How UNICEF Ventures Is Borrowing Strategies from the Startup World to Innovate for Good

As established for-profit firms invest in new technologies to maintain their success, large nonprofit organizations are also exploring new avenues of growth to benefit the common good. In this episode of Mastering Innovation on SiriusXM Channel 132, Business Radio Powered by The Wharton School, Rajesh Anandan, Senior Vice President of UNICEF Ventures, discusses the how innovating inside a charitable organization compares to doing so in the private sector.

Established organizations across all domains face struggles to manage the core business while simultaneously exploring new avenues, Anandan points out. One approach that worked for his organization was to create a dedicated team that functioned similarly to a startup, with the freedom to test new ideas. This led to the unexpected development in 2015 of the the Kid Power Band to promote empathy and a sense of agency among children in America. For every 25,000 steps walked, a packet of therapeutic food is unlocked and delivered by UNICEF to a child in need. Led by Anandan and his team, the Kid Power program has since expanded into classrooms across the country.

An excerpt of the interview is transcribed below. Listen to more episodes here.

Transcript

Rajesh Anandan (Senior Vice President, UNICEF Ventures)

Saikat Chaudhuri: I’m intrigued because you mentioned that UNICEF runs this venture zone of which you’re in charge, and creating ventures that are sustainable is very important. Given your background coming from Microsoft, how does UNICEF Ventures compare to a classic venture capital fund in Silicon Valley or the tech industry? Where are the similarities and the differences?

Rajesh Anandan: The ventures team inside UNICEF USA is more of an internal incubator. We don’t have money to play with; we sort of beg, borrow, and steal to quickly test some theses or insight about a challenge that kids have. We then translate that into a product or service, get it in the hands of users, and get feedback. One difference is that we’re not a venture fund; we’re an incubator. It may be similar to an innovation team inside a big enterprise that’s looking at product extensions or businesses adjacencies which are a little outside of the core business but represent a new market that they could be entering.

That said, I do want to say that UNICEF the international organization does have an innovation fund investing in early-stage startups. Because it’s inside an entity that isn’t trying to maximize profit, the fund constrains itself to investing in open-source startups. If that startup succeeds, then it’s created a public good that benefits everyone, instead of providing a massive return to a small group of shareholders.

Chaudhuri: That’s a major difference. You were talking about the incubation arm within an organization like UNICEF USA. I can imagine that there are some differences in trying to create these ventures within UNICEF but also some similarities, because UNICEF is a large established organization with a proud history, not unlike companies that have also been around for a long time. Have you found that to be the case, especially comparing to your senior Microsoft experience or what you saw at Bain Capital?

Anandan: I’d say it’s very similar in that you have established organizations in any domain, whether that’s the nonprofit space or the commercial sector. The world changes, and you have to change with it. The challenge that most established organizations face is that you’ve got a core business to run. That places intense demands on your team and management to respond to the needs of that core business. This leaves little time to be looking ahead, outside, or across, and then making a concerted effort to investigate, invest, and explore what happens next. The idea of having a ventures group or an innovation team that’s dedicated to looking outside the core business is something that applies to any established organization where you need the space, time, investment, energy, and creativity to be innovating effectively.

“You have established organizations in any domain, whether that’s the nonprofit space or the commercial sector. The world changes, and you have to change with it.” – Rajesh Anandan

Chaudhuri: You’re talking about the challenges of an incumbent and how it’s difficult across the board. It resonates with me that at UNICEF you need to free up resources, combat the inertia, and do things slightly differently with a separate organization. If you look at the challenges when you went to try to promote these different ventures, what is your biggest challenge that you have to overcome?

Anandan: I’d say a number of them are no different in a nonprofit than a for-profit. Big organizations aren’t great at starting new things outside of the core competence. It’s a different pattern of behavior, a different profile of talent, and a different way of working. First is being able to create an approach and a culture that can be different but not conflict with the parent organization. Inside the ventures group here at UNICEF USA, and now the Kid Power Team, we behave like a startup. Everybody’s on Slack and we work in two-week sprints. We have software developers and engineers, we manufacture hardware, and we’re implementing the program in schools. That’s very different from charitable fundraising. We needed to be able to create a space where we could attract different profiles of talent who love the idea of being able to use what they do and what they’re good at for a higher purpose.

