Lean Impact

1. Think big, start small: Set audacious goals and validate with small experiments

"Small is beautiful, but big is necessary."

Set audacious goals. Lean Impact challenges organizations to think beyond incremental improvements and instead aim for transformative change. This requires setting measurable, ambitious targets based on the true scale of the problem, not just what seems achievable with current resources.

Start with small experiments. While the end goal may be massive, the path to get there involves starting small and iterating rapidly. This approach allows organizations to:

• Reduce risk by testing assumptions early
• Learn quickly and cheaply before making large investments
• Avoid unintended negative consequences when working with vulnerable populations

Examples of this principle in action include:

• One Acre Fund's goal of serving 1 million farmers by 2020, achieved through continuous small-scale testing of new crops and techniques
• VisionSpring's journey from selling 800 pairs of glasses in 2003 to reaching millions through partnerships and system-level change

2. Love the problem, not your solution: Deeply understand user needs before designing interventions

"Being proximate matters even when working with populations near your home turf."

Get close to the problem. Effective social innovation requires a deep understanding of the people you aim to serve, their context, and the systemic issues at play. This means:

• Spending time in the communities you work with
• Engaging beneficiaries as active participants in the design process
• Using tools like ethnographic studies, journey mapping, and system mapping

Avoid assumptions. Our instincts and experiences can be misleading when working with populations different from our own. Examples of organizations that prioritized understanding before intervening include:

• Health In Harmony, which discovered that providing healthcare was key to forest conservation in Indonesia
• Proximity Designs in Myanmar, which integrates customers throughout the design process for agricultural tools

By focusing on the problem rather than a predetermined solution, organizations remain open to unexpected insights and potentially more impactful interventions.

3. Validate value, growth, and impact: Test assumptions for all three pillars of social innovation

"To realize social impact at scale, we need to deliver on all three."

Three pillars of social innovation:

1. Value: Do users want and use the solution?
2. Growth: Is there a sustainable path to reach all who could benefit?
3. Impact: Does the intervention create meaningful positive change?

Organizations must validate assumptions for each pillar through experimentation. This often involves:

• Testing value through user engagement and feedback
• Exploring various growth engines (e.g., market-driven, government adoption, replication)
• Measuring both short-term outcomes and long-term impact

Examples of organizations validating across all three pillars:

• d.light testing customer preferences for solar lantern designs (value)
• Off Grid Electric proving its pay-as-you-go business model (growth)
• One Acre Fund rigorously measuring yield increases and income improvements (impact)

Failing to validate any one pillar can lead to solutions that are unused, unsustainable, or ineffective at addressing the core problem.

4. Iterate rapidly: Use build-measure-learn cycles to improve solutions quickly

"The most critical indicator of successful innovation is the speed of iteration."

Accelerate learning cycles. The faster an organization can complete build-measure-learn loops, the quicker it can improve its solutions. This involves:

• Creating minimum viable products (MVPs) to test key assumptions
• Collecting data and feedback quickly
• Making decisions based on evidence rather than hunches

Techniques for rapid iteration:

• Simplify MVPs to test one aspect at a time
• Use technology for faster data collection and analysis
• Break down long-term goals into shorter-term indicators

Examples of rapid iteration in action:

• Summit Public Schools redesigning its entire classroom model through weekly experiments
• CareMessage refining its health management system through text message tests with family members and clinic patients

Organizations should strive to reduce the time between iterations, even in contexts where full impact may take years to manifest.

5. Measure what matters: Focus on innovation metrics, not vanity metrics

"Vanity metrics have spread throughout the social sector like a communicable disease."

Avoid vanity metrics. Many organizations focus on metrics that sound impressive but don't drive decision-making or indicate real progress, such as:

• Total number of people reached
• Dollars raised
• Activities completed

Prioritize innovation metrics. These metrics measure progress at the unit level and can guide improvements:

• Adoption rate
• Cost per outcome
• Net Promoter Score
• Retention rate

Examples of innovation metrics:

• Harambee Youth Employment Accelerator tracking job retention rates
• One Acre Fund measuring yield increases per farmer
• Revolution English monitoring weekly practice time for language learners

By focusing on metrics that truly indicate progress toward the mission, organizations can make data-driven decisions to improve their interventions continuously.

6. Pursue multiple paths to scale: Explore various growth engines beyond traditional nonprofit models

"Scale is making the shift from linear to exponential growth."

