Nonprofit organizations often operate under severe budget constraints that force them to choose between helping more people or offering more variety so recipients are getting products or services that fit their individual needs.
What if organizations didn’t have to choose? By providing partially completed products, many nonprofits and non-governmental organizations (NGOs) could reach more people while also customizing solutions for diverse clients, according to research from Duke University’s Fuqua School of Business.
“A key challenge that many nonprofits face is that their beneficiaries can have very different needs,” said Can Zhang, a Fuqua operations management professor and an author of the paper forthcoming in the journal Manufacturing & Service Operations Management. “If everybody needs the same thing, serving them is easier because you can provide standardized products. But if beneficiaries have diverse needs, you may need to offer many options. In this case, it can be optimal to offer partially completed products. Then recipients can customize the product to their exact needs, which ultimately serves them better.”
In their research, the authors point to an example in the Chilean architectural firm Elemental that was charged with building new homes for the residents of Constitución, left homeless in 2010 by a devastating earthquake.
Architect Alejandro Aravena, who went on to win the industry’s most prestigious Pritzker Prize, would propose building each dwelling with a $7,500 government subsidy by leaving each plot with only half a house. It would be up to the new residents to complete the unfinished halves over time, adding bedrooms, balconies or big windows to their liking.
With partially-completed homes, Elemental created twice as many dwellings than if the firm had designed fully finished houses.
The half-built houses inspired Zhang and co-authors Atalay Atasu of INSEAD and Karthik Ramachandran of Georgia Tech to create a model that helps organizations determine when to use this strategy and how to offer a product portfolio with optimal levels of completion and variety based on recipients’ needs and skills.
“When the needs of your recipients are highly varied, that’s when offering partially completed products can be particularly valuable as an alternative to the expensive process of customization or offering many options,” Zhang said. “When recipients lack the skills or resources to complete a portion of the product themselves, more complete products or services should be provided.”
Partial completion, however, is not valuable only as a compromise due to budget constraints, Zhang added.
“Even when funding is not a concern, offering partially completed products or services can still be an optimal strategy for nonprofits and NGOs to serve their clients,” he said.
The authors, who also summarized their research in Harvard Business Review, also highlighted another example in the nonprofit organization Daya, a Houston group that helps clients leave abusive relationships and become financially self-sufficient. Typically, clients need about six months to relocate, find jobs and establish financial independence, the researchers note. Daya offers four months of financial and legal support, getting clients more than halfway through the critical period so they are well positioned to finish the transition on their own, Zhang said.
Providing partially complete solutions that require a little do-it-yourself effort from recipients has several advantages, including creating more equity among an organization’s beneficiaries, Zhang said.
“It’s counterintuitive,” Zhang said. “One might expect that providing partially complete products would create a burden for beneficiaries. But we show that for organizations who care about equitable distribution, it can actually be optimal to provide a less complete product so more recipients end up with an outcome that is a better fit for their needs,” Zhang said.
The partial-completion strategy could be useful to many other philanthropic or not-for-profit organizations hoping to extend their impact, Zhang said.
“A key feature of this strategy is that it’s designed for organizations that are not trying to make a profit, to help them create a product portfolio with different options and different completion levels so they can not only reach more people, but create a better fit for the people they do serve,” he said. “We hope this will encourage more work in this area of study about the long-term benefits of this type of strategy, particularly whether this creates higher satisfaction for beneficiaries of these organizations, or even helps recipients of partially completed products develop new skills that continue to serve them in the future.”