In this uncertain era, many are re-imagining and preparing for a Brave New World. A world where profit is inextricably linked to people and the planet; a world where disciplines such as economics and accounting are being questioned and revisited; where human behavioural assumptions are being interrogated; and where results of our collective efforts for closing inequality in all its dimensions, from income and gender, to race and ownership of future technology, are scrutinised. And so, the word ‘Impact’ has become ubiquitous, used in every setting and context to capture the intended or unintended consequences of our human actions (or lack of).
The challenge of understanding impact and embedding it in existing organisational systems and frameworks is therefore both urgent and opaque. Leaders and managers are asking: How can we all measure our impact? As there is no magic formula for impact, the following few reflection points may provide a humble impetus to think about the implementation of impact.
The first safe assumption is that no organisation will be spared in this impact reflection, in this new future. While the field of social entrepreneurship and ‘impact investing’ was somewhat built on Environmental Social and Governance (ESG) policies and practices, all entities (corporations, investment vehicles, public organisations and non-profits) will be subjected to greater scrutiny on its ESG standards, but may also be induced to measure and provide evidence for its impact on society and the planet, in alignment with its values and standards.
The second point of reflection is that impact will no longer be seen as an add-on, a nice-to-have politically correct tool in addition to a profitable, performing or growing entity. Impact and financial performance will increasingly go hand in hand to provide an overall view of organisational performance. The Harvard Business School, in partnership with a plethora of experts, is now working on an impact-weighted accounting system. Such efforts are likely to spread across legal entities, including non-profits.
Thirdly, impact reporting and an impact system will be required. Confusion often arises when organisations only engage in reporting to display impact metrics for an external audience. However, to produce this kind of report with an inherent verification, validation and timeliness of data requires an internal impact system that plans for an organisations’ activities, tracks inputs, outputs, in order to produce outcomes and impacts. As such an impact system ultimately requires investment in the right metrics from the onset and an internal tracking mechanism to produce reliable and verifiable evidence. For instance, when providing education in slums, an organisation (whether for-profit or non-profit) must buy tables, chairs, supplies, hire teachers (input), in order to ensure that students enrol (output), learn well and pass to the next class (outcome) and eventually graduate and go to college or work (impact). Throughout these steps, gender equality, security, inclusiveness (from race to ethnicity and income), stakeholder engagement are all impact metrics that are part of the planning and implementation phase. In the same way, that one cannot expect a delicious meal without the right ingredients, one cannot assume reliable metrics are provided to stakeholders without a robust and aligned internal impact system.
Fourthly, any law, policy or technical system in any field is never fully effective if it is not enforced and this requires human change at the organisational level. The Universal Declaration of Human Rights is a case in point. As all organisations transition and evolve, to make impact a reality may require an organisational culture change and/or a leadership change (this is why elections are sometimes useful). Values have to be aligned throughout to produce the results we want to see in the world.
Finally, the reality of impact will also be dependent on the quality and adaptability of the technology offering to enable us to capture more easily these various metrics of human and planet change. Whereas the number of impact software companies are growing, the supply of solutions is still not necessarily organised by organisational size or scale or type of portfolio and the impact does not seem yet to be able to be aggregated across entities. For instance, in the case of funds/vehicles/non-profits working towards the United Nations’ Sustainable Development Goals (SDGs), it would be ideal to work with software, AI, product development experts to be able to seamlessly aggregate and revisit timely data (both positive and negative impact data), and most importantly, routinely connect with end-users to embed the voices of those whose lives are being changed or at least provide proxy indicators or images of those who cannot speak (animals, marine creatures, water or trees). End-user consultation and feedback is the foundation of good design.
The term ‘Impact’ therefore requires a worldview shift, a wide and long-term vision, a systemic view and an ability to deal with complexity through increasing data-driven clarity.
Farahnaz Karim is the founder of Insaan Group.