How to Design for Real Impact

Know your mission, measure the right thing, and measure it well. Kevin Starr introduces a framework for gauging whether your company is creating meaningful impact (because if it isn’t creating impact, what’s the point?).

Trained as a physician, and still practicing medicine (very) part-time, today Kevin is known for one specific thing: his relentless focus on impact. A stint in a Cambodian refugee camp at age 19 propelled him on the path to his current work. This work includes building Mulago Foundation’s investment portfolio – D-Rev, One Acre Fund, Living Goods, and others – all of which are specifically focused on bringing to scale lasting change for people living under $1/day.

Generating positive impact is the only thing that matters, and the secret to doing so boils down to 3 things:

1. Know your mission
2. Measure the right thing
3. Measure it well

Know your mission.

This requires answering the question: “What difference are you making in the world and what is the context of the problem?” This should not be designed for your website or your funders; rather, it should be used as an internal compass that is responsible for guiding your venture to achieve its eventual goal instead of explaining the “how” behind achieving that goal. Your mission should be a summation of the single outcome you hope to measure expressed in eight words or less.

These eight carefully selected words must include the following:

1. Verb
2. Target
3. Outcome

Consider the company Living Goods. This Mulago Foundation portfolio company uses ‘Avon-like’ micro-entrepreneurs who go door-to-door teaching families how to improve their health practices while also selling an assortment of affordable, life-changing products. Their mission: “Save African Kid’s Lives.” (Got it? Verb: “Save.” Target: “African Kids’.” Outcome: “Lives.”).

Measure the right thing.

This requires you to narrow your focus to one thing. The one thing that is simply a non-negotiable. If you waver in choosing the one thing you will measure, you are choosing to compromise the impact your company is capable of generating.

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Consider the microfinance industry. Instead of choosing to measure only one thing, companies within this industry often measure three competing things simultaneously. These include: activities (defined as the number of loans going out), behavior (defined as the number of loans repaid), and the impact (not defined narrowly enough). It is often assumed that if loans are being repaid then those loans are also benefiting the recipients. When this notion is more rigorously looked at, a different picture emerges. In fact, 25% of loan recipients are considered “significantly better off” after having received a loan versus before and 50% of loan recipients are considered “a bit better off.” The last 25% of loan recipients are actually considered “worse off” after having received a microfinance loan which makes sense because the average interest rate of a microfinance loan is about 40%.

Measure it well.

This allows you to understand the change you actually create – what happened with you and what would have happened without you.

Consider the company Living Goods again. Their mission is to, “save African kids’ lives.” However, gauging their impact on child mortality rate is challenging because so many factors attribute to calculating this metric. To measure their impact well, Living Goods selects a test group of communities, and from this test group they randomly divide the selection into two halves. One of these halves has a Living Goods promoter and the other does not. They are then able to compare the child mortality rate between selections and determine if the half with a Living Goods promoter is, indeed, better off.

If you design your company around these three secrets to generating impact, you’ll have an infinitely better shot at making a dent on the world’s biggest problems.

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