Lean Startup for Nonprofits
I was struck, but not surprised, when I heard the authors of Moneyball for Government note, “Less than $1 out of every $100 spent by government is backed by even the most basic evidence that the money is being spent wisely.” This reminds me of Albert Einstein’s quote: “The definition of insanity is doing the same thing over and over again and expecting different results.” To generate transformative change in the social sector, we need to find a better way. What if the opposite of insanity in the social sector is adaptive innovation — improving over and over again and getting better results? That doesn’t mean we need NEW ideas and processes; instead, we need BETTER ideas and processes. I am hoping that in 2018 we officially break up with the word “new” and trade up to “improved” as the gold standard of social innovation. To bring discipline to this process at Social Impact Architects, we adapted Lean Startup for Nonprofits in 2014 and our clients have found it wonderfully helpful and refreshing. We also expanded it later in 2014 with our Social Alchemy model, which takes us from innovation to scale.
Coined by Eric Ries, “Lean Startup” is the alternative to writing a business plan before starting a venture. Instead, it is a hypothesis-driven approach for finding a sustainable and scalable business model. It includes three steps — developing the business model (build), eliciting customer feedback (measure) and developing the product intentionally (learn). While we love this notion, especially for social entrepreneurs, it needs modification to best fit the social sector. To do this, we adapted the model with the following six steps (which we have modified since our first model — practicing what we preach!):
Step #1: Isolate Problem(s) — Many social sector organizations start with the notion of “What if?” Passionate individuals see a need in the social sector and want to fill the void. After first identifying the problem, the next important step is to get to the root cause of the problem. Ask yourself: Why does the problem exist? Are you addressing the symptoms or the actual problem? Why isn’t anybody else addressing it? If someone is addressing it, what isn’t working? Once you have answers to these key questions, you can then develop your overall hypothesis around the social solution, also known as a theory of change.
Step #2: Identify Goals, Target Population(s) and Outcomes — Next, it is important to fill in the details on how you will achieve your theory of change. Ask yourself: What are the goals of the program/organization? Who will you serve? How will they be served? What do you hope to achieve over time? How does it lead to impact? One of the most helpful tools to build your framework is a logic model.
Step #3: Search for Existing Best Practices — Once you have your preliminary theory of change and logic model, conduct secondary research on your idea to uncover what others are doing nationally. You may believe your idea is unique, but it is just as important to confirm this hypothesis. Research: What works with the target population? What research exists around your idea? Are there promising and/or best practices? What can be learned from others? Once your research is complete, consider revising your theory of change and logic model so that your program is research-based.
Step #4: Research Existing Programs in the Community — Now that you have a better understanding of the need and execution, conduct an environmental scan of other nonprofits, government agencies and businesses to understand what others are doing locally, and to find possible partners and funders. Find out: Who is also working with the same target population? Are others providing a similar idea — either in execution or outcome? How are you alike or different? What funding exists to support the idea? Once your scan is complete, you’ll have a better idea of whether there is a market for your idea and if your idea is fundable. If the market isn’t promising, you might revise your idea and/or consider ways to partner with others on the unique aspects of your idea. If it is promising, develop your unique value proposition.
Step #5: Assess Internal Capacity — Now that you know what it takes to be successful, conduct an internal review of your capacity to execute. In your research, you have found what works, what is fundable, and how you are different, so by now you understand your unique value proposition as well as a possible business model. Decide: Is it worth pursuing? Is it consistent with your mission? Are you the best equipped locally to pursue? How will it impact current work? Do you have the resources and/or expertise to pursue it? If the idea has a market, but you are concerned about internal capacity, consider ways to partner or share your idea with others. Sometimes is it more practical and efficient to incubate an idea within an existing organization (as a social intrapreneur) than to start an idea and an organization at the same time.
Step #6: GO — (Re)design Most Impactful, Complementary Program or NO-GO — Once you have covered all the above steps, your idea will be initially “pressure-tested.” You can make an informed decision about whether or not to go forward and turn your idea into action by developing the most meaningful delivery of the program for your community. Then, if you start the program, it is important to support continuous improvement and redesign the program as needed — using these same steps to ensure that your program is still research-based, relevant to the community and right for your organization.
Lean Startup was invented to help existing companies and startups go to market more quickly and deal with rapid change more efficiently. The social sector is feeling this pressure as well — to innovate, create impact and become sustainable. We hope the sector will employ this isolate-identify-search-research-assess-(re)design process as an enhancement to the build-measure-learn cycle and enjoy more rapid prototyping and meaningful results. We would love to hear your feedback on this process and how you have used it!