How well are you managing towards impact?

Impact used to be the preserve of charities. Charities did good; businesses provided the products and services that people want and made profits. Increasingly it’s becoming clear that if we want to have a future as humanity, we need to be better at recognising the inter-connectedness of what we all do with the effects on people and planet. To put it simply, there are consequences to our actions and we, as individuals, organisations and society, need to get better at managing these.

There are many forces driving organisations towards greater consciousness of their impact. Some are intrinsically driven by finding solutions to the problems faced in the world and seek to learn and improve towards this end. Others recognise the connection between serving their customers well, building positive relations with their stakeholders, and fostering their reputation. Another group are more motivated to demonstrate their value to others, responding to the demands of funders, commissioners, investors, customers or other stakeholders – it is no longer sufficient simply to say ‘we did some stuff and some changes happened’. But measuring, managing and reporting on impact can be a challenge. 

4 steps towards effective impact-led organisations

Impact is now high on the agenda for many organisations but, with money tight and resources stretched, it is often seen as something extra and difficult rather than part of core business. So how do we ensure that a concern with impact drives real changes in the way that organisations work and the benefits they deliver, rather than just being about measurement and accountability? 

My experience is that most (if not all) organisations have quick wins to increase the impact they deliver. I want to reclaim ‘impact’ from the complexity of impact measurement and make it a living part of every aspect of organisations – large or small, charity or for-profit. Every decision made has implications both for commercial success and impact. Make this explicit and you can be more deliberate about the decisions you make.

In this article, I set out 4 steps to effective impact management. These follow a logical sequence, but in practice organisations often start at different points in the process – responding to their perceived need. In doing it’s likely that they will need to revisit the proceeding steps. 

Define your purpose and impact goals

Many organisations are clear about ‘what they do’ but they may be less clear about their overall purpose and whether what they do is the most effective way of reaching their goals.

Some organisations have a specific purpose – they seek to solve problems in the world (poverty, homelessness, ill health, financial capability, environmental, etc.). But impact is more than the specific goals you set yourself. Everything you do has an impact on the world, and there are opportunities (often simple) to be more aware of the potential to have greater positive impact (and reduce the risk of creating harm) through the ways that you work. The Impact Management Project (IMP) usefully looks at how organisations might contribute to impact – this ranges from causing harm (increasing regulation and reputation risk are requiring businesses to act to avoid harm) to contributing to solutions. In between are lots of opportunities to benefit stakeholders – typically the sort of things captured in sustainability reporting such as diversity & inclusion, environmental impact, living wages, Fairtrade, good governance, etc. 

A hotel in Costa Rica has gone beyond the normal environmental impact policies. Not only do they look at energy and water use and waste; they employ staff from the local community; use locally sourced building materials; source local food and aim to make purchases from within the local economy; support visitors to engage with local communities to build understanding and create economic opportunities; aim to reduce the travel of guests and employees of the hotel; invest in the education of local children to create an employment pathway into the hotel. 

Contribution to impact

Once you are clear about your purpose and impact goals, you can think about what it is that you do to create impact. This is not just about the specific products or services that you provide, but who you target (or exclude), how you ensure the quality or consistency of your work; how you relate to other stakeholders working in your sector or the ‘system’ you are seeking to change; and what is your business model to successfully do (and scale) what you do. This is not fixed but can be adjusted (or radically changed!) over time as you learn more about the problems you are tackling, about what works or not, or maybe the nature of the problem changes or new ways of working become available (eg. through technology). 

This articulation of what you do, why and how (and the assumptions or hypotheses that you make) are often described as a theory of change. Whatever you call it, this clarity is the foundation for everything that you do to measure and manage impact.  

I asked a charity working with young refugees in London questions to deepen thinking about their strategy:

• You work with 30 young refugees, why these 30 and not the thousands of others living in London? 

• You don’t work with Muslim girls. Is there something about your outreach or the way that you work that excludes them? 

• You work with a small number of people over several years. Is this the best use of your resources to maximise impact? 

