Jason Saul leads a session on social innovation at the 2012 Skoll World Forum.
In a recent speech at Net Impact 2010, I asked hundreds of socially-conscious MBAs which companies they thought were “good,” and why. I got the usual perfunctory answers: “Google because they’re a great company to work for,” “Patagonia because they focus on values,” “Seventh Generation because they use less harmful chemicals,” and “Apple because they’re an amazing company.”
But if we are really committed to changing the world, what does that mean? Does it mean making it better or making it less worse? Is congratulating companies for not polluting, not mistreating their workers and having good values the best we can do? Sure, companies shouldn’t do bad things. And we definitely want to limit their negative effects on society. A Newsweek article entitled “It Ain’t Easy Being Green” makes a similar point: does turning over a stone in your hotel room to avoid washing sheets really make the world any better? Here’s the bottom line: if being good just means being less bad, have we in fact set the bar too low?
I don’t know about you, but I want to actually solve social problems in my lifetime. I don’t want to talk about them anymore and I don’t want to bemoan their intractability. I want to see them go away. And I believe companies can play a major role in addressing some of the world’s most intractable social problems – primarily because many of these problems relate to increasing access to vital products and services (healthcare, housing, education, water, etc.). And that’s what companies do – they meet unmet market needs. But too often, we are not asking this of companies. We’re asking them to be “greener,” more “socially responsible,” and maybe a little more philanthropic. If companies adhere to the Dow Jones Sustainability Index, the Global Reporting Initiative or other “standards” of social responsibility, we deem them “good.” None of these standards evaluate how much positive social impact a company has created – they just seek to minimize the negative impacts. I made a similar argument in a speech at Sustainable Brands 2010 earlier this year. Fast Company’s blog post on my speech was titled “Why Make It Less Worse, When You Can Make It Better?”
It’s time we start teaching companies how to make tremendous amounts of money by serving underserved markets and unmet needs. It’s time we start focusing on solving social problems through business strategy, rather than compliance and charity. This is what social innovation demands. It demands that we set the bar higher, and set the rewards higher. We can do so much better! And we can expect so much more!
For the last 15 years I have been focused on a single knotty question: how do you measure social impact? Across the sector, billions have been spent on evaluations, millions have been spent on capacity building, thousands of studies have been published and hundreds of conference sessions have been held. Yet no one seems to have come up with the answer. How is it that we can measure the temperature on Mars, but we can’t measure what happens within the orbit of a nonprofit organization? Why is measurement so confounding?
After years of consulting with thousands of nonprofits on this issue, it finally struck me: we’re focusing on the wrong problem. This isn’t actually a measurement problem – it’s a strategy problem. The reason why it’s so hard to quantify impact is because, far too often, nonprofits are trying to measure outcomes their programs are not designed to produce. Simply put, we’re trying to cheat our way to the answer. When programs are specifically engineered to produce a particular outcome, they’re pretty easy to measure. Think about how easy it is to measure whether a job training program reduces unemployment or whether a tutoring program increases grade advancement. Simple – both were designed to produce those outcomes. There’s no need for data prestidigitation. Even the “tough” measurement cases such as the Arts can be measured through proxies when the outcomes are clear (think: reaching new audiences or exposing new talent).
Where we get in trouble is when we try to “stretch” our statements of impact beyond the outcomes that are reasonably proximate to our work. Take the case of an after school sports club that we recently advised: in an effort to attract “Gates money”, the executive director wanted to demonstrate that her program was impacting high school graduation rates. The only problem was that the program primarily involved playing basketball with kids after school. While there was a study program, few attended it and those that did basically just worked on their homework. So I guess we could bemoan the measurement challenge of estimating the program’s impact on high school graduation, or we could just be intellectually honest. There are many bone fide (and valued) outcomes that this program produces: reducing risky behaviors, increasing student interest in school, encouraging healthy lifestyles, etc. While those outcomes may not be as “sexy” as improving graduation rates, they are quite important predicates.
