CEO of me

Each person we meet in a professional setting sees two things: the person we are and the role we play. Often, that role casts a long shadow, as people are quick to look for shortcuts in figuring out who they’re talking to and what that person brings to the table.

When my business card said, for five years, that I was head of fundraising at Acumen, I felt like my first job in every meeting was to convey to someone that I wasn’t “just the” fundraiser (indeed every great fundraiser I know says that they “aren’t a traditional fundraiser.”) There was and is a lot of baggage associated with being a fundraiser – many philanthropists would tell me that they experienced many fundraisers as seeing them as nothing more than big wallets waiting to be cracked, which itself tells you something about how we all tend to caricature people. Indeed it was always a sign that things were going well when someone would say to me, often with a hint of hesitation, “Uh, so, how did you get into fundraising anyway?”

The pernicious, less obvious constraints are those we place on ourselves. We let a narrow definition of a role or a title create boundaries around the way we see ourselves, how we walk in the world, and impact we dare to have.

To be clear, in any organization our first job is to do the job that our organization hired us to do – indeed, if we don’t do that with excellence, professionalism and precision then we haven’t paid the table stakes for a broader conversation.

At the same time, we are often the ones who box ourselves in, waiting for someone’s OK to even begin to think bigger in anything but the most private ways.

What would happen if you sent yourself an email signed:

Sincerely,

Your name

CEO of me

The best part is when, somewhere down the line, the bigger, more audacious, more impactful version of how you play the role helps you, and others, reconsider how they mistakenly categorized the role in the first place.

Impact: The Future is Now (Take 2)

Something strange happened with the embedded YouTube video in my last post for email subscribers.

Until I figure that out, here it is again:

impact future is now

 

Impact: The Future Is Now

One of my greatest points of pride from 2014 is how far we have come at Acumen in how we think about and measure impact. So much of the talk in impact investing feels stalled on the question of whether to measure impact, and we’ve spent almost no time or energy, as a sector, on the HOW of measuring impact. I believe if we get this how right, we can measure impact in a way that makes sense for entrepreneurs and brings us real and real-time insight into customers and how we are meeting their needs.

In this talk at Acumen’s Partner Gathering from November, I share my thoughts on how we can break through the logjam in measuring impact by changing our perspective about about what impact measurement really is (hint: it’s about customer insights) and by using new tools and techniques (hint #2: mobile phones, call centers) to gather data.

GiveDirectly – What’s our baseline?

I recently had the chance to catch up with Michael Faye, one of the co-founders of GiveDirectly.   I first wrote about GiveDirectly in December 2012 after meeting with co-founder Rohit Wanchoo and being so impressed both by the approach they are taking as and by how they were going about building the company: a core great idea, being smart about leveraging technology, have a big focus on transparency and accountability, and run the organization with four volunteer founders and extremely lean staff (they were just hiring their first employee).

I met them early enough that my blog post was one of the first published pieces about their work.  Since then GiveDirectly has justifiably captured a ton of attention, including receiving a major grants from Google and from Facebook co-founder Dustin Moskovitz and being covered in The Economist, on NPR, and in the New York Times.

GiveDirectly is a platform for giving unconditional cash transfers to the extreme poor in the developing world, primarily in Kenya.  Their target clients make about US$0.67 a day and they receive cash directly from GiveDirectly via mobile cash transfer.   A typical grant in Kenya of $1,000 is equivalent to two years’ income for a recipient.

The most intriguing part of the GiveDirectly story (and, naturally, the focus of all the press they’ve received so far) is whether giving cash directly to a poor person works.  Like most people, you probably have a gut reaction to the question of whether a typical recipient will spend the money productively or squander it.  Interestingly, the data show that, by and large, the money is spent productively: in a random selection of households in 63 villages receiving cash transfers, according to The Economist, “the number of children going without food for a day has fallen by over a third and livestock holdings have risen by half.”  Perhaps most intriguing, these one-time cash transfers appear to create both short- and long-term improvements in well-being.  That’s a big deal.   (the Economist has lots of great additional details on all of these data).

