Co-Authored by Heather Hiscox and Amelia Klawon
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Innovation in the social impact sector can seem intimidating and unreachable. Nonprofit organizations tackle critical and complex community challenges - lack of affordable and accessible food, shelter, health care, and safety - with too few staff and resources. Organizations must also stay relevant and competitive to vie for funder support.
When the focus is on survival, pausing to think about how to work smarter instead of harder seems outside of the scope of possibility. What this means, unfortunately, is that many nonprofits are failing to create deep value for the people and communities they serve.
Why Innovation is So Hard in the Social Impact Sector
Innovating within the social impact sector is challenging for a number of reasons. Below are two of the most significant.
We serve many diverse customers.
Customers are anyone for whom we need to create value and impact. What is especially challenging is that we solve different problems to create value for each of our different stakeholders.
The needs and interests of donors are significantly different from the needs and interests of community members receiving services, which are different from staff, board members, volunteers, and external partners.
The organization must create value for all of these important customers, and unfortunately, one thing we know for sure is that one size does not fit all.
Not only are customized strategies imperative, but how we arrive at solutions to create value is extremely important. Currently how we decide and whom decides which solutions will create the most value is often dictated by those with the most power in the sector.
For example, in an organization’s effort to remain financially stable, a funder can have more power and influence on programs than the community members benefiting from those programs.
Board members and executive teams can also have significant power. When we focus on creating value for powerful decision-makers, how do we incorporate the needs of those who need solutions most?
When a majority of these key influencers look nothing like the communities we serve and do not live or, perhaps, have never lived in their realities, this vast disconnect in what the customer needs and what the organization thinks they need, can generate not only weak or absent value, but unintended and crippling consequences.
Failure is not an option
When we must balance the needs of those we serve, with the expectations of those with the most decision making power in the organization, how do we try bold, potentially high impact solutions when a new opportunity or challenge presents itself? The stakes are high for all of the customers we serve, so how do we take risks?
Organizations that do want to step forward and try something new are often trapped by the traditional structures and expectations within the sector.
For example, in a majority of philanthropic work, organizations are strongly encouraged to avoid failure.
In fact, they are expected to predict the future.
In a grant proposal they must share what impact they will create, who will benefit and in what ways, how their idea will scale and sustain itself, by when, and how they will execute their logic model, Gantt chart, and multi-page plan with their current or (hopefully) increased capacity.
Not even the world’s most celebrated scientists are expected to make predictions in a controlled laboratory with one hundred percent accuracy.
How and why is it that we in the social impact sector are expected to get our ideas right on the first try? Why is it that organizations are punished so harshly when we attempt to create change in multi-layered and complex communities?
Some of the implications of these two challenges are that we see challenges from our own perspective and fear risk-taking and innovative strategies. These challenges, while significant, can be overcome.
So much more can be accomplished when organizations embrace the unknown, shift their perspective to focus on their different customers, learn from valuable insights gained via empathy and experimentation, and ignite the innovative spirit within their culture.
This is the story of one nonprofit who has overcome many of the common barriers in the sector and who is still experiencing the benefits of the changes in thinking they’ve initiated across their organization - and there’s no sign of them slowing down.
This is the story of how SAY San Diego is using Lean Innovation to create real, powerful change in their community.
Meet SAY San Diego
SAY San Diego is a large nonprofit in San Diego County that helps children, youth and families reach their full potential. Their vision is opportunity, equity and well-being for all San Diegans.
They were having recent trouble operating efficiently and keeping their programs fresh due to a lack of process around testing new ideas and exploring potential opportunities.
The leadership team at SAY San Diego identified a number of internal problems affecting the way the organization functioned.
Their organization had become siloed, they needed to further diversify funding streams, there was a drop-off in employee retention for some programs, and while there was never any shortage of ideas for how to improve, they lacked the systems and processes to determine which ideas to pursue and which to kick back to the drawing board.
Project Goals, Proposed Solutions, and Key Results
When we first met SAY San Diego, they had already identified their challenges. Our real job was getting in on the ground floor and providing them with the tools they needed to solve these problems.
For SAY San Diego, we ran two Lean Innovation Bootcamps and Accelerators, and facilitated a two-hour leadership session in order to begin shifting their culture from status quo to value creation.
The goals of these engagements were to:
Remove silos in the organization
Discover new revenue streams
Improve recruitment practices and employee retention
1. Removing Silos
Silos occur in larger organizations because as they grow, the communication structure breaks down. Organizations also become siloed when the proper processes and operational checks and balances aren’t put into place during these phases of growth. And sometimes, growth occurs so quickly, the problem goes unnoticed until it is too late.
One of the main challenges that SAY San Diego was facing with regard to silos was that staff did not know about all of the programs that the organization offered. Thus, many employees were unable to refer customers to the services that best fit their needs, because they did not even know SAY San Diego offered that service.
The team learned through empathy interviews that employees in certain programs were not being empowered to build cross-program relationships.
