UNIT 4 – Validation Boards, Metrics and KPI

In this last unit, we present first of all a tool connected with Lean philosophy: failing fast by testing your ideas early before you invest a lot of effort into them. It is the Validation Board.

ESII must be able to manage this instrument to develop and support a test execution using this tool. You will then identify which variables have to be measured to understand if the MVP or prototype/prototype that you have developed is evaluated positively and in particular which features or characteristics has been appreciated and which don’t. This analysis will permit to make the decision about preserving your idea or pivoting. In the field of social innovations, metrics and KPI must also be connected to the social impact purpose of the entrepreneur. For this reasons will be presented some of the most used impact indicators and index.

Validation Board

This following video will explain how to use the tool. It is subdivided into 7 steps.

At this web page you can find a description of the single steps with examples applied to non-profit sector.

At the end of this section, you will have understood how to use a tool to recognize which hypothesis, that you have made in the previous units about your social business, have been fully validated and which not.

Metrics, KPI (key performance indicators) and SMART impact indicators

Most of the people fall into the trap of using vanity metrics, data points that sound impressive (e.g. website clicks) but do not provide any actual insights. So it’s important to choose metrics that prove what works and what doesn’t to inform your validation strategy is going forward.

After setting up a test and defined the hypothesis, as we have done in the previous Unit, is fundamental to decide what are the results that you want to achieve. Once the test is concluded you must interpret what really happened and how it differs from what you were expected.

In this presentation, you can find in the first slides a focus on the principal technique of pretotype and examples on how they have been implemented. On the last part of the document, is presented the technique RPI (Return on Pretotyping Investment) that can be used to evaluate the process of validation that you have implemented.

Get your head around the Theory of CHange, this is known as the backbone of any impact measurement system. The best social enterprises have an impact model that is aligned with the business model. Ideally, the first one feeds into the second so that as a company reaches more people and change more lives, it also generate more revenues and grow the business.

The above video the process that stands behind the definition of the outputs and outcomes that a specific kind of social impact activities generate. As you will see, it is a logical process that starting from long term outcomes go backwards and, crossing core activities of the project, build the entire chain of value and impact that its generates.

Finally, we suggest having a look at this page that offers a schematic overview of the principal tool and index social impact measurement. It offers two different perspectives of analysis classifying them along two spectrums: transparency vs. change and perspective vs. adaptive.

Metrics and KPI

Try to find the right connections between cause and effect and understand which is the minimum success criterion for each variable that you have measured.

Remember that we are in a phase of learning and refinement not in the optimization one. All experiments should include a target metric specific to the behaviours you will measure in your experiment, which you establish before running your experiment. This number might be the same as your original hypothesis, or different depending on the specifics of your experiment. For example, an email marketing experiment will likely produce low conversion, given the nature of the email medium.

It’s important to understand deeply the Theory of Change and how to use it to define goals and the path to reach them.

You can also use this useful tool of analysis created by DIY (Development Impact & You). The tool can also aid in aligning team members to the larger end goal, and help them understand  their role in achieving it. ON the same page you can find an interesting video that explains a practical socila project example and how to use it.

At the end of this unit you will have deeply understood the importance of KPI and metrics definition in the measurement of the results of your validation tests. It will be clear how important is this step in the process of Lean validation and which are the proper step to follow to obtain clear and unbiased results. You will also have a clear overview about Theory of Change and other fundamental tools commonly used to measure social impact.