Bringing innovation to a not-for-profit setting

In this episode of The Committed Innovator, American Red Cross chief innovation officer Sajit Joseph speaks with McKinsey innovation leader Erik Roth about the challenges and opportunities involved with innovation in a not-for-profit setting, where the goal is return on impact and teams can include volunteers. This is an edited transcript of their discussion. You can listen to the full episode on your preferred podcast platform.

Erik Roth: I’d like to welcome everyone back to another session of The Committed Innovator. Today we are delighted to be joined by Sajit Joseph. He is the chief innovation officer of the American Red Cross and has been helping that organization think about how to carry itself in the future.

Sajit, most people probably are familiar with the American Red Cross. But can you remind us very briefly of its mission and breadth of services?

Sajit Joseph: Most people think of the American Red Cross in terms of their past interactions with the organization—giving life-saving blood or getting waterfront lifeguard training. But we do a lot of different things. The Red Cross has five mission areas. Our largest is blood services, where we provide 40 percent of the nation’s blood supply. We also provide relief to people affected by disasters—big disasters like wildfires and hurricanes, but also the small disasters which affect individual people, like house fires.

We also provide training and education on CPR and first aid, and we provide 24/7 communication between military families and servicepeople who are deployed. And we work with the International Red Cross and our international partners when they need assistance.

Erik Roth: To an outsider, it may not be obvious how the Red Cross has innovated. What has changed?

Sajit Joseph: As a 142-year-old organization, we’ve been doing things in a certain way for many years. About six years ago, our CEO realized there is a need for change in the way we deliver our mission, particularly in how we use technology and data. That’s how this innovation function got created. Since then, we’ve been looking at how technology could be used to drive large-scale transformation and help us deliver the mission more effectively.

Erik Roth: Thinking about the different services you offer, where would we see the most innovation? What are you trying to solve for, and where would it appear in the array of things you do?

Sajit Joseph: We’ve been looking at it across the broad spectrum. We have many different types of businesses and ways we serve the community, and we’ve been looking at how technology could be used in all those dimensions.

They all operate differently. Regulatory constraints differ. We started off doing a lot of work in our blood services area. We’ve been using AI for changing the way we collect and deliver blood and that whole end-to-end cycle.

The way we approach it is to use technology and data to deliver our mission more effectively. Our mission is to help people affected by emergencies. There are no constraints on how innovation could be used, and that’s the way we’ve been looking at it.

Erik Roth: One of the challenges at many organizations is deciding the level at which to define a problem. What is the right altitude for a valuable problem to solve within your context?

Sajit Joseph: It’s all levels, because every time we go into a problem, we try to get perspectives from all audiences. That includes the C-level executives and, most importantly, people in the field. We talk to users who experience that problem. When we have that 360-degree view of a problem, we get better insights into the nuances of an issue and how best to solve it.

Erik Roth: How do you choose which problems to solve and which to put aside? Many organizations struggle with deciding whether the problem is too big or too small.

Sajit Joseph: It’s purely based on impact. We quantify impact and make sure we are working on problems that have the highest impact. If a problem has a financial impact, then it will be an ROI-based impact, but many projects we look at don’t involve an ROI-based impact. Rather, they involve something we refer to as “return on mission,” so we look at how the innovation we’re considering impacts that.

For example, the American Red Cross provides help for people who have lost their homes in a disaster and need a place to stay. We provide food and all things associated with shelter. We used to track all the associated information manually, but that was inefficient and got in the way of providing a good shelter experience, so we automated the whole process. Last year, we launched a new solution we call shelter-client management tools that allow us to easily use digital tools to onboard clients and manage the shelter system more effectively while providing a lot of insight into how to manage it. Our operations have become a lot smoother as a result. We’ve been able to scale up more effectively, and our shelter clients’ experience has improved. We’re better able to partner with government agencies and others to provide better services.

Erik Roth: Technology projects are often expensive. How do you think about funding and resource allocation when it comes to some of these projects?

