Despite enormous investments of time and money, are we making a enough of a dent on the social and environmental challenges of our time? What if we could exponentially increase our impact? Those are the questions posed by Ann Mei Chang who claims that people working to advance social good are just as innovative as those in business but struggle to scale their innovative efforts to drive truly meaningful impact.
In her new book, LEAN IMPACT: How to Innovate for Radically Greater Social Good, Chang inspires changemakers to innovate for greater impact and scale with the same proven lean principles from the bestseller The Lean Startup that helped over one million business readers. Chang’s insights are drawn from her decades of experience innovating at Silicon Valley companies and with nonprofits and government, including as a Senior Engineering Director at Google and as Chief Innovation Officer at USAID.
SEE Change recently sat down with Chang to discuss the lessons she gleaned from interviewing 200+ organizations around the world and how lean principles can help anyone achieve measurable change.
What inspired you to transition to the social sector after a long business career at Silicon Valley tech companies like Google?
I decided to make this transition almost two decades earlier. In 1995, an executive at Apple named Elizabeth Birch left her job at the age of 38 to become the Executive Director of a nonprofit, the Human Rights Campaign. I’d never heard of anyone doing something like this, and it opened a whole new window of possibilities to me. I decided then and there that I would make a similar switch and spend the second half of my career in the public or social sector doing something to make the world a better place.
How can Silicon Valley approaches to growth and innovation also help accelerate social impact?
Everyone seems to look towards Silicon Valley for ways that technology can help solve social challenges. While the potential for tech is tremendous, I believe there’s an even greater potential for us to learn from the techniques that have led to the breathtaking pace of progress coming out of the tech industry. For over 50 years, Moore’s Law has accurately predicted that the number of transistors on a chip would double every two years, delivering exponentially greater computing power. Imagine if we could even capture a fraction of that progress for social good. This starts with setting more audacious goals, is enabled by embracing risk-taking, and becomes reality through fast experiments that drive learning.
Why is innovation for social good just as necessary as innovation for business?
The point of innovation is to create something that is better, faster, or cheaper than what exists today. We have so many long-standing societal ills – from poverty, to injustice, to environmental degradation. I’d argue there’s nowhere that innovation is more needed.
What makes it harder?
The biggest factor is the nature of funding. Rather than invest in the potential for future growth, most donors care about tangible, predictable results. Thus, nonprofits are forced to operate more like utility companies than startups. This makes it hard for them to experiment, take risks, and pivot – all essential elements of innovation.
In addition, there are also a number of innate challenges in the types of problems we tackle. Measuring impact is much harder than measuring e-commerce purchases, our instincts can lead us astray when serving people very different from ourselves, and experimenting with vulnerable people requires great care.
How did Eric Ries’ bestseller The Lean Startup help inspire you to introduce a new approach to the social sector?
The Lean Startup beautifully captured the mindset and approach to innovation that was in the air in Silicon Valley. At Google, hundreds of experiments were running at any time, and decisions were made based on hard data. After my own transition to mission-driven work, I gradually came to realize that both systemic constraints and ingrained cultures were often forcing organizations to do the exact opposite, dramatically limiting what they were able to achieve.
What’s wrong with or missing from the traditional social sector approach of designing a solution and executing on that plan?
The reality is that very few people, myself included, are brilliant enough to design a perfect solution for a complex problem straight out of the gate. Steve Jobs may be the only person I’ve met who even came close – and even he was wrong some of the time. When we create a “grand master plan,” there are so many things that might go wrong. Any one of them could cause the whole endeavor to fail and waste the enormous amount of time and resources that was invested.
What kinds of insights might a nonprofit discover through a lean-startup style process of experimentation?
Experiments help us test our assumptions and reduce risk each step of the way. Sometimes we might learn that we are solving the wrong problem – one social entrepreneur who wanted to protect the habitat of orangutans discovered the biggest driver for deforestation was the lack of affordable healthcare. Other times we might discover that people’s priorities not what we thought – the nonprofit PATH found that low-income families in Cambodia overwhelmingly chose a nicer and more expensive design for a water filter as they were embarrassed to have something that looked like a garbage pail in the middle of their home.
Won’t it defeat the whole purpose of social good if we apply a business-oriented mindset to it?
I wouldn’t call lean a business-oriented mindset – we’re not talking about focusing on revenues or profits here. A more apt comparison would be to the scientific method, which is all about rigorously testing hypotheses. It turns out that, because of the pressure to make profits, businesses have had to adopt a more efficient way of building better products and services. By turning that same pressure to purpose rather than profits, Lean Impact is merely trying to help organizations find the best path to maximize social impact.
How can people differentiate vanity metrics from innovation metrics to measure social impact success?
