitable organizations are beginning to heed the call for innovation, and it is clear from this study that there is a strong appetite for further research on third sector innovation within both scholarship and practice.

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RECOMMENDATIONS This study demonstrates that team processes and organizational climate are levers that can be adjusted to move an organization in the direction of its innovation goals. Based on our findings, we offer the following recommendations to leaders of nonprofit and charitable organizations seeking to build capacity for organizational innovation. These recommendations relate to the topics of the study—team processes and organizational climate—while recognizing that many other factors have also been found to influence organizational innovation. In addition, we acknowledge the diversity of organizational structures, missions, sizes, developmental stages, demographic makeup of staff, field of work, and other characteristics that make each organization unique. Leaders both influence and work within these conditions. While the following recommendations summarize key insights and suggest practical steps for implementation, they are intended to serve as guidelines for leaders to integrate and adapt to their own organizational contexts. Recommendation 1: Develop staff and leaders’ understanding of the distinct aspects of organizational climate that build capacity for innovation. Leaders in the study used many ways to describe innovation in their recounting of examples of innovation processes and challenges to innovation. “Being innovative” is a broad concept that was understood in different ways by different leaders, and this is likely the case within a single organization as well. Separating out distinct elements of organizational climate, such as flexibility, outward focus, and team reflexivity, clarifies the specific conditions and behaviours that foster innovation. Generating a common understanding of what it means to be innovative can also help teams work more effectively together. As survey results show, each participating organization was stronger in certain areas of climate for innovation than others. One way to build awareness of the organization’s climate is to invite all staff to complete the Organizational Climate Measure (Patterson et al., 2005) or comparable measure and review results together. Understanding an organization’s strengths and weaknesses can help teams to identify areas to improve. Recommendation 2: Seek to strengthen and balance flexibility, outward focus, and reflexivity among the whole staff team. This study confirms previous research that relates organizational innovation to three behaviours: flexibility in structures and roles, attention and responsiveness to the external environment, and intentional reflection about the organization’s programs, mission and processes. We recommend that leaders that want to support greater innovation in their

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organizations set goals to improve these elements of organizational climate. Furthermore, we found that some organizations relied more on the ability of the management team or leader alone to drive innovation. Boosting these capacities within the entire team, rather than just its senior staff, would likely increase the generation and adoption of creative ideas and initiatives to advance the organization’s goals. We recommend that leaders identify staff engagement as an explicit objective and involve teams, for example during staff retreats, in regularly developing collaborative action plans to foster innovation and reviewing progresses together. Recommendation 3: Recognize the important role that team processes play in organizational innovation. The study revealed that not all leaders in the study called team processes as such, and many had difficulty identifying distinct processes because they were so integrated into day-to-day operations of their organization. Greater awareness of what processes are in use within their teams would allow leaders to cultivate more effective and intentional processes towards innovation. Leaders can identify how certain processes may contribute to, or hinder, their organization’s ability to be flexible, attuned to the external environment, and reflexive. In turn, leaders could better articulate the purpose of specific team processes as well as refine them to better meet objectives. For example, leaders could build in time during regular team meetings or staff retreats to reflect upon and evaluate the team processes that contributed to the adoption or rejection of a new idea or the success or failure of implementing an innovation. Key questions could include: “How did we work as a team? How can we work better together?” This is, of course, in itself a practice of reflexivity. Recommendation 4: Implement team processes that emphasize open communication, collaboration, and reflection. Although a great number of specific team processes were described by participating organizations, the study indicates that there is no one-size-fits-all set of best practices. Rather, team processes used during innovation scenarios were found to reflect certain behaviours. The most important of these behaviours were open communication, collaboration and information sharing, and creative reflection about mission, programs, processes and opportunities. Leaders and teams can improve their capacity for innovation by adjusting existing team processes or experimenting with new processes to reflect these behaviours. For example, if staff meetings are simply a review of what team members are working on, but do not strengthen outward focus, a leader could adjust the format of meetings to incorporate creative reflection on trends in the external environment.

