You know the problem you want to solve with your impact startup. Solution design is now about developing innovative and impact-oriented solution ideas. Tools such as the impact staircase and the SWOT analysis help with this.
You’ve come to the right place if …
- you want to found an impact startup or are already in the middle of it with your team.
- you know which problem you want to solve and know its causes and effects.
- you know about your target group and their needs and additional stakeholders.
- you have created a persona or a representative profile of the target group.
Not quite ready yet?
Then select the appropriate chapter here
This chapter helps to …
- develop innovative solutions for your social problem.
- develop hypotheses about the potential impact of your solution ideas.
Review existing solutions and identify potential for innovation
There are already solutions to many social challenges that have been successfully implemented by other courageous people. If you are familiar with these solutions, you may be able to adopt individual aspects and close gaps.
1. do your research
Get an overview of existing solutions, initiatives and projects that deal with your problem area. Gather information on government programs, NGOs, private initiatives, technological solutions and local measures.
2. evaluates existing solutions with the help of a SWOT analysis
By analyzing the reach, target groups and success of existing solutions, you can see which ones are already well positioned and where there are still gaps. This allows you to recognize which parts of the problem are already well covered and where there are still unresolved challenges.
One tool that can help you examine existing solutions is the SWOT analysis. Proceed as follows:
- Identify strengths: Note down what works particularly well about the solution. What advantages does it offer compared to other solutions? What makes it successful?
- Identify weaknesses (Weaknesses): Consider what problems or gaps exist. Are there aspects that could be improved? What obstacles limit effectiveness?
- Identify opportunities: Analyzes which external factors could have a positive impact on the solution. Are there trends or new technologies that could make the solution even better? What possibilities are there for expansion or improvement?
- Recognize risks (threats): Recognizes which challenges or risks could jeopardize the solution. These could be competing solutions, a lack of resources or negative trends that make implementation more difficult.
3. develop at least two solution ideas
Finds areas where new solutions can be developed to close existing gaps. Considers which innovations could either complement existing solutions or offer completely new approaches. These could be new technologies, partnerships or creative business models. Or perhaps you can implement an existing solution in a new region? That is also worth considering.
Develop at least two solution ideas that differ in one important aspect so that you can compare the difference in the variants later with the target group. Formulate a clear hypothesis for each variant as to why it might work better. This way you can later check which version is the most successful.
Initial thoughts on a potential business model
At this point, you should consider how you can differentiate between the customers (who pay for the solution) and the target group (who benefit from the solution). This distinction is particularly relevant for social enterprises and impact startups, as those who benefit from the solution are not necessarily those who pay for it.
Practical examples:
Customers and target group are the same
An app to support people with depression: The users of the app pay for access to the functions and at the same time benefit directly from the therapy tools, mood tracking and support networks on offer. In this case, the paying customers are also the ones who experience the positive impact of the solution(target group).
Customers and target group are different
A company that manufactures sustainable water filters for developing countries: In this case, the customers are aid organizations or governments that buy the filters. However, the target group is the people in the target regions who gain access to clean drinking water thanks to the filters. In this case, it is not the direct users who pay for the solution. This is done by a third party in the interests of the target group.
Target group is integrated into the value chain
A coffee company wants to sell fairly produced and traded coffee in Germany: It therefore pays attention to ecologically sustainable cultivation methods, fair working conditions (living wage, occupational health and safety, etc.) and sustainable transportation routes that are as short as possible. The impact is therefore created along the value chain; the customer in Germany pays for the product.
If none of the models apply
Think about how you can achieve impact. This can be done, for example, by making a fixed donation and cooperating with one or more NGOs. However, make sure that your product or service meets high sustainability standards .
The diagram shows various questions that you can ask yourself in order to develop initial ideas for a business model. Your business model can also combine several strategies.
Match the solution with the customer’s needs
The Value Proposition Canvas tool helps to ensure that your solution is a good fit for your customers. It consists of two parts: the customer side and the offer side. You’ve already worked through the customer side when evaluating your problem, target group and stakeholder analysis if you achieve the positive impact directly with your customers.
If you have recognized in this chapter that your customers are a third party for achieving your impact, fill out the value proposition canvas again for the customers. Now develop the offer side. This includes:
- Products and services: Write down what you offer. Include all elements that your impact startup provides, including non-material values such as support or community.
- Problem solvers (pain relievers): Show how your solution can solve the problems of the target group. Make sure that the pain relievers are tailored to the problems (pains) described and focus on solving the biggest problem.
- Gain Creators: Describe how your solution will make the target group happier. What are the benefits? Make sure that the gain creators are not only functional, but also appeal on an emotional level to create stronger target group loyalty.
At the end, you compare both sides. The value proposition canvas is an iterative tool that should be reviewed and adapted again and again. This ensures that your solutions are effective.
Check the impact potential of your solution ideas using the impact ladder
To be able to work in an impact-oriented way, you need an impact logic that describes the path to the desired impact. The impact staircase helps you to clearly formulate your measures and goals. It shows the individual stages — from the inputs (resources), through the activities, to the results and long-term effects. Try to fill the impact ladder from top to bottom.