Measuring and reporting on impact

Once you’re clear about what you’re doing you can start thinking about measurement. This should include both information for internal use as well as for reporting. Key metrics to include are:

• Who do you serve and exclude?  Do you reach the people you seek to serve (and are certain people inadvertently excluded?).

• Do you deliver the products and services at sufficient volume, consistency and quality? 

• Do you meet the customers/users/stakeholders’ expectations and needs, and how can you do this better?

• What outcomes do you achieve (both intended and unintended) for customers and other stakeholders?

Whilst there are lots of tools and frameworks available, most practitioners find impact measurement challenging and the number of tools confusing. Impact measurement doesn’t need to be complicated. Try to avoid these common pitfalls:

Don’t collect more information than you need. If you’re not clear about the questions you want to answer, who needs the information and what it will be used for its very easy to fall into the trap of collecting information that may be useful. Inevitably this becomes overwhelming, often is poor quality (because no one values it), and often is unused.  There is a useful principle of ‘optimal ignorance’ which says that you should focus on what you need to know.

Don’t forget that you already have lots of information. Before you do anything new, start with looking at whether you can answer your impact questions using existing information, or if you can add in extra data points to your existing systems.

Don’t just rely on case-study stories or the numbers of people served and products or services delivered. Aim for a good balance between quantitative data that gives you a picture of what happens ‘in general’; segmented data that tells you how things vary for different clients or stakeholders (e.g. men, women, young people, education levels, different locations); and in-depth analysis that explains your pathway for impact. Case-studies can be powerful if you can link the single example with your numerical data showing how this is typical of the impact you have. It can also add to your credibility to include some examples of things that do not work well or go wrong – this shows that you are not claiming to be perfect, but it also highlights how you are learning from experience and using this to improve what you do. 

Don’t forget that impact measurement needs to be for management not just reporting. Impact measurement should be relevant, useful, track patterns and allow for interrogation of performance. You need to understand how your products and services are being used, the experience of your customers and other stakeholders, and to recognise any unintended outcomes. Feedback systems are at the heart of this. 

Don’t just think of your funders. Impact information can help you be accountable to your clients and other stakeholders. 

A microfinance organisation I supported decided to track outcomes by measuring the increase in the strength of clients’ businesses over time. They realised that as part of the loan appraisal staff conduct a detailed assessment of the business, including a cash-flow analysis. This information could be used to track progress in the business as clients returned for repeat loans. 

Managing what matters

To deliver impact requires organisations to move beyond a focus on good products or services to build ‘good organisations’. Once you are clear about what are the most critical things that you do (or don’t do) for impact, the job of management is to make sure that these happen consistently and with quality. This means embedding impact into organisational culture and systems such as human resources, staff performance management, finance, governance, risk management, etc.

There are a number of resources that support organisational processes. For example, the B-Impact Assessment is an excellent tool that asks you to think about your current practices in each dimension of your organisations. 

A social business recognised that the management hierarchy was getting in the way of staff communicating their experiences working on the front line. This blocked organisational learning about what was working or not. Changes were brought in to flatten the management structure and create a culture of open communication where all staff felt that their contributions were valued. 

Impact Community of Practice

If the steps in this article sound interesting, they why not join a newly formed Impact Community of Practice for organisations in Sussex? Members identify their own priorities for impact management,  collaborate over the coming months to support one-another, with expert facilitation to guide them. 

The first cohort met in late January. New members can join the Community of Practice by first participating in a 3-hour introductory workshop that will be organised based on demand. Please contact the author for more information. 

About the author

Anton Simanowitz is a Brighton-based consultant supporting purpose-led organisations to be more effective in delivering positive impact in the world. He has 25 years’ experience working with charities, social businesses, social investors, funders and policy makers with from 1 to 2000 staff in the UK and the Global South. 

Anton is author of The Business of Doing Good (Practical Action Publishing). 

Contact: antons@socialperformance.net

Website: socialperformance.net