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Recommendation 5: Anticipate and mitigate common tensions within organizations during innovation processes. The study revealed that tensions sometimes arise within organizations during innovation processes. The ability of an organization to be flexible and focused on the external environment can help generate and respond to innovation opportunities, however these same behaviours can also can create internal challenges. For example, speeding up an organization’s reaction time may reduce its capacity to take the time necessary to engage staff in participatory decision-making. Anticipating and managing such challenges appear to be an important role for nonprofit leaders. Specifically, we recommend that leaders cultivate their ability to:

say “no” when necessary to new opportunities or risks can help avoid over-extending staff;

recognize when to speed up the pace of innovation processes and when to slow down; communicate frequently with staff even when decisions must be taken quickly by the

leader or management team; distinguish when to direct or facilitate a team process themselves and when to

delegate authority to staff; and create formal structures and processes that actually support greater for flexibility and

creativity.

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CONCLUSION The need for nonprofit and charitable organizations to be innovative, especially small- and medium-sized organizations, has arguably never been greater. In addition to increasing demand for services and decreasing or shifting revenue sources, leaders within the third sector are motivated to increase innovativeness in order to make a greater impact on social and environmental challenges. This study adds to a small but growing body of research on how innovation can be supported within nonprofit and charitable organizations. By examining two factors that are within the control of leaders and team members—organizational climate and team processes—we shed light on promising practices to increase internal innovation capacity. All leaders participating in the study expressed an understanding that innovation was important to strengthening the relevance and effectiveness of their organizations. The Open Systems model of organizational effectiveness, with its emphasis on adaptiveness and entrepreneurial growth, was shown to be a useful framework through which to examine nonprofit innovation. Three elements of organizational climate associated with innovativeness—flexibility, outward focus, and reflexivity—were confirmed to be significant in the innovation processes of nonprofit organizations. Participating organizations revealed a particularly high level of outward orientation, and their scanning of and responsiveness to the external environment played a prominent role in generating program improvements, funding, and partnerships with other stakeholders. Findings suggest that team processes, especially those that facilitate open dialogue, collaboration, and reflection among staff, are powerful levers by which leaders can improve organizational climate in order to foster innovation. Since organizational climate is by definition an aggregate of team members’ perceptions, one of the limitations of our study was the collection of data mainly from leaders of charitable organizations rather than from multiple team members. As well, the 18 organizations in the sample are not representative of all medium-sized registered Canadian charities, and self-selection bias may have skewed the sample towards organizations that have a prior interest in the topic of innovation. Another limitation was that the level of actual organizational innovativeness was not measured; findings were thus limited to self-reported experiences of innovation. A number of potentially fruitful questions for future research arose during the study that would produce a more robust understanding of the role of team processes and climate in nonprofit innovation:

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Are there differences between leaders’ and team members’ perceptions of their

organizations’ climate for innovation? What accounts for any differences? We suggest that future studies survey multiple team members from each organization to examine aggregate climate as well as differences between perceptions of leaders other staff.

How do flexibility, outward focus and reflexivity interact in innovation processes? How do they enhance each other? What tensions exist between these elements of organizational climate?

How does organizational structure, including how roles and responsibilities are arranged, relate to nonprofit organizations’ climate for innovation?

How does leadership and leadership style affect the team processes used and the climate created to support innovation?

Case studies of organizations attempting to develop stronger climates for innovation would also likely be fruitful, exploring questions such as:

What team processes were used? What challenges did leaders and teams encounter? How did leaders influence the changes? How did staff behaviours and perceptions change?

Nonprofit and charitable organizations in Canada are grappling simultaneously with resource constraints, expectations that they take on a greater role delivering public services, and aspirations to tackle complex social and environmental problems. To rise to this challenge, effective teams that work together to fulfill their missions in new or better ways are needed. Employing team processes that strengthen an organization’s climate of flexibility, outward focus and reflexivity can increase the capacity for innovation within nonprofit and charitable organizations. In turn, innovative organizations are better equipped to deliver on their missions, solve complex problems, and serve the public good. This report provides nonprofit leaders of with practical steps and recommendations to foster innovative climates within their organizations and contributes insights and knowledge that will build capacity for innovation across the sector.

