The Hardest Thing

It isn’t figuring out how to solve the problem,

or deciding what approach will work best.

It isn’t sussing out what tactics to use,

or who will be your partners and your competitors.

It’s not figuring out product-market fit,

and it isn’t even hammering out how you’re going to convince skeptics of your story.

The hardest thing is figuring out what’s really important to you.

The things you want to work for.

The things that are worth sustained energy and sacrifice.

It’s the act of clearing away the dross, of quieting the voices that are the noise, not signal, streaming through your head.

The moment you state your goal is the moment you can’t hide from it.

It’s the moment you have to stop pretending that you don’t know exactly what it is that you are here to do.

A confluence of impact and scale

I spent last week at the annual meeting of the Global Impact Investing Network (GIIN), and I was struck by three trends that could take our sector to the next level.

The first is around taking impact seriously. The second is how different the impact measurement challenge looks depending on where you sit. The third is the acceleration of the rate at which mainstream financial capital is entering our space.

Throughout the GIIN conference, impact — the role it plays in defining our work and how to improve the quality of our impact data — was front and center in a way that I’ve not felt before. For example, one of the first panels kicking off this year’s event was on market segmentation. While segmentation is not a new topic in impact investing, the panel was titled “Market Segmentation through an Impact Lens.” The panelists — from Skopos Impact Fund, Tideline, Athena Capital Management and Omidyar — discussed their research and client-facing efforts to make sense of impact investing from the perspective of impact objectives.

This shouldn’t be brand new, but it is. An orientation to start segmentation with an impact lens runs against the natural tendency to segment investors by asset class or sector strategy, and it’s certainly a far cry from accepting that “intentionality” (as in: my intention is to make such-and-such happen with limited accountability on the data to figure out whether or not real change is happening) is a high-enough bar to set for the sector in terms of impact.

If we could pull off organizing ourselves, as impact investors, by the change we’re trying to make in the world rather than by the investing strategies we’re using to make that happen, that would be a big step forward.

Second, we need much better impact data AND we need to help people who are drowning in too much indecipherable, low-quality data.

I had the chance to participate in two panels focused squarely on advances in impact measurement. What I learned from these panels is that better impact data isn’t enough — there’s a huge desire for simplification too.

At Acumen, our Lean Data work has focused relentlessly on going directly to the low-income customers we aim to serve so we can understand what they have to say. Our objective is to improve the quality of impact data we have by scaling up our capacity to listen to the voices these customers, so we and our investees can better serve them.

While I’m convinced that this kind of listening must to be the foundation of everything we do as a sector, it’s not enough. Listening to my fellow panelists — from Goldman Sachs, Zurich Re, Abraaj Capital and Leapfrog — I heard that big institutions with large, diverse portfolios of impact investments not only desire better impact data but they also need help simplifying and clarifying the reams of impact data they already feel they receive.

Ironically, these large institutions have too much data coming in and most of it’s not very good. Our job is both to improve the strength of the signal and also lessen the noise.

Lastly, it was impossible not to notice that more and more big-name financial players are coming to the table.

The simple fact of having an impact measurement conversation between Acumen and Leapfrog on the one hand (two organizations that are essentially growing startups, with between $100M and $1B in capital under management), and Goldman Sachs, Zurich Re and Abraaj Capital on the other means that there are innovations in impact management happening across the spectrum of impact capital. That’s hugely positive.

Then, at the end of the day, we got to hear Former Governor Deval Patrick and Deborah Winshel discuss the impact investing strategies they began implementing in the last year at Bain Capital and Blackrock. Both articulated their goals to fully integrate impact into the global practices of these uber-blue chip firms, firms that collectively represent more than $4.5 trillion in assets. While it’s early in the journey for both Bain and Blackrock, it’s clear that their actions could have a huge influence with other mainstream financial players and beyond.

As I left the conference and made my way back to New York, I was struck with the feeling that we are entering a new phase in our sector. Having passed through the teething pains of our early days and our loud, sometimes impulsive childhood, we’re ready to start growing up a bit. This means harnessing — rather than just shouting about — the increased momentum building in our space, thanks to the entrance of major new players, while also taking a much more sober and serious look at the ultimate goal of this work, which is to make a real, large-scale and lasting difference in the well-being of people and the planet.

If, in this next chapter, we can find a way to have impact investing go deeper on impact and bigger in terms of scale and reach, we will truly be in a position to take this work to the next level.

[Note: you can also follow the conversation about this post on Medium]

Why the nonprofit sector moves slowly

Recently I heard a telling narrative about the “old days” at some of the big American foundations.

