At the heart of all progress lies measurement—a marker in the ground that tells us whether we’re going the right way or not. As you grow your company, accounting for social metrics at the beginning is crucial, especially as we see more mainstream investors use a three-dimensional lens—risk, return, and impact—to research and manage their portfolios.
At the heart of all progress lies measurement Tweet This Quote
I’ve seen a number of assumptions hold entrepreneurs back from measuring their impact and reaping the many benefits of doing so. When entrepreneurs neglect to develop an impact management practice, they reduce their chances of success; they miss out on opportunities with investors who will walk if they don’t see a commitment to social performance; they expose themselves to mission risk that can quickly translate into financial risk; and they lose free marketing and business development opportunities that flow from a commitment to learning how to do what they do better.
No matter how big or small, if you’re running a business, it’s never too early to start measuring your impact. And it’s easier than you think to avoid the myths that are often times the Achilles’ heels of impact measurement and business success. Below are four common myths of impact measurement debunked.
Myth 1: Everyone else is running circles around impact measurement
I’ve got a secret. While there are some standouts reaping major free brand building and marketing bennies from publicizing their impact measurement practices, most groups aren’t doing as much as you would think.
When entrepreneurs neglect to develop an impact management practice, they reduce their chances of success Tweet This Quote
For instance, Acumen Fund today is widely known for its leadership on impact measurement. But before they became known for this, they too had issues finding optimal places to deploy their investments. They came up with an approach they thought made sense. Instead of working behind closed doors for years to make it perfect before talking about it, they wrote and published their idea, and they put out an invitation to thought leaders to come to a series of gatherings they hosted to discuss the challenges they were facing in measuring impact and how to manage the related data, and essentially help them learn what they should do. This led to opportunities that not only drew in the usual for-benefit suspects, but also attracted and ultimately deeply involved the likes of E&Y, Deloitte, Google and Salesforce– arguably advancing the causes of both impact management and impact investing (and Acumen’s profile) in a way that Acumen’s core work alone never would have.
Essentially, by publicly admitting they did not have it all figured out, while being truly committed to finding a good approach and respecting others’ work, they became renowned for their impact measurement leadership. Granted the field has evolved since, but this approach is still fundamentally sound. So, if you’re just setting out, don’t worry and don’t be shy.
Myth 2: It’s too hard to measure social impact
Developing the habit of accounting for your social performance is synonymous with understanding your market. It’s identical at the earliest stages to what every good startup team MUST do—go talk to would-be or actual customers. In your case, you have customers and beneficiaries. They aren’t necessarily the same people, but they often are.
Developing the habit of accounting for your social performance is synonymous with understanding your market. Tweet This Quote
Go talk to them. Find out what they need and want that relates to the problem your solution intends to address. If you have a prototype of your solution, let them interact with it and see how it goes. What do they find useful about it? What hinders them from using it? How important do they find its benefits? This will tell you a lot about the nature of the problem you’re really trying to solve, and what would really help the people you’re trying to help. With these insights in mind you can refine your understanding of exactly what you are trying to change, and how you will tell if you’ve succeeded. Therein lie the indicators of change you will need to track.
Myth 3: It’s too early to start accounting for social impact
There is a time when it’s too early to begin actually collecting data against specific, quantitative metrics of your social or environmental performance. And that’s before your business model is defined. If you haven’t transacted with a paying customer, or interacted with a beneficiary of your program, then it is generally too early to collect data on your social performance.
You might realize there is a different problem you care more about Tweet This Quote
That doesn’t mean, however, that you can’t have already begun understanding the problem you want to solve through the eyes of your stakeholders. Research the nature of the problem and the solutions that have been tried. Do this deliberately—as if you are writing a research paper for school. You want to find all the past and current efforts that have attempted to address the particular problem you seek to solve, or closely related ones. Some of this will be written about in the formal academic literature, but a lot more will be covered in newspaper articles or just found via a diligent web search (including a look at what your fellow Unreasonables are doing).
The benefit of this exercise is that it will teach you a great deal about the problem you seek to address—help you refine your definition of it. Along the way, make notes about how those other initiatives measure and report their outcomes. Are any standard metrics being developed in your field? You might realize there is a different problem you care more about. Good. Write that purpose down. Also, write down what you envision the world would look like when that problem is completely solved. And presto, you not only have a draft of your mission and vision statements—key building blocks for your impact management system—but you also have good clues as to what outcomes might be worth measuring and what indicators others have used. At this point your impact management system is well on its way to being drafted.
Myth 4: Learning from others is an unnecessary time drain
Would-be social entrepreneurs are often hit by a combination of two things: one, they see an egregious problem that they feel ethically bound to do something about; and two, they experience a situation where a potential solution is being blocked. This sets up an overwhelmingly powerful need to DO. On the one hand, that impulse is fantastic—it drives a lot of the good in the world. On the other hand, it can lead us to act before fully understanding the context and benefiting from others’ lessons learned.
The biggest myth of all is that impact measurement is not a necessary standard practice Tweet This Quote
Please, spare yourself years of wasted effort and take time to identify who else is working on the solution and how. Heck, maybe you’ll realize you want to go help them succeed instead of creating competition. Or perhaps you’ll realize that you truly have an innovative approach, or that your target beneficiary or outcome is meaningfully different than theirs. And, when you propose doing it with them, they don’t have a way to engage with you. If so, press on, and you will be that much better at it having learned from others.
If your business hasn’t been measuring its impact based on any of these false assumptions, I hope you consider them thoroughly debunked. Because the biggest myth of all is that impact measurement is not a necessary standard practice. When you’re working to solve the world’s biggest problems, if measurement isn’t at the heart of progress, what is?