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APPENDIX A. METHODOLOGY Research design

This study used a concurrent triangulation mixed methods design that included both qualitative and quantitative data collection followed by analysis and interpretation (Figure 5). Qualitative data were obtained through open-ended semi-structured interviews, and quantitative data were obtained via an online survey completed shortly after the interview. Interviews were conducted first in order to gather respondents’ descriptions of examples of innovation in their organizations and to identify team processes used during innovation. The survey findings were used to establish respondents’ perceptions of their organizations’ climate for innovation and to triangulate the results from the interview and identify convergences. As a self-reporting tool, the survey also served to inform our understanding of the sample of leaders, particularly to establish how innovative they thought their organizations were since their ideas and practices were the basis for the study’s insights into best practices for fostering innovation by teams. It was deemed important to gather participants’ responses to open-ended questions about team processes and innovation before exposing them to specific measures of the three selected aspects of organizational climate, which could have skewed interview responses if the order of data collection was reversed. At the same time, a risk in such a design is that interview questions could suggest which factors support innovation, such that respondents may over-report on those items when answering the survey. To mitigate this type of social desirability bias, or the tendency of respondents to over-estimate what they believe is socially desirable, interview questions were open ended and did not make specific mention of the

Figure 5. Concurrent triangulation design

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elements of organizational climate under study or of determinants of innovation. In addition, the survey was made up of seventeen specific statements that encouraged a more critical and frank self-assessment than would general questions such as “How innovative is your organization?” Concurrent triangulation designs are common in mixed methods research, as they make use of the strengths of both quantitative and qualitative methods to produce substantiated findings (Clark & Cresswell, 2008). It has been recommended that research designs using both structured questionnaires and semi-structured interviews collect the two types of data with a minimal time gap (Harris & Brown, 2010). In this study, the survey was emailed to respondents directly following the interviews. Many respondents completed the survey within a day or two of the interview, however due to their busy schedules and the voluntary nature of the survey, some respondents took two weeks to 18 days to answer the survey. Collecting both quantitative and qualitative data in the same phase reduces the time spent on data collection and allows for the two types of data to be directly compared (Cresswell & Clark, 2011). A concurrent triangulation design was selected for this study in recognition of time constraints on the project (three weeks allotted for data collection), the existence of quantitative scales to measure the topics of interest, and our desire to produce findings and recommendations that are practical and applicable to nonprofit leaders. Sampling frame

The population of interest in this study was executive directors, CEOs and/or senior managers of registered Canadian charitable organizations with 3 to 20 full-time employees. As indicated by the literature, leaders play an integral role in facilitating team processes that create a climate in support of innovation; thus, the interviews and surveys focused on the perspectives of leaders and/or senior managers of participating organizations. This size of organization, 3 to 20 full-time employees, was chosen to represent “medium-sized organizations,” recognizing that the majority of Canada’s charities are very small in terms of budget and staff. Because the study focused on team processes among employees, organizations with 3 or more full-time staff were deemed most relevant. In addition, while small- and medium-sized organizations make up the majority in the sector, they face the greatest difficulties in accessing resources and retaining talent. Of Canadian nonprofit organizations that have paid staff, 74.5% employ fewer than ten people (HR Council for the Nonprofit Sector, n.d.). According to the 2003 National Survey of Nonprofit and Voluntary Organizations, organizations that reported annual revenues between $30,000 and $499,999

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(46% of nonprofit organizations in Canada) were more likely to report challenges in recruiting volunteers and obtaining funding than larger organizations (Barr et al., 2006). An Imagine Canada Sector Monitor survey found that organizations employing between 5 and 25 full-time staff were more likely to cite difficulties in offering competitive wages than any other group (HR Council, 2013). The sampling frame was restricted to registered charities—as opposed to including all nonprofit organizations—because organizational data on registered charities are publicly accessible on the Canada Revenue Agency’s website. Recruitment

