This post is going to be boring as all hell for 95% of you but for the 5% who might care about the work I'm currently doing or who are into the social impact scene themselves, I'm hoping this sparks a bit of a debate.
Anand, an old friend of mine, sent me this message a few weeks ago:
"I am very happy that you are taking this route, and wish you the best of luck. I was inspired by the Bottom of the Pyramid course I took at business school, though my dedication waned and I did not end up traveling with the group overseas. Recently, I have picked up my own local and international service and have been faced with very important questions. The primary one being: How do you measure the effect of good done through programs such as yours or through volunteer organizations such as mine?
To answer this I have driven myself to look at metrics - man hours served, money raised, membership, etc - but am still unsure what lasting good any of these do without long lasting accountability.
I recently attended a talk regarding the availability of water in developing nations. One of the most shocking facts was that after modality of water delivery were made available, the donating organizations wiped their hands clean. This lead to defunct systems of delivery being scattered around villages and countrysides.
I would love to hear your thoughts on social change and long term accountability."
He's brought up 2 very pertinent issues plaguing organizations operating in the social space: measuring social impact and long term operational sustainability.
Firstly, as far as I've seen, there is no silver bullet for measuring the good you're doing. This is a field of work that has long been dominated by the NGO / foundation sector that has been loathe to apply concepts from the business world such as performance analysis. It's probably the recent influx of smarter-than-thou MBA shitheads like myself as well as the new focus on social enterprises (and social businesses) that has spurred a greater focus on operational maximization.
The problem, of course, is that there are very few established metrics for what constitutes "doing a good job" in this field. Think about it. In a traditional corporation, if a manager doesn't meet his easily-quantifiable growth targets, the CEO or the board would have his head. A socially-focused organization, on the other hand, has long been given a pat on the back just for trying. It's like when I played league football when I was 8. Sure, I scored an own goal, but hey, I was learning so it's OK.
When it comes to NGOs and foundations, I really don't have a good answer for this. There's never been a mentality in these organizations about maximizing the effectiveness of the money being used. You raise funds, you do your thang, you run out, you try and raise more funds. Maybe I'm oversimplifying it or maybe things have changed - please enlighten me if so.
I think that's a critical failing of that model when compared to a social enterprise or a hybrid social business. The way I see it is that when you actually have to apply a revenue model and a cost model to how you operate, you've automatically inherited at the very least a set of financial metrics you can use to determine how you're doing.
Let's take the example of a social enterprise / business that sells a solar panel - light bulb combo package to provide simple lighting to communities that are off the grid. A simple measure of units sold is a good start. Add a further layer by subtracting the costs of materials, production and installation from that and you come up with numbers for profit - profit that can ultimately translate to growing the business and extending your reach. So if you're making a profit, hey good job, gold star etc. If you're in the red, you're doing a shit job and your mother will never love you.
Of course, all metrics in the social space will ultimately boil down to "how many people/animals/trees have you helped?". In my above example, there's an easy translation from number of units sold. I think I could end my workday happy saying that x number of people pushed a switch today and lo, there was light where before there was none.
It's not quite so clear cut in the case where your product is a service, such as in Anand's organization. Again, in terms of how it could work in an NGO / foundation -type scenario, I'm clueless. In an enterprise model, however, I would adopt the model used by the consulting industry where your "billed revenue" over the cost of paying your indentured servants offers a simple metric for how you're doing (in financial terms, at least). In terms of the actual social impact, I think it then becomes very context-specific as to what your service is.
An illustrative example is an enterprise that goes into poor and underserved communities to provide them with cheap eye screenings (this is an existing, tried and tested business model). The prices are low but enough to generate enough revenue to cover the staff and equipment costs (and then some). A well-trained technician can make a pretty good gander at a person's prescription using little more than a set of stock lenses and an optical test chart (that thing with the bunch of letters on it that spell out bad words). Your social impact then becomes how many people you have helped who, prior to this, may have been living with impaired vision sans the means to diagnose and correct it.
It might sound like I'm being unfair to the NGO model of operation but while I do recognize the need for organizations such as these, I genuinely do believe that the future of social impact lies in applying business models to the BoP, as in social enterprises and social businesses. By applying a cost / revenue structure to your organization, I think you also address the issues of sustainability and long term accountability.
In Anand's example, I suspect a major reason that the donating organizations washed their hands of the project is that the funding simply wasn't there. Or if it was, they had moved on and wanted to use it elsewhere. Or the funding organization itself had directives for where it wanted its money to be used. Had there been a sustainable revenue model applied to the problem at hand, there would have been more of an imperative and incentive to continue operations in the markets you were already in and more importantly, you could have freed yourself of the shackles of being reliant on external funding. Independent sustainability is the key and you just can't guarantee that if you have to depend on somebody else.
Honestly, I am just making this up as I go along, as are 90% of the people / organizations in this sphere. At this point, I'm not even sure I answered Anand's questions and I think I went onto a couple of unintended tangents as well. I would like this to turn into a bit of a debate but I'm not sure if the 3 readers I have are up to it. But it was a nice exercise to make myself think through the issues as well. I just hope this doesn't end up being me shouting into the void.


