Tracking a business’ social impact can lead to competitive advantage, writes Adriel Nisperos, who also writes about education, social innovation, and social entrepreneurship. This article was originally published on Medium.
“If a picture is worth a thousand words, then a number is worth a million words.” — Pedro Cortez, UNDP Business Call to Action Initiative
When I started working on a project supporting impact-driven businesses in the Philippines, one of the many things I realized is that it is quite challenging to prove how these businesses can create social change–at least when putting the numbers on paper.
Beginning in 2020, one of our project managers brought up the challenge of how our project can better support technology business incubators in their journey to boosting startups and impact-driven enterprises. We recognized that there are a ton of institutions out there that are already providing support and capacity-building to these incubators. And so we ask, how might we add more value to these business incubators for them to be able to provide better support to their clients?
It was not an easy question to answer, but we were quick to recognize that there is difficulty in knowing where exactly an impact-driven business is headed. It’s easy to claim that a business is making an impact, but how and did it really? Thus, we focused our training on impact management and measurement, specifically to help not only incubators but also entrepreneurs on how they can track their impact footprints.
Why do impact-driven businesses need to track their social impact?
Let’s start with “why” as popular book author and motivational speaker Simon Sinek recommends. Why do impact-driven businesses need to track the change they are creating for their communities and beneficiaries? Isn’t it enough that they built their business having a social impact at the core of their operations and not just profit? The answer is no.
I was lucky enough to meet Pedro Cortez, an impact specialist from UNDP’s Business Call to Action initiative and also our resource trainer during the three-day workshop we conducted on impact management and measurement. In our conversation, we both agreed that social impact is not just another buzzword that can be mentioned during a pitch, for example. Rather, it is something that impact-driven businesses can leverage to get ahead of the competition.
One of the things I learned from Pedro is that impact measurement and management help a business determine whether it is headed towards its impact goals through its product or service. It tracks whether a business is indeed positively affecting the lives of its beneficiaries or addressing a social issue it wants to change. But it gets more complicated when it comes to attribution (which we’ll leave to the experts for now).
Another practical lesson I learned is on creating an impact value chain (or theory of change). An impact value chain is a tool that helps in visualizing what and how a particular business is making an impact starting from the identified opportunities and problems, to the inputs and activities of the business, up to the activities’ resulting outcomes and impact. Constructing an impact value chain helps a business get a clearer vision or path on how to reach its social impact goals.
In addition to simply creating an impact value chain, it is also important to align the business’ social impact goals to the UN Sustainable Development Goals (SDGs). Aligning a business’ impact goals to the SDGs — down to each goal’s targets and indicators — will help in determining and monitoring exactly the progress we are making towards achieving those goals on a global level.
But how exactly is this process of measuring and managing social impact helping businesses?
How does tracking social impact help businesses?
Impact measurement and management are not additional compliance activities for an impact-driven business. Yes, it can be daunting at first to plan and execute the impact management strategy. But the resulting benefits of doing it are advantageous. Some of the lessons I learned from Pedro is that impact measurement and management can:
- Influence business decisions
Knowing whether a business is on track or not when it comes to achieving its impact goals saves resources. An impact-driven business that doesn’t have a lot of resources can benefit from this. It also gives the entrepreneur an opportunity to check whether their product or service is still addressing their consumers’ needs. - Serve as the value proposition
Social impact can serve as the business’ value proposition. The results of the measured impact can be evidence that a business’s product or service answers a particular social problem. It helps a business get ahead of its competitors. - Help a business become more attractive to investors
Having the capacity to measure and manage a business’ social impact helps in attracting impact investors. It informs investors that the business understands the problem(s) it is addressing, and that there is not only a roadmap to get there but also a way to track it.
There are a lot of tools out there that entrepreneurs can use while in the process. Each of these tools has its unique features. Some of the tools and resources I found online are:
- Impact Lab by Business Call to Action
- Outcomes Matrix by Good Finance
- Social Impact Measurement tools by sopact
Impact-driven businesses should invest resources in measuring and managing their social impact. It can provide them a lot of benefits in the end which can also affect their relevance in the market and their sustainability. For technology business incubators, consider building the capacities of your clients on impact management as part of your incubation program. Learning how to manage social impact at the early stage is a good opportunity.
Putting numbers on a business’ social impact is not the only way to show that they’re making a difference. Writing stories can also deepen the meanings of those numbers. I’ve written as well some of the lessons I learned about telling stories for impact-driven businesses (Read it here).
It was an insightful learning experience listening to Business Call to Action, and I hope our participants also did find it useful for them. I’m excited to know and learn how you’re tracking your business’ social impact. Comment down below on how you’re doing it.
Jann Adriel Nisperos is a passionate and mission-driven communications professional. During the day, he supports STEM students, impact entrepreneurs, and tech hubs at PhilDev Foundation by telling compelling stories of impact through writing, design, and photography.
Gaining a background in development communication, Adriel uses communication to advocate for quality education, social innovation, and sustainability in and outside the work that he does. His hustle for development continues after work hours volunteering as a member-advocate at the 2030 Youth Force in the Philippines.
TechNode Global publishes contributions relevant to entrepreneurship and innovation. You may submit your own original or published contributions subject to editorial discretion.