The following is a conversation between Ann Mei Chang, Executive Director of Lean Impact and the author of Lean Impact: How to Innovate for Radically Greater Social Good , and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

Denver: The social sector, with some notable exceptions, has approached solving problems in very much the same way for decades now.  And while that approach has yielded us some significant wins, it no longer seems to be up to the task for dealing with the scale of today’s problems. So, importing some of the best practices, such as a lean startup movement from business, making the right accommodations to fit the social sector seems like a pretty good idea, and the woman pioneering that idea is with us now. She is Ann Mei Chang, the executive director of Lean Impact and the author of Lean Impact: How to Innovate for Radically Greater Social Good. Good evening, Ann Mei, and welcome to The Business of Giving.

Ann Mei: Thank you so much for having me on your show.

Startup companies work with a lot of uncertainty. They’re generally building things that no one has ever done before, and what we found is that, in traditional software development, in the old days, people would have to build software and ship it in boxes on floppy disks.

So, you have to plan everything well in advance, spend a lot of time designing and then building your product, testing your product, and then shipping it and hoping it was something people wanted.

Denver: Before we get into the Lean Impact movement, it would be helpful if you would tell us about the Lean Startup movement, how it began, and what is the theory at the center of it.

Ann Mei

Ann Mei: Sure, my pleasure. The Lean Startup movement was started by Steve Blank and Eric Ries. It started out in Silicon Valley with the idea of helping entrepreneurs build better products that people actually wanted and needed. Startup companies work with a lot of uncertainty. They’re generally building things that no one has ever done before, and what we found is that, in traditional software development, in the old days, people would have to build software and ship it in boxes on floppy disks.

So, you’d have to plan everything well in advance, spend a lot of time designing and then building your product, testing your product, and then shipping it, and hoping it was something people wanted. The result was a lot of times we shipped products that didn’t really hit the mark. So, with the advent of the web and cloud computing, we are now able to get products out much more quickly. So, the lean startup now is giving us some tools based on the best practices that have developed out of Silicon Valley– to learn, iterate, and improve our products much faster and eliminate the waste that can be involved in heading down the wrong path and building the wrong products that people don’t really want.

Edison said that genius is 1% inspiration and 99% perspiration, and I think that that holds for innovation too. That 1% in my mind is the invention, or the big idea. Absolutely essential, but far from sufficient. I think of innovation as that 99%, the blood, sweat, and tears that goes into testing a solution, refining it, figuring out how it’s going to work in different contexts, building out the infrastructure, and actually getting it to practical application to make a real difference in the world.

Denver: There are some words and phrases, Ann Mei, that are used so commonly and in so many different contexts that they have almost lost their meaning. I think social entrepreneur would be one. But innovation would be another. How do you define or describe innovation?

Ann Mei: I think innovation is probably one of the most overused and most misunderstood words in the English language these days. I think a lot of people think of innovation as that big idea or the transformative technology that’s going to change everything. Edison said that genius is 1% inspiration and 99% perspiration, and I think that that holds for innovation too. That 1% in my mind is the invention, or the big idea. Absolutely essential, but far from sufficient. I think of innovation as that 99%, the blood, sweat, and tears that goes in to testing a solution, refining it, figuring out how it’s going to work in different contexts, building out the infrastructure, and actually getting it to practical application to make a real difference in the world.

Denver: You maintain that innovation for social good is actually harder than innovation for business. Why do you say that is the case?

Ann Mei: I think there’s a number of reasons that innovation is harder in the social sector. Just to name a few, the biggest one that always comes up is funding. If you think about in the business world, you’re usually selling your product to a customer who is then buying your product. So, there’s a very tight feedback loop. If you build a product or service that your customer doesn’t want, they’re not going to buy. So, you learn right away. You can learn very quickly, and that’s really at the core of innovation.

