The article explains why we think it’s so important to listen to customers, beneficiaries and producers if we aim to create and understand social impact. And it argues that we must have a performance mindset when it comes to social impact – differentiating between best and worst performers, and always looking to learn and improve.
While the issue of what and how to measure might seem esoteric or even complex, it needn’t be. Indeed, what we argue for is blindingly simple: if the well-being of human beings is part of your social impact thesis, you can’t know if you’re having social impact without hearing directly from those human beings.
That may seem obvious, but it is far from standard practice.
In fact, most impact investors rely on “triangulation” of their social impact: find a study of a business or intervention that looks similar to your business / investment. Then assume that its impact can be applied to your business / investment. This approach often misstates the impact created and it, by definition, makes it impossible to distinguish impact performance of different businesses.
In a world of increasing transparency, we expect that what’s on the label will reflect what’s inside the package. This is as true for an “organic, cage-free” label on a carton of eggs as it is for a B Corporation Certification or a fund categorized as “ESG.” These terms communicate something specific to the buyer. Their credibility rests on whether what’s on the label is consistent with the product itself.
Hello blog readers, I’d like to ask for your help.
I’m looking to hire someone to work directly with me to lead up U.S. sales for 60 Decibels.
As a regular reader of this blog, you’ll know that 60 Decibels is the company Tom Adams and I co-founded last year to make social impact measurement fast, nimble and useful to the people working to create social change. Our goal is to put the voice of the customer back where it belongs: at the heart of social impact measurement.
We’ve had a great first year. We are working with some of the most dynamic, forward-thinking investors, companies and nonprofits around the world. In 2019 we spoke to more than 50,000 customers in more than 30 countries, delivering more than 200 Lean Data projects. We have a 30+ person team based in four countries. We work hard and we believe in what we’re doing.
The real secret to our success is a handful of loyal customers who show up as true partners. They push us to do our best work. They have high standards and ask us to keep raising the bar. And, quietly but consistently, they support our success by spreading the word to others about the good work that we do.
The salesperson I’d like to work with understands that this is the only approach to build something that lasts: client by client, day by day, doing work worth talking about.
The person we’re looking for has personal experience with social impact measurement. She might have gained this experience working as an impact investor, a philanthropic funder, or a social entrepreneur; or maybe she’s worked to provide impact measurement solutions to those sorts of organizations. Regardless of her specific path, she has significant first-hand experience with the problem we’re trying to solve. She’ll also understand that great selling starts with passionately believing in an idea. She’ll be an effective storyteller, always be looking to learn, and demonstrates all the hustle, resilience, and sense of humor that are the hallmarks of any great professional.
As a regular reader of this blog, I’m guessing you have a sense of the kind of person I’m looking for. Above all, I hope it’s clear how personally I take my work, the values I try to bring to it every day (reflected in our 60 Decibels values), and my willingness to share when I’ve gotten things right and when I’ve fallen short.
I believe that this sort of grounded authenticity is what ultimately empowers us to enlist others in our shared mission of making the world a better place.
During Q&A at the social impact measurement panel at this conference, a woman in the audience, sounding exasperated, asked whether social impact is like health: is it something so nuanced and complex that we can never fully understand it in a simple, clear and comparable fashion?
The implication seemed to be that until we can boil social impact down to a single number, like IRR, we can never really understand it.
I love the health analogy, but I disagree wholeheartedly with the conclusion.
How Do We Measure Health?
Let’s think for a moment about how we measure health. While a person’s health is complex, there are some basic, universal measures that indicate well-being: blood pressure, resting heart rate, BMI, cholesterol levels, respiratory function, and so on.
Think about the characteristics of these measures: they are easy to gather, we collect them directly from patients, and they can easily be compared.
We gather this data annually in a physical (and gather a subset of them every time we visit the doctor), and doctors and nurses use these data to get an overall sense patient well-being. If these measures are way off, a patient might be unwell and in need of further testing.
Some Core Principles of an Effective Measurement System
Let’s think about the core principles that are in evidence here, because they give us good guidelines for how to think about social impact measurement:
Find measures that apply broadly
Determine what good and bad ranges look like
Regularly gather primary data to understand how individual patients are faring
When those indicators are off target, go deeper with specialized measures
It feels obvious that doctors have a core set of things they can measure to understand well-being. At the same time, we are not scared off by the complexity underneath. Indeed, we recognize that we must master that complexity to truly help patients: the human body is complex, so we must be comfortable with complexity to understand it fully.
And so, in patient care, simplicity and complexity happily coexist.
The Core, Comparable Metrics of Social Impact
Similarly, for social impact measurement, there are broad indicators that can be easily compared (many of which align with the Impact Management Project and for which we’ve developed questions and benchmarks at 60 Decibels):
WHO is being served: income levels, access levels, gender, members of excluded groups, etc.
WHAT is their experience of the product: Net Promoter Score, customer effort score, etc.
