<< Ch. 4: Business Model | Ch. 6: Phase One Action Plan >>

A. Business Plan Timeline

As of November 2013, our plan is divided into two phases over five years. Details in this business plan focus on the first phase and cover two years, from January 2014 to December 2015. The goals in each phase are as follows:

Phase Goals

Testing and refining strategies to generate, develop, and deploy new methods of creative problem solving.

January 2014 - December 2015 (2 years)

  • Recruit initial board of directors and establish governance structure
  • Gain tax-exempt status and independence from fiscal sponsor
  • Develop leadership team and hire core staff
  • Formalize partnerships
  • Launch core engagement platform (CivicExchange)
  • Build customer pipeline and sales funnel
  • Build and engage user community through in-person events
  • Create measurement system

Scaling proven strategies at a regional level to transform and fundamentally reinvent civic culture.

January 2016 - December 2018 (3 years)

  • Launch incubator
  • Pursue growth opportunities
  • Make necessary course corrections

B. Strategic Goals

1. Position Public Innovation as an open platform for co-creation

First and foremost, Public Innovation must position itself as an open platform. This will allow us to forge a new kind of thinking in the region about organizational design. As an open organization, we will allow others to shape our direction and foster mutual trust among stakeholders, public officials, and the general public.

Platform thinking comes from the technology space, but technology is simply the manifestation of people and process. So, as an open organization, we believe it’s vitally important that we are open about the people with whom we engage and the processes by which we co-create solutions. Our platform, CivicExchange, will enable individuals and organizations to voluntarily join the ecosystem and decide for themselves whether they want their involvement public or private. Users will be able to create user accounts and login from my.publicinnovation.org where they will then be prompted to enter basic information that will allow us to connect them with other users with similar interests. Again, we do not expect to build a robust online platform, as our intent is to use our digital assets to structure in-person collaboration. But a digital platform is necessary to organize mass co-creation and provide us with the necessary data to prioritize and sequence our activities.

2. Create the scaffolding to drive toward collective impact

Collective impact sounds great in theory, but it’s incredibly difficult to implement in reality. At the core of any collective impact initiative is the relationships between the individuals and organizations that comprise the network. And relationships are hard to maintain. Competition for funding and recognition can lead to bruised egos. It’s difficult to overcome that friction.

While Public Innovation won’t be capable of solving or preventing the conflicts that result from these fundamental facts of human nature, we can build the scaffolding to enable better communication and reduce the complexity associated with massive multi-sector collaborative efforts.

3. Model a “culture first” philosophy to demonstrate our theory of change

Throughout the past 40 years, there has been an increasing emphasis on the role of public policy in driving change. We believe, however, that we are at the cusp of a revolution that is moving away from policy and toward a culture of trust. The architecture of open systems allows for real-time transparency to expose emergent approaches to service delivery, mitigating the need for overly prescriptive policies that inhibit creativity and flexibility in the pursuit of public goals. Today we're able to quickly determine whether or not a particular approach is working and pivot as necessary.

The public is not at a point, however, where it is willing to trust government to deliver services in an environment of ambiguity. We will begin to model how real-time openness can restore trust and create an authorizing environment where experimentation is not only permitted, but expected, as a tool for accelerating progress. Through the use of open data, we can objectively demonstrate the value of putting culture ahead of policy.

4. Build regional capacity for civic and social innovation projects

Fiscal prudence is a value that most business owners, nonprofit executives, and public officials hold in high regard. No one wants to throw their money away by funding unproven approaches. While this mindset is completely rational, it’s led to a best practices industry complex where off-the-shelf solutions are sought to solve problems for which a one-size-fits-all approach is inadequate. Similarly, if everyone followed best practices, we would cease to evolve.

So Public Innovation will build the necessary capacity to launch in local civic and social innovation projects. We will marshal the resources from a large number of sources to diversify investment and reduce risk for any single organization. In that sense, we'll invent best practices others will want to replicate.

5. Incubate and test new ideas for impact

Much of the Sacramento region’s risk aversion could be mitigated with the creation of a space with the explicit purpose of incubating ideas. Along with incubation comes failure and failure is okay if it’s done in a way that’s smart, quick, and cheap. In the same way that this business plan is a prototype, we want to help public agencies, nonprofits, and social enterprises prototype their way to better outcomes.

Our approach to creating better civic experiences is rooted in the disciplines of user experience (UX) and interaction design. This means that we start with needs. All too often we’re inclined to start with a solution and this habit is exacerbated when the particular problem at hand is faced by a community of which we do not belong. Sacramento has no shortage of think tanks capable of making recommendations based on the analysis of data, but we lack a willingness to experiment. In particular, we need to better understand the needs of those for whom we want to co-create solutions with–not for. Borrowing from the toolkit of user experience designers, we want to get out in the field and perform usability testing with our potential users, much like the approach Smart Chicago Collaborative has taken with its Civic User Testing Group. Public Innovation will embrace this approach and provide it as a service.

