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Guest Post: Business Tools for Social Impact–Continuous Improvement

Many people who, like me, have crossed into the social sector from a for-profit background, want to see nonprofits take advantage of business principles to generate ever better outcomes. Continuous improvement is one such tool.

To oversimplify, continuous improvement involves capturing crucial performance data in ongoing feedback loops so staff can make enhancements to better serve customers. This process is best known in manufacturing, but the principle has been applied broadly. In service industries, where products are not purchased, cycles of market research and satisfaction tracking can still shape how companies iterate in delivering benefits to customers.

The process involves noticing, capturing, and sharing data on all sorts of dimensions to uncover problem patterns or discover what could be done better. Practitioners react to the information and develop new insights. They adjust what they do and then see how that changes things, starting a new cycle of data gathering. This is exactly how we hope social causes progress. In order to use continuous improvement techniques, an organization needs to watch for leading indicators (earlier than outcome metrics) so changes can be tried sooner, more frequently, and with different subgroups. Unlike traditional monitoring and evaluation, a continuous improvement process is less concerned with maintaining a stable baseline or consistent treatment for comparison at an end point, but instead fosters regular course adjustments, observing what appears to achieve the desired effect.

For-profit businesses invest millions of dollars in market research and customer satisfaction feedback to inform this process. When driven to satisfy customers and the bottom line, companies chase questions most relevant to potential improvements and find ways to embed monitoring into daily operations. They know the resulting insights enable them to create the kind of value that leads to increased purchasing.

While continuous improvement principles can be applied by any nonprofit or social enterprise, microfinance institutions (MFIs) are especially well-placed to employ them. MFIs already operate as a business, are data-driven, and have used similar processes to achieve high repayment rates or to control costs. That’s how they can affordably provide masses of hard to reach people with loans as little as $50.

With the research of Portfolios of the Poor, microfinance is at an inflection point, more aware of the hardships resulting from erratic incomes for people in poverty and the importance of diverse financial tools like insurance to protect against inevitable shocks or savings to provide stability and asset growth. Continuous improvement could be used to assist MFIs in moving from this recognition of client needs to creating effective products and services that fulfill those needs.

It’s a balancing act to diversify services that both address clients’ needs and operate profitably enough to keep expanding into unreached markets. MFIs could apply a continuous improvement approach in these three areas: a) product designs and delivery, b) customer satisfaction feedback systems, and c) social performance management. If MFI’s can build client satisfaction feedback loops they can pay closer attention to and adjust how different products help lives improve. R&D responsive to real-time client input could more rapidly prototype products that meet client-focused needs in new ways. Social performance management can add greater value if designed to glean insights that fuel ongoing improvements vs. react to external questions of impact. Fortunately, with the spread of mobile phones, rough but real-time customer satisfaction tracking, market research, and social performance management surveys could feasibly become automated, and the resulting improvements in operations and product designs could make it worth paying for customer texts (if not covered by a corporate partner).

Thought leaders in the social sector are beginning to outline the elements of such an approach. Former American Evaluation Association President, Michael Quinn Patton “assume[s] a world of multiple causes, diversity of outcomes, inconsistency of interventions, [and] interactive effects at every level”.  To address this, he says in “Evaluation for the Way We Work”, we need embedded evaluators partnering and shaping the “long-term, ongoing process of continuous improvement, adaptation, and intentional change” with more of a “probe-sense-respond” outlook. See Patton’s table in the paper that outlines the qualities different from traditional methods and case studies put in action by FSG’s Strategic Learning & Evaluation Center. Dean Spitzer, another corporate authority, applies his “Performance Measurement Cycle” to turn data into wisdom, action, and continuous learning for social objectives (“Dean Spitzer on Interactivity: The Key to Improving Performance Mea…”). Behavioral economics is incorporating psychology to tweak poverty interventions, such as through Princeton’s Eldar Shafir’s study on the role of marketing in supporting U.S. financial inclusion.