HOW MUCH does the product or service improve their lives: meaningfulness of impact, other indicators of changes in well-being (income, confidence, safety, empowerment, etc.)
All of these data can be easily gathered directly from the people experiencing (or not experiencing) social impact. And, just like blood pressure, gathering this data from the actual people being served is a prerequisite to understanding whether a specific product or service is making a difference.
From the People Being Served
“From the actual people being served” bears underlining: if my doctor wants to understand my health, she wouldn’t be satisfied knowing the BMI or blood pressure data of people like me. Instead, she would use population data to understand what the healthy range was and compare that range to what she reads on her dial when I’m standing right in front of her.
That might seem obvious, but in social impact measurement we seem too easily convinced that studying similar interventions is good enough—that we can simply extrapolate that data to our investment and be done. The fact is, as in medicine, studying other, similar interventions is the starting line, not the finish line. When I arm myself with that desk research, and then couple it with what I learn about the lived experience of the people my impact investment is serving, then (and only then) am I in a position to understand the impact performance of my investment.
Conversely, if we never listen to the customers being served by our investment, we’re saying the equivalent of (at my hypothetical doctor’s appointment), “typically, 46 year old white men have a blood pressure of 125 / 85.” That’s good to know, but it tells me nothing about whether I’m eating too much salt or at risk of heart disease.
Even more obvious, we would never expect that a blood pressure reading or BMI, alone, would tell us everything we need to know a person’s health. So why are we so obsessed with finding a single, one-number measure of social impact? These simplifying measures are, at best, directional indicators of a deeper reality that lies beneath. Importantly, that is not the same thing as saying that all that complexity must can and should boil up to that single number.
Finally, let’s not be frustrated that we can’t compare everything to everything. After all, we can only compare lungs to other lungs, not to livers or kidneys. Despite this limitation, we are not powerless to deduce whether one person is healthier than another.
Embracing Simplicity and Complexity
That’s good news.
It tells us that, in human health, we are comfortable with embracing both simplicity and complexity. We understand that the human body is itself a system with countless underlying organs and sub-systems. We recognize the need to understand these systems at a micro and a macro level. When we do so, we are in a position to successfully manage human health.
We can and should be just as comfortable with the notion that social impact happens as part of complex systems; and we should be optimistic that a core set of simple, easy-to-measure, comparable indicators can give us an enormous amount of insight about actual, on-ground social impact. Like in human health, we should also embrace the need to understand this deeper complexity if we are serious about managing social impact performance. That means deep, specific data about my specific intervention, coupled with cross-cutting, universal measures that apply to all interventions.
A Glimpse of the Future
This is all well within our grasp.
The first step is to stop telling ourselves that there’s some magical shortcut between here and there. Our work, and the people we aim to serve, are too important, and the amount of capital coming towards social impact is too big, for us to aim to skip steps.
Most important, let us never forget is that this work is about real, actual, living people. These people are the locus of change. It is a core part of our job to listen to them so that we can truly understand their perspective and their lived experience.
This is the only way we can manage social impact performance to achieve meaningful better outcomes.
And someday soon, doing all of this will be as normal and as natural as taking someone’s pulse or their blood pressure.
It’s the chart that talks about impact performance for the estimated $502 billion of impact investing assets. In my view, it’s the most important chart in the report: since “impact” investing exists to create impact, we should care most about whether we’re pulling that off.
Unfortunately, data on impact performance is hard to come by in this report. The only chart that speaks to it directly, the one that I flip to immediately, doesn’t have performance data. Instead, it asks impact investors to self-report their performance relative to their own expectations. It’s a start.
Our Performance, Relative to Expectations
So, how do we think we’re doing? Pretty great, it turns out.
This year, 98% of the impact investors who responded to the survey said their impact performance was in line with or exceeded their expectations. Put another way, just 5 of the 266 impact investors surveyed were brave enough to say that they were under-performing on impact (or, maybe only five have clear enough impact goals and data to make it possible to under-perform).
How to make sense of this? Mathew Weatherly-White proposed on Twitter that perhaps the sector is exclusively doing place-based impact investing in Lake Wobegon (which would lead to the next question: would our version of Garrison Keillor’s famous closing line be, “Well, that’s the news from Impact Investing, where all the women are strong, all the men are good-looking, and all the funds’ impact performance is above average.”)
What happened in 2019 that makes us feel we’re doing so exceptionally well? Nothing much, it turns out, as this is not a new development. In fact, the numbers in this chart have been essentially unchanged over the last three years. Here’s a composite chart based on the data in the 2017 to 2019 GIIN reports:
Perhaps this is our sector’s version of “too big to fail”–if you’re a self-styled impact investor, you cannot, by definition, fail at meeting expectations for impact. This isn’t for cynical reasons: most impact investors don’t yet have transparent, concrete targets around the impact their capital is meant to create; they don’t have benchmarks of impact performance; and they don’t feel they have a useful, repeatable way to measure that impact in a way that works for them and their investees.