Chaudhuri: Being in academia, you mean?

Anandan: Yeah. There’s a tremendous pool of talent out there who have incredible skills in engineering, analytics, or any domain, who would love to have the chance to work on something that matters. We were able to form a fantastic team and adopt a version of Agile. We use a scaled agile framework that allowed the entire venture around Kid Power to be functioning in a very different way so that we could move quickly, test things with our end users, and keep iterating. That’s allowed us to continue to evolve what Kid Power is.

“We needed to be able to create a space where we could attract different profiles of talent who love the idea of being able to use what they do and what they’re good at for a higher purpose.” – Rajesh Anandan

We started out as a kids’ wearable product. Today, we’ve evolved into a video-driven service. We’ve gone from IoT to SaaS, and this is happening inside a nonprofit. When we started with the wearable, we didn’t want to get into hardware manufacturing. Nobody does. We talked to a bunch of the big players in the fitness-tracker space, and they were intrigued by this idea of connecting kids’ activity to impact. Our simple idea was, “Listen, kids don’t really need to track their steps. There’s no need there. They certainly don’t need to track their sleep or heart rate, but they do need to feel important.” We think we can create an experience, built around an activity-tracker, that connects their steps and their activity to impact. Every 25,000 steps a kid takes, they unlock funding for a packet of food. We have an in-app experience that celebrates the impact they’re having and takes them on little journeys to discover these countries and cultures that those packets of food are going to.

We believe there’s a positive experience we can deliver, and if we do that, there’s a massive market. There was a lot of intrigue, but nobody was buying. So, we went ahead and built our own wearable. We were able to partner with a group called Ammunition that designed the Beats headphones, and they were very generous and kind and worked with us pro bono to design the first Kid Power product, the Kid Power band.

Chaudhuri: We actually have one of those at home.

Anandan: Oh, look at that. How is it going?

Chaudhuri: It’s good. I was cringing a little when you said, “Well, we realized that we shouldn’t be in that business anymore and we should do other things,” but we were one of those early adopters. My kids thought it was very cool.

Anandan: While we didn’t want to get into the hardware business, we did. We were able to launch that band as a consumer product at Target. When we had launched, the Kid Power band was the number two selling wearable brand at Target. Not kids’ wearable, just wearable brand, period. We were outperforming JBL, Pebble, and Misfit. The reason we were doing that is not because we had a lot of money to spend on marketing — we had zero marketing. It was because at its core, the product was meeting a real need that kids have: this desire to feel like they matter, to feel a sense of significance. We were able to create a very simple product connected to an in-app experience that continuously reminded them that they’re amazing, that they can make a difference. They were making a difference. To date, all these kids, from around the world, who initially were participating with their Kid Power bands and are now in classrooms doing Kid Power Ups, have unlocked enough packets of therapeutic food that UNICEF has been able to deliver to over 70,000 severely malnourished children.

Those are children whose lives were at risk. A bunch of 8-, 9-, 10-year-olds, all over the U.S., from all walks of life, have come together and saved the lives of 70,000 children. That is what these kids have been able to do. For us, getting into a new business that we had no business to be in, hardware, was something that we needed to do because we were trying to respond to an insight around the need kids had to feel like they matter. The product or service is just a way to get there.

I’d say that willingness to leap into a new category, whether you’re inside a nonprofit or a for-profit innovation team, is something you have to do. You can’t say, “Well, Fitbit’s going to be so much better at it,” because the reality is that our product, our kids’ product, was outperforming everyone else’s kids’ wearable.

About Our Guest

Rajesh Anandan is an intrapreneur, entrepreneur and growth architect. He is the co-founder & CEO of ULTRA Testing, a neurodiverse technology company named one of Interbrand’s Breakthrough Brands in 2017, and founder of UNICEF Kid Power, a wearable-for-good named one of TIME’s 25 Best Inventions of 2016. Rajesh began his career at Microsoft as a program manager, then joined Bain & Company where he focused on business incubation and growth strategy. For the past decade, he has worked in the impact sector, including launching and running UNICEF Ventures. Rajesh has a BSc and MEng in Computer Science and Electrical Engineering from MIT with concentrations in Artificial Intelligence, Systems Dynamics and Economics.

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.

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