6. Link our programs and projects to salient quality of life indicators

Although there is much detail in this plan, we need to get even more specific if we want to be confident that we are making a difference. This will require a robust system of measurement that links our programs and projects to the quality of life outcome areas in which we want to accelerate progress. As with everything we do, these metrics will be transparent and open for community feedback.

7. Produce a library of immersive digital content experiences

Our last strategy is designed to “close the loop” by telling the stories of both innovations that are already happening and those to which we are making an active contribution. There are numerous compelling stories that simply aren’t being told. We will expose the vibrant personalities of those changemakers working to make our region a better place and highlight their valuable work.

C. Tactical Goals

1. Team and Governance

PHASE ONE GOAL: Formalize organizational structure, establish leadership roles, and hire core team.

a. Fiscal Sponsor

As soon as we see a signal that we'll be successful in raising initial seed funding, we will begin the process of searching for a peer organization with 501(c)(3) status who can temporarily act as our fiscal sponsor. The role of this sponsor organization is to accept tax-deductible donations until Public Innovation is able to receive 501(c)(3) tax-exempt status. Our fiscal sponsor also will manage administrative functions such as payroll, benefits, and accounting. We will provide ten percent of our revenues to our sponsor until we the IRS grants us tax-exempt status and we are prepared to establish ourselves as an independent entity.

b. Board of Directors

As part of our initial fundraising efforts, Public Innovation will offer membership to our board of directors to individuals who are able to successfully connect us to funding sources. We also seek regional leaders with a demonstrated commitment to innovation and who are tolerant of risk and ambiguity. The board of directors will establish our governance structure and guide decision-making at a strategic level. In addition, our board will hold executive staff accountable for the outcome of our work. We expect the number of members to remain relatively small and that the board will meet on a quarterly basis.

c. Advisors

Public Innovation already has a stellar group of advisors guiding our effort. These individuals have a non-fiduciary role and are experts in their fields. They will be listed here upon their consent:

  • [Your Name Here]

Organizational affiliation listed for identification purposes only.

d. Organizational Structure

As a startup, our organizational structure is small, agile, and emergent. We are led by a two-person team. Combined with the board we hope to eventually recruit, organizational roles and responsibilities are as follows:

Role Responsibilities
Board of Directors

Membership to be determined

  • Approves and monitors business plan
  • Holds Executive Director accountable for performance
  • Monitors finances
  • Guides strategic direction
  • Identifies new opportunities
Founder and Executive Director

Ash Roughani

  • Leads business plan implementation
  • Oversees and manages all projects
  • Monitors organizational and program performance
  • Directs user experience and customer development
  • Hires staff
Co-founder and Lead Technologist

Thomas Hopkins

  • Leads civic technology projects
  • Guides technical decision-making
  • Develops design standards

e. Staffing Plan

Our two-person founding team has bootstrapped Public Innovation to date. Our Year One budget includes funding for a third TBD position and would likely have responsibilities over external relations, business development, and marketing. In Year Three, we plan to hire a fourth position and in all years would have sufficient funds for intern stipends, limited-term contract work, and professional services.

2. Financial Sustainability

PHASE ONE GOAL: Survive Phase One.

a. Financial Requirements

Phase One of our plan comprises the first two years of operation, 2014-15, when we run at a loss. It is not until Phase Two that our operating balance will be net positive. Because we will not generate sufficient revenue through earned income and grants ("earned revenues") in Phase One, our costs would leave us with a deficit of $252,344.

Phase One
Earned Revenues 388,281
Expenses 640,625
Profit/(Loss) (252,344)
Committed Philanthropy 0
Capitalization Amount ($252,344)

Therefore, this plan cannot be implemented in its current state without an initial investment of $250,000.

b. Sources of Funds

If we are able to raise seed funding, our total share of revenues over our first five years are targeted to be as follows:

Revenue by Source

Share of Revenue 2014 2015 2016 2017 2018
Seed Capital 65% 15% - - -
Grants 15% 40% 25% 15% 15%
Earned Income 20% 45% 75% 85% 85%

c. Capitalization Strategy

Seed funding is likely to come from either prospective board members willing to fundraise on our behalf or a large foundation, or group of foundations, interested in testing our business model's potential replicability and scalability. In the former scenario, we could be capitalized if ten regional leaders individually raised $25,000 each on our behalf. In the latter scenario, five foundations could each invest $50,000.