Convenience sampling was first employed to identify organizations that fit within the sampling frame. Additional lists of organizations were then generated through searches of charity listings on the Canada Revenue Agency’s website. The J. W. McConnell Foundation, our community partner, also supported the recruitment process by sending an invitation to participate in the study to eligible organizations in their national network of charitable organizations. We invited leaders of organizations that fit our sampling frame to participate in the study via email. A public recruitment message was also posted on the researchers’ Facebook and LinkedIn pages. Out of the 34 organizations invited to participate in the study, 18 organizations consented. Data collection

Data were collected via interviews and an online survey. Between May 28 and June 19, 2015, the research team conducted interviews with 18 participants. Following the interview, the participants were asked to complete an online survey. A link to the survey was sent to them via email immediately following the interview. Interview

Interviews were conducted via voice or video calls. Each in-depth one-on-one interview was conducted by one of the two researchers and was audio-recorded. Two interviews were not recorded due to technical difficulties, but detailed notes were taken throughout. The interviews lasted between 30 and 45 minutes. The interview questions were semi-structured and asked respondents to share their experience with innovation adoption in their organization and the processes that occurred within their work group that led to the final decision. For example, respondents were asked, “Tell me about a time when a new idea for a program or initiative came about that you did eventually implement in the organization.” Probing questions included, “How did the idea emerge in your team?” and “What do you think your work group did

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that helped this new program or initiative to come about?” Respondents were also asked to reflect on what their work group does well to create a climate that supports innovation and what they could improve upon. These questions were designed to elicit responses that would identify specific practices leaders have implemented as well as processes they would implement within their work groups with the intention to foster a climate supportive of innovation. Survey

The interviewee from each participating organization completed an online survey administered via SurveyMonkey that took approximately 10 minutes to complete. In addition, interviewees were asked to forward the survey to up to five of their colleagues who could complete it voluntarily. In total, 5 additional respondents from two organizations completed the online survey. The survey drew on two existing measures of organizational climate related to innovation in order to examine respondents’ perceptions of three aspects of climate: their organization’s flexibility, outward focus, and reflexivity. These three elements were chosen because of their linkages to innovation and because they were hypothesized to be of importance to medium-sized Canadian charities aspiring to be innovative. Items were measured on 5-point Likert scales, anchored by “1 - strongly disagree” and “5 - strongly agree”. The direction of the scales were reversed for some items to prevent acquiescence bias, the tendency of survey respondents to agree rather than disagree. Eleven items were drawn from the Organizational Climate Measure (OCM) (Patterson et al., 2005) to measure flexibility and external orientation. The OCM measures 17 specific aspects of climate based upon the four models within the Competing Values Model. Certain terms in the OCM items were adapted slightly to be more relevant within a nonprofit context: “company” was changed to “organization”, “customer” to “participant or community” and “market” to “field”. In addition, the original 4-point scale of the OCM was changed to a 5-point scale to align it with the reflexivity scale and to facilitate comparative analysis. Measures for flexibility, drawn from the Innovation & Flexibility subscale (6 items) of the OCM, asked respondents the extent to which they agreed with statements such as, “New ideas are readily accepted here.” Measures for outward focus, drawn from the Outward Focus subscale (5 items), included items such as, “The organization is quite inward looking; it does not concern itself with what is happening in the field.”