In the social sector, often the person paying for your product or service is not the person receiving it. So you have two customers you have to deal with, which makes your feedback loop much more complicated, but it also means that they may have different agendas. Your funder may have different priorities than what your beneficiary actually needs. Funders – also can be very restrictive in the kind of -place a lot restrictions on the grants that they give, so that they require you to do a lot of planning upfront in your proposal,  and then expect you to execute on that plan very faithfully through the duration of the grant. And that also makes innovation difficult. There’s many other challenges. Certainly measuring E-commerce transactions is much easier than measuring social impact. Social impact can take months or years to fully realize. Experimenting with people who may be in vulnerable situations takes a lot more care. These are just a few things, but I think there’s a number of different elements that makes innovating in the social good space much more difficult.

I think across the social sector… this is a gross generalization because certainly there is a range, but there’s a tendency to plan based on constraints rather than plan based on needs. And by constraints I mean, you have a certain budget, certain staff, certain grants that you’re applying for that have a certain time duration.  And you think: What can I do with what I have or what I might be able to get in a grant? So, we tend to think small.

…. People tend to be fairly risk-averse. They want to see what their dollars are doing right away. So, there’s a real pressure to deliver. There is a lot of hesitation to take risks that are necessary to be able to innovate.

Denver: Before we get to Lean Impact, it might helpful if you would tell us how projects happen in the social sector or in global development now.  And what are some of the shortcomings you have identified with this approach?

Ann Mei: I think across the social sector… this is a gross generalization, because certainly there is a range, but there’s a tendency to plan based on constraints rather than plan based on needs. And by constraints I mean, you have a certain budget, certain staff, certain grants that you’re applying for that have a certain time duration.  And you think: What can I do with what I have or what I might be able to get in a grant? So, we tend to think small.

Another thing that’s common in the social sector is that when you get grants, usually – and even if you get individual donations – people are looking for short-term results… as soon as possible. How many people are you reaching? What are you delivering? People tend to be fairly risk-averse. They want to see what their dollars are doing right away. So, there’s a real pressure to deliver. There is a lot of hesitation to take risks that are necessary to be able to innovate.

Denver: The Lean Impact approach is in contrast to some of that. So, there are three core, guiding principles. I’m going to ask you to say a word about each, if you would. The first is: to think big. We need to be bold. Speak to that.

Ann Mei: As I mentioned earlier, we tend to think too small in the social sector. We tend to think within the constraints that we have, and the needs are tremendous. A lot of times, even the most successful nonprofits and social entrepreneurs are hitting only a tiny fraction of the need that exists in the world. When I worked in Silicon Valley, what we found is every entrepreneur is out there with their hockey stick graphs projecting how they’re going to hit a billion people, and I think we should have some more of that ambition when it comes to social good because it’s absolutely needed.

The first principle of Lean Impact is to think big. To really be more audacious in the goals that we set because if we don’t set a goal that’s audacious, there’s no reason to take the risk to try to get there. Just as an example of that, one of the social entrepreneurs I highlight in the book is Ben Mangan of EARN. He started a social enterprise called EARN that is helping Americans develop a habit of saving, particularly low-income Americans. EARN, several years ago was really lauded in the sector for being one of the most successful because they had 7,000 people that they were helping build a habit of savings.

But one day, Ben woke and he was thinking, “There’s 200 million people out there that could benefit from something like this, and we are reaching such a small fraction, and we’re not going to get anywhere close on the path that we’re on.” At an awards dinner, he actually stood and made this audacious pledge to say, “We’re going to reach a million people in five years.” And that was so far and above what they were doing today, it required them to completely rethink their model. They were previously doing in-person visits, doing matching grants, and that just wasn’t going to be possible if you’re going to scale to a million people. Instead, it pushed them to develop an online platform where they could reach a lot more people, a lot more quickly, and a lot more scalably.

Denver: And when you get audacious like that, you get people excited. One of my favorite expressions is, “If you’re having trouble rolling a small rock up a hill, go find yourself a bigger rock.” Because you do get people excited, and as you say, you find different strategies that you’re forced to take. Now, this is a little counterintuitive, your second point, because if you need to think big, you suggest we start small. Now, why would you want to do that if you want to think big?

Ann Mei: It is a little counterintuitive. But for many things we do today, we have a tendency to think too small and start too big because of this pressure to deliver and show results. I would argue that if we want to get big, if we want to scale to reach massive numbers of people, we want to dramatically increase our impact; we need to experiment; we need to learn. We don’t have the answers, and the best way to experiment is to start small. When you’re only working with 5 or 10 or 100 people, it’s much faster and much cheaper to be able to test something out, to learn something and to iterate. It’s also much easier to be responsible about making sure you’re not having unintended consequences. And when we start too big, and we roll out things to too many people, it can really slow down that learning process. We’re spending all our time and money just running things instead of learning. So, I think the key in innovation is the speed of your learning cycle– that the faster you can learn, the faster you can innovate.

Denver: And the final core principle: to relentlessly seek impact. What’s the secret to that?

Ann Mei: In business, the structure of business is such that everyone is trying to maximize shareholder value. It’s built into our laws and regulations. What I think is essential is that we figure out how to have that same relentless focus on impact when it comes to social good. There are so many things that can lead us astray. Whether it is: we have a particular technology that we’re excited about, or a particular role for an organization that we’re trying to push, or a particular press release we’re trying to make, or just a solution that we’re really wed to. So, I think part of making innovation successful is trying to figure out: How do we create the systems within our sector such that everyone that is working towards social good is really focused on the tradeoffs that maximize social good, versus one of these other things that may distract us.

Ann Mei Chang and Denver Frederick inside the studio

Denver: In the book, Ann Mei, you differentiate between vanity metrics and innovation metrics. What’s the difference?

Ann Mei: Vanity metrics is a term that Eric Ries coined in the Lean Startup. What he calls  vanity metrics are things like the number of people we’ve reached, or the number of dollars we raised. It you think about that, you can reach a lot of people, and you can raise a lot of dollars and not actually be doing any good, right? You could have trained a number of people, but they may not have done anything different as a result or had their lives improved as a result. And I would argue that even if you train people and as a result, their lives are better and you have some great stories to tell – it doesn’t necessarily mean that the money that you spent in doing so couldn’t have been better spent by somebody else. They maybe could have trained twice as many people or gotten twice as good results. That’s why we call those vanity metrics. They sound good. They’re the kinds of things that most nonprofits have on their websites – this is how many people I’ve reached, this is how many lives I’ve touched or improved – but I don’t think they’re that meaningful.

What’s meaningful are what Eric calls actionable metrics, or I call innovation metrics, which are usually at the unit level. For every hundred people we train, how much money are we spending? How many of them are having their lives improved? How many of them are telling their friends and family and referring them to us because they were so compelled by what we created? What’s the conversion rate? When we optimize on these unit metrics and reduce the cost, increase the yields, increase the success rates, then as we scale, we can magnify the impact that we have.

Denver: It sounds to me that if you’re in for the long game, you need those innovation metrics. If you want the short game, go for the vanity metrics, but they’re going to hit a dead end pretty soon.

You also advised that people love the problem and not your solution. Speak to that a little bit, and how can it help change the approach?

Ann Mei: I think in the social sector, there’s a real tendency to fall in love with our solutions for a number of reasons. Almost any solution will do some good. We will always have a story where it helped someone in their life that’s really tangible, and so we can become emotionally attached to that solution. We don’t want to let it go. The solution is also a thing that we identify with. It’s what we everyday pump ourselves up with to go out to funders, whether institutional funders or individual donors, and tell them how great our solution is.  And it’s the best thing since sliced bread, and so it’s easy to drink your own Kool-Aid and get really attached to your solution.

What I think is important is to stay focused on the problem, and because no solution is perfect, and if we stay focused on the problem and really look at the data, it’ll tell us whether our solution is working or not. If we’re honest with ourselves and we pay attention to that data, we need to be willing to let go of our solution if it turns out to not be the best solution. Sometimes it may be a slight tweak to our solution; sometimes it may be a more major pivot. Sometimes it may mean taking a completely different path altogether.

Denver: It’s sort of strong convictions… loosely held.

Let’s put this all together, and a wonderful example of an organization that has embraced the Lean Impact approach is Summit Public Schools out in the Bay Area. Walk us through what they did and what the results were.

Ann Mei: Sure. Education is one of those areas that’s notoriously difficult to innovate because the feedback loops can be very long. It takes a long time. Summit Public Schools’ initial goal was to have their students, 100% of their students, graduate from college. Now, you can imagine, it takes eight years to get someone from junior high to college. When their first class got to college, they were really pleased to see many of them were graduating from college, but not 100%. But because the rates have increased so much, a lot of people were coming and saying, “Hey, this is a great model. You should scale.”

I really admire the founder of Summit Public Schools, Diane Tavenner, because she said, “No, this is good, but it’s not good enough. We can do better. But we need to find a faster way to figure out how to improve because we can’t wait another eight years to figure out if we’ve gotten it right.” So, she actually had gotten a copy of Eric Ries’ book, The Lean Startup, and started looking at: How do we do this within the context of education?  And short version of it is that they were really focused on this notion of personalized learning, and they started running week-long experiments where they would try different configurations of mixing individualized coaching and personalized learning and project time, looking at what the mix of interventions was that was most effective. Each week, they would look at the data. They would look at assessment scores.

They would look at feedback from the students. They would have focus groups. They would look at what was working well, and then they would do something different the next week. They actually spent 57 weeks on these different iterations to really refine their methodology. I think they’ve come up with something that is revolutionary and has been very successful in their schools, and now they’ve branched out. So, they’re really now trying to scale. They started out in their own charter schools, but now they’re working with public schools, and they’ve now trained I think teachers from over 300 different public schools across 40 states who are now adopting this model and really bringing it to scale.

Denver: That is fast. One week of trials and then moving on to another one! You mentioned, they’re about listening to the feedback that they were getting, and that is so important because I’ve always found nonprofit organizations to be focused on the donor.  We focus on our board; we listen to experts all the time in terms of what’s the latest research. But often, the last person we speak to are the beneficiaries, and it’s been very encouraging to see this movement gain traction around beneficiary feedback and constituent voice. Why is it good for organizations to think of their beneficiaries as customers?

Ann Mei: I think it’s absolutely essential. I think historically there has been a tendency… Even the word “beneficiary” is a little bit questionable. It feels very patronizing in a way. But I don’t know of a better word. I think customer is a great word.

…if we’re really trying to improve people’s lives, we need to understand the realities of their lives and what works in their context. A lot of times, one of the other reasons that innovating for social good is harder is often the customers or beneficiaries we’re working with have very different experiences than our own.

Denver: I think constituent voice is a good word.

Ann Mei: Yeah, that’s another great word. So, I think there’s a number of reasons. First of all, if we’re really trying to improve people’s lives, we need to understand the realities of their lives and what works in their context. A lot of times, one of the other reasons that innovating for social good is harder is often the customers or beneficiaries we’re working with have very different experiences than our own. So, our natural instincts can just be off. So, we need to understand what it is that their experience is like.

Especially, when I was in global development at USAID, and we’re working with people who are in far-off countries with very different cultures, living in very different circumstances, our assumptions can just be completely wrong. Listening to them as our customers can make sure that we are providing something that they value. So, we’re not giving them things that they receive because it’s free and they’re happy to take, but they make no use of because it doesn’t fit into their lives. But instead, we’re really listening to them and saying, “What is it that they need? How will they use it?  And how can we design this to be of the most benefit to them? Because at the end of the day, if your beneficiary customer doesn’t want what you’re giving them, you’re very unlikely to have a very big impact.

Denver: And that’s why sometimes I think when I look at these revenue models for nonprofit organizations, it makes sense because if you’re getting some of your money from that stream, it really is basically saying people want this product.  And if it’s all philanthropy, you’re really never sure. So, I think that it can be a good litmus test for you.

Let’s say we do some lean impact; we get some great results; you know one of the hardest things to do in the social good sector is to scale. As a matter of fact, I had Doug Galen on the show– of RippleWorks– recently. He’s created an entire organization about scaling social good. How do we need to think about that?

Ann Mei: That’s a great question. I think of all the different challenges in the social good sector, scale is probably the biggest one in my mind. One of the problems is, I think that we often look at scale as an afterthought. That we go out, we have an idea for a solution. We test it. We pilot it. We see if it works. When we get to the point that we’ve run a pilot and we have some data that show, “Hey, this is actually working.” Then we think, “Okay, how are we going to scale this thing?” I would say it’s too late at that point because the path that you’re going to take to scale, whatever model you’re going to adopt to scale, has to be built in from the start.

Now, think about, if you’re going to charge someone for your product, you can’t run a whole pilot and give that product away for free and then say, “Okay, now we’re going to start charging for it.” Because people may not buy the product, or the price point at which you have to have the product for people to be able to afford it is going to be very different, so you have to design a whole different product or service. Or if you want government to be able to adopt something, they’re going to have different requirements, both in terms of budget, in terms of footprint, in terms of how the processes work. So, I think that your path for scale really needs to be tested from the beginning, just like you’re testing things, like whether it’s something your customer wants and whether it has the impact that you’re looking for.

I think the whole idea of Lean Impact is to start small and test early and often along the dimensions of value, growth, and impact to ensure that we have all the elements that are necessary, before we make bigger investments to take us forward that may be misdirected.

Denver: So, build an organization not for where you are, but where you want to be.

Ann Mei: Exactly. I think the whole idea of Lean Impact is to start small and test early and often along the dimensions of value, growth, and impact to ensure that we have all the elements that are necessary, before we make bigger investments to take us forward that may be misdirected.

Denver: Let’s get back to funding and the challenges inherent in that. So much of the social sector is dictated by grantmaking.  If a nonprofit wants to get the money, they need to comply to the guidelines if they’re going to be eligible. What things could grant makers do that would help create greater lean impact?

Ann Mei: I think there’s a number of things that grant makers do, and I think there’s a number of things that nonprofits can do who are applying for grants. One of the things that we did at USAID to really encourage innovation is to use a form of tiered funding for a program that we call DIV or Development Innovation Ventures. It’s modeled after venture capitalists where we, in the early stages, give out lots of small grants so we can place many, many little bets and take greater risks on those bets because they’re small.

Then we look and see of signs of traction on those innovation metrics. Are they starting to show that this solution really has legs, really has promise?  And for the ones that do, then we can increase our investment. Rather than making a big bet up front and trying to choose among a hundred different options and trying to perfectly choose the right one, by using this tiered funding mechanism, we can try a lot more different things and then double down on the ones that work, and then double down again as they continue to work. So, it allows both for more flexibility, which is essential for innovation and more risk taking, which is also essential for innovation.

I think as you get to the later stages of innovation, looking for ways that grant makers can start paying more for outcomes than for activities is another way to support innovation. So, if you are paying for outcomes, and it doesn’t have to go to the extreme of a social impact bond, but if you’re just even having bonuses based on outcomes, or a part of your grant being outcomes-driven, it can encourage a social entrepreneur to increase their cost effectiveness because then they can make more money. They can be able to do more good. I think there’s a number of tools like this that grant makers can use to encourage risk taking and incentivize innovation.

Denver: I can see how a startup nonprofit or a young organization can really embrace lean impact. What about existing organizations? It can be very difficult to change the way you’ve operated for many years and the way you go about doing things. What advice would you have for them?

Ann Mei: That’s a great question. It’s always easier to innovate in a small startup than it is in a big organization. I think that holds true in business as well. I’ve seen a number of different things work. For many large organizations, they start out with an innovation team or lab that they’ve tried to cordon off and let them play under a slightly different set of rules, give them a little bit more flexibility; and that allows the organization to get started, get their feet wet, show some successes and show the potential. I think that’s a good tool to get started. A bigger challenge is:  How do you mainstream that? Because nonprofit organizations don’t have complete control over their priorities because a lot of it is also driven by their funders as well. Part of that involves the negotiation with funders.

One thing that I advocate nonprofits consider is actually pushing back on funders a little bit, right? Not being mean about it, but being willing to go back and say, “We think we could do this better if you give us a little bit more flexibility.” Or, “We found this way to do it better.” One way to do that is to in a proposal, potentially, have a small slice; 95% is exactly what the grantmaker was  requesting, but maybe 5% is an innovation fund that allows you to run some experiments to figure out how you can do that 95% more cost effectively; and if in that 5%, you even figure out a way to make it 10% better, it overall is going to pay off. And that seems like a hard proposition for a grant maker to turn down.

Denver: And it would seem like the foundations are going to be used to that 95/5 model, aren’t they?

Ann Mei: Yeah. Exactly. One other thing I was going to say is, I believe that the breeding ground for innovation starts with a big goal. If you have an audacious goal that’s measurable, that you take on– like sending a man to the moon, that you just can’t achieve with business as usual… that’s where innovation starts to kick in.  In a large organization… I’ve seen a lot of large organizations say, “Okay, now we want to innovate. Everybody innovate. We’re going to send you to this innovation workshop. We’re going to talk about innovation.” But when they go back to their desks, what they’re rewarded on is still the same things. They’re rewarded on successfully applying for grants and successfully executing on grants.

So, if you have goals that are achievable with business as usual, there’s no reason to take those risks. But when you start setting stretch goals for individuals and organizations that requires you to do something different, then you need to start taking the risk.  And it starts the whole cycle, at least having the incentive and the reason to be able to innovate.

…if we’re trying to tackle a problem that is where we don’t have a solution that’s nearly sufficient, it’s irresponsible for us not to take risks to find a better solution. I liken it to thinking about:  Are we trying to empty the ocean with a spoon? If the need is so great out there, and all we’re doing is trying to scoop little teaspoons out of the ocean, we should be thinking about building a bigger spoon, of building a bucket.

Denver: What would you say, Ann Mei, to those organizations who are going to say, “What if we fail? What if we don’t make our goal?  Will that kill our funding?” What would you reply to them?

Ann Mei: For larger organizations, I certainly wouldn’t bet the farm on any one thing. And that’s the idea of placing these small bets, and that’s the importance of starting small, is that when you innovate, when you take risks, there is a good chance some of those things will fail. But I would also argue that if we’re trying to tackle a problem that is where we don’t have a solution that’s nearly sufficient, it’s irresponsible for us not to take risks to find a better solution. I liken it to thinking about: Are we trying to empty the ocean with a spoon? If the need is so great out there, and all we’re doing is trying to scoop little teaspoons out of the ocean, we should be thinking about building a bigger spoon, of building a bucket.

Denver: In addition to an audacious goal, in the companies or organizations you profiled in your book, were there any common threads in the workplace culture, the corporate culture, that made those organizations ready for Lean Impact? Anything specific if it comes to mind.

Ann Mei: I think the biggest one is that audacious goal. I think that the organizations that are the most innovative are the ones that recognize– like I talked about with EARN– that the need is so much greater than they’re able to reach with what they’re doing today. Thus, it forces them to really stretch themselves, and that’s the starting point of innovation. I think another piece of it though is the agility, the willingness to take risks, to be agile, to be humble and recognize we don’t know all the answers.

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Denver: You spent most of your career Ann Mei in the tech sector, Silicon Valley. Then you made a pivot to the public and social sector. Tell us about that journey and how it had evolved to writing Lean Impact.

Ann Mei: I spent 23 years in the tech sector. I studied as a software engineer, worked at a bunch of big and small companies throughout Silicon Valley, and it was a remarkable journey. I started out pre-web and sort of watched the rocket ship take off with the dot-com boom and bust and so forth. Ended up the last eight years, I was in Silicon Valley was at Google as a senior engineering director, building all our mobile apps and services. Throughout this time, I knew that I wanted to ultimately do something that felt more meaningful. Silicon Valley was a lot of fun but it didn’t have as much meaning to me in terms of feeling like I was giving back to the world. I had made this decision something like 20 years ago to spend the first half of my career in the tech sector, and the second half in the public or social sector and finding some way to give back.