When organizations talk about their social impact, what do you usually hear? Most often, it’s the number of people reached or lives changed. The Lean Startup calls these types of aggregate measures “vanity metrics” as they sound good, but don’t give us meaningful data about how good an intervention is. In reality, you could reach a lot of people, but not make a particularly meaningful difference in their lives. Or, even if you did have a positive impact, it could be more due to fundraising prowess than effectiveness. That is, another organization might have been able to achieve much more with those same dollars.
On the other hand, innovation (or actionable) metrics tend to focus on unit metrics such as the adoption rate, conversion rate, success rate, or cost per intervention. When we improve these numbers, we can be confident we are delivering greater bang for buck.
How can social sector organizations apply a lean approach to thinking differently about their finance models?
One of the three pillars of social innovation is growth. The difference we make is based on both the depth and breadth of our impact. If deliver significant impact, but only for a tiny fraction of those in need, are we really moving the needle?
Too often, scale ends up being an afterthought – something organizations only consider after they have proven an intervention works. But, the engine for growth should be an essential element of the core design. If a solution works, but is too expensive to scale, it may need to be entirely redesigned and retested. Thus, Lean Impact encourages us to test our growth hypotheses early on, along with value and impact.
What challenges did you encounter and what results did you achieve when you were chief innovation officer at USAID?
As with any large institution, there is inertia both in the culture and the procedures. Change takes time. We built support by seeking out early adopters – established leaders across the organization who saw the need and were willing to take some risks – and partnered with them to adopt new technologies and new ways of working. As they started demonstrating successes, they ended up becoming our best evangelists among their peers across the agency.
Can you explain how to “Love the Problem, Not Your Solution,” and how can this imperative change the way we innovate social good?
There’s a tendency in mission-driven work to become overly attached to our solutions. After all, this is what we pitch to funders and live and breathe every day, so it’s understandable that our solution can become part of our identity. As a result, it’s easy to focus on promoting, refining, and implementing our solution, lose sight of the problem we’re trying to tackle, and fail to realize when a different approach might be called for.
Why should one think of the beneficiaries of social good as customers?
When we think of people as beneficiaries, it’s easy to fall into the trap of giving them what we think they need versus what they actually want. In contrast, when we treat people like customers, it forces us to be responsive to their priorities and desires. Many social entrepreneurs have told me that they made a deliberate choice to charge a least a nominal fee for their products and services so they will receive a clear signal of whether they are meeting their customer needs.
How does social innovation scale differently than in business and why should that inform one’s approach?
The business model for most companies is fairly straightforward – customers pay for your product or service. For social impact, the model for scale can be far more varied, involving multiple elements or evolving over time. In certain cases, a market-driven business model can be viable. But, other common paths to scale could involve cross subsidy, open source/replication, voluntary donations, government adoption, and policy change. Whatever your engine for growth, the important thing is to test the assumptions behind your model early.
Can you explain how Starting Small and Iterating Fast can scale impact?
When we’re tackling a problem where a high degree of uncertainty is involved, our priority should be to learn as much as we can, as fast as we can. Thus, the most important success factor is how quickly we can iterate through each cycle of the build-measure-learn loop. That’s much easier if we’re testing an idea with 10 or 20 people than if we’re trying to deploy something to thousands.
How can donors innovate new ways to fund organizations that get more impact from their dollars?
I’d encourage all donors to find ways to stretch $1 of their money beyond buying $1 of benefit. At the Lab at USAID, our Development Innovation Ventures program used an evidence-based tiered funding mechanism based on venture capital to allow us to place lots of smaller, riskier bets to find game-changing innovations. Prizes, advanced market commitments, and other forms of outcomes-based funding are also valuable tools to incentivize the development of options that deliver greater bang for your buck.
I also see blended financing – where philanthropic and investment capital are combined – as a promising way to leverage charitable dollars to catalyze larger pools of private capital into impact-driven enterprises.
What might our world look like if everyone started applying lean principles toward social good?
I believe we’d see dramatically better solutions for the problems plaguing people and our planet. We would embrace a healthier mix between addressing short-term needs and investing in longer-term transformation. Ultimately, our pace of progress would start to catch up with the accelerating pace of change around the world.
Ann Mei Chang is Executive Director of Lean Impact at the Lean Startup Company. Previously, she was Chief Innovation Officer at USAID and Mercy Corps, and served the U.S. Department of State as Senior Advisor for Women and Technology in the Office of Global Women’s Issues. Prior to her pivot to the public sector, Ann Mei Chang had more than 20 years’ experience as a technology executive at such leading companies as Google, Apple and Intuit, as well as a range of startups. She has spoken at TEDx MidAtlantic, SxSW, Social Good Summit, and SOCAP.
You can order her book here: www.leanimpact.org