What’s interesting from a marketing and storytelling perspective is that the fact that cash transfers work isn’t new, it’s just new to the mainstream.  As Michael is quick to point out, more than $100 Billion is already being transferred by governments to poor people through both conditional and unconditional cash transfer programs around the world.  The biggest and most-studied cash transfer programs are the Bolsa Familia in Brazil (which is directly credited for 1/6th of the reduction in poverty in Brazil over the last decade, at a cost of just $12 per child – about 0.5% of GDP) and Oportunidades in Mexico.  These have been in place for more than a decade and have helped tens of millions of poor people.

What IS new about GiveDirectly, beyond the fact that the cash transfers are unconditional, is that they are creating a platform that makes the entire transaction – from funder to end recipient – cashless.  This creates huge potential efficiencies in a massive global money transfer system that is ripe for evolution, and if GiveDirectly can serve as a leverage point to begin to transform a $100 Billion industry, allowing more of the money that goes into these programs to end up, safely and conveniently, in the hands of end recipients, then they will have significant global impact.

It strikes me that there is yet another important leverage point for GiveDirectly that I don’t hear people talk about, and it’s around how to benchmark impact.  The typical benchmark, whether for a large-scale, rigorous randomized control trial or for simple observational analysis of an intervention, is a control group with “no intervention.”  Put another way, this means that when we study whether a $10 million program worked, our question often is: “was there a quantifiably discernible impact relative to a group that received no intervention?”  Put more simply: did our $10 million do more than nothing?

That’s a dispiritingly low bar.

Wouldn’t it make much more sense to demand that we show that our $10 million created more impact than we would have created if we had directly handed $10 million over to end customers?  To show that, for example, $10 million put into a seed company or a solar lighting company or a sanitation company created $100 million in value – in terms of savings or increases in productivity?    This thinking is what led Acumen to develop the Best Available Charitable Option (BACO) methodology, and it feels like it is high time that we all use this higher benchmark to assess our work.

Surely our goal must be that we can do better than, figuratively, dropping money out of a plane.

No, it’s not too much trouble to measure impact

As impact investing goes more mainstream, there is a growing chorus suggesting that impact measurement might be the providence of academics and idealists.

(as in, “…we have spent too much time and too many resources discussing impact measurement and trying to measure outcomes. Is an individual who needs eyeglasses better off if she has access to them? If you are wearing a pair while reading this article, you know the answer. There are myriad basic products and services such as eyeglasses to which the majority of the world’s population does not have access and which, if they did, would allow them to live significantly improved lives. So let’s move on and not overburden those initiatives focused on underserved communities with academic questions. They already face plenty of challenges trying to deliver what they promise.”)

Now, the argument goes, the real investors have arrived, so we can do away with all of that impact measurement mumbo-jumbo.  If companies succeed and grow, if capital is getting deployed and returned, and if more capital is coming in, then we know that we are succeeding.  The rest is just noise.

That argument would make sense if impact measurement is undertaken as an academic, ex post process  in which those on the periphery of the system peer into its beating heart, extract data, and attempt to define whether or not those at the center are creating sufficient impact.   Who are they to judge?

Indeed, let’s avoid a scenario like that at all costs.  In fact let’s avoid any measurement system in which the main goal is to produce data that isn’t, at its core, useful to operating companies in their interactions with end customers.

However, let us also avoid quick, easy caricatures about what measurement is and could be.

To walk through an example, let’s begin with the assertion that any company that qualifies as an impact investment is creating some sort of direct benefit for end customers or other key stakeholders (e.g. creating jobs).

So, we might ask, who wants to know if this hypothetical company is creating impact?

Sure, a wonky social scientist would love to know.  She’d hope to understand if someone who buys a solar light or who hooks up to a mini-grid stops spending money on dirty, dangerous, expensive kerosene.  If she doesn’t, then there’s less impact than one would hope.

