Entrepreneurship is ultimately about people with shared passions coming together to build something new. As entrepreneurship becomes an increasingly popular vehicle for addressing global challenges, it becomes all the more important that we know how to navigate what creating deep, transformational impact really implies.
How do we decide where to focus our attention? How do we design solutions and organizations that provide the best chances for success?
These 14 questions serve as a simple checklist for anyone looking to maximize the impact of a particular initiative. Entrepreneurs early in their journey can use this test as a frame for thinking about how to design their venture, while those with existing ideas or early ventures can use it to identify where to put some additional focus.
Understanding the system you are working to change
A system is a set of interconnected actors, activities, and forces that together make a complex whole. Without truly understanding a complex system, it is almost impossible to change it. Even those of us intent on understanding a system can be easily sidetracked; we naturally succumb to the love affair with ideas, have biases towards specific narratives, or just have certain comfort zones from which we extrapolate.
But if we are really trying to change things, we must learn how to shed those biases and preconceived notions by building narratives from the ground up using systems thinking and first principles. To do so requires a commitment to fully understanding the underlying problem we are trying to solve and the dynamics that keep that problem rooted in place.
1. Have you set boundaries around the system you are looking to understand?
Systems can be endless; it can be easy to become overwhelmed by what can feel like ever-growing complexity. By properly scoping or drawing a boundary around the system you are analyzing, you make understanding the system more manageable. One useful method is to identify the core question that you want your learning process to answer (e.g.: “what is driving biodiversity loss?”). This starts you off with a global frame, but as you start to understand the high-level situation and key trends, you will find the need to shrink the scope (e.g.: “what is driving biodiversity loss in Europe?”). As you progress, the scope gets smaller and you are able to get more detailed. Scoping a system is also something that happens iteratively, ideally enabling you to hop between different scales and lenses to give you a full picture of what is going on. Some call this the balance between holism and reductionism.
2. Have you mapped a system in a way that reveals its hidden dynamics?
Understanding a system involves exploring the relationships and interconnections between stakeholders, forces, and processes. Working on a problem from a systems perspective allows you to spot patterns―such as balancing and reinforcing feedback loops―that drive the “big problem” you are working on. Systems mapping tools (like Loopy and Kumu) help simplify this process by making the elements easier to visualize and the emergent dynamics easier to model. Having knowledge of common systems archetypes can also provide shortcuts to understanding the dynamics of a system. This web of interconnections becomes an important asset throughout the process of designing a solution. It provides an important basis to roughly simulate proposed solutions, giving you the ability to see how a system may respond to a new influence.
3. Have you engaged with a broad spectrum of stakeholders to validate and improve your understanding of the system?
Understanding a system involves moving beyond desk research and engaging with different actors that have firsthand experiences with the issues and actors you have begun to map. To obtain a holistic view and reduce biases, you should speak to different actors, many of whom could challenge your preconceived notions. Stakeholder input reinforces an understanding of the system, which in turn reinforces the ability to ask good and targeted questions. In absence of direct engagement, other content such as existing interviews can serve as a useful substitute.
4. Have you identified key points of leverage for changing the way the system works?
A leverage point is a place in a system where action can lead to an exponential reaction or change. Identifying leverage points increases the likelihood of affecting real change. Identifying and building solutions around leverage points is fundamental to shifting paradigms. While not an exact science, it does require a deep understanding of the patterns in the system. Leverage points are most often found by evaluating the causal relationships between elements of a system, to spot where a small change could have a large, cascading impact across the system. For more information on creating causal loop diagrams and mapping systems, see Systems Thinker’s resources or those from various UN agencies like UNESCAP.
Addressing systemic challenges and reducing key barriers to change
If the goal is to maximize lemonade consumption, a lemonade beverage company is likely to be vastly more effective than one specific lemonade stand. But a successful campaign to cement ‘lemonade stands’ as the quintessential example of childlike entrepreneurship is likely to be significantly more effective than one specific lemonade drink company.
If we want to change the way a system works, we need to think differently about how to solve problems and achieve our goals. More effective solutions are typically more emergent than imposed, more co-created than invented, and leverage the capacities of others. As we design our solution, we should be mindful that we are creating something that can achieve enough scale, visibility, and improvement that it changes the logic of the system.