To prove the point that employees needed access to the information and the confidence to provide comprehensive referrals, SAY San Diego created a “secret shopper” experiment.
During the experiment (which was designed and launched in an hour), a, “secret shopper” posed as a parent in need asking for a very specific issue that was served by the organization. Every employee who was tested tried their best to answer the question, but no one was able to point the customer in the right direction.
This experiment validated that the lack of internal referrals was not caused by the staff’s unwillingness to go the extra mile to refer customers, but rather a systemic inefficiency preventing them from providing comprehensive referral services to clients. The issue was with the system, not with the people.
Through their empathy interviews and rapid experiments, SAY San Diego was able to:
Point out a specific inefficiency in their system and understand the reason for the lack of internal referral effectiveness
Make a case for the development and strengthening of relationships between coworkers across departments and position levels, and making program information easier to find
Teach leadership how to leverage economies of scale in organization size and collective staff wisdom to create deeper value for families
2. Diversified Funding Streams
For any organization, it is important to have a diverse funding portfolio, but for nonprofits, it is especially important. Relying on a sole revenue source makes programs and even the organization itself vulnerable to closure if a major donor or foundation decides to stop giving or a government contract is not renewed.
Unfortunately for SAY San Diego, their funding was becoming more and more dependent on a handful of streams and their CEO was looking for new opportunities.
One avenue of diversification that SAY San Diego had been exploring before we began our work with them was a summer camp program called STEAM (Science, Technology, Engineering, Arts and Math).
Instead of relying solely on internal feedback and funders’ motives, SAY San Diego came up with a plan that took other stakeholders’ perspectives into consideration before drafting and launching the initiative.
They defined the key stakeholders who should be involved, and their teams conducted interviews with potential instructional staff, SAY leadership, representatives from SAY’s volunteer and development departments, as well as parents, children, and potential partner agencies in the community.
These interviews resulted in clarity around distinct priorities for these different customers which shaped the content of the camp curriculum and the way the team considered opportunities.
From a number of interviews and experiments, SAY San Diego was able to:
Illuminate staff needs for STEAM-related training and bring attention to the specific support and supplies they needed to feel confident in delivering quality programming
Drive greater opportunities for customized partnership proposals that create reciprocal value for both SAY and their potential partners
Validate cost, demand, and content for the program, allowing them valuable insight that was used to solidify a launch date for the camp and generate additional revenue for the organization
Increased confidence to invest program resources because through experimentation they captured deposits from parents indicating significant interest in both the STEAM-related topics and camp format
3. Recruitment and Employee Retention
Having an organizational culture that employees want to be a part of is paramount to success. Not only is high employee turnover expensive, it diminishes morale among the rest of the team.
At SAY San Diego, leadership identified a retention issue with regard to one of their programs: Child and Youth Development. They saw that this department was struggling to retain part-time staff, but had no idea why.
Since there were many hypotheses about why this was occurring, the Child and Youth Development department partnered with HR to form a cross-functional team to explore this challenge.
This involved having several critical conversations among team members from within these departments in order to uncover the real problem, which happened to be related to the organization’s recruitment practices.
Their collective exploration using Lean Innovation allowed them to:
Approach the challenge collaboratively and make decisions based on evidence instead of opinions or assumptions
Experiment with new potential segments of potential employees
Identify bottlenecks in the current recruitment process and test potential solutions to address them
Over the course of our engagement with SAY San Diego, their teams conducted more than 250 interviews, brainstormed more than 100 solutions, identified nearly 125 assumptions, and ran 15 experiments to reach their goals.
After completing the 12-week accelerator program, Nancy Gannon Hornberger, President and CEO, SAY San Diego confided that “This process was a breakthrough and is becoming a natural and necessary part of work, building on our core values of responsiveness to clients and community. It’s a fresh way to make decisions - creating nimbleness and testing ideas within weeks, versus months. We can already see the multiplier effect.”
SAY San Diego Today
We continue to stay engaged with SAY San Diego and the organization continues to reap the benefits of empowering their employees to approach challenges differently.
SAY San Diego has continued to tweak their hiring practices and outreach methods, and has hired the highest number of new Child and Youth Development staff in recent history. This staff increase has reduced their staffing cost of $32.50 for a temporary worker per hour to $14.35 per hour for an employee, a savings of a projected $206,000 over a six-month period ($13,000 per month).
They have also just received their largest private grant ever of $500,000 for a new workplace-based child care initiative, another opportunity they validated using Lean Innovation.
Their next step is to begin training some of their staff to serve as internal Innovation Coaches for their peers, which will dramatically accelerate the cultural transformation and impact they are able to achieve.
As SAY San Diego shows, real change can occur among the social impact sector. When organizations embrace true innovation, they can drive powerful value creation and be leaders in their community.
For more information on our social impact program, click here or reach out. We are always happy to help, no matter how small (or large) the challenge.
For more information about how SAY San Diego is shifting behaviors to create real, deep change, download the full case study here: