Chapter Thirteen
Making It Stick
If you’re reading this book, you are clearly motivated to maximize your impact and scale. But what happens a day, a week, a month, or a year from now? Before the norms, habits, and culture of your organization reassert themselves, how do you move from theory into practice?
Adopting an entrepreneurial mindset is an important first step. Consistently applying it requires both a clear purpose and aligned incentives. Imagine you want to have a healthier diet. Knowledge of the basic tenets of nutrition is certainly necessary. Yet for most people, knowing what to do is not enough. Life interferes. However, maybe you have your annual physical and the doctor reports that your cholesterol is high or you’re prediabetic. You better make changes, or you’ll have serious problems. Now you have a compelling purpose and incentive – to lower your cholesterol or blood sugar and avoid a serious chronic health condition. Still, the day‐to‐day choices can be hard. Maybe your family and friends offer to cook healthy meals together and stop bringing cookies. Continual reinforcement can help you to build new habits and keep from slipping back into your unhealthy ways.
When organizations embark on a quest to become more innovative, they typically start by bringing in new skills, talent, and tools. This might include running an innovation workshop, hiring a new innovation team, or engaging experts on disruptive technologies. The basic tools and techniques can be taught or hired relatively quickly. But, then what? If staff is evaluated and rewarded based on their success in winning large grants or faithfully delivering on preplanned commitments, then what is the message we are really sending? Without a more systemic transformation, those new teams and efforts can become marginalized and frustrated – while for the rest, it’s business as usual.
A culture of innovation arises from measurable stretch goals that inspire, ongoing incentives that reward experimentation and learning, and entrepreneurial people who are willing to take risks. It’s a rearchitecture of an organization, starting from its core. This may sound daunting, but this chapter will give you the practical tools to start this transformation.
CULTURAL BARRIERS TO INNOVATION
How to transform a traditional organization into a more nimble one is an age‐old challenge. In the social sector, the muscle memory that develops from writing grant proposals and executing grant agreements can become deeply ingrained and permeate the culture. These habits continue to propagate as individuals join new teams. Even when more flexible funding is available, the familiar rhythms of grant cycles can still dominate.
With the enforced waterfall model of most grants, a comprehensive program design must be submitted in a proposal before work can begin. Everything must be thought through in advance and convincingly pitched as the best option. Thus, organizations become accustomed to creating detailed designs within resource constraints, then executing to that plan. Deep faith is placed in “experts” and solutions, which are in turn sold to donors as competitive advantages.
As we now know well, this is the polar opposite of lean thinking. At the end of a two‐day workshop I led with one nonprofit, a number of the staff self‐identified the biggest barrier as their own perfectionism. Whether identifying a problem, interviewing a customer, or deploying an MVP, they would hesitate to take the next step forward until they were confident they were on the right path. But, unlike a grant application, you don’t only have one shot with Lean Impact. Experimentation and failure are natural parts of the learning process. Peter Murray, president of social enterprise incubator Accelerate Change has found that “Rapid experimentation can be jarring for organizations that are used to running proven models. Nonprofits don’t like failing, even if they are failing fast and iterating.”
In addition, given that many nonprofits are perpetually strapped for both time and money, particularly due to a lack of unrestricted funds, a scarcity mentality can easily take hold. There is always too much to do and not enough to do it with. Naturally, such an environment encourages a focus on juggling short‐term needs rather than seeking long‐term opportunities. As Doniece Sandoval, founder and CEO of Lava Mae, puts it, “Nonprofits generally lack a growth mentality, as they need to fight for every penny. This stifles their ability to be creative and constrains their willingness to take risks.”
When I moved from the tech sector to the social sector, I admit that the most difficult adjustment for me was finding it no longer acceptable to question experts. Now I don’t mean me questioning others, but rather others questioning me. In Silicon Valley, the ethos was to question everyone and everything with the belief that the best ideas arise when they are poked and prodded from all sides. Now, somehow I was considered an “expert” and very few people were willing to tell me when I was wrong. How would my ideas get better?
