We find it unfortunate that non-profits tend not to think about competitive advantage as it relates to social impact and growth: far too many social change organizations view competition as something reserved for the unseemly, for-profit world. Yet it doesn't take long to see that this way of thinking doesn't make sense. Non-profits like us compete for clients, who have the option of getting their financial needs met by credit card companies, payday lenders, rent-to-own stores, etc. We also compete for funding and, lastly, for ideas. Yes, ideas! After all, lots of people have thoughts on how to tackle poverty (and even more people don't think about it at all), and so we are in a kind of market place where the good we are selling is opportunity and an approach to fostering a more equitable American society and economy, and our customers are policy makers, business leaders and the general public.
So once we start thinking in terms of competitive advantage, the next step is to identify what, exactly, ours is! I believe that we have four (4) qualities as an organization that will set us apart and propel us to becoming a national organization that makes a significant dent in American poverty. These traits are: 1) Products and services; 2) Beautiful design; 3) Culture; 4) Data mining. What follows is a description of what each of these mean, how we will carry them out and why they are so crucial.
1) Business Model. You can't have an outstanding company without an outstanding business model. For 2.5 years we racked our brains to come up with a way of maximizing social impact while also improving loan repayment rates and earned income from our operations. The model we came up with (click here for a video describing it), combined with our unique products and services, give us a leg up on the competition for several reasons. For starters, we are able to offer affordable loans to low-income families while meeting critical needs--be it starting a business, buying a computer or applying for US Citizenship--without suffering high default rates. This is thanks to our first-of-its-kind loan evaluation approach, which takes into account goals achieved during financial coaching. Second, our business model increases our earned income which, in turn, decreases our dependence on grants. The less time we spend chasing grants, the more we can focus on our business operations. And finally, we have thought long and hard about making sure that our products and services actually help people out of poverty: every interaction with a client is geared toward meeting their needs and helping to knock down their barriers to success.
2) Beautiful Design. Would Apple be the most valuable technology company in the world today were it not a leader in design? Design matters, whether you are selling iPods, cars or financial services that create pathways out of poverty. Effective social change organizations leverage good design to tell their story, raise funds, communicate complex ideas and, in short, achieve their missions. In our case, for instance, the concept of using financial services as a poverty-fighting tool isn't necessarily obvious or easy to grasp, but through a beautiful web site and crisp and clear flyers and promotional materials we can help people understand, buy into and otherwise support our work.
3) Culture. My dad likes to say that 'Businesses don't do business with businesses... People do business with People.' An organization is only as strong as its people and the culture they help to create. We are young and entrepreneurial (we describe ourselves as what happens when Silicon Valley meets a soup kitchen). We take an open-source approach to what we do, meaning that we believe in sharing lessons learned with others and making our intellectual property available to other social change organizations and leaders under a creative commons license. And finally, we are client-oriented, which to us means that we treat our clients with dignity and respect and that we always work for them to be a partner as they meet their goals.
4) Data Mining. These days, data is everywhere, and more and more companies are basing their financial success on their ability to successfully use data (think Facebook, Google, Twitter, LinkedIN and Wal-Mart). Through data mining, we will be able to not only increase our loan repayment rates, but rather we will also be able to triage our efforts so that clients will only receive those services they need to truly benefit. For instance, we may find that some clients only need one hour of one-on-one coaching time to achieve impact, while others will need 20 hours. Data can tell us whom to serve, how to serve them and for how long to serve them.
Taken together, these four qualities will take us to where we want to be--a force for social change in America.
Want to support our work directly? You can make a loan to us--and earn between 1- and 3% return on your investment--so that we can make more life-changing loans, or you can make a tax-deductible gift that we will use to build our capacity to serve 1,500 families in 2013 alone!
So once we start thinking in terms of competitive advantage, the next step is to identify what, exactly, ours is! I believe that we have four (4) qualities as an organization that will set us apart and propel us to becoming a national organization that makes a significant dent in American poverty. These traits are: 1) Products and services; 2) Beautiful design; 3) Culture; 4) Data mining. What follows is a description of what each of these mean, how we will carry them out and why they are so crucial.
1) Business Model. You can't have an outstanding company without an outstanding business model. For 2.5 years we racked our brains to come up with a way of maximizing social impact while also improving loan repayment rates and earned income from our operations. The model we came up with (click here for a video describing it), combined with our unique products and services, give us a leg up on the competition for several reasons. For starters, we are able to offer affordable loans to low-income families while meeting critical needs--be it starting a business, buying a computer or applying for US Citizenship--without suffering high default rates. This is thanks to our first-of-its-kind loan evaluation approach, which takes into account goals achieved during financial coaching. Second, our business model increases our earned income which, in turn, decreases our dependence on grants. The less time we spend chasing grants, the more we can focus on our business operations. And finally, we have thought long and hard about making sure that our products and services actually help people out of poverty: every interaction with a client is geared toward meeting their needs and helping to knock down their barriers to success.
2) Beautiful Design. Would Apple be the most valuable technology company in the world today were it not a leader in design? Design matters, whether you are selling iPods, cars or financial services that create pathways out of poverty. Effective social change organizations leverage good design to tell their story, raise funds, communicate complex ideas and, in short, achieve their missions. In our case, for instance, the concept of using financial services as a poverty-fighting tool isn't necessarily obvious or easy to grasp, but through a beautiful web site and crisp and clear flyers and promotional materials we can help people understand, buy into and otherwise support our work.
3) Culture. My dad likes to say that 'Businesses don't do business with businesses... People do business with People.' An organization is only as strong as its people and the culture they help to create. We are young and entrepreneurial (we describe ourselves as what happens when Silicon Valley meets a soup kitchen). We take an open-source approach to what we do, meaning that we believe in sharing lessons learned with others and making our intellectual property available to other social change organizations and leaders under a creative commons license. And finally, we are client-oriented, which to us means that we treat our clients with dignity and respect and that we always work for them to be a partner as they meet their goals.
4) Data Mining. These days, data is everywhere, and more and more companies are basing their financial success on their ability to successfully use data (think Facebook, Google, Twitter, LinkedIN and Wal-Mart). Through data mining, we will be able to not only increase our loan repayment rates, but rather we will also be able to triage our efforts so that clients will only receive those services they need to truly benefit. For instance, we may find that some clients only need one hour of one-on-one coaching time to achieve impact, while others will need 20 hours. Data can tell us whom to serve, how to serve them and for how long to serve them.
Taken together, these four qualities will take us to where we want to be--a force for social change in America.
Want to support our work directly? You can make a loan to us--and earn between 1- and 3% return on your investment--so that we can make more life-changing loans, or you can make a tax-deductible gift that we will use to build our capacity to serve 1,500 families in 2013 alone!
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