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Six items from Schippers et al.’s (2007) two reflection subscales were used to measure team reflexivity. Schippers et al. (2007) had concluded that these two subscales—evaluation/learning and discussing processes—form the most valid instrument to assess reflexivity in teams. We included 4 of the 19 items from the evaluation/learning subscale and 2 of the 4 items from the discussing processes subscale in the survey. For example, respondents were asked the extent to which they agreed with statements such as, “We regularly discuss whether the team is working effectively.” A selection of the subscale items were used because it was hypothesized that the internal reliability of these six items would be sufficient to assess overall team reflexivity. Other researchers have tested the reliability and validity of the OCM (Bernstrom, 2009) and Schippers et al.’s (2007) reflexivity scale (Schippers et al, 2014; Schippers et al., 2015). Data management

All data collected in this study were stored electronically using Google Drive and Dropbox to facilitate collaboration between the researchers. Both accounts were encrypted and password-protected and were only accessible by the research team. Names associated with raw data were replaced by a numerical coding system. Documents containing direct identifiers were separated from the data set and were encrypted and password protected. All paper records, notes, and electronic backups on USB keys were stored in the researchers’ homes in a locked filing cabinet, accessible only to the research team. Detailed notes were taken electronically during each interview. Interviews were also audio-recorded to allow the researchers to transcribe relevant responses. The audio files were stored in a password-protected folder on a password-protected computer accessible only to the researchers to ensure anonymity and privacy. The recordings were destroyed once the analysis was complete. The online survey was hosted on SurveyMonkey on a password-protected account accessible only to the researchers. A numeric code rather than a name was used to match interview responses with survey responses for each participant. Data analysis

It has been recommended for research designs with structured questionnaires and semi-structured interviews that each data set be analyzed using methods suitable to each rather than, for example, forcing qualitative analysis to fit the categories predetermined in questionnaires (Kendall, 2008; Harris & Brown, 2010); then results can be compared to see if any common messages resonate from both sets of data.

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To analyze interview responses, transcribed notes were uploaded to Dedoose, an application for qualitative and mixed methods research. The 18 interviews were coded multiple times by both researchers for the presence of team processes and climates of flexibility, outward focus, and reflexivity. The initial coding stages generated a list of main codes and subcodes. In addition, other factors that emerged as important to organizations’ innovation processes were extracted. In total, 6 main codes and 41 subcodes emerged during analysis. The main codes were “flexibility”, “outward focus”, “reflexivity”, “other innovation factors”, “team processes”, and “challenges”. Quantitative data obtained from the survey were used to corroborate interview responses and determine whether the respondent perceived their organization to have a climate that supported innovation. For organizations with more than one survey respondent, the average of the responses on organizational climate measures were used in analysis. Cronbach’s alpha (α), which measures how closely related a set of items are as a group, was used to check that the internal consistency of each of the three scales (flexibility, outward focus, and reflexivity) met a minimum reliability of 0.60 before they were combined. This test helps confirm if multiple items in a set are closely related or not and therefore if a scale in a survey is reliable. In this study, responses to one particular item in the flexibility scale were so different from the other items that the item was removed from analysis. The average score of each of the three scales were then summed to create a single “innovation score” out of 15. Scores ranged from 10.1 to 14.3. To allow for comparative analysis, organizations were classified as being perceived as having “very strong”, “strong”, “moderate”, “weak”, and “unsupportive” climates for innovation based on their innovation score. Limitations

Research design

The design of the study had several limitations. It has been suggested that when ‘confirmatory’ results are being sought via semi-structured interviews and structured questionnaires, then the instruments should be tightly aligned (Harris & Brown, 2010). The interview and questionnaire did not ask similar questions; rather, the interview asked open-ended questions about team processes and scenarios while the questionnaire asked the extent to which the respondent agreed with specific statements regarding aspects of organizational climate. Therefore, the two types of data cannot be deemed to be confirmatory but complementary. Gillham (2007, p.165) emphasizes the complementary role of varying