When global development nonprofit Pact started its innovation journey, it launched an online internal marketplace in which anyone could share innovative ideas. To determine the best ones to take forward, all staff was given the ability to vote proposals up or down. It quickly became apparent that given the collegial organizational norms, very few people were comfortable voting down ideas. Asking tough questions or critiquing peers was not part of the culture. Eventually, the crowdsourcing approach had to be abandoned, and the marketplace evolved into an online resource for sharing best practices.
Cultures are deeply embedded and don’t change overnight. Superficial initiatives will quickly become subsumed by unstated norms. But when the core drivers themselves change, a culture will begin to shift and adapt in response.
CULTURAL TRANSFORMATION
Culture forms over time as a natural reflection of the incentives at play, along with the norms and systems that shape individual and group behavior. We can’t shift a culture simply by putting up motivational posters or declaring a new set of organizational values. Rather, culture flows from the formal and informal reward systems that encourage or discourage particular practices.
To transform an organization, we need to rearchitect it from the ground up to reflect a new set of values and priorities (see Figure 13.1). This starts with reorienting goals to stretch us beyond our comfort zones and require a shift from business as usual. Then, incentives need to be aligned up and down the organization to embrace risk taking, experimentation, and data‐driven decision‐making. Finally, we must create a team of people with diverse talents who are willing to embrace change. The behavior of people is shaped by their incentives, which in turn reinforce the goals. We’ll explore each of these layers in detail next.
Figure 13.1 Drivers of cultural transformation.
To successfully instill a culture of innovation, change must occur at all three levels. If we attempt to induce a shift by introducing a few “innovative” people, without modifying the goals and incentives around which the current culture was formed, behavior will quickly revert to form. The results can be ephemeral or take hold only in pockets.
If changing an entire organization at once isn’t feasible or desirable, the same approach can also be applied at the team or department level by instituting a different set of rules and rewards. Consider the formation of Defense Advanced Research Projects Agency (DARPA) as an agency under the US Department of Defense. In 1957, the Soviet launch of the world’s first satellite, Sputnik 1, forced the military to recognize that its existing institutions were ill suited to advanced research. A new agency that could take risks on leap‐frog technologies had to be built from the ground up, with an anticipated high rate of failure as part of its DNA. To do so, DARPA instituted a new playbook that included hiring program managers on fixed two‐year terms to bring in fresh talent to take on ambitious endeavors with a relatively short fuse.
There are many ways to start your journey to establishing a culture of innovation. Summit Public Schools and Copia Global shared The Lean Startup book with their teams to establish a common framework and vocabulary. Watsi and New Story participated in the Y Combinator accelerator. The San Diego Food Bank was sponsored by the San Diego Foundation to participate in a workshop led by Moves the Needle. PSI brought in IDEO.org as a consultant. Many others have taken online courses from +Acumen. Each path brings slightly different emphases and tools, but all tap into an innovation mindset. What’s important is making it stick.
Goals
There are the rare occasions (such as with the discovery of penicillin due to the accidental contamination of a petri dish) when innovation arises from a serendipitous discovery. Far more often, innovation is the result of a painstaking process of experimentation in pursuit of a clear goal. The story of Thomas Edison’s development of the lightbulb is emblematic – over a thousand failed attempts before he succeeded. While others had produced incandescent lights, Edison had his sights set on identifying a filament that would burn longer and cost less. His goal wasn’t to invent a lightbulb; it was to create a commercially viable lighting system.
Chapter Two covered the importance of a measurable, audacious goal. Whether it is to send a man to the moon or eradicate polio, a stretch goal motivates teams. The stretch part is critical. If you can come even close to reaching your goal with business as usual, there’s not a compelling reason to take the risk of trying something new. I like to challenge my teams by asking, What would you do to be 10 or 100 times more effective or scalable? It’s a good way to shift the discussion out of an incremental mindset.
Your audacious goal is the foundation upon which an innovative culture is built. It is the compelling need that makes innovation an essential, rather than discretionary, activity. Clear goals are important at every level – for the entire organization, each division, right down to the individual. These goals should cascade so that individual goals articulate how each person will contribute to the division’s goal, and the division’s goal articulates how it will help achieve the overall organization goal. The larger goals serve to keep the big‐picture mission in mind, while the individual ones guide direct activities and trade‐offs.