The good news is that while the academic would love to have answers to these questions, we wouldn’t and shouldn’t answer these questions primarily for her.  Because the same questions she has are core questions driving the success of the business.  Any company that has an iota of sales and marketing DNA will need to understand answers to a basic set of questions:

  • Are customers buying solar lights as a replacement to kerosene or as a supplement?
  • How much less do customers spend on kerosene as a result of having a new source of light?
  • Are lights are used primarily late at night in homes, for kids to study, or out in the fields?
  • And on and on….

Similarly, a company selling drip irrigation kits has no choice but to find out whether end customers achieve the 2 to 3x yields that the company gets on demonstration plots.  A company selling drinking water needs to understand if customers are contaminating the water before they consume it (which means that a marketing message around better health ultimately won’t deliver).  And of course a company offering vocational training and job placement will definitely need to know how many graduates they place, how graduates’ incomes compare with the money they made before the program, and which training programs have the highest yield on job placement rates and salaries.

All of which is to say that understanding impact is a key driver of business success for any company selling a new product or service to an underserved market.  And the companies that are first to realize this will be best positioned to meet the needs of their customers and deliver products that create the most value.

Put another way, understanding impact starts with questions like:

  • Who are we serving?
  • Why are these customers buying this product? (what problem does it solve for them)
  • How are they using the product?
  • How does this product compare with what they did before?
  • What benefits do they hope to realize when using this product?
  • Are they realizing those benefits?
  • Why or why not?
  • Etc.

If we recognize that conversations about impact start and end with the end customer, we will sort out the way forward.  Whereas we will continue to stumble out of the gate if they we miscast these efforts as pitting investors’ priorities against those of companies.  Companies will increasingly need this data, and, recognizing that this data must and will be collected, we as a sector will miss an opportunity if we don’t agree at the outset to use a common set of standards – so that as the data is collected, it can be aggregated in ways that allow for easy comparison.

The idea that we have the option to opt out of understanding impact is akin to arguing that we can build large-scale, successful new enterprises without understanding our end customers in any real way.   It’s absurd.  Our opportunity is to understand, in a much deeper way, the intersection of a company, its products, and a customers’ well-being.  The better the customers are served, the better the company will do, and the flywheel will start turning.  If we lack data on impact, we’ll never start walking that path.

Our benchmark

The other day I had the chance to visit with Rohit Wanchoo, one of the three co-founders of Give Directly.

The idea behind Give Directly is so shockingly simple that you can’t help but feel, at first, that it can’t possible work.  The model is: donors give to GiveDirectly; GiveDirectly gives cash to poor households in northwestern Kenya.  Done.

Now here is some of the surprising information: this kind of giving (when you get fancy you call it either “conditional cash transfers” or “unconditional cash transfers”) is being practiced at a huge scale.  According to Rohit, it’s received by nearly 1 billion people globally.  In Mexico, it is called the Oportunidades program and it reaches about 5.8 million families, or 30% of the population.  In Brazil it’s called Bolsa Familia, it reaches 50 million Brazilians, and the program is much of the reason why, according to the NY Times, the incomes of the poor in Brazil grew seven times faster than the incomes of the rich from 2003 to 2009.

It’s not just that paying money increases incomes – how could it not?  Study after study has shown significant improvements in well-being, everything from improved childhood nutrition, increased birth weights, decreased HIV infection rates, increases in schooling and decrease in child labor. Also, the evidence shows that cash transfer programs do not increase spending on things like alcohol and tobacco.   And these are not just initial findings.  In fact, DfID, the UK’s main aid agency, recently published a comprehensive summary of the evidence to date, and DfID notes that cash transfers are “one of the more thoroughly researched forms of development intervention.”  Put another way: it’s widespread and has been studied a lot, and by and large the evidence is really positive.