The old-school modus operandi of these foundations (more recently than I’d have thought, closer to 20 years ago than 50) was a program officer locked away in her office for months, drafting PhD-type documents explaining a theory of change and a grant strategy. These documents would wend their way up to the Foundation President who would inevitably send them back with long and detailed critiques, asking for the next draft. Years could pass in this back-and-forth.

The apocryphal version of this story was that by version 16 version of the paper, an exasperated program officer would just send back the original draft….which would then get approved.

We’ve come a long way in the nonprofit sector, but we still are, by and large, slower than we should be.

Part of the cause is the looseness inherent in the kinds of financial transactions we engage in. There’s an organizational culture multiplier around how we act when money changes hands: years couldn’t pass if there were a real customer waiting to buy a real product from that program officer.  “Budgets” are just that – intentions and plans – and they operate with a different logic and profoundly less urgency than accounts payable and working capital. We convince ourselves that we are prioritizing getting things right, when all we’re really doing is letting another month slip by.

Because we mostly lack the tight and consistent drumbeat of traditional financial transactions – of buying and selling – we have to do extra work to create cultures of hard deadlines. These days we talk a good game about moving fast and being nimble, but the pendulum is just starting to swing in the right direction. To keep the momentum going, we need to make sure we ask ourselves questions like:

  • When we have a deadline, what happens when our intention to move fast hits up against our desire to get things right?
  • How often do we break an established process to keep a promise to make a call by a given date and time?
  • When a key decision-maker is unavailable to join a decision-making meeting, does the meeting get rescheduled?
  • Do we regularly track and review the external promises we make and how good we are at keeping them?
  • If we posed a free response question to our customers asking them to describe us, how sure are we that nobody would say “slow”?

Often we’re so busy asking those around us about their process and their results that we forget to look at ourselves in the mirror.

Put the gloves down

What does it mean to say that real fundraising is about building long-term partnership?

It means that some of the most important meetings you have with long-term funders are the ones that cover topics that don’t require their funding support:

The amazing, fully funded project that you’re just kicking off with a few other partners.

The great piece of work that you both know is outside of their formal strategy that you’re really excited about.

The new initiative where you’d value their experience and input.

Some funders are so used to – and so tired of – being pitched constantly that they end up behaving protectively, as if the only thought running through their head is, “how many times will I have to say ‘no’ in this meeting?”  I’ve had funders start sentence after sentence with, “we’re not doing any new funding this cycle” long before I’ve asked for anything. There’s no hope of building a relationship if someone has their gloves up protecting themselves from an onslaught of asks.

Fundraisers can be part of the problem, acting as if that every meeting should include a financial ask, and fearing that they’ve made a mistake if they don’t ask for money each time.

Every meeting should help deepen the relationship and, even better, should give everyone around the table the chance to contribute meaningfully to making positive change happen. Often that’s not about money.

Taking a stance that you’re not constantly, desperately on the lookout for funding is one of the best ways to allow the partners you hope to work with to put down their gloves and actually listen.

How philanthropists really decide where to give

The natural place to start, as a fundraiser, is at your desk. You judiciously read every webpage, article and report about a potential funder’s strategy in search of the best fit between a donor and the work you are doing.

And then, research completed and grant application submitted, you’re surprised to figure out that the fit isn’t there after all. The pieces don’t snap together cleanly, your proposal has been turned down. Then what?

Perplexed, you may head back to your desk to do a little more research.

Please don’t, because the answer you’re looking for is not somewhere on the screen or hidden away in a Google cache.

Philanthropy – whether a $25 donation to an Indiegogo campaign or a multimillion dollar grant from a huge foundation – is always personal. The published philanthropy strategies you are researching are a sensible narrative that pulls together a bunch of threads, but they are not the whole truth. Far from it.

Think of it from the other side: there simply is no such thing as the best place to give a donation (heck, there’s no such thing as a best car) so there’s no analysis that gives the philanthropist the right answer no matter how much they spent trying to figure out the problem.

All the best philanthropists I know have a healthy dash of angel investor in them. Angels invest in people above all else, because they know that when you can find that rare combination of grit, belief, tenacity, vision, people skills, humility, audacity, courage, and, and, and….

You see, that’s the point.

The list is too long, the unicorn-like combination of attributes so rare, that it’s always, fundamentally, about someone’s belief in you.

(and, for those keeping track, ‘you’ is not just the founder or the CEO.  Not by a long shot).

Teaming

Last week I had the chance to participate a day of panel interviews for the 11th class of Acumen Global Fellows. It’s always a great day, a chance to meet exceptional people who are devoting their lives to social change. (It is strange, though, how they seem to get younger every year….)

