For nearly 50 years, social innovation has followed roughly the same trajectory – philanthropy funds pilot programs, researchers evaluate the results, and government replicates what works. This process, which we’ll call “pilot-evaluate-replicate,” makes sense given the priorities and constraints of the players involved. With the average foundation distributing less than $1 million in grants each year, philanthropy can fund innovative pilots but not the resources to sustain programs at scale. Proof of cause and effect is considered the “gold standard” for evidence in the social sector, so researchers focus on isolating the impact of individual programs from the complex circumstances of people’s lives. Faced with significant financial and regulatory barriers to innovation, government agencies forego experimentation in favor of prescriptive policies that scale individual programs with proven results.“For nearly fifty years, social innovation has followed roughly the same trajectory – philanthropy funds pilot programs, researchers evaluate the results, and government replicates what works.” [email protected] Click To Tweet
Pilot-evaluate-replicate has produced many innovative programs, but there are limitations. Feedback loops can be painfully slow – it commonly takes five to seven years for a pilot program to produce validated results in a randomized controlled trial. Isolating program impact is expensive and researcher capacity is limited, leaving the vast majority of programs without any evaluation at all for years on end. Replicating programs across populations with different contexts and needs produces mixed results at best, with successful pilots delivering strong results in one community, only to falter at scale.
We can do better. The social sector is experiencing a data revolution, with new technology and integrated data systems enabling government to measure population-level outcomes on a quarterly – or even monthly – basis. Large-scale data has the potential to dramatically shorten feedback loops in the social sector, driving better outcomes for millions of Americans and saving billions of dollars.“The social sector is experiencing a data revolution, with new technology and integrated data systems enabling government to measure population-level outcomes on a quarterly – or even monthly – basis.” [email protected] Click To Tweet
What does this look like in practice? Very much like the build-measure-learn cycle that powers innovation in the Lean Startup community, but applied to networks of service providers instead of a single organization.
In 2017, Third Sector partnered with the King County Division of Behavioral Health and Recovery to launch an initiative to improve behavioral health services at the county level – Outpatient Treatment on Demand. The objectives focus on having diagnostic assessment offered within one day, assessment happening within four days, and follow-up care starting within seven days. Our goal was to create a performance feedback loop that would move the entire network toward more effective treatment.
Third Sector worked with King County staff and behavioral health providers to design a contract amendment that leveraged up to $2.3M in annual bonus payments over three years to reward providers for faster service delivery while providing data analytics support to help them track their progress. Twenty-three out of 29 providers in the County adopted the amendment. In the first year of the program, the rate of assessment offers within one day increased from 63% to 77%, the rate at which people received assessments within four days increased from 55% to 67%, and the rate at which people started routine care within seven days increased from 54% to 61%. Critically, these are population-level changes affecting 21,000 people annually, not just results from a pilot program for a few hundred. These short-term measures are hypothesized to support key long-term outcomes for the project – improving patients’ overall health and well-being.
The total cost to design this project was approximately $1.1 million to influence about $115 million in annual funding for outpatient behavioral health services. On the systems level, this is a small bet with a potentially huge payoff in both impact and validated learning.
Projects like King County are just the beginning. Today, Third Sector is testing our approach in partnership with two agencies that fund more than $1 billion in social services each year. In Los Angeles County, the Department of Mental Health will align performance incentives, data, and services around better outcomes for up to 250,000 county residents. In Washington State, the Department of Children, Youth and Families will integrate faster feedback loops for learning and improvement into as many as 1,200 contracts for family services across the entire state.
We envision a future where the dominant strategy in the social sector shifts from pilot-evaluate-replicate to build-measure-learn. Just as philanthropists, researchers, and the government had distinct roles to play in the old approach, they will have new roles to play in this future:
- Philanthropy can drive population-level impact by developing government’s capacity to implement build-measure-learn feedback loops across networks of service providers
- Researchers can shape practice by using their expertise in measurement and study design to provide the capacity the government needs to link funding to measurable outcomes
- Government can leverage its position as the largest funder in the social sector to create incentives for innovation and continuous improvement at the systems level
- Service providers can partner with government to shift from reporting on activities and costs to using administrative data for outcomes measurement and performance management, streamlining compliance and unlocking flexibility for innovation
This change will take time, resources, and collaboration. Realigning the way an entire industry does business is never easy. But we know success is possible. Ten years ago only a handful of people had heard of a “lean” startup, and today there are thousands of thriving companies built on lean principles. One day soon we will look back on a similar movement that challenged the status quo in the social sector – in the meantime, we’re looking forward to putting in the work.
Thank you to Caroline Whistler, CEO & Co-Founder, and Oliver Gould, Business Development Manager, of Third Sector Capital Partners for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.