Thanks to Kathleen Kelly Janus for contributing this piece. She is a social entrepreneur, author, and lecturer at the Stanford Program on Social Entrepreneurship.
Failure, and knowing when to admit failure, are critical to the innovation process. Thomas Edison once famously said, “I have not failed. I’ve just found ten thousand ways that won’t work.” Thomas Watson, the CEO of IBM for over forty years, once said, “The fastest way to succeed is to double your failure rate.” But embracing failure is easier said than done.
In recent years, in the world of Silicon Valley innovation, there’s been a great deal of attention paid to the importance of teams having leeway to take more risks, and to fail more often. This is a critical step in the Lean Startup methodology, namely that companies must pivot or course correct when a product isn’t showing business results. But in the social sector – where there’s much more incentive to talk about your successes as opposed to your failures, in order to continue to receive philanthropic funding – failing to produce the outcome a nonprofit has promised is still very taboo and puts organizations at risk of losing their funding.
In my extensive interviews with hundreds of the most successful nonprofit leaders for my book, Social Startup Success, many breakthrough social entrepreneurs revealed that they embrace this failure ethos, and truly believe that failure has often been a critical element of their success. They realize that failure is a necessary corollary to innovation and that failures should be reframed as productive learning experiences. Adopting this ethic instills a culture of innovation that ultimately fuels faster growth.
Just as the most successful Lean Startup companies realize that continuous course correction is what leads to radically successful products, nonprofits must do the same. Organizations that want to do a better job of embracing failure, and using it as a strength that helps them pivot as opposed to a weakness, should be asking themselves the following questions:
Does your organization provide spaces in staff meetings, reports, blogs and/or funder meetings to have open conversations about failure?
You can’t expect your team to embrace failure if you don’t start by creating safe spaces to talk both about programs that are working as well as the ones that aren’t. For example, the Hewlett Foundation started a tradition of the “biggest failure” competition where staff share and celebrate failures to reframe them as learning opportunities. Many organizations, such as D-Rev, a nonprofit medical device company focused on delivering quality care globally, also speak publicly about failures. When, after testing their “Brilliance” newborn phototherapy product in rural markets, they realized there were challenges in these markets that made it impossible to continue the program, they wrote a public blog about the pilot emphasizing that was not a failure. As they wrote, “in design, everything is information for the next iteration.” This mentality of reframing failure as learning, and willingness to be publicly transparent about the innovation process is what has made D-Rev so successful as they regularly course correct and pivot toward what’s working, and away from what’s not.
Does your organization regularly assess its programmatic priorities to ensure it is focusing on areas where it can have the most impact?
You can’t be in a position to assess programmatic priorities unless you have a strong system for measuring the impact of your work. Take the case of Last Mile Health, a Liberia-based organization focused on reducing mortality rates. When Raj Panjabi first started the program, he launched several projects including teaching better farming methods and opening a women’s center, all while simultaneously trying to support hospitals and rural clinics. Fortunately, Panjabi did something critical to the organization’s success from the start: he made sure it had a good system for gathering data about the effectiveness of the projects. After a year of operations, the data clearly showed what the organization was really good at was supporting HIV patients through community health workers. As Panjabi says, “None of those were necessarily bad projects.” But he perceived that the organization could have the most impact by focusing exclusively on the training of more community workers, and he was willing to take the dramatic step of transitioning ownership of all the other programs. By embracing this and turning its attention to the work having the most impact and gaining significant financial support, Last Mile Health became a major force in averting a global disaster in 2014, when the Ebola outbreak hit Liberia. The organization’s network of community health workers was critical to stopping the spread of the disease, something that might not have happened had Last Mile Health not had the courage to pivot away from their other projects and persevere with the community health worker trainings.
Does your organization have a process for discontinuing programs when they are not having the expected impact?
One of the hardest parts about honestly assessing whether your programs are having an impact is risking that you may have to shut them down. When Kiva– a crowdfunding platform to support microfinance projects globally – decided to test a new form of lending under the Kiva Zip program to allow small businesses to raise money directly from individual lenders online, they were excited about the prospect of cutting out the middleman. Their U.S.-based program showed early promise, but there were challenges such as internet connectivity and fundraising difficulties with their Kenya pilot. In a blog post about the closure, Kiva shared that “for the Kiva direct model to be sustainable, borrowers themselves must be digitally included at a level that is currently not common for low-income borrowers in developing countries.” Having the courage to discontinue programs – or pivot away from them – when they are not having the expected impact is a critical component of the path to success.
Ultimately, for nonprofits to truly embrace failure, funders are going to have to embrace the Lean Startup methodology too. Research shows that only 52 percent of nonprofits feel comfortable discussing problems that occur mid-grant with a funder. While it is important for organizations to establish a rigorous approach to learning from setbacks and take action to improve results, the process can only be effective if funders create space for nonprofits to talk openly about their challenges alongside multi-year grants so that nonprofits don’t have to worry they might lose funding if they are transparent.
If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.