Nonprofits should develop business models in selling impact – Rewane
Social Innovator, change-maker, problem-solver. These terms give an idea of the footprint MISAN REWANE has made in the area of youth employment in Nigeria. The Stanford and Harvard trained Senior Fellow leveraged her education and experience at multinational strategy consulting firms and non-profits to tackle Nigeria’s youth unemployment head-on through WAVE, the non-profit she founded in 2013. In a chat with the NPLM Programme, she shared insights on how young founders can develop an effective non-profit business model. OSA VICTOR OBAYAGBONA has excerpts:
How do you clearly identify a business model for a newly identified social problem?
Building a non-profit business model is similar to building a for-profit business model. Every business model has four key components: the customer value proposition, the product value chain, the “go to market”, and the financial model.
Study generic business models. You’re not the first person to have done a lot of these things, so don’t go reinventing the wheel. There are likely others out there who are doing what you want to do.
Let’s start with the customer value proposition. How does a founder developing a new business model (or trying to evolve their existing business model) create a unique value proposition for their non-profit organisation?
First, identify “the why” of your value proposition.
What value do you or does your organisation add to society? If you go bankrupt tomorrow, what would society miss? And if it will miss nothing, why then do you exist? I love these questions because they help me think critically about the value I add to the world.
For instance, a person thinks society will miss someone who facilitates conversations between industries. That’s my unique value proposition, but five other organisations that facilitate such conversations, then that’s not a unique value proposition. So always be able to articulate what exactly will society miss if you don’t exist. Remember: as a non-profit, you are selling impact.
What is the value that you’re creating for the user/beneficiary or customer? When you create value for someone, you are helping them to achieve something. Your value proposition should comprise two parts: the core value or customer value proposition and the funder value proposition.
WAVE is tackling the youth unemployment problem by teaching hardworking young people the skills required to get a job, start a career, and build a brighter future. There are many other things that we do, but this is our core value proposition.
Next, identify “the what” of your value proposition.
It’s very helpful to think about the value you create in terms of “the job to be done”. You must design your business model, value proposition around jobs to be done. You have got three branches of these jobs: functional, social, and emotional.
A person comes to WAVE because they need to skills-train and find work—that’s our functional job. They need a steady and secure source of income for a secure livelihood—that’s our social job. We are helping them become what they imagine and helping them realise their dreams—that’s our emotional job. The social and emotional jobs give you a bigger sense of humility and stewardship. So it’s not just job skills training for us at WAVE; we are in the business of helping people realise their potential and that’s work to take very seriously. It makes us very intentional about designing. Finally, consider “the how” for your value proposition.
How do you develop, produce, and deliver your value? Start by making certain assessments, firstly about your customer. What are the things that your customers prioritise? These become your product attributes. In your space, your customers might prioritise price; people just want to go to the cheapest education option or healthcare provider or financial literacy programme. For others, it might be convenient; they just want the easiest thing. Some want reliability and care about the quality of your after-hire support; they want to make sure you’re not just a bait-and-switch operator but that you will be with them after they’ve hired your product. Some people care about speed; they just want service delivered quickly. Some care about flexibility; they want service personalised to their unique needs, not cookie-cutter solutions. There are many different types of product attributes, so think about those in your particular industry, work, and organisation, and think about your customer’s goals.
Your customers may change over time, though.
Yes, they will. Your target customer today is not necessarily your target customer tomorrow. So when considering your customer value proposition, it’s important to ask yourself another question: how will my target customer segments change over time? What’s the value proposition for future customers? When we started WAVE, we wanted to train young people and connect them to entry-level work. Because we were new and didn’t yet have a defined brand, we decided to take lower risks in the beginning. Our initial strategy was therefore to become more accessible over time. So our initial customer segment was pretty much A-players, i.e., people with a minimum of a secondary school certificate. Our strategy: we get these people (who, for whatever reason, are unemployed) into the market, the market responds well and our brand reputation grows, then we gradually expand to take B-players, then C-players. In the early days, 70% of the people we worked with had a degree. It’s now the opposite: 70% of those we work with today didn’t even finish secondary school. That’s our core market today and we knew from the outset that they would eventually be our core market.
What else should founders consider when developing their product value chain?
Identifying the Minimum Viable Product is vital. An MVP is a pilot version of your product or service. It will help you test to see if there’s even any interest. Your eventual product may have 15 different features and elements, but what is the minimum viable product that can get on the market and test certain assumptions? Your ideal product might be a three-month programme charging x amount and run at a nice campus with a certain calibre of instructors. Before you rent a property or hire these people at his price point, however, you launch a two-day programme that’s enough to tell you certain things. Are people willing to pay for this programme? Are we teaching the right skills? What timeline will people be interested in? What are the minimum qualifications or experience for a facilitator to do a good job here? A WhatsApp flier you put out for your MVP is in itself a form of MVP; you haven’t done any recruitment, incurred facilities expenses, or drafted the full three-month curriculum, but your flier will tell you what percentage of people who see it are interested and sign up for the programme.
After your MVP comes to your product roadmap. Here, you identify the stages at which you release certain versions of your product or programme. Your MVP tells you how many people express interest and register. Next, you’ll find out how many of those who registered will show up on day one. After running the two-day programme, you will find out how many attendees are interested in a three-month programme and you can now launch the full programme. So version one is just the flier. Version two is the two-day programme. Version three is the three-month programme. Version four might be a one-year master’s programme two years later when you move to your permanent site.
It’s also important to identify required third-party complements or ancillary services. What additional things do your customers need to have to use your product or service? Maybe you are setting up a primary school for low-income children and you realise that because the school is far away, your students will need additional complementary services, like a school bus or some other form of transport to the school because it’s far away from these young children.
WAVE used to require a completed guarantor form from trainees at enrolment because employers require a guarantor, but this rule became a stumbling block for some and discouraged them from enrolling. We no longer mandate one at the programme start, but trainees must have it by the time they graduate. Over those three weeks, we’re reminding them all the time to get the form.
To conclude, please share your thoughts on how founders can navigate a post-pandemic world during a recession
The covid-19 universe presents an opportunity to revisit your planned or existing business model. Re-exam your business model to understand where new value is being created. Your pre-covid value proposition for your customers may be very different now. And so, examine where new value is being created and where value has been destroyed. Where are people no longer getting value from? To do this, you have to get back to your user, get up close and ask them where value is being derived right now.
By articulating and thinking through each of the details of your business model and hypotheses with a fine-tooth comb, you’ll be able to bring to the fore issues that are dealbreakers and identify any lack of internal consistency between your value proposition, operations, go to market, and pricing. You’ll be able to ensure that you’re selling impact—innovative and collaborative impact.
WAVE is tackling the problem of youth unemployment by teaching hard-working youth the skills that businesses are hiring for and also helping these businesses find the right talent.