So how does it work in practice?  At Give Directly – which is a new, small startup, though they just won a $2.4 million Google impact award – they go to a poor community in northwestern Kenya, survey households to determine which ones are the poorest (mostly by seeing whether houses have mud floors and thatched roofs – those that do qualify), and, for those that qualify, they give those households $1,000 over the course of one year, using cellphone-based money transfer powered by M-PESA.  There’s also a bunch of verification to check identity and protect against fraud.  And households can only receive funds for one year.  It sounds like a lot of steps, but all of this costs just a few cents on the dollar.  And from day 1, GiveDirectly has been opening up its to rigorous analysis to understand impact – not surprising since Rohit and his co-founders have Masters and PhDs in economics or development studies.

Just as a standalone idea, in terms of its direct impact, it’s interesting and important to understand this model.

But the big idea that really caught my attention was Rohit’s statement that what they really want to accomplish is to have direct cash transfer be the benchmark against which other poverty-alleviation interventions are measured.  Meaning, the development sector as a whole spends a huge amount of effort to demonstrate impact, and the benchmark is to show a positive impact relative to no outside intervention.  But couldn’t we, shouldn’t we, raise that bar?  Shouldn’t we be asking ourselves whether a given intervention (buying a cow, delivering food, or a vaccination or leadership training or anything) is more effective than the direct cash value of the program itself?

That sounds like a low hurdle to clear, but it’s higher than the hurdle the development sector is trying to clear today.

I haven’t studied the literature on cash transfer enough to really understand what is and isn’t known, what are the best ways to design the programs, what are the pitfalls.  Still, it seems like a very fair question to ask ourselves, to ask the big aid agencies, to ask the government: would your beneficiaries be better off if you just handed them the money?

Investing in leaders and ideas

At the start of this year, I took on a new role at Acumen as our Chief Innovation Officer.

Acumen’s mission is to change the way the world tackles poverty by investing in companies, leaders and ideas.  The Chief Innovation Officer role is about scaling Acumen’s impact: building out from our core investing work to create the ecosystem of leaders the world needs to do this work; and investing in the spread of ideas by digging in to measure and understand the direct impact we are having through our investing work and sharing these learnings with the world – so we can all get smarter about what it really takes to tackle poverty at scale.

The impact piece is the most challenging and potentially the most exciting part of this work.  Challenging because deciphering and quantifying impact is the 10 zillion dollar question in any social change work.  And exciting because I firmly believe that the day we can clearly and succinctly explain and quantify impact is the day that everyone stops pretending that financial returns are the closest proxy for success for impact investors.

I dug into these issues in my recent talk at Acumen’s Investor Gathering last week.  The talk just went live on YouTube (see below or link here), so I thought I’d share it here first.

(Special thanks to Niklas Peters at Acumen who helped with the presentation and, while juggling a million other things, found the image for my favorite slide – the one from Brazil.)

Your job, and leverage

If your life is one of service, then the one question to ask yourself when figuring out where you are and where you’re going is:

What role, what organization, what situation allows me to maximize the impact I’m having on others?

Most organizations find good people and ask little of them them.  Some organizations, sadly, even find great people and ask them to do mediocre work.

The best organizations take great people and help them be extraordinary.

It’s possible.

And the best part is that extraordinary feeds on itself.  Extraordinary creates more extraordinary.

Project leader or project doer

There’s a lot of confusion about this one, because you can “do” all the work and not lead, and you can effectively “lead” something without doing all the work.

So sometimes someone is asked to “lead” a project and what they hear is “please do all the work.”  And sometimes the fact that someone is asked to “do all the work” is confused with a leadership opportunity – it is a step towards leading, but it’s not the same thing.

“Leading” means: I’m ultimately accountable for the success of this thing.  If I’m successful at leading, it will be done better and faster than expected and all the people doing it will feel great about what they accomplished together.  They may not even notice that I “led” anything – in fact it could be a great sign if they didn’t.

The most interesting, underappreciated opportunities are leadership opportunities when you’re not in charge.  It’s important because it’s the top-LEFT quadrant in this 2×2 (lead but not doing) that has the most leverage, not the top right (leading and doing).

The upper right has you working as hard as is humanly possible and feeling in control, but there’s a limit to how much this quadrant scales.