Be careful not to allow your goal to devolve into a vanity metric. I’ve talked with too many organizations that have inspiring and audacious missions, but the day‐to‐day focus predominantly revolves around how many people were reached and how much money was raised, without a clear connection to how those add up to transformational change. Particularly at the team and individual level, goals should center on innovation metrics – the unit level targets that are needed to achieve the overall objective, such as adoption rate, net promoter score, or unit economics.
At Google, we tracked goals using a system called OKRs (Objectives and Key Results) for every level of the company, with both a quarterly and annual review. “Objectives” defined the overall goal, while “key results” broke down the measurable progress for that time period. Typically, only three to five objectives were included to ensure focus on the most important priorities. At the end of each quarter and year, OKRs were self‐graded with a score between 0 and 1. Unlike many other management‐by‐objectives systems, the expectation wasn’t to score all 1s. In fact, those who met their goals regularly were encouraged to be more ambitious. Of course, a 0 wasn’t a great showing either. On average, a score of 0.7 was considered ideal – indicating substantial progress towards a challenging goal. As the company recognized that the more you stretch, the more often you are likely to fail, OKRs were not used for performance ratings directly. Instead, they served as a tool for clarifying priorities and building alignment around shared goals. John Doerr’s 2018 book, Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs, chronicles how OKRs have led to explosive growth at a wide range of organizations.
Incentives
Incentives are the substrate out of which culture emerges and takes hold over time. If you’re not happy with the culture, look beneath the surface at what formal and informal signals are being sent. You’ll find that most people behave quite rationally based on the incentives they encounter.
Some incentives are formally institutionalized through objectives, performance reviews, bonuses, promotions, recognition awards, and criteria for hiring and firing. As these have concrete repercussions, they tend to disproportionately drive behavior. Other incentives are subtler and are telegraphed through what leadership and colleagues highlight, discuss, and encourage. When the various incentives are inconsistent or in conflict, people can respond unpredictably, by being less than forthright or even passive aggressive.
To build an innovative culture, incentives need to shift from rewarding expertise, execution on predefined tasks, and hitting vanity metrics to rewarding learning, risk taking, and performance improvement. For change to take hold, this message must be consistently reinforced at all levels, both formally and informally. Many organizations give mixed messages without realizing it. Leaders may stand on stage, espouse the importance of innovation, and highlight some flashy examples. But what actually matters, as reflected in objectives, metrics, promotions, and informal cues, still revolves around raising money and executing plans.
I recently ran a two‐day Lean Impact workshop with staff from Independent Sector, an association of nonprofits, foundations, and corporate‐giving programs. Everyone was energized by the new, dynamic tools, but by the second day people started to wonder how they could keep the momentum, as all the normal workplace pressures resurfaced when they went back to work. Not only were participants concerned about their own time, but they also weren’t sure their colleagues would be supportive of unfamiliar activities such as conducting interviews and running experiments. To reinforce the support of leadership, COO Victor Reinoso offered each team a reward if they met certain learning targets by continuing their interviews and experiments. Brilliantly, he also offered the entire organization a day off if all three teams succeeded, incentivizing everyone to pull together to establish a new way of working.
The traditional measures of success that are celebrated and rewarded tend to be vanity metrics along the lines of grants submitted, dollars raised, beneficiaries reached, and deliverables and compliance requirements met. But none of these give a meaningful indication of whether progress is being made towards the overall social mission. In contrast, innovation metrics track the unit‐level characteristics, such as satisfaction, costs, or yields, which will shift the trajectory so that a stretch goal becomes achievable.
These innovation metrics may be one and the same as your value, growth, and impact success criteria (see Table 6.1 for an example). An improved net‐promoter score reflects customer satisfaction that is likely to increase both ongoing engagement and word‐of‐mouth viral growth. Better unit economics, with lower costs and higher revenues, will enable an intervention to reach more people. And greater yields – whether in the form of income increased, test scores improved, or lives saved – indicate a path to mission fulfillment. Those metrics that matter should be tracked and measured in organization, division, and team objectives and reinforced on an ongoing basis.
