Dear Reader,
There is a phrase I keep coming back to:
Fall in love with the problem, not the solution.
It sounds simple. In practice, I think it is becoming increasingly difficult.
This is an incredibly tough funding environment. Organisations are cutting costs, looking for new sources of revenue and asking where the money is going.
I am seeing several shifts.
More interest in scaling through government. More conversations about earned income and cost sharing. More pressure to diversify across funders, geographies and different kinds of capital.
None of these are inherently wrong. Some may be exactly the shift an organisation needs.
But there is a difference between adapting to a changing funding environment and allowing funding to quietly rewrite your strategy.
Start with the impact, not the funding
This is partly why I think a good Theory of Change matters so much.
I don't really care whether you call it a Theory of Change, Theory of Impact or Theory of Transformation.
What matters is whether you have done the hard thinking about the problem you are trying to solve, for whom, the ultimate change you want to see and your best hypothesis for how you will get there.
And importantly, what pathway you are choosing to create that impact.
For some organisations that will mean scale. But not everything has to scale.
You might grow your own delivery. Others might replicate your solution, including government. You might deliberately stay deeply rooted in particular communities. Or your contribution might be changing policy, incentives or the wider system.
Those are very different strategic choices.
Your funding model then needs to enable that strategy, not determine it.
Changing the model can be exactly the right thing to do
I have done this myself.
At Living Goods, we moved away from an entrepreneurial model where community health workers earned income through selling products. It had been fundamental to our model, but the evidence increasingly showed that it wasn't the best route to the impact and scale we were trying to achieve.
We changed the model to serve the mission, not the mission to preserve the model.
I think the same principle needs to apply to funding.
If a funder cares about evidence, impact and cost per outcome, emphasise those things. If technology or AI is genuinely part of your strategy, make it more visible to funders interested in it.
But changing the emphasis is very different from changing what you do to follow the money.
For any significant shift in revenue strategy, I would be asking:
Does this move us closer to our strategy, or are we moving our strategy towards the money?
What would have to change in our operating model?
What might we stop doing, or do less well, as a result?
And if this funding disappeared in three years, would we still believe this was the right strategic direction?
Then give people time to wrestle with the choices
There is another part of this that I think we sometimes underestimate.
Good strategy isn't just about getting to the right answer. It is about building enough understanding and alignment around that answer that people can actually implement it.
Sometimes, when you're developing a strategy, you need to hurry up and wait.
The leadership team may see the direction before everyone else does. But taking the team and board through the thinking, tensions and trade offs isn't wasted time.
It is part of the strategy work.
There is a big difference between sharing a strategy and bringing an organisation through the process of creating one.
By the time you have the beautifully written strategy, some of the harder work of implementation should already have begun.
The team understands the choices. The board understands the trade offs. The difficult conversations have happened. There is enough alignment to move.
And your Theory of Change shouldn't then sit untouched for the next five years either.
It is a theory.
Test it. Learn. Change it when the evidence tells you to.
In a funding environment where organisations are under enormous pressure to adapt, I think that discipline matters even more.
Fall in love with the problem. Build your best theory for solving it. Make the strategic choices that follow from it. Then find the funding that enables you to deliver it.
Not the other way around.
Liz
Warmly,
Liz
Strategic Advisor | Former CEO | Founder, Volante
Based in Kenya, available globally