Model variety
There are alternative impact models such as IOOI logic, Theory of Change, LogFrame and the impact chain. In this playbook, we work with the chain of effects.
1. fill in the impact staircase for your solution ideas
Now it’s time to check whether your solution ideas can solve the social problem you have identified and achieve the desired impact . To do this, go through the impact ladder for your ideas. Let’s start with step 1 of the impact ladder:
Stage 1: Activities take place as planned (output)
Determine which specific measures or activities are necessary for your solution idea. These also belong to the outputs and are the basis on which you build the next steps. Ask yourself:
What specific activities do we need to carry out?
Stage 2: Target group reached (output)
Determines how many people from your target group you can reach with your solution. This is also one of the outputs and is an important key figure for evaluating the success of your project. Ask yourself:
How many people from our target group do we want to reach with our solution?
Step 3: Target group accepts offers (output)
Define how the target group should accept and use your solution. This step is crucial to understanding the impact of your solution. Ask yourself:
How should the target group react to our offer and make use of it?
Stage 4: Target group changes their awareness or skills (outcome)
Describe what new knowledge or skills the target group should acquire. This change in awareness or skills development is one of the outcomes that you can measure in order to track progress. This is where the impact begins. Ask yourself:
What specific knowledge, attitudes or skills should the target group develop?
Stage 5: Target group changes its actions (outcome)
Determine what new behavior the target group should exhibit. This behavior is an important step on the way to your desired outcome. Ask yourself:
What specific actions or behaviors should the target group change?
Step 6: The target group’s living situation changes (outcome)
Describes how the target group’s living situation should improve in concrete terms. Step 6 of the impact ladder is the outcome of your work. To be able to formulate it accurately, ask yourself:
What specific improvement in the target group’s life situation do we want to achieve?
Stage 7: Society changes (impact)
Define your long-term goal or the desired impact in society. This is where the positive change you want to achieve belongs. Name this impact clearly by asking yourself:
What long-term change in society are we striving for?
When the effect staircase is in place, you can consider what resources, means and inputs are required to carry out the planned activities. These include financial resources, personnel, materials and technological resources, but also knowledge and networks.
One impact staircase per target group
Have you realized that there are several target groups for your solution? Then it’s best to build a separate impact staircase for each target group and take a close look at the point at which the different impact staircases interlock. However, try to concentrate on as few target groups as possible — otherwise your impact logic will lose its sharpness.
Next chapter: Testing solution ideas
Another important step has been taken: You have developed innovative solutions for your problem and built an impact staircase.
To check the solution approaches, we recommend testing your ideas with the target group. We will do this in the next chapter.
Tips from PHINEO experts:
Typical mistakes in the impact staircase
The target group is not named in the objectives
It remains unclear who your solution is actually intended for. You can do this: Relate your impact objectives to the target group. Example: “Children from educationally disadvantaged families between the ages of six and eight can read better.”
The objectives are not formulated in a clear sentence, but are at best listed in bullet points.
You can do this: Formulate goals as specifically as possible. The more precisely an impact goal is named, the easier it is to derive indicators from this goal that you can use to determine and measure the achievement of the goal.
The targets are formulated negatively.
You can do this: Formulate goals in such a way that they evoke positive associations. Positive goals motivate and release energy. Example: “Children between the ages of six and eight can read” is a better formulation than “Children between the ages of six and eight no longer read so badly”.
There are several destinations connected with “and”.
For example: “Children gain more knowledge and greater self-confidence”. Both objectives cannot be checked in one go because each of the two objectives requires different indicators, which in turn entail different survey methods. You can do this: Describe both goals in one sentence each.
Various target groups are addressed.
You can do this: Build a separate impact staircase for each target group and consider where they interlock.
Target group reached” refers to all persons who use the service.
You can do this: Make it clear who exactly belongs to your target group, who is a sub-target group and who is not a target group. What is relevant for achieving the goal is that people from the target group (!) actually use the solution.
You are pursuing utopian goals.
The fact that people in precarious situations (e.g. people who are homeless, long-term unemployed or suffering from addiction) actually use your solution may already indicate a change in behavior. Using integration into the primary labor market as a measure of success for such target groups misses the point. What you can do: Check your assumptions realistically and discuss them with others!
Level 4 and level 5 are confused or connected by “and”.
You should know this: Stage 4 is everything that takes place in the mind (new knowledge, new skills) and emotionally (changed awareness, different attitudes). Level 5 only concerns the changed actions.
Many people find it difficult to distinguish between level 6 and level 7.
This will help you: A rule of thumb could be: — Up to and including level 6, your solution is aimed at people who you address directly or indirectly via an intermediary target group such as parents, educators or teachers. -
Level 7 is about the impact on a societal level or in an ecosystem. This does not have to be the entire population of Germany, but can also refer to a neighborhood, a district or a specific region (depending on the scope you are aiming for).