It’s an intense process, with pitches, a panel interview, case studies and a group activity. The group activity stood out for me this year as a chance to see six super-productive people try to become an effective team quickly. Some groups do this incredibly well, others crash and burn, most are somewhere in the middle.

It strikes me that in professional contexts we naturally focus on two areas: the skills, capabilities and leadership qualities of individuals; and these same folks’ capacity and effectiveness as managers. This is the stuff that appears in the goals we set and the content we write up in annual performance reviews.

“Teaming” is notably absent. It appears in peripheral ways, in conversations about how people interact with one another and how they manage, but what it takes to be a great team member feels like it lurks in the background when, really, it’s probably the most important thing we do.

(If you don’t believe me, take a few groups of your top people, give them a 20 minute task to perform, and watch the divergence in their results.)

In an effort to take this head on, recently I spent some time with the Acumen team in Nairobi and we took 90 minutes to discuss three pieces that I shared with them a few days before the meeting:

The Google articles focus on the notion of “psychological safety” in teams and what it takes to build it, and shares their data that one characteristic of highly effective teams is that members of these teams tend to contribute equally to most conversations. And Seth, as usual, finds a way to share these and many other powerful ideas in one-tenth the words of everyone else.

I’d encourage you to share these articles with your teams and hold similar conversations. I’d also appreciate suggestions – in the comments – on additional articles on teaming that you’ve found particularly helpful.

(Hamilton-inspired) Time for Synthesis

I recently became obsessed by the music from the Broadway musical Hamilton (I know, I’m not alone).

I haven’t seen the show yet, but I’m going to next month so I’ve been reading up on it – so far, mostly articles and reviews, not the huge Ron Chernow Hamilton biography, which is next on my list.

In the New Yorker profile of Lin-Manuel Miranda, the genius songwriter/actor/rapper who wrote the script and music for Hamilton, I came across this excerpt about his process:

Miranda writes many of his lyrics while in motion: walking around Fort Tryon Park, which is near his apartment, or riding the subway downtown from 181st Street…

‘I will write eight or sixteen bars of music I think is exciting, or interesting, or sounds like the pulse of the character I want to be speaking, and then I will go put on my headphones and walk my dog and talk to myself,’ he says.

Sometimes when he is working on a riff he sings into the voice-memo function on one device while listening to the loop on another. The refrain of Aaron Burr’s signature song, ‘Wait for It,’ came to him fully formed one evening on the subway. “I was going to a friend’s birthday party in Dumbo,’ he says. ‘I sang the melody into the iPhone, then I went to the guy’s party for fifteen minutes, and wrote the rest of the song on the train back home.’”

I get a fair number of questions about how to “be innovative,” and mostly I don’t know how to answer them. But I do think it’s pretty clear that, most of the time, creativity and new ideas don’t spring forth when we sit at our desk, clicking between Outlook and Word (never mind Facebook).

In my experience, my own unanswered questions from an intense period of work will churn in the background until a moment of insight comes unexpectedly, even inconveniently, often when I’m on a run or doing something else that’s seemingly not work-related.

While I usually feel foolish stopping a run to tap out something on my iPhone, wondering if I’m missing the point entirely of going for the run, I do increasingly try to capture the thoughts that spring up in these moments by sending myself a quick email as I wipe the sweat out of my eyes, or recording a breathless voice memo if it’s a longer or more complex thought.

One of the risks of day after day of tasks, meetings, to do lists and email is that we need extra space to go from grappling with big, challenging questions to answering them. Equally important is to remember to put down our phones, in the elevator or when walking down the street, to give our brains some down time to process our own thoughts.

We’re all different, but I think it’s important to reflect on when our insights come and to make more space in our weeks for these insights to bubble up.

For me, I typically have insights in one of four types of moments: conversation with a colleague, on runs (but not other kinds of exercise), when I sit down to blog, and when I set aside larger blocks of time to think through a problem (including reading relevant articles on a given topic). Since I have stretches when I fail to set aside those larger blocks of time, I’m working to make sure I always have space for the other three, and that I experiment with using other “found” moments of time (like, say, on the subway) to generate spontaneous moments of synthesis and reflection.

Probably the easiest shift to make is to recognize that little gaps of time – a short walk on the way to work or to lunch, an elevator ride, when we walk the dog or even prepare dinner – aren’t wasted time to be filled with yet another distraction. These are precious moments to let our unconscious mind come up with the answers that our conscious mind can’t quite produce.