Spin Your Cycle Time Faster, But With A Clear Purpose and Sharp Processes
Today, some hospitals are discovering that they can dramatically improve fundraising ¬ — doubling, or in some cases even tripling the money they raise — by embracing quality improvement principles originally developed in manufacturing, such as those used in Toyota’s “Lean” and GE’s Six Sigma programs.
Lean Six Sigma is usually regarded, quite apart from fundraising, as a key way to improve quality, safety and costs. A Lean organization strives to cut waste and increase value for customers by creating an efficient flow of products and services. Six Sigma is a disciplined, data-driven approach to eliminate defects in any process. When you combine the methodologies, Lean Six Sigma emphasizes speed, reduced waste and making the best use of resources through a powerful data-driven system.
This makes Lean Six Sigma a potent performance improvement method — but one, notably, that most healthcare systems haven’t yet started to apply in fundraising, even though Lean and other such tools are gaining increasing acceptance elsewhere in hospitals.
Virginia Mason Medical Center in Seattle, which has been named a “Top Hospital” for a decade by the healthcare improvement coalition The Leapfrog Group, is known for applying Lean methods in healthcare. The Virginia Mason Foundation was raising $7 million annually in 2002 when its health system adopted Lean as a key transformation strategy. In its presentation at the Association for Healthcare Philanthropy meeting in 2011, the Foundation reported raising $15 to $20 million per year with a staff of 24 and an annual budget of $3 million. The Foundation dramatically cut “time in process” for major gift solicitations, citing an average of less than one year and a 90 percent completion rate from prospect identification to solicitation.
We’ve seen similar results, first with the development of the “Core Process” — an early implementation of Lean principles about a decade ago — at the Florida Hospital Foundation, which completed a $100 million campaign over goal and a year early.
The secret: measures and metrics. Sometimes called moving from anecdote to antidote, the use of metrics changes everything.
Discussion of cycle time — the measurement of which is a core Lean principle — can result in a counterargument that fundraising is different than other processes. The stated objection may be that relationship building is, as it is so often expressed, “a marathon, not a sprint.” Yet relationship building in major gifts fundraising often involves longer time spans than those typical in developing personal or business relationships into something more than periodic communications and occasional visits.
The reality is that speed matters: not “hurry-up-and-ask” speed, but the kind of speed that comes from clarity of purpose, well-defined processes, active listening, intensity of effort and continued focus on those prospects inclined to give.
In a typical fundraising operation, a development officer might have a portfolio of 100-150 prospects, and the time from identification to solicitation and gift acquisition could take 18 months — or even up to three or more years. If you intensify the relationship-development process — which, among other things, involves reducing the size of the MGO prospect portfolio to around 30 good, active candidates — you can shorten the cycle time to less than a year, increasing throughput and raising more money. Read “Going After the Big Fish.”