Big Idea 2014: Nonprofits Must Get Lean to Change the World
Ben Mangan
Advisor to Philanthropists and Impact Investors | CEO and Founder | Board Member
This post is part of a series in which LinkedIn Influencers pick one big idea that will shape 2014. See all the ideas here.
Even if you are an optimist like me, it is challenging to look at the world and feel like we’re making progress solving the biggest problems facing people around the globe. Some of the problems people face are so devastatingly basic that I find them soul crushing when I consider what they mean for the state of humanity. Two in particular really get to me. Around the globe, 30 million people live in slavery today. Nearly 800 million people around the world cannot read or write.
Governments and corporate philanthropy must lead effectively in order for society to make progress on issues of this magnitude. Yet, I argue that nonprofits, already valiantly on the front lines of solving complex problems like these, have enormous untapped power to solve problems like human bondage, illiteracy, and so many others. To seize this power, however, the nonprofit sector must embrace a new way of doing work – defined and anchored by the Lean principles, which I discuss below.
If we expect to create breakthrough change through the work of nonprofits, we need to foster breakthroughs in the way we do our work. All nonprofit leaders need to publicly and constructively push our field to regularly learn and improve in a way that allows us to increase our impact and decrease our costs. Defensive responses are sure to follow, ranging from “because we’re always starved for funding” to “the problems we aim to solve are so complex, markets and government can’t even solve them!”
Both of these statements are true. It is also true, however, that we can do more by transforming our organizations using Lean principles.
If you are new to the Lean principles, they represent a simple, but powerful way to grow an enterprise or solve a social problem in an incredibly cost-effective, client-centric way. The fantastic book “The Lean Startup” by Eric Ries, brought these ideas squarely into the mainstream, and I highly recommend that you read it. These principles are called “’Lean” because they provide a fast, inexpensive, effective critical path to getting the answers you need to achieving your objectives in bring a social or business solution to the marketplace.
The Lean principles involve a robust toolbox that is invaluable to learn and practice, but here are five essential steps anyone in the nonprofit world can use to get started right away:
1) Don’t get hung up on the startup piece of “The Lean Startup.” This can be adapted to work anywhere.
2) Once you’ve defined the problem you are trying to solve, clearly and thoughtfully identify the core assumptions you are making as you design the solutions you’ll provide. Make sure to define them in a way that allows you to test whether these assumptions are correct.
3) Build what Eric Ries and others call a “Minimum Viable Product” – literally the most inexpensive, often creatively bootstrapped program or product, that allows you to get real live feedback from your target customers. Building a minimum viable product allows you to hold off on investing in infrastructure, and full program implementation until you know how your program ought to be built – and with this approach you learn this directly from your target customers as they react to what you offer them.
4) Find even a small group of people who can consume your minimum viable product or service to see if your core assumptions were correct. You’ll learn things in days, weeks and months – not years, as is so often the case in the world of performance measurement in nonprofits. While some tests will suggest that your assumptions were correct, in some cases, you’ll learn that your assumptions were just completely wrong. In other cases, you’ll learn something unexpected. There’s tremendous value in all three of these outcomes.
5) Be flexible enough to build your program or product iteratively, until you’re certain you can justify investing to scale your solution beyond your small tests. If your find that your assumptions are incorrect, reconsider whether the new program you are launching still makes sense. Consider pivoting to dramatically change - or even scrap and re-design - your solution based on what you learned.
This approach allows us to invest as little as possible in early attempts at solving problems, by failing as quickly and as cheaply as possible. This is how you get to the right answers as quickly and cost effectively as possible.
But don't assume that the simplicity in all of this makes it easy. In fact, it's quite hard to get this right - building an organization and culture that sustains this approach regularly over time. Truly embracing and using the lean principles requires tremendous strategic focus, unflinching discipline, and in nearly all cases for nonprofits, major cultural shifts.
We have lived this at EARN, the nonprofit I run, over the past two years. After a decade of being one of the largest US microsavings providers we decided that our impact was out of whack with the size of the American economic security problem – and that we needed to vastly expand the number of lives we changed for the better. It has taken two full years to transform ourselves from a mostly in-person service/product delivery organization, to one that strategically leverages technology and lives the lean principles everyday. And, it’s been one of the greatest challenges of my career to get us here – involving a reorganization, challenges with skeptical funders, and a reboot of EARN’s culture.
