Measuring Business Social Impact – Getting Started 101

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cartoon-ruler-006At Unitus Ventures, we invest in “BoP Startups” – early stage impact businesses that serve low income populations. I have been working for some months to apply my academic measurement and evaluation training to create a BoP Startup-friendly framework for impact measurement and reporting.

To get started, I had discussions with a number of our portfolio companies’ CEOs about measuring “Business Social Impact”. Given my experience in academia and non-profits, I was wondering if these CEOs would be too focused on business vs. impact. By the end of my initial discussions, I had confirmed that they were very clear on their two-fold vision – to scale and succeed as a business and to scale their in-built BoP impact! I am going to assume you know how to measure your business success. My goal is to provide a means for you to think holistically about impact measurement that produces business value. I will also talk about how impact metrics can tie into various aspects and functions of the business.

In a seed-stage business, resources and time are barely sufficient to run the business. Fundamentally, the business needs to grow and become sustainable, simultaneously achieving the social impact intended. Quoting an entrepreneur, “Our business is not separate from our impact, there is no one without the other.” Keeping this integrated approach in mind, let us think about ways to define impact metrics so they can be effectively utilized to improve the business:

How can measurement provide clarity to the business operation model, or highlight challenges to the process, execution and scale?

We have established that the success of the business is partly defined by whether the envisioned impact has been achieved. While identifying metrics, select ones that will indicate the efficiency and effectiveness of the implementation model and measure specific processes towards scaling the business and impact. Think of a framework that throws perspective on the organization’s high level goals as well as tactical progress, in the short and long term. For example, a vocational training business identifies their short term impact is for students to get jobs and long term impact is increase in income, they may have to look into their training design if students are unable to get a job that materially improves their income earning potential for the mid- to long-term.

Marketing / Reporting / Fundraising

A target population at the BoP combined with a relatively low-margin business model makes an impact business both tough to run and to pitch to investors. Converting the impact created back into marketing and fundraising efforts helps solve that problem.  Do some market research – what are upstart competitors measuring? What are the industry standards in the established market? What impact measures will convince your customers to buy your product or service? Take an education business working in urban slums that is having difficulty in enrolling children into the program. Going to parents and the community with performance results of current students in comparison to general performance of children in the region will help increase enrolment. It would also give investors a better picture of success and potential scalability of the impact business.

Staff roles / Trainings

Are all your staff working towards the same business goals and same impact? Alignment of staff is critical, and even more so for customer-facing staff, as they form the voice for the organization. Design staff roles and responsibilities, trainings and communication guidelines with your impact in mind. For example, as a new agriculture technology solutions business, you may face credibility issues with farmers. Having your sales and marketing staff trained to say a standardized story, translated to the local language, could help you overcome that problem. Incorporate regular feedback and improvement based on cultural nuances without changing the crux of the story.

Monitoring, Learning and Evaluation systems

Businesses generally have monthly or quarterly performance metrics to ensure targets are on track. Hiccups and mis-steps, are continually recognized and fixed on an ongoing basis. Based on your impact measurement results, performance metrics could be added or modified to bring in more focus and clarity to the larger vision of the organization. Let’s take an example of a healthcare business providing a screening service with the desired outcome that the screened patients are treated for health issues detected from the screening. An example of a typical business metric would be number of units of screening equipment installed per month and the number of screens completed. But the business metric might not follow the customer through to find out if the positive screens result in treatment.

In the long run, if the intended impact (treatment) is not achieved, the business ultimately will not succeed. So adding a monthly performance metric on number of patients treated post screening and identifying causes for any under-treatment would increase what you ultimately wanted as impact, thus strengthening the value proposition of the business as well.

 

Social Impact

# Lives Touched

# Employees in companies

# States Touched

2012

2013

% G

2012

2013

% G

2012

2013

% G

1000

2500

150%

30

70

133%

1

1

0%

Financial and Systemic Impact

$ Revenues

$ Further Capital

# Ecosystem partners

2012

2013

% G

2012

2013

% G

2012

2013

% G

50000

70000

40%

100000

500000

400%

1

1

0%

Sector Specific Impact

% Student Test Pass Rate

% Student Attendance

# Educators Trained

2012

2013

% G

2012

2013

% G

2012

2013

% G

85%

94%

11%

75%

82%

9%

25

60

140%

Team Achievement!

Nothing like a cheer to all the team members – full time and part-time employees, volunteers and interns working on the ground breaking systemic and cultural barriers making the business happen. Share the impact results with all your staff, have discussions, get feedback and suggestions so they are motivated to improve and perform better. Don’t forget to celebrate!

As you think through your impact measurements, focus on what is unique about your business. Try to keep the number of indicators to a minimum (more in the next post) for two main reasons – (a) it keeps the organization and impact focused; (b) it allows optimal use of limited financial and human resources. Researchers from Innovation for Poverty Action have devised a set of principles, the CART —credible, actionable, responsible, and transportable data collection. Impact businesses should also keep these principles in mind as they think about measurement. Keeping the above in mind, here is an example of an education business score card (numbers are all hypothetical):

The sample score card keeps the business’s focus to three broad categories of impact:

  • Social – Number of beneficiaries, job creation and geographical reach
  • Financial and Ecosystem – Sustainability of the business, potential to scale and role in systemic change
  • Sector specific – Student performance, participation / retention and quality of content and delivery

To summarize, identify metrics that help you measure and track what you envisioned for the business to create as impact is coming true keeping in mind the stage and time of measurement. In the next post, I will talk about adapting a commonly used evaluation framework – logic models — to measure impact in social businesses keeping in mind the stage of the business.

Other articles in the “measuring your impact” series:

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