[Blog 04] Lean Startup for Social Impact

How the two “Whys” are connected:

Why I am writing this book and Why you are reading this book

Ever since I began the current writing project, some of my friends kept asking me: why are you so passionate about writing this book?

Yes, the “Why” is important, otherwise I would not have the energy, patience and passion to sustain it.

In short, it is my strong desire to disrupt a stable and unjust equilibrium.

Let me first explain the meaning of ‘stable and unjust equilibrium’.

I have taken this concept from a book which I strongly recommend all of you to read: Getting Beyond Better: How Social Entrepreneurship Works[1](2015).

To put this book in perspective, you should be aware of two great books on social entrepreneurship published before: How to Change the World: Social Entrepreneurship and the Power of New Ideas[2], which is considered as the ‘bible’ of the social entrepreneurship field, and Getting Beyond Better.

How to Change the World is an excellent introduction to the emerging horizon of social entrepreneurship, while Getting Beyond Better addresses the practicability of social entrepreneurs’ challenges and concerns. Specifically, the latter attempts to introduce the readers the meaning and significance of social entrepreneurial practices.

One of the central ideas of Getting Beyond Better is equilibrium shift. Although different social entrepreneurs tackle a range of social and societal issues, what they have in common is their attempts to disrupt what they see as stable and unjust equilibriums and to build a new, more just equilibrium.

For example, Muhammad Yunus’ focus was to disrupt the stable and unjust equilibrium of inaccessibility to credit by people in need. It is ‘stable’ in the sense that the prevailing parties concerned have an interest in maintaining the status quo; it is unjust because it denies credit to people who need it in order to get out of poverty. In the end, Yunus created a more just equilibrium under which poor people can have access to micro-finance.

In the book Getting Beyond Better, the authors showcased numerous social entrepreneurs who have disrupted stable and unjust equilibriums and built sustainable ones.

So what is the “stable and unjust equilibrium” that I am trying to disrupt by writing this book?

It has to do precisely with building new ventures for social impact.

The chance of startup failure is high – we all know it. But with the advent and spread of the Lean Startup methodology, things have changed for good. If we say that the success rate of startups is less that 10%, those who have mastered and applied the Lean Startup methodology might have a success rate of 60-70%. That is a huge difference.

But why are social-purpose startups not learning and using the Lean Startup methodology?

Here we have a stable and unjust equilibrium. Although the Lean Startup methodology is not rocket science and anyone with a high school education could master it, it does require training and coaching (say, about 3 to 6 months). But hardly anyone is interested in providing the training and coaching to social-purpose startups simply because they can’t afford it.

Training consultants who could provide them generally are not interested in assisting social-purpose startups to learn and apply the Lean Startup methodology. They would rather offer their services to business entrepreneurs or corporations who could afford them.

Hence, we have this stable, unjust and undesirable situation: social–purpose startups which stand to benefit greatly from mastering and deploying the Lean Startup methodology do not have the opportunity to learn it.

The sad story of LEAN IMPACT – Lean Principles for Nonprofits and Social Enterprises

Shortly after it was known to the social sector that the Lean Startup methodology is relevant and applicable to NGOs and social enterprises, a new organization and website known as Lean Impact[3] came into being in 2013 to help social-purpose organizations learning and mastering the methodology.

The website has a rich source of information and resources. The organization also offers conferences and seminars for NGOs and social enterprises to exchange experience on applying the Lean Startup methodology. Unfortunately, the organization behind Lean Impact had to ‘pause’ operations in 2014 because it could not find a sustainable business model. The painful reality is that although social good organizations are eager to learn the methodology, they could not afford the trainers and consultants to assist them.

Leanne Pittsford, founder of Lean Impact, explained in the ‘pausing’ message on May 24, 2014:

In January 2013, we started on a journey to help social good organizations use Lean Startup principles. We’d like to share a bit about how we got here, and the future of Lean Impact.

Lean Impact came out of our work for social good, our experiences with startups, and a deep desire to help impact organizations achieve greater effectiveness.

We thought, if we could take the Lean approach that works so well for startups and apply it to the social good space, taking into account the unique needs of social good organizations, what incredible gains could we help organizations make?

As a Lean organization ourselves, we started with a Minimum Viable Product. We launched three experience sharing gatherings in New York, Washington, DC and San Francisco. Each party had over 600 people register and over 300 through the door.