About seven years ago, I decided it was time to make that switch. The last year I was at Google, I actually knew I was heading in that direction. I had thought about what I wanted to work on and decided to focus on global poverty because it seemed like it was at the root of so many of the different challenges in the world that I cared about. So, the last year at Google, I started a new division that was focused on emerging markets that got me a little closer to that space. Then I decided to take the leap. I left Google and went to the State Department through a fellowship. I thought of it as my custom Master’s in public policy where I was learning by working with some of the best people in the world, trying to understand how change happens, and working with not only government, but all the partners that the government touches.

After that, I went to a nonprofit called Mercy Corps. It’s an international development organization. State Department operates at the ten-thousand-foot level. Mercy Corps and other nonprofits operate right on the ground. So, I got the very fortunate opportunity to learn more about how this work actually happens. Then I got my dream job. This opportunity at USAID came up for me to be the first executive director of the Global Development Lab there that was set up with this audacious mission to, on one hand, identify breakthrough innovations, and on the other hand, look at how we could transform the way we do global development altogether to accelerate our pace to progress. I couldn’t have created a better mission myself. It truly was a dream job. But as a presidential appointee, at the change of administration, I had to leave. And as I was thinking about what to do next, I thought about going to work at another nonprofit, going to work at a think tank, lots of different options.

Denver: Write a book.

Ann Mei: Yeah, but ultimately, I decided that there are so many challenges in the industry that get in the way of innovation. Innovation is so needed that going to any individual organization, just try to do that; I didn’t feel like I could make as much of a difference. What I wanted to do was look at: how can we help the whole industry be far more effective and work together to remove some of these impediments to innovation, so that we can accelerate our progress.

Denver: Let me close with this Ann Mei. In a sector that is becoming increasingly blurred with purpose-driven businesses and B Corps, hybrids of every shape and kind, LLCs, and not foundations, where do you see the sector going in the next decade?  And what role do you foresee Lean Impact playing in taking it there?

Ann Mei: I think you’re totally right. As I’ve gone out in the process of writing this book, I interviewed over 200 different organizations, really without a filter. I asked people I knew, the smartest people I knew, what were the best organizations they knew about and talked to them. What I found is that many of the most interesting, most innovative, most Impactful organizations are some sort of hybrid. They’re no longer your traditional pure nonprofit, but neither are they your traditional pure for-profit. They’re somewhere in between.

Sometimes organizations that look almost like each other… One could be a nonprofit, and one could be a for-profit, and they’re doing very similar kinds of work. So, I truly believe that if we look forward, that more and more of the interesting work is going to happen in this hybrid space because there just isn’t enough grant funding for us to reach the size of the need that exists in the world. So we’re going to need better tools, both for organizations to organize themselves, as well as for funders to fund these types of organizations to be able to draw from different types of funding… to blend if you will philanthropic capital with investment capital, to be able to meet the needs of these kinds of hybrid organizations. In terms of the role of Lean Impact, I am hoping that Lean Impact will become a movement just as Lean Startup did.

Today, in Silicon Valley, even many people who haven’t read the Lean Startup book know the concepts, and they’re injected in the way they do their work. If you’re not taking the Lean Startup approach, people look at you a little funny because … Lean Impact and Lean Startup are not rocket science. They’re both based on tried and true scientific method. Hypothesis-driven and experimentation, and its mixed common sense, but it’s not something that is always done because of a lot of the pressures that exist. And so my hope with Lean Impact is that. It will shift our mindset to ask the question before we make these big investments:  Can we do some smaller experiments that can help us learn, help us get to the best answer as quickly as possible and as inexpensively as possible?

Denver: Think big, start small. Ann Mei Chang, the executive director of Lean Impact and the author of Lean Impact: How to Innovate for Radically Greater Social Good, I want to thank you so much for being here this evening. Now, people know how to buy a book. But, what about your website? Tell us about that.

Ann Mei: If you want to learn more, go to www.leanimpact.org.

Denver: Thanks Ann Mei. It was a real pleasure to have you on the show.

Ann Mei: Thank you so much for having me.

Denver: I’ll be back with more of The Business of Giving right after this.

Ann Mei Chang and Denver Frederick

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