Sajit Joseph: As a not-for-profit organization, we have the opportunity to work with volunteers and a lot of corporate organizations like tech start-ups that are willing to help us on a pro bono basis. That allows us to expand the way we look at problem solving. We also have a team that helps in problem solving internally. The combination of all this helps us scale and look at solutions that might be resource intensive.

Erik Roth: How do you ensure that project funding has its optimal outcome or impact?

Sajit Joseph: We’ve tried to make sure we focus on the most value. We try to find the essence of the opportunity that matters most. We start small and then iterate. If you focus on a smaller problem and get that delivered, you have better chances of expanding it. It’s a good way to launch a product: get feedback, see if we are hitting the right areas, and expand from there. That gives us an opportunity to test an idea and then scale effectively once it’s successful.

Erik Roth: How do you manage the portfolio? Is it all individual projects, or do you look across the portfolio and consider what’s working, what’s not working, and make changes along the way?

Sajit Joseph: Our function is focused on newer projects, so once we have started getting the business benefits out of it, we transition into our run-and-maintain mode, which is supported by our business organizations and IT partners. They take on the solution, and we go on to the next problem.

The only exception is that we also take on large-scale transformation efforts that we chunk into smaller pieces. In those cases, we just keep moving up the value chain after we have delivered one chunk and go on to deliver the next chunk. But we have always tied each of those projects to business cases, and together they solve a bigger objective.

Erik Roth: How has the innovation agenda been going? Where do you see challenges?

Sajit Joseph: In the last six years, I think we have evolved at least six times to adapt to what works best. A journey for innovation is always going to be a mixed bag: some things work, some things don’t work. And we will continue to evolve.

Looking back, our velocity has worked really well. We’ve been able to move quickly and deliver value to the organization in a short period of time. Change management has been tough, though, and is something we continue to work on. People are extremely passionate and committed to the mission, but we’ve had folks who have been doing certain things in a certain way for many years, so change management tends to be tougher. We’ve been working on the process of buy-in. Once we get buy-in, the support from the field has been amazing.

Certain things help with getting buy-in. One is visually communicating an idea. We moved past PowerPoints to visual concepts, even doing a show-and-tell, which worked well when we were pitching about 11 projects that would transform the organization’s process. Finding change agents and working with them also helps. And we have found that having a governance process helps. In general, everybody has bought into the concept of driving change and innovation, but having some structure helps drive that process.

Erik Roth: How does innovation fit into the larger organization of the American Red Cross? How do you work with the International Red Cross and your sister organizations in other countries?

Sajit Joseph: Each country has its own Red Cross, governed by the rules of that particular entity. The American Red Cross is completely governed by the charter set up for it. Each Red Cross operates differently. In the US, we provide blood services, which may not be the case for some other Red Cross organizations. We don’t provide ambulances, but the Italian Red Cross does.

We are all connected to the international federation and work together as an international group. What my team does is predominantly for the American Red Cross, but we work with international societies as well. A lot of knowledge sharing happens within organizations.

An innovation team within the international federation looks at innovations happening across different geographies and shares knowledge among each area. We do the same for blood services: an international group of blood operators works across the globe and shares ideas. We look at how each organization is using technology and how we can all benefit from it.

Erik Roth: Is your focus always on the one in need or also on the first responders and other providers engaged in the delivery of that service?

Sajit Joseph: It would be people who are impacted; those are our primary constituents. But we partner with other organizations that provide other types of services. In the nonprofit world, we call them constituents, because we’ve got a broad set of constituents we work with. Some we partner with; some we provide direct help to.

We look at use cases from a Red Cross perspective, meaning delivery of services. We are not a first responder, so we would probably not be looking into how a first response happens. We focus predominantly on the mission areas of what we deliver and whether we are delivering those services properly to be an effective force in the community.

Erik Roth: Talk about your innovation group and how it came about. Does it have a specific mandate, or do you create your own portfolio by investigating across the organization?

Sajit Joseph: It is mostly creating our own portfolio. About 90 percent of the things we work on have been identified by us. But it takes a village to also go through the identification process, because everybody has something to add. Somebody might mention a problem, and we’ll figure out whether it’s part of a bigger problem or not.

Erik Roth: If necessity is the mother of innovation, do you find that the best innovation happens in the context of disaster response?

Sajit Joseph: In some cases, but the Red Cross has multiple lines of services, and they all operate differently. If you look at blood services, it’s a very regulated function, with extensive documentation requirements, so the nuance in that area is completely different as compared to disaster services. We’ve been able to make significant impact in our blood services area, given its regulated nature and all the data and processes already in place on which we can piggyback to innovative rapidly.

Erik Roth: Given the nature of your innovation model and assets, including volunteers, what’s the balance of internal versus external innovation for you? How do you decide whether to extend yourself externally and perhaps get others to help co-create solutions and innovations?

Sajit Joseph: Our model is a combination of internal and external. The Red Cross has a lot of volunteers, and they help with the innovation function as well. We have some very talented folks—some are data scientists, some are conversational AI experts—who help us build solutions. We also have partnerships with tech companies, including Microsoft and Amazon. Also, a lot of my team members and I come from consulting organizations, so we have an external view of things. Many industries have solved problems that could be applicable to us, so we are constantly looking at what others are doing and how we can leverage that for internal use cases.

Erik Roth: You mentioned that your group is part consultancy and part start-up and that you have volunteers. What is the composition of your team?

Sajit Joseph: We have product managers, data scientists, developers, and leaders for different areas. They’re all super talented and have tenacity and the ability to deal with ambiguity. So while each person might have domain expertise in one area, they can swing across different domains. That has helped us scale and look at problems differently, so we can get different perspectives and scale and do more and faster.

Erik Roth: Do you think innovation in a context like the American Red Cross is easier or more difficult than it is in other contexts, such as a corporation?

Sajit Joseph: I think it is more difficult, but I spent my first 12 years in a corporate context as a consultant, and a consultant organization is brought in typically when there is already buy-in for an idea. Here, my team is identifying the problem, getting buy-in, implementing it, launching it. There’s a longer life cycle that I didn’t experience as a consultant. That includes looking at things that may not make sense now, identifying opportunities that might make sense later, and trying to get buy-in for those too.

Erik Roth: What does the application of AI in the American Red Cross look like?

Sajit Joseph: We’ve been looking at AI across the spectrum. So far, we have deployed around 25 custom AI solutions, including conversational AI chatbots we launched four or five years ago and a lot of machine-learning and deep-learning models. Most recently, we’ve been doing a lot of work with generative AI. The bulk of our value is in machine-learning opportunities, mostly in our blood services space, where we have found we can use AI to solve discrete problems.

For example, we collect about 5.4 million donations a year at many, many blood drives. It’s difficult to predict how many people will show up for a blood drive, so it’s also difficult to predict how many of our people we should send to a blood drive. If we send more people, then we have an optimization issue. If we send fewer, we have a customer experience issue—long lines. That is the first use case we worked on. We delivered an AI model that predicts how many people will show up with a fairly good level of accuracy. We’re working on the end-to-end blood collection process to make it more efficient.

It gets better as you build on successes. It’s more difficult to get buy-in for AI solutions, in large part because it’s a black box—you can’t see how it works. The advent of generative AI is shifting things, though. We have some folks who can use gen AI for doing their day-to-day work, and we’ve been looking at how we can use it for activities such as helping with the course material on the trainings we offer.

Erik Roth: Innovation, at the end of the day, is about defining the future. What should we expect the future of the American Red Cross to look like?

Sajit Joseph: It looks amazing. Technology forces are coming together, and to look ten or fifteen years down the lane is very exciting. In our blood services area, we collect 40 percent of the nation’s blood supply. If you look at research happening in genomics and liquid biopsies, they are beginning to use liquid biopsies—blood samples to detect cancer. Could there be a time when, as part of your blood donation, you get screened for cancer? There are lots of possibilities, so the future is amazing.