5. Do you have a clear mission that drives your efforts towards a specific outcome?
A mission is a foundational goal that does not change. How you fulfill your mission may change over time, but what outcome you are trying to achieve and why you are working to achieve it remains static. For commercial organizations, it may be little more than a checkbox for marketing. But for organizations looking to maximize social and environmental impact, the mission is a guiding light and sets a critical reference point. It enables the measurement of any product, service, hiring decision, investment decision, and so on, against your least movable target. Be bold but specific.
6. Have you designed a solution that has the highest possible leverage?
There will always be multiple leverage points within a system. Often, the deeper the leverage point, the more challenging it is to act upon despite having more potential. Designing a solution that has the highest possible leverage involves being realistic about the trade-off between feasibility and effectiveness. Feasibility relates to the ease of implementation and involves both external barriers (political, economic, technical, etc) and internal capacities (skills, network, experience, etc). Whereas effectiveness relates to the potential for impact (breadth, depth, significance of breakthrough) and likelihood to change the structure of the system if theoretically implemented. To design a solution with the highest leverage, the process typically involves identifying solutions with the highest effectiveness and then working to improve their feasibility through innovative approaches. Matrices like the one outlined on page 26 of Metabolic’s Systemic Venturing Whitepaper can aid this process.
7. Is your solution designed to limit shifting problems (or creating new ones) elsewhere in the system as it’s replicated and scaled?
Burden shifting refers to solving a problem in one place while intentionally or unintentionally causing problems somewhere else. Avoiding burden shifting involves addressing and managing a problem holistically. We should not design an electric mobility solution without being cognizant of the serious challenges of mining and recycling electronics, just as we should not design a new approach to development aid without understanding how it might affect local economies and cultures. As systems entrepreneurs, we cannot and should not design solutions without identifying and mitigating (or avoiding) the problems they could potentially create elsewhere in the system. Designing a solution with scale in mind may help you foresee and hopefully mitigate some of these unintended consequences. Arm yourself with examples like biofuels and learn more about how to foresee and mitigate unintended consequences.
8. Do you understand why previous [related] solutions have failed to address the problem or find traction?
Precedent is something that precedes or comes before. Precedent research is about more than simply identifying competitors and finding rhetorical ammunition for the primacy of your solution. No matter what you are trying to do, it is likely that similar or related efforts to tackle a problem have been attempted by others. Seek out and learn from these efforts. What made them fail? What did they get right? What did they reveal about the design of an effective solution? Proper precedent research can also reveal valuable partners with whom to collaborate or share experiences. One place to start is the concept of the idea maze that typifies early entrepreneurship.
9. Have you created a theory of change that connects the outcomes you are hoping to achieve with your proposed activities?
A theory of change (ToC) can help to explain how your designed solution ultimately leads to the change you want to create. Often visualized graphically, ToCs are typically characterized by inputs, activities, and outputs that you have control over, which are connected in a causal relationship to outcomes and impacts largely outside of your control. While a ToC can be a useful tool to communicate externally, the real value is when it is used internally to help us be objective and explicit about our hidden assumptions. It also helps us identify other needed solutions or activities, outside the scope of our own activities, which are nonetheless essential for achieving our theory of change.
10. Have you tested the effectiveness of your solution and validated your theory of change?
A ToC remains just a theory until it is validated. In commercial terms, validating a solution involves testing whether it fulfills a need, creates a willingness to pay, and can generate growing demand. But systems entrepreneurs aim for more than just a successful business. The goal of validating a theory of change is to build confidence that a solution, if effectively deployed, will lead to the ultimate outcomes intended. While it may never be possible to completely validate a ToC at the outset, testing embedded assumptions produces a more versatile solution and increases confidence that the solution will lead to desired outcomes. One manifestation of this process is the “Build – Measure – Learn” approach described in the Lean Startup methodology.
Structuring your organization to protect and ensure its mission
An organization is the housing and vehicle that surrounds one or more solutions. An organization includes things like a culture and long-term strategy, but also a structure for how decisions are made, how ownership works, and how capital is raised and invested. These ‘harder’ facets of governance and ownership are foundational to any organization.