Improvement on innovation metrics doesn’t always proceed linearly, so shorter‐term progress might measure the pace of learning for both teams and individuals. Are interviews being conducted, experiments run, and data collected? How quickly are hypotheses being proven or disproven? Are sufficient risks being taken so that we are seeing both successes and failures? Do we pivot quickly when the data indicates a particular path is unlikely to produce the results needed? These can also be set as objectives, reinforced in performance reviews, and celebrated in meetings to reorient the culture.
As a new culture takes hold, decisions will be driven more and more by hard data – from interviews with beneficiaries and stakeholders, results of experiments, or ongoing usage and feedback – rather than expert opinions. What is valued will shift from who you are and what you know to how eager you are to learn. The cofounders of Bridge International Academies believe that nobody’s opinion matters, including their own. They didn’t select the location of their first school on emotion or preference, but rather ranked two dozen countries based on five factors for success. Kenya came out on top.
Leaders must reinforce the values that underpin a culture of innovation visibly and consistently. They use data to make decisions, share information transparently, engage the best people irrespective of rank, encourage constructive risk taking, celebrate learning from both successes and failures, drive for continuous improvement, and adopt a bias towards action. Over time, these attributes will seep into an organization’s norms, and a new culture will emerge.
People
Christy Chin, managing partner at the Draper Richards Kaplan Foundation, describes the characteristics of the most promising social entrepreneurs as data driven, curious, deeply respectful of beneficiaries, and driven by a sense of urgency to solve a problem. More so than in the private sector, humility stands out as an essential quality for tackling complex dynamics in communities that are not our own.
A culture based on the principles of Lean Impact is not for everyone. For those accustomed to the more consistent rhythms of the social sector, the pace of constant change may be too unsettling. Bridge International Academies has recognized the importance of hiring staff comfortable with change and iteration, given the ongoing experiments and improvements constantly being made in their schools. Yet finding such people can be difficult given the hierarchical business culture in Africa, where they work.
Transforming an existing culture can be far more difficult than creating a new one from the ground up. When CEO Mike Quinn introduced rapid prototyping at Zoona, a company in southern Africa that provides financial services to underserved communities, he met with some resistance. Many staff quickly embraced this new approach, but others reverted to their comfort zones. Over time, as more staff adapted and new staff was purposefully hired with a learning mindset, a new culture began to take hold. Mike recognized that in order to make Zoona a top place to work and accelerate the pace of progress, he had to raise the bar on performance and accountability. This included finding a compassionate way to make some tough choices and move poor performers out of the organization.
Any major change is disruptive, and not everyone will make the transition. I’ve heard similar stories from many entrepreneurial leaders who have been brought in to lead established nonprofits, one over a hundred years old. One way or another, a large portion of the existing leadership team turned over. Some weren’t happy with the changes and opted out, while others couldn’t keep up. The challenge comes not only from adjusting to a new way of working, but also the high standards of performance that are essential to delivering disruptive solutions. Those who may have coasted before suddenly need to step up or step out.
Beyond an entrepreneurial mindset, adding new and diverse perspectives to a team can expand the potential landscape of ideas, perspectives, and approaches. The increasingly hybrid composition of the social sector can be well served by bringing together the understanding of people and problems from nonprofits with the business models and fast‐paced delivery of the corporate world. Other domain and functional expertise can further expand the range of tools a team can draw from, whether it be digital technology, behavioral science, marketing, scientific research, anthropology, or beyond.
In fact, Launchpad Central, an online platform created by Steve Blank and Jim Hornthal to support lean innovation, has found that across its database of more than 16,000 teams, the highest performing teams are also the most diverse. This includes dimensions of gender and ethnicity as well as subject expertise, such as bringing together engineers and MBAs. Jim believes a mix of different experiences improves the crucial ability for a team to recognize patterns from interviews, data, and findings. He likens it to a game of Boggle. If you turn the tray by 90 degrees, you’re likely to see a completely different set of words that you missed before. Perspective matters. And, as projects rarely end where they begin, a team with perfectly tailored expertise at the start may not realize when a pivot outside their domain is required.
