It is harder than it sounds...
I am frequently asked, these days, what “positive impact” means. What are we talking about here, specifically? How is it measured?
How can we be sure that “positive impact” isn’t just a buzzword used to raise money from investment funds that are dedicated to impact?
How can we be sure that “positive impact” isn’t just marketing-speak to appeal to the wealthy, urban, young adults who care about “sustainability” in their abundantly-consumerist lives?
As I talk to investors, partners, and big institutions about what we do at Imagination Machine, they justifiably expect a rigorous answer.
Here are five attempts that I’ve made to answer a difficult question.
1. Positive Impact is a culture.
There are many public frameworks to define “positive impact”, but I believe it is bigger than any of those definitions. Just like nations, religions and social movements have their own cultures, “positive impact” has its own culture, too. And like any culture, it is broad and rich and difficult to pin down.
Like any other culture, positive impact has a set of shared values – like respect for human dignity, free flow of information, equal representation of all voices, and many more. It has shared combats, like the fight against climate change, against discrimination, against poverty. Like any other culture, it has a code of conduct, unspoken rules about how we all interact with each other. It has heroes, community leaders, and structuring institutions. It has a specialized vocabulary, like a unique language. Positive impact even has aesthetic codes, office hubs in cities and regions around the world, press outlets... These things are all natural outgrowths of a powerful culture.
Perhaps this is why it’s rather easy to spot “greenwashing” when we see it – because it is not enough to talk about a certain problem or metric. Joining a cultural movement requires a more profound shift.
2. The UN’s Sustainable Development Goals is a language.
Using the culture metaphor we can think of the UN’s 17 Sustainable Development Goals as a language, a shared vocabulary, more than as a quantitative rubric for evaluation. As a vocabulary it is incredibly useful.
Because these 17 Goals (and 231 sub-goals) emerged from a collective, deliberative process with all the nations of the world, they are widely accepted and used. As a result, we are all talking about the same thing when we use specific terms. We can share ideas, data, and best-practices in a much more fluid manner. And when it comes to measurement, it means we have a common framework as a starting point.
But of course a vocabulary is not a definition; it is a means of expression. It is not enough to say that a project is in service of SDG 3. That is not a definition, it is the beginning of a thought that needs to be elaborated.
3. To have a positive impact, it is essential to articulate a clear mission.
One of the things that distinguishes our projects at Imagination Machine is that we always start with a clear mission for our companies, an answer to the question “why does this company exist?” These clear missions are like having a “positive impact thesis” at the heart of every business. We are convinced that the clarity of the impact vision makes all the difference.
Within that impact thesis, we use the vocabulary of the SDGs to reference ideas; but the SDGs themselves are not the missions, merely a way to communicate something more specific. I am proud of the work one of our startups, Good Steps, has put into their manifesto (in French). Another one of our startups, Beem, has a more succinct mission that is no less powerful (also in French).
These impact missions leave a wide latitude for the product or service to evolve or change. They leave many options for which metrics to use to measure impact, depending on how the business model manifests. The best missions are qualitative, visionary, and broad, while being specific and opinionated enough to be motivating.
4. Measuring impact requires both quantitative and qualitative approaches.
A company may have a clear impact goal, but measuring that goal is rarely simple. How can you be sure whether any change observed was due to your product or not? If someone buys second-hand clothes from one of our startups, would they have bought second-hand even if our startup didn’t exist? Are they buying more clothes overall because of our second-hand solution, which might actually accelerate the growth of the polluting fashion industry? Or are customers actually reducing their consumption of new-fashion thanks to a second-hand alternative?
What about the indirect impact? For example, if our brand of tampons leads to more general awareness about the importance of women’s health among disadvantaged communities, and that broader awareness later leads to political change, that is a massive positive impact – how can we measure it? In many cases, these indirect impacts can take many years to play out.
In the nonprofit and governmental world, the gold-standard for measuring impact is Randomized Control Trials (RCTs). But this tool is expensive to set up and long to see through, and is almost never used in the business context.
It is also not enough to simply measure impact, we must understand why and how that impact happens. If we sell a million solar panels, then yes, we can measure the number of kilowatt-hours of green energy produced; but how can we prove that the innovations around the user-experience of residential-solar are what unlocked a more rapid deployment of renewable energy? Proving that is actually essential if we want our impact to be truly scalable, to be deployed massively and worldwide.
We are inspired by the work of 3i evaluation in their rigorous and complex studies of impact projects around the world. These studies are proof that measuring impact is never simple and never purely quantitative, but it is possible when done well.
5. Measuring impact too early can squash innovation.
Ours is not the only way to build startups, of course. But at Imagination Machine we use an innovation process that requires careful listening to customers, and incredible, rapid agility. For many months we listen, we test ideas, and we “pivot” our concept dozens of times. When it works, an innovative, new-to-the-world idea emerges; but this is not the end of our process. This new idea is fragile and must be fortified, step by step, with many adjustments along the way. The business model can change, the product will evolve, the distribution strategy may be totally different from initial hypotheses.
When the process is successful, we end up with a clear, easy-to-understand business with an obvious alignment of mission, product, and business model. The challenge turns to scaling. It can be easy to forget that for the first several years of the business, those elements were ever-changing and that the clarity and alignment were hard-won, earned with thousands of hours of work.
Because measuring impact is complex, requires careful structuring of the measurement effort, and takes time, it carries a risk. Such a heavy and rigid process can make it all but impossible to do the rapid-adjustment work necessary for innovation.
Even though this is perhaps counterintuitive, and not necessarily what investors demand, we avoid measuring impact for our startups in the early years.
These five thoughts paint a complex picture. All too often, in the world of positive impact businesses and projects, someone will say “I’m working on SDG 5!”, or measure the CO2-reduction of their solution versus competitors, and expect that to be the end of the conversation. And in some contexts, that kind of simplicity is what investors and funders are looking for.
I think that positive impact is both more expansive and ambitious than that, and therefore harder to define.
Based on these ideas, I aspire to do the following: first, to be an active member of the positive impact culture. That’s one of the reasons that I publish this newsletter.
Second, I aspire to recruit colleagues and co-entrepreneurs who are committed to the same positive impact culture. Then to work with them to set clear missions for our new projects, missions that are ambitious, clear, and detailed.
I fear constraining the innovation process, so we avoid measuring impact in any rigorous way in the first several years of a project. But I do look forward to working on a robust impact measurement study of our work at Imagination Machine in the coming years, once our portfolio of projects mature. I plan to work with a third-party expert on this study, and we’ve scheduled it for 2024.
If you have your own definitions of positive impact I’d love to hear about them!