What Not-for-Profits Can Learn from Startups: Part 1
The landscape that all organisations exist in is constantly changing and complex. Rapid advances in technology have presented global connectivity and awareness previously not experienced. Digital technology and social media have created an expectation of instant gratification and unlimited access to knowledge. People are now demanding more transparency, more meaningful experiences, more personalised communications and want to be a part of a journey rather than a transaction. More employees want a supportive and inclusive culture that provides meaning and impacts the world around them.
These challenges are experienced by not-for-profits (NFPs), in addition to challenges unique to their sector. There is an expectation by donors and impact investors for increased financial transparency and administrative efficiency. People want to see the impact organisations have in return for their investment or donation. Just asking for money to solve society’s biggest problems isn’t enough anymore.
For NFPs, it’s hard enough attempting to solve the wicked problems they were founded to tackle. This combined with the aforementioned challenges, requires new approaches. What if you were to look to a different sector for inspiration?
In the last seven years, we have seen a rapid rise in startups. In these volatile environments there is a huge risk of failure, and the reality is, most fail. Successful startups have developed innovative approaches to management, culture, problem solving, planning, product and service delivery to customers. These thriving startups have adopted and refined these new methodologies to enable teams to deliver real value to customers. All the while ensuring a sustainable model and increasing revenue.
Over the next few weeks we are releasing a series of articles that explore how NFPs could consider adopting new approaches practiced by successful startups. From alternative organisational structures, to strategy development and innovation. It’s not about replicating startups, it’s about learning and adapting to meet the challenges facing NFPs in our rapidly changing world.
Management & Structure
How Do We Build an Organisation to Respond to Change.
Many NFP organisations started decades ago. The organisational set up, business model and management styles are reflective of the business world at that time. To change and innovate is challenging considering the lack of resources, such as time and money. However it’s often the cultural mindset and organisational structure that most inhibits innovation.
If we look at startups, they have anticipated and learned that older business models make it extremely difficult to deliver new ideas. They are not conducive to collaboration and responding to change. New methodologies have been adopted to redefine how startup businesses operate to develop new ideas and bring them to life. Mindsets such as design thinking, lean and agile. Operational structures such as flat hierarchies and new workplace environments. These are all designed to encourage ideas, collaboration, autonomy, and innovation. Let’s briefly look at a few, how NFP’s could integrate and the benefits.
Lean Startup
In the past 5–7 years, a new methodology for launching companies, called “the lean start-up,” has begun to replace the old regimen. Traditionally, a venture’s founders would write a business plan, complete with a five-year forecast, use it to raise money, and then go undercover to develop their offerings, all without getting much feedback from the people they intended to sell to. Lean startups, in contrast, begin by searching for a business model. They test, revise, and discard hypotheses, continually gathering customer feedback and rapidly iterating on and re-engineering their products. This strategy greatly reduces the chances that start-ups will spend a lot of time and money launching products that no one actually will pay for.
The last point is key. NFPs can no longer afford to spend time and money delivering services, and getting money through campaigns, fundraising and partnerships without having more certainty of success that only be gained from “customer” feedback. Rather than investing in an all or nothing approach, consider smaller iterative delivery methods. Gather feedback, refine and then roll out at scale.
“Lean” is a mindset that can be applied in any situation — even those that are extremely capital intensive — to test as efficiently as possible, and iterate accordingly. When it’s used in management, “being Lean is not simply procedural, it’s cultural, and it requires change in the principles and values that motivate how people work.” (Jonny Schneider)
Organisational Structures For a New Way of Working.
Many organisations waste hours and hours of time having meetings, and meetings about meetings. This coupled with an inability or fear to make independent decisions without going through multiple levels of approval results in a loss of time and motivation.
Traditional hierarchies have many challenges. Communication typically flows from the top to the bottom which means innovation stalls, collaboration is virtually non-existent, an there is a loss of engagement. This type of environment is constrained by red tape and is very slow moving. For any new initiatives to progress requires multiple levels of approval, more meetings and less time getting things done.
Most startups are moving towards a flatter structure, unlike the traditional hierarchy which typically sees one way communication and everyone at the top with all the information and power; a “flatter” structure seeks to open up the lines of communication and collaboration while removing layers within the organisation.
For NFPs the CEO and Board set the vision. Coupled with an easy to understand, implementable and achievable strategy. This needs to clearly define a set number of problems facing the organisation and a picture of the outcome if these problems are solved.
Under that is a flatter structure that aims to work collaboratively in multidisciplinary teams to solve these problems. This encourages innovative thinking and alternative views, rather than departmental isolated silos with their own top down hierarchy. For example, working on a new fundraising campaign. Rather than this being the sole responsibility of the “Marketing & Fundraising” team bring together people from HR, finance, public programs and volunteers to work on the idea collaboratively. Look to use workshop methodologies like Sprint or Gamestorming that have processes and include focusing on an outcome, not brainstorming.
The desired outcome is a culture and workforce that has high autonomy with high alignment. Watch how Spotify explains this approach.
It also creates a culture of engagement; different people working together to solve problems, rather than only their set predefined job role.
Design Thinking for Problem Solving
Many startups use an approach called Design Thinking. It is a way to explore complex problems to uncover insights and opportunities. Many see it as a step by step process, which it is not. Design Thinking is a mindset, as well as a set of techniques. It requires understanding and clearly articulating the problem, searching for solutions, considering many options and finally converging on an approach to pursue in detail. It pushes people past settling on the first and most obvious solution.
NFPs can gain a lot from using Design Thinking. The problems they are trying to solve are complex and have a huge impact on many people in society. This mindset can provide alternative ways to approaching how NFPs deliver their services and solve problems. It promotes continual improvement based on user feedback. It is a collaborative and inclusive activity, that can be adopted by anybody not just “designers”.
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The next article in the series will examine how startups develop strategy, their approach to planning and how they facilitate innovation best practices.
By Rusty Benson | Co-founder & Research Lead
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At Raine & Makin we work with organisations to understand their challenges and turn them into opportunities. We focus on defining the problem, before rushing to the solution. If you have a problem that is stopping you from achieving your organisation’s mission, get in touch to discuss how we can work together to solve it.