After the launch parties, we focused on the Lean Impact blog, and creating rich educational content to provide true value to our community. We created The Ultimate Dictionary of Lean for Social Good, which is still to this day the only Lean Guide specifically written for social good organizations.

We had some hard conversations about whether to continue Lean Impact, but we remembered the incredible “ah ha” moments from the launch parties. So we tried to iterate that on a grander scale, by launching the Lean for Social Good Summits.

The Lean for Social Good Summits brought together 1,000 people for half-day, educational and inspiring events in New York, DC and San Francisco. Over 40 organizations shared their Lean stories, and we had funder panels in which funders and grantees discussed the opportunities and challenges of implementing Lean for Social Good.

While the Summits were fantastic, they also were not scalable long term, and we didn’t feel we could grow them while maintaining the standard of quality and education that our audience deserves.

We began to explore the next step of making Lean Impact scalable to a wider audience, and sustainable from a business perspective. To test the market, we embarked on a crowdfunding campaign.

In order to make Lean Impact scalable, we needed a way to more widely distribute education and implementation using technology. To truly do this, we started sketching out an online curriculum, which would enable the most number of people to really engage with Lean in their organization.

Before investing in it, we wanted to test the market (as we had in all other steps of this journey). This time we chose crowdfunding as our test.

We set up the campaign, created a video, developed perks, and launched it to the world using our newsletter, social media, blog posts and other means.

After 30 days, we had only raised $500.

We had failed fast, and we had the answer to our test.

Since our crowdfunding campaign, we’ve done a lot of questioning and soul searching. Where is the disconnect between social good and Lean?

It’s clear that there’s interest around the topic, as evidenced by the over 1,800 people who registered for the launch parties, and over 1,000 who attended the Lean for Social Good Summits.

It’s clear that the industry believes we’ve hit on something that the social good sector needs. In every conversation, we heard people express frustration at the way things had traditionally been done, and an eagerness to use Lean to try something new.

The disconnect is between what people say they want and what they’re willing to pay for.

On the whole, the social good sector is very price sensitive, as they’re working with limited funds. But so are startups – not every startup is Snapchat, and the vast majority of startups are operating on very limited funds.

The difference is that startups are willing to invest to grow and social good organizations, on the whole, are not.

Simply put, if you want something, you have to pay for it. But that’s not how the social good sector typically operates. For so long social good organizations have relied on in-kind donations, sponsored items, and hand-me downs from corporate. Added to that is the external pressure to keep “overhead” costs low, as outsiders erroneously focus on that one metric as a measure for organization effectiveness.

As a result, there’s fear of spending money, and there’s not a culture of investing to grow. But when you’re an entrepreneur trying to create something for the social good sector, you need to think about scalability and growth in order to make your idea sustainable.

It’s clear that there’s no product-market fit for Lean Impact. And for that reason, we are pivoting.

What’s Next?

We’re putting Lean Impact on pause temporarily in order to explore other avenues of funding.

Though we’re disappointed that our crowdfunding campaign wasn’t successful, we’re glad that — in true Lean form — we got an answer without extensive investment or time, and we could make a data-informed decision.

It’s been a fantastic journey. Thanks for being a part of Lean Impact and please stay tuned for the next phase!

Excerpted from: The Future of Lean Impact https://leanimpact.org/lean-startup-for-social-good-the-future-of-lean-impact/

The Lean Impact journey highlights the existence of a stable and unjust equilibrium. This is exactly what I am attempting to disrupt. It will not be easy. And writing this book is but one of the first steps, albeit an important one.

Now let’s come to Why you should read this book. Here are some good reasons:

• It will enable you to appreciate the nature and power of Lean Startup

• It will convince you that if you were to launch a social venture, the application of the Lean Startup methodology would greatly enhance your chances of success

• If you would like any individual or organization that you know of to succeed in launching social ventures, you should urge them to learn and master the Lean Startup methodology

• Just helping to spread the idea of Lean Startup is already a major contribution to creating social good

• Above all, you could become a trainer and/or coach of Lean Startup – which is vitally needed

By now, I hope you could see how the two WHYs are connected. It is only when they are connected that you have the incentive to continue reading this blog.

Your feedback is most welcome. Please send it to kakuitse@gmail.com

[1] Roger L Martin and Sally R Osberg, Boston, Mass: Harvard University Press, 2015

[2] David Bornstein, Oxford: OUP, 2007.

[3] https://leanimpact.org/

Co-authors: Karen Lee, Wander Meijer, Catus Lee, Ivy Lau, Marcus Lim