Impact measurement over the next decade

I had the chance to participate on a panel at SOCAP about the future of impact measurement, and was surprised how challenging I found Karim Harji’s framing question:

Where is impact measurement headed over the next decade? What is it going to take to get there? 

After pondering on this question for a while, I ended up at the conclusion that the future is very bright at the level of company-customer interaction.

I say this because in the coming decade, social enterprises, like all companies, will necessarily begin accessing and managing much more customer data gathered remotely through devices. It’s a bit easier to see this future when one is in San Francisco staying at an Air BnB and taking Lyfts everywhere: as mobile phones become both the communications and transaction platforms for nearly everything in everyone’s lives, companies, no matter what their specific business or the customers they serve, will have more data about us. While it’s true that poorer, more remote customers will lag millennials in San Francisco in terms of how soon they get on this conveyor belt, the direction this is heading, for everyone, is clear.

With that in mind, the only question at the company-customer intersection is whether and to what extent companies will incorporate data about social impact into their growing data flow. My thesis is that doing so will be a competitive advantage, allowing companies that move first to better understand how well their products and services are improving their customer’s lives, thereby driving greater loyalty, share of wallet, and share of mind and voice.

I believe this because, as our Acumen impact team has worked with companies on Lean Data projects, it’s become increasingly clear that value creation is impact when you’re dealing with critical goods and services like electricity or education or healthcare: if the customer who buys her first solar lamp stops using kerosene, uses the lamp to keep her business open later at night, and also uses a second lamp for her kids to study at night, then that lamp is creating deep and meaningful value (impact) for her. And all our data show that this same customer is nearly always a net promoter of the company, a source of positive word of mouth, and a high-value and loyal customer.

If this thesis plays out over time, then we’re about to be riding a huge, powerful wave that we’ll simply have to redirect slightly to incorporate thoughtful impact data capture and to drive towards impact management. Soon, even resource-strapped, impact-focused companies in the developing world will have no choice but to gather and utilize more data (including impact data) from end customers if they want to serve these customers effectively.

The question I find harder to answer, interestingly, is: What is going to happen to the capital market for impact? Here, things seem a bit muddier.

In order for capital to increasingly flow towards high-impact opportunities, there has to be some standardization in terms of how impact is measured and communicated, so that an investor looking to compare impact performance can compare opportunity A and B in the same way she compares financial performance for these same two opportunities.

I believe this evolution is a very important one, indeed it might be the most important development that needs to happen if the impact investing marketplace is to realize its full potential. However, unlike the evolution at the company-customer level, it’s less clear to me that there’s forward momentum pushing us in the right direction. It seems possible that we are due for a step-change in terms of how investors deploy capital for impact, and it seems just as possible that five or ten years from now things will be as bespoke and hard to decipher as they are today.

My best guess is that what’s needed to make a shift here is that a handful of highly influential and interconnected players – those holding large amounts of capital that they distribute through a large ecosystem of connected funders – need to establish their own higher, clearer impact measurement standards that they will use to deploy capital, such that their new standards flow all the way down the chain and slowly shift expectations for, and raise the bar for, everyone in the space. This was the role that the U.S. Government played with LEED certification through the GSA, which owns 9,600 buildings in 2,200 communities across the U.S., and I suspect it’s the pattern that needs to play out in impact investing too.

For more on this topic, here’s the link to the SOCAP16 plenary I got to do with Karim Harji, Jim Fruchterman, Kelly McCarthy, and Paul DiLeo.


The Easiest Money I’ve Ever Given Away

The easiest money I’ve ever given away was the day after my wallet was returned to me, untouched and full of cash.

Having done the mental work of literally imagining living without that money, it was easy to see the request to give money away as a simple reminder: “Ah, yes, this money isn’t mine after all.”

The practice of giving is just that, a practice. And like any practice, it is in the act of doing that the behavior becomes normal, expected, and part of our lives – not the other way around. The practice of giving is how we pound away at the mold of who we are. We exert effort and willpower until the very material of our selves begins to yield and take on a new shape.

Part of that reshaping manifests in a new story we tell ourselves, a story about how to think about our wealth and our skills and our possessions and the choices we can make about how to deploy all of them – maybe, just maybe – to reshape the world into the better image we dare to imagine.

Over time, we also discover that, in the act of starting to show up differently in the world, the world starts to show up differently in us. In the act of trying to shape the world in a new way, the world sneaks up on us and starts to reshape us too. If we are very lucky, both of those transformations will be for the better.

Today Acumen is celebrating its fifteen-year anniversary, and in a couple of months I will hit my 10-year anniversary at Acumen. Looking back, it’s easy be misled by the small, nearly imperceptible daily changes we have made in the world and that the world has made on us. But looked at from the vantage point of a decade, or a decade and half, it’s obvious that the changes are both profound and lasting.

If there’s one thing I’ve learned in this time, it’s that the only way to become the kinds of people who show up, who hammer away and who do the work is by showing up, hammering away, and doing the work. It also helps tremendously to have people who are willing to show up alongside you, people who are willing to pour their best selves into a shared vision about what is possible.

To all the people who have been willing to show up alongside me, and to all the people who have shaped me in ways that I hope you know (but I bet you don’t know fully): thank you.

