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Lean Impact: How to scale social innovation for good

Closing the Gap – a series of Oxford University postgraduate student insights to the Skoll World Forum 2018

Nikhil Dugal, Skoll Scholar and 2017-18 MBA at Saïd Business School, reports on the Skoll World Forum workshop ‘Lean Impact: Scaling Innovations for Social Good’.

Ann Mei Chang is the author of the upcoming book, Lean Impact, on how modern approaches to innovation can drive massively greater social impact and scale.

She is the former Chief Innovation Officer and Executive Director of the U.S. Global Development Lab at USAID. Prior to her pivot to the public sector, Ann Mei had over twenty years of experience at leading Silicon Valley companies including Google, Apple, Intuit, and some startups.

At the Skoll World Forum, she led a workshop titled Lean Impact: Scaling Innovations for Social Good where participants were introduced to the lean methodology to help develop more scalable solutions for social innovation. Participants were asked to arrive with a social challenge or a solution where they’d like to see growth.

Session for Lean Impact - Workshop cabaret tables at the Skoll World Forum

The workshop started with her posing an intriguing question. There has been slow but steady progress in multiple focus areas in the development sector such as sanitation and health, but shouldn’t we be shooting for progress at the same rate as disruptive technologies such as mobile phones? Their adoption has skyrocketed over the past two decades unlike any other technology deployed in the social sector.

Edison once stated, ‘genius is one percent inspiration and ninety nine percent perspiration’. A lot of time when we think about innovation, we focus on the one percent inspiration, but success is about making that idea practical and applying it to achieve true impact at scale in the world.

The lean startup movement has done a good job capturing the fundamental strategies for scaling up in the startup sector but the movement mostly addresses businesses in the private sector. Lean impact aims to help fill in the gaps for applying the lean methodology in the social sector.

Ann started the session with three principles to follow in order to achieve lean impact: Think big, start small and relentlessly seek impact.

  • Think Big: Think about the problems that you want to solve, instead of thinking about problems you can currently address based on your resources. For example, Astro Teller from Google X stated that we should be clear whether our aim is to make a 10% or a 10x improvement. Sometimes 10x could actually be easier because fewer people have tried it.
  • Start small: Key to innovation is about how fast you’re able to iterate your solution. That’s why you should start small. It’s easier to test something out with 10 people rather than 1000 people.
  • Relentlessly seek impact: You need to love your problem not your solution, and relentlessly seek impact in your interventions.

Further, she stated that social innovation lies at the intersection of three pillars: growth, value and impact.

Ben diagram of Social Innovation. Value/Growth/Impact

1) Value

The value in the social sector comes from two customers, your funders and your end users.

You need to understand what your end users need, and not move forward with assumptions. Are you delivering something people want or come back for? How do you make something people desire and demand?

A prime example for testing customer value is PATH water filters. They tried two versions when they were going to market, one was the simplest and cheapest version, and one was a nicer model that cost twice as much. Three times as many people bought the nicer version because they didn’t want something that looked like a trashcan sitting in their living room! You want to create real world conditions to see how people will respond in the real world because observed data is more valuable than self reported data.

Meanwhile, funders are looking to minimize risk rather than enhancing learning. Funders need to look at starting small, taking more risk and placing lots to bets. Based on traction, funding can be scaled up over time.

2) Growth

Do you have an engine for growth that doesn’t just grow linearly but accelerates over time? Many organizations focus on scaling their work in the short term instead of the long term. In the social sector, we often see growth curves like the inverse hockey stick. An organization can scale quickly but then when they reach 100,000 or 1 million people, there are just not enough donor dollars to continue scaling up and stagnation occurs.

A typical grant program can cause organizations to scale up too fast instead of iterating, starting small and testing solutions before scaling them up. We need to also validate drivers that can accelerate growth in the long run.

3) Impact

It is also possible for an organization to scale up too fast, and focus on vanity metrics such as the number of people they reach or total funding mobilized. This leads to scale with unclear impact. Instead, innovation (outcome) metrics should be drivers for how your intervention works, such as adoption rates or percentage of users working or studying longer. How can we test early on to see if the intervention solves the problem we are addressing? There are several linkages between an intervention and the resulting impact that need to be confirmed before scaling up.

Organizations like ID insight are introducing cheaper and faster tools to evaluate impact, lightweight proxies that can tell if the intervention is working before investing in expensive evaluations like RCTs.

Decision vs. knowledge focused evaluation

Ann went on to explain that there are four proto-typical business models in the social sector:

  • Market-driven: These rely on market forces for traction, and are the easiest to scale. For example, Off-grid Solar uses a pay-as-you-go business model using mobile money over time instead of customers facing a large upfront cost.
  • Cross-subsidy model: This involves cross-subsidizing an impact generating non-profit service with a for-profit or revenue generating activity. A leading example is Arvind eye care that has each wealthy patient pay for up to 3-4 people. Facilities are different but everyone gets the same quality healthcare.
  • Replication: Microfinance was pioneered by the Grameen Bank in Bangladesh by Mohammed Yunis. This model has now been replicated and spread around the world to reach over 200 million people.
  • Government spending: This is a often the most appropriate/likely path to scale for basic services such as health and education, where the government is usually the biggest provider and potential partner.

Workshop Exercises

The session also included a workshop to help participants work on their ideas.

The first included defining a goal and a problem. To identify a goal we can start by asking, ‘How will the world be different in 10+ years if you succeed?’. A problem is what is preventing the goal from being reached today. These problems are due to some root causes. If we identify those, it can help frame the solutions to address them.

The second exercise was to generate lots of solutions to pick one for testing. Attendees were asked to be creative and think outside the box, keeping in mind that high risk leads to high reward. Participants must start with a blank slate in order to do so. Then, one idea must be selected from this list and the attendee must identify their assumptions behind it and how the solution will play out.

The third exercise was about asking who will pay for the product/service at scale and who will implement the solution at scale.

To learn more about Lean Impact and Ann’s upcoming book, visit leanstartup.co/social-good