While these results could be seen as discouraging, there’s an opportunity here as well. The GIIN, for one, describes their own rising expectations of impact investors in the opening of the report: “Growth [of dollars invested] without impact is pointless…[we believe] impact investors should have specific impact intentions; consider evidence and impact data in the design of their investment strategies; [and] manage their impact performance.”
I’d underline the phrase “manage their impact performance” and add to it “and set and share impact targets and performance for their funds.”
Setting targets, and managing to those targets, isn’t an end in itself. It’s a beginning.
The act of setting goals, and then taking them seriously, is a leverage point that is hiding in plain sight. It has the potential to jump-start a meaningful cycle of learning and improvement. We all know that there’s no way for performance to reach its full potential without knowing what excellence means, without having a bar to strive for. Nor can we improve without useful data—the kind of data that tells us both how we’re doing today and how much separates us from the best performers in our field.
How do we get from here to there?
With something as important as “impact”–the conditions of people’s lives, the fate of our ecosystems and the planet –we cannot miss our opportunity to become great at what we do.
Becoming great at anything feels daunting at the outset, but, as always, our only job is to start at the beginning: by taking one small step, and then taking the next one.
In this case, we starts by setting real targets, taking them seriously, and doing what we can to gather meaningful data about how we’re doing relative to our goals. If we do this with intention and follow through with integrity, then, bit by bit, we will get better. Once we choose to walk this path, we will discover that our small steps take us far: in a year, and then in five years, and then in 10, we’ll be at a different level in our capacity to invest to create positive change, just as we are experts, today, at deploying capital.
This need not be burdensome, heavy or expensive. The best way to start is by going directly to the source—for example, if you’re making investments designed to help people, then talk to those people. Better yet, do it in a way that is respectful, fast, and light touch, one that gives comparable performance results for impact, just like we have for financial results.
Let’s aim higher, not because we have to, but because we can.
Today marks the start of a next chapter for me professionally: I’m launching a new social enterprise, called 60 Decibels, that I’ve co-founded with Tom Adams. Our goal is to reboot social impact measurement, to make it useful for people who are doing the work of building social businesses and NGOs. We want to help them serve customers better and, in so doing, create more social impact.
Our thesis is simple: understanding social impact should be based on listening directly to people.
60 Decibels will take forward the Lean Data approach, which was first built at Acumen to solve our own impact measurement challenge and has already been used by more than 200 non-profits and social businesses in 34 countries.
Imagine if we truly held ourselves accountable to the people that impact capital and philanthropy are meant to help, by systematically including their voices in how we assess impact.
(And, for those of you who don’t work in this sector, it’s worth articulating the counter-factual: yes, it’s true, today, when we ‘measure’ impact in impact investing, most of the time we don’t actually talk to the people whose lives we aim to improve. Crazy, huh?).
My belief is that if we can get this right, we have the potential to make a massive shift in the world.
Everywhere, the cracks in capitalism are being exposed. That’s leading to backlash against “plutocrats,” it’s creating waves of populism, and it’s generating calls, in some circles, for a new model of capitalism: one that creates wealth without being so extractive, one that balances the needs of shareholders, customers, suppliers, employees, and the planet.
But how are we going to put the needs of customers, suppliers, employees and the planet on more equal footing?
Our bet, with 60 Decibels, is that it starts with voice: that by listening better, and by amplifying voices that are currently left at the margins, we can create a system that’s more in balance.
The in’s and out’s of how I think we get from here to there is a longer conversation. (You can get a sneak peek here at the 60 Decibels website, where we’ve written a white paper that’s equal parts manifesto and social impact data). The short version is that 60 Decibels helps companies that are in the business of creating social change listen to their customers. We leverage the power of technology and mobile phones to make it easy to listen to anyone, anywhere, and hear from them about their lived experience. And we move fast, getting results in weeks (not months or years), because that’s the only way we’ll be relevant to the people doing the real work.
So, if you’re in the business of social change and have found social impact measurement to be challenging, burdensome, complex, or frustrating, let me know, maybe we can help.
And, if you’re wondering, 60 Decibels is the volume of human conversation.
So far, it’s been a lot of fun, it’s really challenging, and we’re just getting started. We have a team of 30 amazing people in the US, UK, Kenya and India and we’re working with customers all over the world.
And, in terms of this blog, I’ll still be here every week sharing what’s on my mind. I expect that, gradually, the content of the posts I write will shift slightly. That’s nothing new—it’s been happening since I started blogging in 2008, as my bullseye has moved from fundraising and sales, to generosity, to leadership and the work we all need to do to be grounded, effective agents of change.
A closing thought: in many ways, this blog is a chance for me to think out loud about the issues I find most important, most challenging and most meaningful. That exploration is an important part of my own evolution and growth. To the extent that I’m ready to take on this next challenge, that is due in no small part to what I’ve been able to figure out, week in and week out, through the dialogue that unfolds here on this blog.
None of that would be possible without you showing up and continuing to read and respond. So thank you.
Here’s to the next chapter. Thanks for continuing this journey with me.