Diverse paths to scale. Organizations should consider multiple strategies to reach massive impact, including:

• Market-driven approaches
• Government adoption or funding
• Replication and franchising
• Open-sourcing and commoditization
• Partnerships and shared infrastructure

Examples of innovative scaling strategies:

• VisionSpring partnering with BRAC's community health workers to distribute eyeglasses
• Code for America accessing government funding to scale its food stamp enrollment service
• PATH open-sourcing water filter designs to create a more competitive market

Organizations should identify and validate their "engine for growth" early, as it may significantly influence the design of their solution.

7. Embrace failure as a learning tool: Create a culture that celebrates calculated risks and pivots

"Innovation cannot exist without failure."

Reframe failure. In the social sector, fear of failure can lead to risk aversion and lack of transparency. Instead, organizations should:

• Differentiate between "good" failures (learning from calculated risks) and "bad" failures (avoidable mistakes)
• Create mechanisms to share and learn from failures openly
• Reward risk-taking and pivots based on evidence

Techniques for embracing failure:

• Hold "joyful funerals" or "fail faires" to celebrate lessons learned
• Include failure stories in regular team meetings and reports
• Set expectations with funders about the role of failure in innovation

Examples of organizations embracing failure:

• One Acre Fund's shift to small-scale testing after a large failed crop initiative
• The International Rescue Committee's Airbel Center for innovation in humanitarian aid

By creating a culture that values learning from failure, organizations can accelerate their progress toward impactful solutions.

8. Align funding with innovation: Seek flexible capital and outcomes-based funding models

"Making grants less restrictive and less prescriptive is an important first step towards building trust."

Challenges of traditional funding: Rigid grant structures often impede innovation by:

• Requiring detailed plans upfront
• Focusing on activities rather than outcomes
• Discouraging experimentation and pivots

Innovative funding approaches:

• Unrestricted funding: Allows organizations to allocate resources flexibly
• Tiered funding: Provides increasing support as evidence of impact grows
• Pay-for-success models: Tie funding to achieved outcomes
• Blended finance: Combines philanthropic and investment capital

Examples of aligned funding:

• The Edna McConnell Clark Foundation's shift to providing flexible growth capital
• Development Impact Bonds for education in India
• The Rise Fund's $2 billion impact investment fund

Both funders and recipients must work to create funding structures that enable and incentivize innovation for greater impact.

9. Transform systems, not just symptoms: Address root causes through collaborative efforts

"To tackle both long‐standing social ills and new challenges, 193 of the world's leaders came together at the United Nations in 2015 to adopt a shared vision – the Sustainable Development Goals (SDGs)."

Move beyond individual interventions. Many social challenges cannot be solved sustainably by any single organization or solution. Instead, focus on:

• Understanding and mapping complex systems
• Identifying leverage points for change
• Building coalitions across sectors

Strategies for systems change:

• Multi-stakeholder initiatives
• Policy advocacy and reform
• Market-based approaches to address market failures
• Building shared infrastructure and platforms

Examples of systems-level approaches:

• EYElliance bringing together government, industry, and nonprofits to tackle global vision care
• Alliance for Affordable Internet advocating for policy changes to reduce internet costs
• Freedom to Marry's coordinated campaign to legalize same-sex marriage in the US

By addressing root causes and transforming systems, organizations can create more sustainable and far-reaching impact.

10. Bridge the hybrid gap: Blend profit and purpose with new entity structures and financing

"We are at an extraordinary moment in the evolution of our society, a point at which charitable entities are increasingly embracing business‐oriented approaches to expand their scale and impact, while companies are increasingly recognizing the need to balance profits with their benefit to society."

The hybrid gap. Traditional nonprofit and for-profit structures often fall short for organizations seeking both financial sustainability and maximum social impact. New approaches include:

Entity structures:

• Benefit corporations
• Low-profit limited liability companies (L3Cs)
• Community interest companies (CICs)

Financing mechanisms:

• Impact investments
• Blended finance funds
• Outcomes-based financing

Examples of bridging the gap:

• Omidyar Network's flexible deployment of grants and investments
• Village Enterprise's Development Impact Bond for poverty alleviation
• B Lab's B Corp certification for socially responsible businesses

By developing new hybrid models, we can unlock greater resources and align incentives to drive social innovation at scale.

Last updated: November 19, 2024