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types of data and that “interview data have to be taken as ‘valid’ in their own right: they add something different to other data.” It is more common for interviews to follow questionnaires in order to collect greater detail about participants’ original survey responses (Gillham, 2007). In this study it was deemed important to gather participants’ responses to open-ended questions about team processes and innovation before exposing them to specific measures of the three selected aspects of organizational climate which could have skewed interview responses if the order of data collection was reversed. On the other hand, the interview may have primed respondents to aspire to greater innovation and thereby to rate their organizational climates as more flexible, reflexive, and oriented towards the external environment in their survey responses. To mitigate this risk of over-rating their organizations in the climate scales, the survey was made up of multiple and specific statements rather than a small number of general questions such as “How innovative is your organization?” As well, interview questions were purposefully open-ended and did not indicate the determinants of innovation under study. In the end, our research design prioritized the qualitative interview data over the survey data because we decided that rich descriptions of examples of nonprofit innovation, in participants’ own words, would best serve the purpose of increasing our understanding of how a climate for innovation is created. Recruitment and sampling

The recruited sample for the study is not representative of all medium-sized registered Canadian charities. Participants were recruited via the researchers’ and the community partner’s networks, which may have biased the sample towards organizations that are involved in networks that exchange best practices and that are more interested in innovation than the average organization. Nonprobability sampling may have also resulted in self-selection bias towards organizations that are comfortable with the concept of innovation or perceive themselves to be innovative, as participants were informed of the research topic prior to participating in the study. While a broad spectrum of activity areas was represented in the recruited sample, certain types of charitable organizations were excluded from eligibility, including educational institutions, hospitals, and foundations. Since the recruited sample was restricted to registered charities, the findings may not be generalized to all nonprofit organizations. Data collection and analysis

Several limitations arose during the data collection phase of the study. Respondents were aware of the subject of the study, which may have resulted in biased responses. Since the

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survey was conducted online, there was no opportunity for respondents to clarify any of the questions. It is further unknown to the researchers whether the interviewee distributed the online survey to a representative cross-section of the organization’s employees. Bias may have been introduced in the climate scores if the survey was distributed to like-minded colleagues. The small sample size (n = 18) limited the ability to employ sophisticated statistical analysis on quantitative data or to use comparative analysis. This study primarily measured leaders’ perceptions and experiences of their organization’s climate in support of innovation. As climate is measured at the organizational level as an aggregate of team members’ perceptions and actions (Allen et al., 2013), a more robust picture of an organization’s actual climate would be captured if the perspectives of multiple team members were gathered. Furthermore, this study focused on just three elements of organizational climate, namely flexibility, outward focus, and reflexivity. A number of related aspects of organizational climate that have been linked to innovation were not included such as support for creativity and risk. Finally, it is important to note that actual organizational innovation or innovativeness were not measured. The literature demonstrates a link between an organizational climate in support of innovation and organizational innovation, but this study may still have limited external validity. Ethics

Some of the organizations recruited to participate were grantees of the McConnell Foundation and/or participants in the foundation’s capacity building programs. In order to alleviate participants’ pressure to appear innovative or to participate in the study in order to maintain positive relations with this grantmaking foundation, the invitation letter, consent form, interview protocol and survey each reminded participants that their data would be kept confidential and their responses and organizations anonymous. There was a mild likelihood that participants could experience discomfort during the interview or survey as they required the respondents to assess their own organization’s innovation practices, which included unsuccessful experiences. In order to reduce this potential discomfort, the researchers explained at the beginning and end of interviews and the survey that all organizations face some challenges and have some successes in creating a climate for innovation and that the research was aimed at producing knowledge that any charity could use for improving their team processes.

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Participants were generally very busy in their work schedules; therefore the researchers acknowledged the time given to the survey and interview. To minimize the inconvenience of the time commitment, phone interviews were scheduled at times chosen by the respondents, and they were reminded of the opportunity to postpone the interview if needed to minimize the risk of disruption to their work activities.

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APPENDIX B. INTERVIEW GUIDE Please describe the management structure at your organization.

Probing questions: Is there a management team? Who is involved? What does the management team do?

What would you consider to be your main work group?

Explanation: the team of people that you work with on a regular basis to guide and direct the organization.

Probing questions: Who is part of this team or work group? Is your main work group the same or different from the management team? How?

