5 Key Aspects to Measuring Your Company’s Impact.

In previous posts we have talked about how technology can act as a lever to solve the global problems in this century and how it can help us to build a better world.

Different institutes, new start-ups and large corporations are launching projects that aim to change the world whilst making sustainable growth possible.

These projects have aims as far reaching as improving access to education, achieving gender equality, creating more circular forms of consumption, eradicating poverty throughout the world, transitioning towards 100% renewable energies, or protecting land and sea biodiversity.

These aims are very different in nature; therefore, it is very difficult to establish common impact measurement criteria in these projects.

In fact, measuring impact is one of the great challenges to solving the serious problems affecting our planet.

Without common measurement criteria, it will be difficult for companies to invest in this types of project, for start-ups to get the financing they expect or for governments to prioritize the most serious regional needs and issues.

Anyone who has worked in the technology industry knows that it is very difficult to launch successful digital products without first laying down test, measurement and improvement criteria.

At Paradigma we have always considered measurement a fundamental part of the technology projects we work on. It helps us to validate product hypotheses and to make iterative increments based on the value products are providing to companies.

Today it is essential to create a similar framework – but applied to impact measurement, ie a collection of steps and processes that can help us to define key measurement criteria in projects that aim to have an impact, to analyze their evolution, and to be able to make iterative decisions that will help us to solve the great challenges we face.

This is why on this post we would like to list some of the key steps and processes that currently exist to measure impact.

We realize this is not a single, linear process, but we hope that the following ideas will be helpful to many companies for whom impact is a priority.

Define your value proposition to the world

The first step is to know what your goals are and to define a clear value proposition about the impact you want to have and the key relationships that will enable you to have said impact.

The Theory of Change is an analytical method that will precisely help you to ascertain how a set of actions and relationships can help you to have that impact. To work with this method, it is essential to have a clear idea about the ultimate aim to be achieved.

For example, let us consider a project for supplying solar panels to places without electricity in Africa. The ultimate aim of this project should not be to reach 300 people or 120 houses.

The ultimate goal should be to increase people’s quality of life, well-being or academic results thanks to having more time of electricity at home for studying.

Identify agents of impact and the depth of the impact

Once you have defined the aim and the change you want to bring about, you have to identify the main stakeholders involved and the depth of the impact you want to have on their lives.

First of all, you need to find out who will benefit from what you want to achieve. They might be individuals, families or communities, but also the planet proper, through eg emissions reduction or species protection.

The fact of the matter is that as a society we rely on nature’s resources for most of our activities and, therefore, many projects will affect many different stakeholders.

The second thing you need to analyze here is the depth of the impact you want to have. It is vital to know how your activity is going to change the life of these people or the environment where we live.

This is essential in order to prioritize efforts and select projects that are truly transformative.

Choose the key KPIs by using reference tools

Once you have identified your purpose and the key stakeholders, you can start thinking about specific targets and reference KPIs.

This is one of the decisive aspects, as the key variables that will have to be monitored throughout any impact project will be defined here. It is important to use reference tools to do this. There are few systems that have been as well received as Iris.

Iris is a free, open reference system created by the Global Impact Investing Network where 160 ‘targets’ of the UN Sustainable Development Goals can be used to define specific powerful metrics and KPIs.

Choose the best method for obtaining data

There are different ways to measure and monitor your impact project depending on the ultimate aim and the indicators you have selected. It does not matter how well you have defined your criteria; if you are not able to measure these variables accurately, you will find it hard to meet your targets.

There are many different ways to obtain data depending on the type of impact you want to have: Relying on your main channel and its measurement possibilities, creating a new direct-measurement tool, relying on third-party measurement systems, collecting public data provided by governments, giving questionnaires to beneficiaries, or deploying sensors that measure the impact in real time.

The important thing is to be sure about all of this from the get-go so that you can monitor impact as the project progresses and make sure you are getting the results you expected.

Put it in numbers and build your ‘impact case’

In most projects in which they decide to invest, companies try to estimate the ROI, ie the financial return they will get from their investment.

Just as the ROI is measured and a business case is put together in business terms, equivalent calculations need to be made in connection with the project’s social or environmental impact. The Social Return On Investment (SROI) is a variable that intends to achieve this.

The SROI is a method for assessing an organization’s impact and how an investment is going to contribute to having that effect on society or the environment.

It is a hard-to-calculate metric; there are different methods out there to this end. What really is important is to have the intention to measure the return not only in financial terms but also in terms of impact.

The topics we have covered in this post are not to be taken as a framework of reference or a process to be followed to measure impact. The idea was to throw some light on the key metrics, concepts and resources that are used nowadays.

Every company needs to find the process that will work for it to devise an impact measurement methodology that will allow it to monitor its impact and improve continually.

The move of companies towards business models with a positive impact on the world is today a factor of growth, and we know that technology is going to be a fundamental driver of change in this regard.

However, if we fail to establish actual criteria and mechanisms for measuring the impact we want to have as companies, we will not be able to scale things up and truly make a better world.