Although seed funding would be spent across the first two years, 80 percent of that capital ($200,000) would need to be allocated in Year One so that we can ramp up our customer pipeline and sales funnel, and demonstrate our value proposition through early wins.

d. Financial Projections

Revenue Source 2014 2015 2016 2017 2018
Seed Capital 203,125 49,219 - - -
Grants 46,875 131,250 94,336 65,092 74,856
Earned Income 62,500 147,656 283,008 368,854 424,182
TOTAL $312,500 $328,125 $377,344 $433,945 $499,037

e. Sustainability

We do not anticipate becoming sustainable until the end of Year Three, in 2016—also the beginning of Phase Two. As detailed in Chapter 4, our earned income strategy is our path to reaching that point and will consist of a diversified revenue mix across the following sources:

  • Fee-for-Service
  • Channel Partnerships
  • Corporate Sponsorships

Although it is too early to predict exactly how our total share of earned income will be distributed across these three sources, we expect the most substantial portion to comprise fee-for-service activities.

3. Marketing

PHASE ONE GOAL: Build and engage user community through partnerships, in-person events, and empathy.

Marketing is typically viewed through a lens of a firm's marketing mix: price, product, promotion, and place. As a place-based, impact-focused organization, however, the more relevant marketing strategy is how we best position ourselves to drive the social impact model we identified in Chapter 3. Key to driving this impact is our marketing focus on users, not customers.

a. Brand and Communications

True to the spirit of the values associated with creating the OpenOrg standard, Public Innovation is an open, emergent organization built on trust. As a civic startup, we are committed to building a civic innovation and social entrepreneurship ecosystem in the Sacramento region. We will hold ourselves accountable for accelerating measurable quality of life improvements in those areas within which we initiate and manage projects.

Our leadership team consists of technologists who will not only build the digital assets necessary for communicating the Public Innovation brand, but also making Public Innovation a digital by default organization.

b. Target Market

As specified in our business model, we've outlined six unique market segments who are all equally important to our success:

  • Public Servants
  • Social Impact Leaders
  • Aspiring Changemakers
  • Business, Technology, and Creative Professionals
  • Engaged Citizens
  • Potential Funders

c. Partnerships

After releasing the initial version of this plan, we will reach out to potential partners and ask them to formalize our relationship with their organizations by listing them here.

To date, we have confirmed partnerships with:

  • [Your Organization Here]

4. Technology

PHASE ONE GOAL: Deploy a suite of low-cost tools to streamline our operations.

Not only will Public Innovation do everything we can to build an external digital by default organization, but we also will continue to deploy a suite of low-cost, lightweight tools to efficiently and effectively manage our internal operations.

5. Public Policy

PHASE ONE GOAL: Advocate, as legally permitted, for policy changes that help us advance our agenda.

Although we are explicit about the importance of culture and delivery over policy, there are two specific areas of policy that would make our lives easier and have greater impact.

a. Procurement

The first area of policy where we would like to see changes is in procurement. Public sector procurement is widely observed to be unnecessarily complex and difficult, resulting in IT contracts being awarded to large companies for the wrong reasons (ability to game the system versus provide the best value). Fortunately, the blundered rollout of HealthCare.gov was a focusing event that has opened up a policy window for reform to happen in this space. Similarly, Code for America has committed itself to continue working on the issue.

b. Open Data

Another area of policy that will help us develop innovative solutions to drive social impact is in the open data space. With West Sacramento's recent passage of the region's first open data policy and Mayor Cabaldon's leadership, the stage is set for a regional approach to open data that create cross-jurisdiction synergies. According to a recent study by McKinsey, open data has the potential add $3 to $5 trillion in economic value over the coming years. A regional open data ecosystem will allow civic technologists and entrepreneurs combine datasets in new was that can drive both public and private sector value.

6. Performance and Social Impact Measurement

PHASE ONE GOAL: Develop a robust, transparent measurement system that enables the public to hold us accountable for progress.

Coming soon.

7. Risk Mitigation

PHASE ONE GOAL: Be prepared for Plan B.

The biggest risk we face is unsuccessfully raising the necessary seed funding to implement Phase One of this plan. If this turns out to be the case, we will resort to Plan B: becoming a benefit corporation and attempting to raise venture capital by giving up equity. This will require substantial modifications to our business model.

There has been a recent push to encourage the formation of more for-profit social impact organizations and civic startups. Although there's nothing wrong with this approach, we believe that the legal structure of a nonprofit public benefit corporation will allow us to have greater impact because our initial investors will not be seeking a financial return. In other words, even as a "low-profit" benefit corporation, we will be legally required to pay dividends to shareholders that would otherwise be used to fund our non-revenue generating programs, such as the Social Innovation Fund and Impact Incubator.

8. Lifecycle

PHASE ONE GOAL: Put up or pack up.

All good things come to an end. While we will continuously evolve, it's not in our interest to outlive our usefulness. As a catalyst for change, our success will render our existence meaningless. In other words, we want to help spark a revolution in the way people in the civic and social space think about solving problems. That's going to take a culture shift. But a shift in culture will be a catalyst in and of itself. In the best of all possible worlds, we get a few big wins over the next five to ten years, close shop, and move on to solving other problems that don't yet exist and with tools that haven't yet been invented.

<< Ch. 4: Business Model | Ch. 6: Phase One Action Plan >>