Intellectual honesty is one way to solve the measurement problem. That doesn’t mean we need to prove everything to a statistical certainty: randomized control studies are always nice, but often practically infeasible. It means that we need to demonstrate a substantial contribution to the outcome. If you’re an advocacy organization looking to pass a law, substantial contribution means you led the coalition, lobbied the legislature and helped craft the legislation. If you’re running a direct service program, substantial contribution to an outcome is a function of dosage, frequency and duration. I recall a corporate citizenship executive once asking me how to measure the impact of a one-day volunteering event on employee retention. The answer was simple: there is no impact!
Of course, the other way to solve the measurement problem is to just improve our programs. If we want to be able to say more, we need to actually do more. I recall meeting with an arts group whose primary goal was to engage younger artists and support them in their careers. The organization spent 80% of its budget on a weekly newspaper for artists. When I asked whether young artists ever read the paper, the executive director replied: “no, they’re all online!” Yet the organization kept publishing the newspaper because that’s what it always did. Measuring this organization’s impact on young artists would have been extremely difficult – but not because of measurement, because the strategy was never designed to produce that impact. Put simply, we are using yesterday’s strategies to produce today’s outcomes. If we want to really make a difference, we need a new generation of social strategies, not a new generation of social metrics.
We can do this. Take the United Way. For years, many of the financial self-sufficiency programs it funded were piecemeal: a busing program here, a computer job bank there. But the organization stated an intention to impact financial self-sufficiency for the working poor. So United Way decided to design a new program – a “prosperity center” where a coordinated set of services would be offered under one roof (job training, counseling, asset building, etc.) to make a substantial contribution to the outcome of economic independence. United Way can now track the number of participants who became “economically stable” as a proxy for repaired credit, gainful employment and training. Measurement is easy when the program is designed to drive it. See more about the United Way of Oakland’s prosperity center, which is called “SparkPoint,” here.
Funders have a role to play too. Instead of goading nonprofits to prove the impossible, let’s set reasonable expectations for results. Funders should ask organizations to state their intended outcomes upfront, and make the case for how they will make a substantial contribution toward achieving those outcomes. Instead of requiring 10% of the grant be used to hire an evaluator, foundations should require that 10% of the grant be used to design the program for greater impact.
At the end of the day, we have two choices: we can be less ambitious with our measurement or more ambitious with our programs. I say we do both!
The following excerpt is from an article featured in CRO Magazine that I wrote with Chery Davenport this month (October 2010).
Marketers get it. Tylenol is not headache medicine, it’s a pain reliever. IBM doesn’t manufacturer computers, it provides solutions. Facebook doesn’t post pictures, it connects people. And Walmart no longer guarantees low prices, but rather promises a better life. These and many other companies give us what we want: It’s not about products, not services, not programs, or widgets. It’s about results. And chances are, if you are a corporate responsibility officer of any sort, that’s what your CEO, your investors, your customers, and your consumers want too.
A New Sense of Urgency
The demand for results is not new, but it is more palpable now than ever, and not just because of the economic downturn. The real exigency for results is not so much about accountability (most corporate investments in CR are relatively modest). Rather, the real driver is value creation. We aren’t just going through an economic downturn; we’re going through a social and environmental downturn. From resource depletion to healthcare to education to hunger, social issues are becoming business issues. The public is raising its expectations of corporations: not just to make things less worse, but to solve social problems. And therein lies an unprecedented business opportunity: to create social and economic value that translates into real, tangible shareholder value. Indeed, in a poll published in The McKinsely Quarterly in 2009, 56 percent of investment professionals and CFOs, when asked, said they believe that “CSR improves shareholder value.” Now here’s the shocker: 53 percent of CSR professionals answered a shoulder-shrugging “I don’t know.” That’s a problem.
In light of this heightened demand, many corporations are wildly chasing the elusive measurement rabbit around the track: “If only I could figure out the right metric. Maybe this web-based, software ROI calculator will be the answer. Or, maybe it’s in a workshop or maybe this new academic research project. . . .” There are an endless stream of new measurement methodologies and frameworks, but the answer isn’t out there. The answer lies within your organization. Here’s what we’ve learned from helping dozens of Fortune 500 companies measure their CR impact – Read More
Subscribe to RSS