Organizations designed to bring about fundamental change need to create a protective system where the mission cannot be co-opted by internal or external forces. Moving beyond pure self-interest, whether consciously or subconsciously, to do things like help transform policy, create new infrastructure, and generate new innovation, is part of achieving a larger mission. Organizations need to be mindful of their structure and be conscious of their potential leadership role to maximize their potential to affect true systems change.
11. Have you established an aligned governance, financing, and broader incentive structure that protects the organization’s mission long-term?
Protecting an organization’s mission means ensuring that the mission takes primacy over the personal gains or whims of shareholders. The concept of ‘profit maximization’ can be detrimental to the longevity of mission-oriented organizations—emphasizing quick financial wins and leaving ventures vulnerable to resource extraction or outright sale. Ventures built for transformational impact should be designed to live beyond their founders, partners, and investors. Truly protecting an organization’s mission means embedding protections in a legal and governance structure. Depending on the organization, its founders, and its goals, this can look very different; setting up cooperatives, foundations, or splitting decision-making out from economic shares are just a few ways to accomplish this. It is also important to keep in mind that an organization’s legal and governance architecture, and how it deals with profit, is certain to impact its financing options, and thus should be thought of holistically. Steward Ownership is one emerging approach that embeds these principles into a venture’s legal DNA and governance architecture while aligning them with appropriate financing options.
12. Does your approach to IP ensure that key capacities are disseminated or made accessible to others?
Broadly speaking, Intellectual Property (IP) is a venture’s competitive advantage. It can be thought of as the unique assets developed to enable a venture to do something more effectively than the status quo. As a result, IP is often protected to ensure that others cannot freely use it. An organization’s approach to IP can have far-reaching implications on its ability to transition a system. A balance needs to be reached between 1) protecting this advantage and 2) disseminating IP in a way that maximizes the desired impact outcomes. This canvas, which integrates intellectual property with sustainable business models, can help you begin to think about this trade-off.
13. Is your organization playing a leadership role that moves beyond pure self-interest?
Playing a leadership role involves enabling other stakeholders, including competitors, to break key barriers (whether cultural, policy, societal, financial, etc.) and change the way a system works. This could mean demonstrating workable models others can replicate, lobbying for policy change, disseminating critical IP, or producing foundational thought leadership, among other things. The common denominator is engaging in activities that also provide key benefits to other organizations or even entire sectors, industries, or groups of people. One example is Patagonia, a well-regarded social enterprise that has chosen to move beyond responsible sourcing and meaningful thought leadership to pioneer a new certification method for agriculture, called Regenerative Organic. This is likely to help Patagonia’s sourcing efforts and increase their brand awareness, but it is also a form of leadership that, alongside the “1% for the planet,” helps galvanize a broader industry/sector.
14. Have you identified key metrics for monitoring the effectiveness of your activities in a way that supports internal learning and steering?
The ‘Build – Measure – Learn’ process allows a venture to assess the assumptions embedded in its theory of change, and steer its activities accordingly. Learning enables an organization to evaluate the impact (social, environmental, or economic) its activities are having, validating or invalidating earlier assumptions, and then to accordingly update their theory of change and course of action to better reflect reality. The most important aspect of this steering process is deciding what to measure. What metric accurately captures the assumption that you are testing and the impact you hope to have? This metric (or metrics) often depart from the metrics an organization publicly reports and could simply rely on stakeholder voices. Imagine a new venture that seeks to create demonstration farms in order to trigger other farms to make the transition to regenerative, ecological agriculture. Although the venture may be reporting all sorts of things, such as jobs created and CO2 saved, the one set of metrics they should be watching closely would be the number and pace at which surrounding farms decide to make the transition to regenerative agriculture. In other cases, internal steering metrics can be entirely based on stakeholder voices.
Progress typically starts with asking the right questions. These questions are designed to serve as an initial trigger for thoughts about the design of ventures for maximal impact. The systemic venture checklist was partly derived from Metabolic’s white paper on Systemic Venture Building, which you can find online in full.
Please do email us at firstname.lastname@example.org if you have comments, questions, ideas, or criticisms. We would love to hear if this test helped you or if you have thoughts on how to improve it.