What’s necessary for continuous improvement success? It will take cost-effective feedback mechanisms, expertise, and understanding funders. The social sector needs to build expertise and incentives if it is to benefit from continuous improvement disciplines. MFIs and NGOs will see greater success by owning this problem and building capacity so they can drive the process of learning to make swift adjustments for better outcomes rather than reacting to external scrutiny. Funders need to support this process with tolerance of instructive risks and failures, flexible reporting and budget designations, and resources for social organizations to develop new expertise.

Let’s set a benchmark for an ideal percentage of budget that NGOs spend on continuous improvement (not merely tracking and reporting), similar to what companies spend on market research. And let’s not punish that as “inefficient overhead,” but rather as “sharpening the saw” for better results as Stephen Covey observes in 7 Habits of Highly Effective People. Let’s learn to publicly celebrate and reward whenever an organization discovers a mistake and makes a change to fix it or takes advantage of a new experiment. Even if trials fail, and those lessons inform other attempts, let’s learn to rejoice with Thomas Edison who found 999 ways not to make a light bulb.

We can’t wait for perfect solutions to such urgent problems, but better outcomes should evolve faster from the “speed-of-business” operations of microfinance or emerging social enterprises as they develop mechanisms for rapid response to client needs. Investing in this approach is one way the corporate world thrives at creating value, wealth, and products/services that people want, so let’s apply it in the social sector to meet human needs.

Further Reading:

1. Development Evaluation: Applying Complexity Concepts to Enhance Innovation and Use by Michael Quinn Patton
2. Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success by Dean Spitzer
3. Research by Princeton University’s Eldar Shafir
4. Leap of Reason: Managing to Outcomes in an Era of Scarcity by Mario Molino
5. McKinsey & Company Social Sector Office

 Editor’s Note:

This blog was first published on the Center for Financial Inclusion Blog, and is reproduced with the permission of the author.

As ACCION International’s Senior Director of Corporate Partnerships and Adjunct Professor of Northwest University’s master’s course on sustainable organizations, Chris Wolff applies his business background to companies seeking to achieve business plus social objectives through “shared value” or corporate social responsibility.  For more information, visit www.accion.org/corporate.

You can follow Chris on Twitter (@ChrisAWolff)

Kim Who? Some Thoughts on the World Bank’s Newest President

The mix of knowledge, insight, and experience made for compelling conversations at Wednesday’s wine reception before the screening of  Bonsai People. With financial managers mingling with social entrepreneurs, it seemed the perfect venue to ask people what they thought about the new president of the World Bank. Some attendees weren’t aware of the selection, or if they were, had few opinions about it. This ambivalence is telling. At a cocktail party for people engaged in improving the financial health of the world’s poorest, in a hub of global health and development, the response is “Kim who?” This isn’t to say that folks don’t care or aren’t paying attention, but that the World Bank, its leaders, and what they do, is so far removed from those on the ground, that this kind of news just isn’t on the top of people’s news feeds.

A few facts: On Monday, Dr. Jim Yong Kim became the latest president of the World Bank. An anthropologist and physician, he is co-founder of Partners in Health, is a former director of the HIV/AIDS at WHO, and has served at the president of Dartmouth College since 2009. The other two nominees were Nigerian finance minister and former World Bank managing director, Ngozi Okonjo-Iweala, and former U.N. official and Colombian central banker, José Antonio Campo.

Some people said that Dr. Kim “sounds good on paper,” while others, such as Alan Leong, Director of Research at Biotech Stock Research, noted the controversy of the developed world (namely the U.S.) once again having the control, despite the goal to have more leadership from the developing world, like from Nigeria, or Colombia, for instance. Others expressed frustration with the institution, likening it to big banks and their culture of taking care of their own (executives) rather than the people they are meant to serve.

One attendee framed it this way: “What does the World Bank do that actually reaches real people?”  Others, like Eric Youngren, of Solar Nexus International, hoped that Dr. Kim could start making investments that truly lead to sustainability. Michael Kaemingk, project manager at Lumana, considers the selection a nice surprise that will provide the World Bank a more relevant perspective: “He’s less removed from the concerns of the developing world.”

