“Lean impact” by Ann Mei Chang takes lessons from the Lean Startup methodology and applies them to impact-making, which is a bit more complex than the traditional startup. She has some new approaches and many examples about social entrepreneurship and impact funding.

The main question is this: How to optimise the impact on the world, when we give our time and money? We could also ask: How can we make this sector more effective and less wasteful?

The first step is to take lessons from the Lean Startup approach, which essentially is about creating a successful product or service under conditions of extreme uncertainty (sounds familiar?):

• Dream big, start small.
• Evaluate and test hypotheses – most risky/crucial first.
• Build, measure, learn – fast!

The three pillars in this book are (customer) value, growth & impact. If you cannot satisfy all three, maybe your time and money should go elsewhere.

The first two pillars are from the Lean Startup methodology, where also important tools like MVP or A/B testing were popularized. The third though, impact, is novel. It creates a new game:

“Of course, making the world a better place is far more complicated than buiding an app. It involves more listening, more care, and more stakeholders to ensure solutions are fully embraced, address root causes, and include an engine that will drive growth.”

So in the impact sector, there are a bunch of extra difficulties, for example:

• Funding is restricted and funders require exact planning
• Impact is hard to measure
• Responsible innovation is difficult to get right

And Lean Impact is not only about starting out. Here is Mei’s idea for thinking about what you’ve done so far: Don’t fall in love with your solution – stay focused on the problem and pivot, if needed to truly increase impact. In fact, don’t be satisfied with vanity metrics – report unit and marginal metrics to understand where you are and could be going. Don’t wait until the next grant proposal deadline to evaluate your work – be data-driven, so you can learn and pivot, if needed.

So far, this has all been about the entrepreneurial side of things. How to innovate impact in a lean way. But a huge part of impact entrepreneurship is how impact funding works. How the funders frame their conditions incentivises the entrepreneurs to write certain proposals and do things a certain way – it might even repel certain kind of innovators.

The book thus closes strongly with examining the funding side of things. There are really innovative ideas like paying for outcomes (e.g. for poor pregnant women to regularly visit their doctor, or business reducing their plastic packaging), no matter what method is used to get there (within constraints to do no harm, of course). The funding angle is also quite helpful to understand why the two traditional models of social entrepreneurship – non-profit and for-profit – should both be considered essential building blocks and often be merged.

Another helpful overview is Ann’s keynote presentation.