Our reward, however, was well worth the challenge. EARN just launched our new online Firefly Savings Account, designed to help low income workers build financial capability , and a habit of saving, in 6-12 months. Using the lean principles, we’ll test our core hypotheses about what it takes to get people to save regularly, and we’ll pivot accordingly. With this approach, EARN will serve millions in our second decade, instead of thousands – and for pennies on the dollar of our costs in our first decade.
I will share this journey here on LinkedIn to provide key learnings for how nonprofits can apply lean principles to expand impact. There are already some good resources available to those of you ready to go now. Some excellent leadership is coming from the folks at LeanImpact and the great Beth Kanter recently highlighted ten social sector leaders using Lean principles. Reading Beth’s blog is a great way to inspire your journey toward increasing impact and decreasing cost.
What are you waiting for? Get Lean!
About Ben Mangan: Ben is President, CEO and Co-founder of EARN, a lecturer at UC Berkeley's Haas School of Business, and a blogger for the Huffington Post. Follow Ben at LinkedIn and Twitter for provocative, truth telling about leadership, social enterprise, the social sector and doing good in the world.
Photo: CreativeCommons/Cambodia4kidsorg
Writer & Photographer
11yThanks for this article Ben. I just read it and the commentary of the last four months. It seems to me that for a start up the lean strategy is a no brainer. Most of the concerns expressed have been focused on established NGO's and their worries around losing major funding. Were I the CEO of an NGO or Non Profit considering applying LEAN principles to our organization I'd want to reach out to our donors and educate them first. Then invite them to participate on a committee to manage and evaluate a small experiment before scaling it up.
What seems to be missing in a lot of the commentary and criticism of this post is any sense that Lean is an effective and structured methodology that can allow any organization to review their particular work processes and get rid of bogus/superfluous activity that is not useful to outcome. My experience around non-profits has been that they are often started by good-hearted folk who want to do good in the world, but have not examined their assumptions, worldview, assessment of who they are serving, how they are intervening, and what effect they are trying to achieve. Organizations sometimes seem to be reacting by what an educated middle-class suburbanite thinks the solution is. A lot of folk who are drawn to this work are coming from the empathy/sympathy side of things and are untrained in doing program design and trying to optimize their work. I think Lean can be a big boon to this sector, if it can overcome negative stereotyping that it is simply to be used to cut staff and/or squeeze workers harder or worker fears of change. I disagree that Lean or this post ignore the financial considerations that non-profits face. Funders are increasingly looking for outcome data from the programs that they finance. In my view, lean is one methodology to critically examine interventions and work processes, optimize them, and be part of an ethical commitment to doing effective interventions with clients.
Resigned
11yWhy is it that most Non-profit organisations are set up by those that have less funding or no cash? However they seem to be the genuine people to follow with the genuine ideas. Many of these so-called organisations that are sponsoring and backing non profit projects are really just ensuring their own existence at the expense of the non profits. Since leaving the forces in 1993 I have been associated and worked with non profit organisations and I have never had to fight so hard in my life. My present project is a mental health anti-stigma and discrimination organisation. Don't people see the stigma the inflict todays on others will come back and haunt them tomorrow? 1 in 4 of the WHOLE population WILL be touched by a mental illness during their lifetime. http://www.musicandthemind.co.uk - info@musicandthemind.co.uk
Visiting Assistant Professor & Former Deputy General Counsel & Assistant Secretary, Textron Inc.
11yUnderlying your article is the premise which I have been pitching to my nonprofit clients-you may not have shareholders but your financial and operational health which is critical to carrying out the social mission-requires that you think more like for-profits in terms of being a business. I am a big believer in the Six Sigma lean process and its application does not cost a lot of money; just some time and focused problem-solving. And this can be done without damaging the culture of nonprofits which is critical to achieving their mission. Stated another way, many nonprofits could "lean out" their operations which would only make them better able to fulfill their laudable missions. If anyone is interested, I recently published a brief article on the importance of risk management for nonprofits which should be on Linked-in and will be publishing a more espansive piece with the RI Bar Journal in March 2014.
Assistant Professor of Criminology and Criminal Justice, University of Maryland-College Park
11yI like the basic premise of this article given my training and experience applying Lean Six Sigma principles. However, I would also comment that the entire burden cannot solely fall on nonprofits to change how they operate. The private sector and governments, too, must evolve in a way that gives nonprofits the space and capacity to grow organically without creating additional economic constraints. Otherwise, the untapped potential of the non-profit sector will likely go unrealized