A WORD ON FAILURE
Innovation cannot exist without failure. And yet, failure is taboo in the social sector. During the time I was leading the USAID Lab, I asked my teams for an example or two of failures from their portfolio to use in an upcoming speech to aspiring social entrepreneurs at MIT. My hope was to highlight the role of failure in the innovation process, along with common pitfalls to avoid. At first, I received no responses. I asked again, but still no response. Only after some cajoling, badgering, and reassurance was I able to elicit a few stories. And, still there was wariness in sharing them at a public forum. Don’t forget, this was the bureau created as a hub for innovation at the agency. Risk taking and celebrating failure was part of our charter. Yet, exposing our own failures, and those of our grantees, was still a bridge too far.
Again, it’s the funding dynamic that fuels this dysfunction. The concern is that if an organization is perceived as producing anything other than a pure, unadulterated success funders will balk. As a result, the easiest path is to avoid failure if possible and obscure failure when it occurs. This risk aversion and lack of transparency frequently interfere with the experiments, learning, and pivots needed for Lean Impact.
Many organizations have sought to shift this cultural dynamic by celebrating failure. MoveOn, a grassroots progressive advocacy group, created the concept of a “joyful funeral” to honor risk taking, effort, and creativity, even when the outcome wasn’t successful. Rather than bemoaning a failure, the staff would declare, “Yay, joyful funeral” and share the resultant lessons with the rest of the team. At one point, they even engraved the project name on a digital gravestone for the internal website. MoveOn considers killing projects essential to staying nimble and relevant, making space for even better ideas to emerge.
The fail faire, or fail fest, is a growing tradition that has also proven to be a popular outlet to laugh, learn, and celebrate what we learn from our failures. Some are standalone events, such as Wayan Vota’s annual Fail Festival DC for global development, that bring together practitioners across organizations for fun, commiseration, and a shared mission to reposition failure as a badge of honor rather than a source of shame. Many more are entirely internal affairs, held regularly to surface lessons learned and build cultural acceptability. We ran our own at USAID’s annual internal conference on science, technology, innovation, and partnerships. While participants were often initially reticent, it was frequently the most popular session of the week. Having some well‐known executives start by sharing their own failures set the tone and helped get the juices flowing. After hearing from leaders they respected and admired, everyone else felt it a sign of hubris not to share their own failures.
It is important to distinguish between a good failure (to be celebrated) and a bad failure (to be avoided). The good kind of failure is expected when we take a calculated risk to test our assumptions. When an MVP produces different results than we expected, it helps us learn, improve, and ultimately deliver greater social impact. If we always succeed, we’re likely not taking enough risk or thinking out of the box. Good failures help us avoid bad failures (such as Tenofovir’s trial or One Acre Fund’s passion fruit rollout from Chapter Six), when we fail big and waste far more resources than necessary to learn a lesson. For both types of failure, sharing the experience openly is an essential part of learning.
Perhaps one of the most difficult times to take risks is in the heat of a humanitarian crisis. Yet, the International Rescue Committee (IRC), one of the largest humanitarian aid nonprofits, is seeking to do just that through its Airbel Center for innovation. As a recent article in the tech magazine Fast Company described: “In Silicon Valley, failure is worn as a CEO’s badge of honor – proof that he or she has simply dreamed too big. In the arena of humanitarian aid, that notion is a luxury. Failure for an organization like the IRC can mean starvation, sickness, lives lost. But if the IRC can succeed in finding innovative solutions during this time of unprecedented crisis, it will demonstrate how important it is to take risks, even when – or especially when – so much hangs in the balance.”1
If even talking about small failures is hard, acting on large ones is even harder. Recognizing that a program or organization is no longer delivering differentiated value and winding it down is an exceedingly rare occurrence. Instead, mediocre work tends to continue as long as funding is available. This serves to redirect precious resources to inferior solutions and undermine better options. Knowing when to let go or pivot, particularly in the face of strong personal attachment, is one of the hardest decisions for leaders to accept.
Embracing risk taking and failure can be a difficult, but essential cultural shift. In the words of Winston Churchill, “Success is stumbling from failure to failure with no loss of enthusiasm.” For social innovation to deliver impact at scale, a new mindset must take hold. This means moving beyond quick wins to the deeper work of culture change. We need to architect our organizations from the ground up to move fast, take risks, be audacious, and relentlessly seek impact.