Matthew Weatherley-White on How to Turn the Capital Markets Upside Down

In further proof that most important innovation involves the reassembling of existing ideas in new, surprising and powerful ways, I’d encourage you to check out this talk by Matthew Weatherley-White at SOCAP 2016.

Matthew’s big idea goes something like this:

In Austria, organ donation rates top 90%, in Germany they’re below 14%. Why? Because in one you have to opt in to donating your organs, and in one you need to opt out. And what could be more important, or more personal, than organ donation?

So maybe the way to make investing with a purpose mainstream is to stop fighting to change people’s minds and instead make it a default strategy.


[If you’re not seeing the embedded video below, you can click here to see it.]

If I were to describe the video in joke form, it would go something like…

Q: What do the Twilight Zone, organ donation and ESG investing have in common?

A: ???

(If you can make that into an actual joke, you win a prize.)

Our practice

We become who we are going to be someday through practice, and we will excel at the things that we practice.

“Who we are going to be” doesn’t refer to doctor, lawyer or firefighter.  It doesn’t even mean “great public speaker,” or “fiction writer” or “people manager.” We have to right-size our lens to the component parts that we can actually, manageably practice. And we have to remember that, conscious or not, we are always practicing many things.

We can practice generosity, openness, and stillness.

We can practice being courageous, not taking it all so personally, and seeking out others’ strengths.

We can practice demagoguery, reinforcing our biases, blaming others, and deflecting criticism.

We can practice objectifying others, defining “us” by demonizing “them,” and stoking fear.

We can practice hiding, critiquing, standing on the sidelines.

We can practice raising our hands first, doing the work, being reliable.

We can practice speaking in a way that others understand and relate to, every time

We can practice telling stories and using the words “for example.”

We can practice telling ourselves a story about our own limitations, and that this is all we will ever be.

Or we can practice being honest with ourselves, not shying away from our fears, and seeking out feedback.

And of course, most important at all, we can practice practicing.

Whatever we practice, that is what we become.

Opening the door to emotional content

My last post was about what it takes to deliver a message that has emotional content, whether an apology or an expression of gratitude or a sincere request for help.

The flip side of that post is to ask: what can I do to make it easier for people to show up in an authentic way and speak their truth?

Highly effective teams are those in which the emotional hurdles have been lowered. While it’s not up to the authority figure alone to lower these hurdles, the work often starts with her.

In thinking about how you show up with your team, notice how what you say in the first few minutes of a meeting plays a huge role in determining what is and is not discussed. Be aware of when it’s time to talk less. Notice what happens when you ask more open-ended questions. Make sure that you let silence be your friend, and that you allow challenging or uncomfortable moments to persist, instead of jumping in to resolve them. And always keep an eye on the data you’re getting back from participation: Google’s research finds that the most effective teams have equal participation from all members.

This all might make intuitive sense, but we can often be unaware of our own biases. I’ve always been pretty comfortable speaking up, and I’ve always taken it as a point of pride that I deeply believe that good ideas can come from anywhere. But it took me a while to see my own blind spots: I spent far too little time thinking about how different people respond to roles, hierarchy and authority; I rarely gave much thought to noticing who was more introverted or extroverted and adapting accordingly; I paid too little attention to the active work I could do to build others’ confidence; and I expected that that most people experienced “healthy debate” as, well, healthy.

Mostly, what I was exhibiting was a lack of empathy: respecting other people is one thing, but empathy means that I actually see things from their perspective, rather than generalize from my own. If I’m honest, I often used to find myself thinking, quietly, “well, if he thought that why didn’t he just speak up?” until I finally figured out that every time I thought that I needed to then ask, “and what more could I have done to help make that happen?”

I’m sorry

You might have noticed that apologies don’t need to happen just once.

The first time, the words can catch in your throat. You might sound a bit defensive, even reluctant, a bit like the little kid who looks at the ground, mumbling almost unintelligibly as his parent nudges him forward to say “sorry.” What’s going on is either that you don’t fully believe your own words, or you sense that the person you’re speaking to isn’t totally ready to hear you.

The second time you apologize, you’ve gotten past the noise in your head (“I’m not the only one who did something wrong!”) and the self-congratulations (“I’m such a martyr”) and started to get in touch with real feelings. As these feelings of remorse start to be visible, you begin to build an emotional bridge between you and another person.

And the third time, well, the third time you are fully grounded in the truth of the wrong you’ve done, the hurt you’ve inflicted, the unnecessary slight, and you can match those feelings to the words you say and to how you say them. When that comes out, you can truly apologize and begin to set things right.

Of course there’s nothing special about apologies. This is the way it goes with any communication that has real, challenging emotional content, including expressions of humility, gratitude, requests for help, even communicating the joy and hopeful enthusiasm you have for a job you want, joy that is often buried beneath layers of seemingly-appropriate responses.

There are no shortcuts to expressing your emotional truth. There’s just the progressive work of discovering it, and then having the courage to reveal it.


Live stream today – the future of impact from SOCAP 2016

I’m excited to be speaking today at 2:30pm Pacific at SOCAP on a panel about the future of impact measurement. 

The panel is being live streamed in case you want to tune in: click here to tune in to the SOCAP live stream. 

The panel is with Jim Fruchterman (Benetech), Kelly McCarthy (GIIN), Paul DiLeo (Grassroots Capital) and Karim Harji (Purpose Capital) and it starts at 2:30pm Pacific. 

I hope you’ll join us!