Tell me about a time when a new idea for a program or initiative came about, that you did eventually implement in the organization. (program/product innovation)

Probing questions: How did the idea emerge in your team? Walk me through the steps of what your work group did. What happened next? Who was involved? What did they do?

What do you think your work group did that helped this new program or initiative to come about?

Tell me about a time when a new idea for a program or initiative came about, that you did not end up implementing in the organization. (program/product innovation)

Probing questions: How did this idea come about in the first place? How did your team go about if it was an idea worth pursuing? Walk me through the steps and who was involved in exploring the idea.

How did your work group finally decide not to implement this new program or initiative? Why did your work group come to that decision?

Tell me about a time when there was a change in the external environment, which had an influence on the work of your organization.

Explanation: examples of a change in the external environment could include: a funder’s priorities, the actions of another organization similar to yours, a government policy, a news story about an issue your organization works on, a change in what the community or participants want from your organization.

Probing questions: What happened? How did your work group learn about this change in the external environment? Who was involved in discussions about this change?

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What did your work team do with this new information? How your work group respond to this change in the external environment? Were there any adaptations of your programs or initiatives as a result of this external change?

Thinking of your work group, what are the things that your work group does well to create a climate that supports innovation in your organization?

Why do you think these things help support a climate supportive of innovation? What are the things that you would like to improve within your work group to create an even more supportive climate for innovation?

Why do you think these things would help? Those are all of my questions. Is there anything else that you would like to add?

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APPENDIX C. SURVEY QUESTIONS 0. What is your job title: _______________ 1. What is the official name of your organization (as registered with the Canada Revenue Agency)? _________________________ (Note: The name of your organization is needed in order to join your survey responses with your interview that you have already completed. In addition, the researchers will use this information to verify charitable registration with the CRA. After this verification, the name of the organization will be replaced with a numeric code to ensure confidentiality of your responses and electronic or print records with the name will be destroyed. ) 2. How many employees does your organization currently have:

full time employees: ____ part time employees: ____

3. What is the primary activity area of your organization?

Sports and Recreation Arts and Culture Education and Research Social Services and Community Development Health Environment International development Philanthropic Intermediaries and Voluntarism Other: __________________

4. Province or Territory in which your organization is located:

Alberta British Columbia Manitoba New Brunswick Newfoundland & Labrador Northwest Territories Nova Scotia Nunavut Ontario Prince Edward Island

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Quebec Saskatchewan Yukon

5. What is your age in years:

24 or under 25-34 35-44 45-54 55-64 65 or over I prefer not to answer this question

6. What is your gender (self-identified):

female male trans* other _______________ I prefer not to answer this question

8. How long have you been working at this organization?

0 to 2 years 2 to 4 years 4 to 6 years 6 to 8 years 10 or more years

9. What is the average age of employees at your organization in years:

24 or under 25-34 35-44 45-54 55-64 65 or over

10. How many employees in your organization do you directly supervise (“direct reports”)?

0 1 to 2

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3 to 4 5 to 6 7 to 8 9 to 10 11 or more

11. Please read the following statements and rate them according to how you think they apply to your organization.

strongly disagree

disagree neither agree nor disagree

agree strongly agree

In this organization, the way people work together is readily changed in order to improve performance

The methods used by this organization to get the job done are rarely discussed*

There are regular discussions as to whether people in the organization are working effectively together

In this organization objectives are modified in light of changing circumstances

In this organization, time is taken to review organizational objectives

12. Please read the following statements and rate them according to how you think they apply to your organization.

strongly disagree

disagree neither agree nor disagree

agree strongly agree

This organization is quite inward looking; it does not concern itself with what is happening in the field*

Ways of improving service to participants or the community are not given much

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thought*

Participant or community needs are not considered top priority here*

This organization is slow to respond to the needs of participants or the community*

This organization is continually looking for new opportunities in the external environment

*The asterisk refers to items for which the scale must be reversed before analysis because they are negative statements. 13. Please read the following statements and rate them according to how you think they apply to your organization.

strongly disagree

disagree neither agree nor disagree

agree strongly agree

New ideas are readily accepted here

This organization is quick to respond when changes need to be made

Management here are slow to spot the need to do things differently*

This organization is very flexible; it can quickly change procedures to meet new conditions and solve problems as they arise

Assistance in developing new ideas is readily available

People in this organization are always searching for new ways of looking at problems

*The asterisk refers to items for which the scale must be reversed before analysis because they are negative statements.

