One of the greatest risks anyone can make is to design initiatives based on "common sense" and other untested assumptions.
Since programs and services in the social sector can endure long cycle times before results can even be evaluated, testing assumptions first becomes a crucial part of lean thinking. It helps us see which of our efforts create true value and which ones create waste.
The meaning of value and waste isn't all that different in the context of nonprofits, either. Value is the benefit created through programs and services. Waste, on the other hand, is anything else that consumes time, energy, and money, yet doesn't create any benefit.
Nonprofits are quick to understand why they must build this kind of adaptive capacity. Now they want to know how: How can they start testing their own programs and services so that they can prioritize their time, energy, and money into building things with lasting value?
An Introduction to the Value Proposition Canvas
Remember that Alexander Osterwalder, entrepreneur and author of the book Business Model Generation (Osterwaler & Pigneur, 2010), had created the Business Model Canvas which lets anyone visualize their organization’s logic through a nine building-block framework. The business model canvas has been praised by lean thinkers in both business and the social sector as one of the best ways to rapidly test and develop new business models.
Osterwalder revealed in late 2012 another rapid prototyping tool called the Value Proposition Canvas which combines many core lean thinking concepts like Clayton Christensen's JOBS framework, XPLANE's empathy map, and Steve Blank's customer development principles. This canvas digs one level deeper by exploring how well your products, programs, and services meet the needs of your clients.
How does it work?
The canvas actually breaks down two types of assumptions:
First, it explores who the client is really like today. This includes the jobs they're trying to get done, along with their current pains, wants, and needs.
Second, it explores the epicenter of your value proposition: Your programs and services, along with the pains eliminated and the gains created for clients.
The canvas works best when it's filled out with a group. During the first half of the process, the trigger questions are used to populate the canvas from right to left. When finished, the relationship between the two types of assumptions can be clarified and quickly understood.
The completed canvas isn't the final word, but a hypothesis that nonprofits use to explore their information gaps and formulate the right questions. The other half of the process is to "get out of the building", talk to clients, and then come back to fill a 2nd iteration based on the new insights obtained.
Here are 5 ways the new value proposition canvas can help nonprofits test assumptions:
1. You're unclear about your value proposition
Why should investors or donors cut you a check? Why should volunteers or the community co-create change with you? What social return can they expect?
Even nonprofits need a value proposition. This is the compelling case for support which differentiates your mission from the rest, the unique benefit or social impact that clients and donors can expect from their partnership with you. There's no escaping the fact that nonprofits exist in a crowded marketplace where they must still work to attract revenue, acquire subsidies, retain support, and build advocacy.
The reality of your value proposition will always be mirrored by how well you understand your clients and how well you design your programs and services. The canvas can serve as a reality check.
2. You need to recalibrate from mission drift
Mission drift occurs when a nonprofit strays from its original vision. Some of the top cited causes for mission drift include desperation for funding and confusion in how their organization should grow (i.e. the "bigger is better" mindset).
Sometimes a large infusion of funds from a donor can come with hidden compromises. The collateral damage isn't evident until later on in the form of depleted morale, disengaged staff, and most of all, negligible social outcomes with little resemblance to the nonprofit's original founding vision.
Recovering isn't easy. Neither is pivoting. Pivoting is the lean startup term for sharply overturning an organization's previous strategy and charting a new one towards their true destination.
A pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.
The Value Proposition Canvas can inform the need to pivot or persevere. Use it to take a snapshot of your current value proposition. Finally, take it one step further and use that to fill out the Business Model Canvas so that you can create a candid conversation about your partners, clients, and various stakeholders. Ask: Who helps? Who hinders? Which funding sources can be added or subtracted from the picture, and how would it affect the overall cost-structure of the organization?
3. You need to find out how your various client and “customer” segments have changed
Nonprofits will have to visualize two different value propositions: one for the clients who benefit from the nonprofit's services, and another for the donors who write a check and expect a "social return" in the long run.
The thing is that these people aren't static: They're dynamic characters in the nonprofit's story, each with unique experiences, preferences, attitudes, behaviors, and expectations that color their world view.
Sometimes we just have a hard time seeing how they've changed through time without getting lost in the details. The beauty of the value proposition canvas is that it's partly an empathy map so that anyone can easily drill down on the details for each segment. You can manage and track these profiles over time and use them as a point of reference as your programs and services evolve.
4. You need to learn quickly what works and what doesn't.
The reason lean thinking advocates for a minimum viable product (or program or service) is to learn quickly if something will create lasting value before committing scarce resources.
Nonprofits deal with scarce resources all the time, but if there's one thing they can't afford it's waiting for years in a marketplace that's always in flux.
The Value Proposition Canvas is like a visual battle plan that can help test for strengths, weaknesses, and unmet needs. This helps organizations understand what they're building before they build it. Use it as a blueprint to improve, retain, or prototype something new.
5. Visual collaboration just works better
Sometimes words alone don’t work. Everyone may hear the same thing, but in their mind's eye they may not see the same thing.
Pictures are a universal language. External visualization tools are an effective way of informing strategy because it helps convey "messy" topics. Think whiteboards and sticky notes.
The Value Proposition Canvas, especially, frames these kinds of conversations in a way that's easy for everyone to see, grasp, and understand. If conducted correctly, it pools everyone's ideas, gets people to bounce back with their own unique insights, and builds up the feeling of ownership.
The one thing that no one can control is their environment: The marketplaces, technologies, stakeholder attitudes, and economic conditions that make it all up. So while these planning tools aren't magic fixes, they're a good starting point in putting rapid prototyping and other lean principles into practice.