Measurement with Purpose

Social impact is wickedly hard to measure. If we want to use measurement in social change, then we need metrics that are robust and meaningful.

Business leaders understand the power of measurement, and as they reorient their businesses from the 20th century goal of shareholder profit maximization to the 21^st century goal of sustainable prosperity for all stakeholders, they will play an integral role toward creating a more just society. Since the social impacts we want – let’s use the United Nation’s Sustainable Development Goals as shorthand here -- only emerge over time and are the result of many factors beyond any one organization’s control, business leaders are doing what has worked well in traditional business measurement practice: Focus measurement on the things they do control, things that are prerequisite to the change we want. This means starting with measures of beliefs, behaviours, and actions.

Businesses making the transition to “stakeholder capitalism” are finding new measurement tools to track what they can manage and use to accelerate progress to meet the new business imperatives of our time. One tool that they are turning to, Single Organizing Idea (SOI), has a series of case studies that illustrate an innovative system that philanthropy and nonprofits may use as well. Here is how it works.

Step One: Using SOI’s playbook, a company identifies and defines its unique single organizing idea (4-6 months).

Step Two: The company rides the wave of energy released in the discovery of its SOI to make and execute plans to align itself to its SOI. This may involve everything from being carbon neutral in its production by 2030, to revising its social impact work to be directly accountable to those experiencing that impact, to developing new products and services more fully expressive of its SOI. Each of those plans will have clear and measurable indicators of success that will be tracked and reported in due course to internal and external stakeholders. These measures include the physical things – like CO₂ emissions, pollution, and use of natural resources. They also include metrics for tangible changes for humans – for example mortality, disease prevalence, birth weights, incomes, knowledge attainment.

Step Three: As these goals can take years to achieve, SOI conducts independent, regular assessments that invite internal and external stakeholders to say whether the company is actually living its single organizing idea. Assessments follow six themes: Core purpose, values, positioning, network, success indicators, and strategy implementation. The metrics look to the organization’s culture -- beliefs, values, relationships, and behaviors. By communicating the results of these independently administered assessments, the company allows others to judge for themselves and hold it to account – this is what “walking the talk” means in stakeholder capitalism. It distinguishes itself from “emperor and box-ticker companies,” who will be called out as green washers, purpose washers, or even "woke washers."

Step Four: The transition to alignment with your single organizing idea is a major undertaking. Assessment scores will highlight the need for improvement actions beyond the ongoing alignment plan activities from Step Two. The SOI measurement system calls for the creating of learning loop teams with clear mandates to understand underlying causes and co-create solutions.

A company that runs effective learning loops will achieve two things at once. It wins trust across internal and external stakeholders who can see for themselves that the company is living its SOI. And it builds its capacity to learn and improve in real time by tackling root causes.

It is this capacity to learn and improve, and to do it by bringing everyone along with you, that distinguishes ineffective from effective measurement. Instead of stopping with metrics one sees in social impact reports – indicators like “lives touched” and “trainings delivered” –SOI-led companies publish all those activity and output indicators (they have their place), but more importantly they track and report the quality of engagement with stakeholders, the extent to which learning loops are discovering and amplifying proven solutions.

Measuring social change depends upon a guiding star, a call to action, against which we collect and review evidence. Companies that are transitioning to being SOI-led have a top-line metric – The SOI Alignment Rate – that could literally change the way we change the world: The average number of weeks it takes for a learning loop to discover and implement a solution to a root cause problem, to the satisfaction of the constituents of the problem/solution.

This mock-up of a 21^st century top-level dashboard shows how a business lives into the integration of social and economic strategies. Of course, it will also have detailed metrics on commercial and overall business performance.

This dashboard tells us:

• How long it takes, on average, for a learning loop to solve a problem in the company’s transition to sustainability.
• The company has a healthy balance between learning loops of two types, those that are after a fix with what is now available to the company (remedy) and those that will require the company to create something new, normally reaching to address larger constraints in the wider ecosystem (innovate).
• The company also has a healthy spread across the life cycle of any solution: (a) testing different possible solutions (diversify); (b) making a decision as to which tests are the most promising (select); and (c) implementing proven solutions (amplify).
• The company also has a solid profile of stakeholder engagement with the assessments. Twenty-eight percent of those engaging are making suggestions. Three-quarters of those answering surveys are repeaters. A fifth are new. If I were the CEO here, I would want to push for a higher percentage of suggesters.
• Impressively, the response rate to micro-surveys is going up, and in the last quarter 71% of people who received a survey answered it. That is a strong signal that people believe that their opinions matter in the company’s process of learning and improving.

I’ll close with a prediction. COVID has underlined the fragility of the national and global economy and brought the systemic nature of injustice clearly into view. SOI-led businesses will be help to bring us back to our roots in adaptive and caring resilience. SOI businesses will close the wealth gap, create opportunities for communities and individuals on the margin, clean up the environment (leading to better health for all), and all along do so in ways that capture the carbon from our atmosphere and bring balance back to nature’s diverse ecosystems.