Starting a successful organisation is no easy feat, especially for social enterprises. Let’s face it: social enterprises (and impact-driven organisations) – like Enviu – have chosen a path with a few extra twists and turns. Our commitment to making a positive impact means we’re not just focused on profits but on doing good too. And that noble cause brings its own set of challenges: unique risk-return profiles, slower route to market, slower profit timelines, and higher costs.
In short, we face a long list of hurdles. That’s why adopting a lean methodology is crucial—it helps navigate these hurdles quickly and sustainably, keeping the mission on track without getting bogged down.
In this post, we will dive into:
- What is the lean methodology?
- How to apply the lean methodology within a social enterprise
- 3 reasons social enterprises should adopt the lean methodology
(Want to skip ahead? Click on any of the links above.)
What is the lean methodology?
The lean methodology, initially developed by Toyota, involves cutting unnecessary time and costs, focusing on learning and striving for continuous improvement. This approach has been successfully applied in various fields and was adapted for business startups by Eric Reis in his book The Lean Startup.
The Build-Measure-Learn cycle is the core framework of the Lean Startup methodology. It emphasises rapid iteration, experimentation, and feedback to develop products that truly meet customer needs. Let’s take a closer look:
1. Build
The goal of the “Build” phase is to create a the most basic version (called Minimum Viable Product (MVP)), of the product or service, or even just a feature or representation of it, to be usable by early customers and to start the feedback process. The idea is to build something quickly and cost-effectively to test assumptions.
2. Measure
The “Measure” phase – on the other hand – is all about gathering data on how the MVP performs with real users. The key here is to track relevant metrics that provide insights into how customers perceive your idea, product or service, or how they are interacting with it.
This phase involves setting up metrics and key performance indicators (KPIs) that align with the startup’s hypotheses.
3. Learn
In the “Learn” phase, the organisation analyses the data collected during the Measure phase to gain insights and determine whether to pivot or persevere.
The learning comes from understanding what the data tells you about your assumptions. If the assumptions are validated, your organisation can continue refining the product. If they are not, the startup may need to pivot—changing some aspect of the product or strategy.
How to apply the lean methodology within a social enterprise
If we take these steps and apply them to a social enterprise, they might look something like this:
1. Building an MVP
The “Build” phase is centered around creating an MVP—a prototype or pilot mimicking your solution that directly addresses a specific social or environmental challenge. The focus is on quickly developing a solution that can demonstrate potential for significant impact on a small scale.
How do we do this at Enviu?
Enviu identifies a pressing issue, such as plastic waste management . The team collaborates with local communities and stakeholders to co-create an initial solution, like a pilot project that tests a new solution that prevents packaging from entering a landfill by refilling it on a small scale – e.g. within a specific neighbourhood of the city. This MVP is designed to be quickly deployable, gather feedback from real users and generate measurable impact, even in its simplest form.
2. Measuring impact
In the “Measure” phase, social enterprises focus on assessing the real-world impact of the MVP, and if suits the people we’re designing for. This involves collecting data not just on operational metrics but also on how well the solution is meeting its social and environmental objectives.
How do we do this at Enviu?
Enviu employs both qualitative and quantitative methods to measure impact. For example, if the MVP is a new reuse venture, the team would track metrics like the amount of usage cycles of a reusable packaging, the reduction in plastic pollution, and the economic benefits to local waste pickers.
3. Learning and refining
The “Learn” phase is about using the insights gained from the measurement stage to refine the solution.
How do we do this at Enviu?
Enviu analyses the data to determine whether the MVP is effectively addressing the problem and if it can be further detailed or even scaled up for greater impact.
If the MVP proves successful, Enviu iterates on the design, addressing any identified weaknesses or areas for improvement. For instance, if a reuse pilot shows strong results but faces logistical challenges, Enviu might optimise the supply chain or introduce new partnerships to enhance efficiency.
The learning phase might also reveal the need for a strategic pivot, such as shifting focus from reuse to eliminating waste generation at the source. Once refined, the solution is scaled, either within the same community or expanded to new regions, always with an eye on maximising both social and environmental impact.
With these steps in mind, here are the key reasons why the lean approach particularly benefits social enterprises.
3 Reasons Social Enterprises Should Adopt The Lean Methodology
1. Helps social enterprises tackle resource constraints
Low cost, low waste. Social entrepreneurs often struggle to secure funding due to non-traditional risk-reward profiles and longer paths to profitability. The lean startup methodology helps address this challenge by providing a framework to work with limited resources. By minimising waste, they can make the most of their resources and focus on what truly adds value.
This also includes rapid learning cycles. In fact, additional costs can accrue quickly within socially and economically responsible business models, making quick learning an essential element. The lean approach emphasises quick springs of experiences to seek quick validation of direction (instead of investing heavily into an un-tested solution). This process allows social entrepreneurs to pivot their business model quickly to meet market demands.
Take it from one of our venture builders (Arpana Philip, Senior Venture Builder, Enviu Agrifood:
Our venture building process relies on quick experiments to ensure quick learnings, so we don’t waste time and money on things that the customer doesn’t want. For example, in Kenya, we wanted to test if farmers would pay money to be trained (a tangible way Enviu is seeing system change in Kenya). During the first day of testing, we rolled out a short training and asked farmers to pay for it. 100% of the farmers paid and we assessed we could build a model based on this. This gave us quick learnings at a very low cost.
2. Helps maintain a mission-driven approach
We’ve all been there – it can be easy to get side-tracked by non-essential activities. Lean helps ensure social enterprises can effectively scale their solutions step-by-step, while maintaining a focus on the mission and impact. It also encourages the measurement of both outcomes and impact, which is a critical element when demonstrating effectiveness of their solutions to stakeholders, funders or even the communities they serve.
3. Helps build a sustainable model
Lastly, the lean methodology encourages building a business model that is not only impactful but also highly desirable to customers and financially viable. By focusing on continuous validation and iteration, working lean ensures that the solution aligns with real market needs while being capable of generating long-term financial stability. This is vital for social entrepreneurs who need to balance mission-driven goals with the practicalities of running an organisation.
*Note: this is not an exhaustive list of reasons. There are many more benefits to using the lean methodology in the impact space, such as the promotion of ongoing stakeholder engagement.
Working lean can help tackle our most urgent challenges
The urgency of our planet’s challenges requires social enterprises to bring solutions to market as quickly as possible. The lean approach can assist these enterprises in doing just that whilst also overcoming capital constraints and connecting with funders.
As you have read, this is the approach we – here at Enviu – take as well.
Enviu is a global, impact-driven organisation that builds solutions to tackle the most pressing environmental and social issues. The lean methodology enables us to prioritise ideation, testing and validation before fixating on immediate profitability.
Thus far, it has proven highly effective – which is why we encourage more social enterprises to embrace the lean approach in building their solutions and operations.
Get in touch!
Want to learn more about how we (Enviu) leverage the lean methodology to build world changing companies?