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APPENDIX D. INTERVIEW RESULTS: FREQUENCY OF

CLIMATE ELEMENTS & TEAM PROCESSES

Major Categories

Subcategories Number of participants

Flexibility (18)

● Quick to respond ● Adapt team responsibilities and structure ● Adapt programs/strategies ● Willing to try new things

10 6

15 17

Outward focus (18)

● Client/participant/user impact or needs ● Funding opportunities + changes ● Non-client stakeholder feedback/advisors ● Nonprofit field trends/competition/duplication ● Policy/government priorities ● Technology/new tools available

16 16 6

12 6 4

Reflexivity (18)

● Evaluation, research, data analysis ● Reflection on organizational goals/strategy ● Reflection on personal goals/motivation ● Reflection on program/implementation ● Reflection on team processes, workflows, relations ● Time to reflect

16 14 3

13 10 9

Innovation factors - other (18)

● Board staff relationship ● External expertise / consultant / facilitator ● Knowledge and info systems ● Organizational structure ● Physical space / office layout / meet in other places ● Support for innovation ● Team composition / staff with innovative approach

8 8 3

12 5 9

11

Team processes (18)

● Affirm everyone’s ideas / brainstorm / value creativity ● Arts-based team practices ● Cross-departmental collaboration ● Defining roles ● Have fun, play, spend time together ● Individual check-ins

11 2

15 3 4 5

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● Informal meetings ● Leadership ● Open door policy ● Open, honest communication ● Participatory leadership / engagement in decision-making ● Professional development, training, knowledge transfer ● Questioning ideas ● Staff retreats ● Strategic planning / shared vision / scenario planning ● Team meetings - small group ● Team meetings - whole group ● Trial and error / testing

11 13 3

10 14 6

12 6

13 11 15 9

Challenges / could do better (17)

74

APPENDIX E. INTERVIEW RESULTS: AREAS FOR

IMPROVEMENT FOR ORGANIZATIONAL INNOVATION The following lists the areas leaders reported that they wanted to improve to create a climate for innovation (open-ended question), and the number of leaders that mentioned each point. Generation of innovation

● more time for visioning - 1 ● think and plan further ahead in time - 1 ● encourage creativity by all staff - 1 ● physical space - office conducive to sharing and discussion - 2 ● connect more with constituents - 1

Managing innovation ● say “no” more often to new ideas or opportunities in order to not overstretch - 3 ● ability to review or let go of recurring programs - 2 ● internal processes: more structured / follow through better on agreed-upon processes -

2 ● responding to staff’s creative ideas when they are not likely to succeed/or lack of

capacity - 2 ● work more nimbly across departments - 1 ● meet needs of different reflective styles of staff (some reflect on spot, others need time

to process) - 1 ● engage in less reflection before getting to a decision - 1 ● timing and process of annual budgeting restricts implementing new activities - 1

Building capacity of team members ● increase training and involvement of other staff in innovation - 2 ● more professional development - 2 ● better use of information infrastructure to track results & share information - 2 ● more shared leadership - 1

Communication between staff and leadership ● improve communication with staff, especially when leaders must quickly make

decisions and act on opportunities - 3 ● improve communication from staff to leaders so that innovative ideas filter up - 1

Leadership and governance ● leader’s availability to staff, time in office, follow through with staff - 2 ● more frequent directors’ retreats -1 ● courage to change before forced to change - 1 ● board’s understanding of programs and commitment to innovation - 1