Zbigniew Bochniarz, a visiting professor at UW Evans School of Public Affairs, acknowledged that Kim is “a good man” and that his record in health care should provide some needed perspective to an organization that has been heavily criticized for neglecting the social aspects of development. “Here’s a guy who knows the issues and is sensitive to them,” he noted, while also congratulating President Obama taking the risk and nominating someone with a development background.

If you decide to dig in and learn more about Dr. Jim Yong Kim, be sure to include this video from last year’s Dartmouth Idol Finals. Wait through a few minutes of that sappy Dirty Dancing theme song, and you’ll witness Dr. Kim doing the robot and rapping in white leather, neon bracelets, and spacey sunglasses. Dr. Kim certainly has the personality, playfulness, and skills of collaboration to bring new leadership and  ideas to the stiff-limbed World Bank.

Member Guest Post: The Butterfly effect – everyone was a hero in Cairo

By Akhtar Badshah, Senior Director, Citizenship and Public Affairs, Microsoft

I landed in Cairo earlier today a few hours ago expecting to see significant changes. In many ways everything has changed yet on the drive from the airport to the hotel in Zamalek to across the Nile, Cairo is still the same. The wonderful energy, the crazy traffic with cars moving in a slow dance – it was Friday evening after all and people were out and about enjoying the beautiful evening. Traffic was snarled in some places with the Presidential campaign in full swing and supporters out in the streets waving signs and banners in support of their candidates. For life in a very big city it seems very normal. Yet for many their whole world has been changed completely. Many of us hope for the better but not everyone is that sure.

Right after my arrival I met with 25 youth leaders that have been part of the Microsoft Tech Hope program. This is a program where they are using technology to bring about social change. After the initial introductions the conversation quickly turned to the Arab Spring and the revolution. I asked them if they had been part of the demonstrations in Thahrir Square and all but two raised their hands. The other two were from outside Cairo and participated in local demonstrations. I was surprised as the room had equal number of men and women.

I wanted to know their opinion on the revolution and how they all felt. Almost all of them felt that they, the middle class youth, now felt more empowered. They all felt that they can now do something on their own. They do not have to go into just another job. One of them was very clear, he told me ‘before the revolution my plan was to leave the country and study abroad, find a job there and stay there’. There was no future for him in Egypt. Now he is full of optimism and will stay here and work to bring about positive change in the underserved communities.

Every single one of them felt the revolution had impacted them, but for the poor there has been no immediate impact and for them change will be very slow. All of the youth in the room were concerned about this and as a group felt that they should work together towards equitable change.

I also asked them for their experience with the revolution and if anyone deserves any or some credit for it. One of the young men said the Ministry of Interior. I was taken aback and asked him to explain. He said that January 25 started out as a day of protest as it was Police Day – a day to celebrate the police- and what started out as a protest against the Ministry of Interior spun out of control over the next several days because of the brutal force the Ministry used to squelch the demonstrations. His opinion was if the Ministry had not taken this approach there would not have been a revolution as no one started out wanting a change in power.

One young lady put it best, she said it was the ‘butterfly effect’, one butterfly takes off and then another and suddenly you have a whole flight of butterflies. Everyone got involved, young and old, men and women, rich and poor and that is why she believes everyone is a hero. I just thought that was a great sentiment.

The conversation lasted late into the night and they were all bouncing different ideas off each other about how they can continue to drive positive change and how they all can make a difference together.

At one point, someone asked if the women in the room felt they would lose out when the new regime comes into power. They felt that was not the case, everyone participated and even some try people will not go back and not let anyone push them back.

Hope was the common sentiment in the room, though many are wondering how they can ensure that everyone will benefit from this change.

On Sunday we will launch of Innovate4Good@Microsoft for the Arab region and if this conversation was any indication we’re in for a fantastic event. We have young leaders from across the region including Libya, Tunisia, and Iraq attending the event. I cannot wait to hear their stories.

The butterfly effect – what a great way to start the conversation in Cairo.