How companies can use data to maximise impact
It is possible for businesses to improve lives and be commercially successful – but harnessing the power of data management is crucial
By Adeel Ashfaq, Saemi Matsumoto, Cameron Talbot-Stern, Mikkel Tolnaes and Saad Farhad, Judge Business School, University of Cambridge
From developing an efficient clinical system in rural Kenya to providing a shareable source of clean energy in Rwanda, emerging inclusive businesses – those that engage people with less than $10 (£8) per day in purchasing power – are gathering steam. While these innovative ventures focus on providing positive impact to local communities, they also seek commercial success. Inclusive businesses can make significant improvements in the communities where they work, while pursuing the highest level of return. Integrating impact measurement and management as a practice can help them achieve this.
The concept of impact measurement centres around providing data-driven validation of a business’ social, environmental and governance-related impact. Impact management takes this a step further – using data insights, companies adjust their business models to ensure that they better serve the communities they work in, and manage their contributions to the sustainable development goals – while making sure they also meet profit targets.
While the principle is a positive one, often companies are deterred from measuring and managing impact because it is perceived as too hard, too costly, or not profit-focused. Here are four misconceptions, debunked.
Measuring impact is costly
There are many ways to keep costs low, such as by choosing the right method for data collection. Measurement should be tailored to best suit the company in terms of readiness, capability, data maturity and budget. Inexpensive tools such as smartphone data collection, online analytics, and even simple paper surveys can be quite powerful, as demonstrated by the success of lean data approaches. The costs of implementing impact measurement can also be significantly reduced by embedding the data collection process within existing operations. For example, a clinic that already collects health data can add other quality metrics such as patient satisfaction.
Just collecting data is enough
While data collection is crucial, it doesn’t resolve any problems on its own – this is where impact management comes in. Companies must use data to quantify and validate their social impact and plan strategic actions as a result. Those that are successful in this process have made changes to their businesses, including changing and adjusting their product offerings, creating new product services, and adopting impact management as a core business practice.
For example, Akash Ganga, an inclusive business working with farmer co-operatives in India, was surprised to find that data collected for impact measurement showed only 30% of women surveyed confirmed they were working with cattle. This result spurred Akash Ganga to develop new strategies in order to deepen their engagement with the women in the cooperatives.
You only need to do it once
Impact measurement is a continual process rather than a one-off project – this cannot be stressed enough. The most powerful result comes from the integration of impact measurement into a company’s core strategy and day-to-day operations. Business Call to Action (BCtA) engaged 20 companies over three years in a comprehensive cycle of impact measurement through its flagship BCtA Impact Measurement Services (BIMS) project. Participating companies were supported with technical expertise and technology to design and implement survey based data collection for assessing social and environmental as well as operational performance. A recent survey revealed that over 70% of companies engaged under the BIMS saw the business value in continuing to collect data and manage their impact.
One of the greatest challenges of successful impact measurement and management is to create a corporate culture that bolsters the value of evidence-based change. There must be a cross-functional effort with buy-in at multiple levels, including those on the ground who lead the implementation effort. Improving beneficiaries’ lives, in a lasting way, takes time. It is thus essential to measure progress, identify gaps, and improve regularly.
Business and social impact are mutually exclusive
Actually, business and social returns are mutually reinforcing. They are interrelated and occur simultaneously. Several companies that have implemented impact measurement practices have been able to validate the impact they have had on their beneficiaries with respect to income, health, and education. For example, Drishtee, a business providing education to vulnerable segments of Indian society, including farmers, was able to quantify that their services increased farm income by more than 35% for participating families.
Companies have also used impact measurement to identify new market segments and spot unmet customer needs. As a result, they can offer new products or services that allow for business success and greater social impact. For example,Mahindra Home Finance (pdf), which provides loans to low-income families, found that there was demand for customised insurance and mutual fund products. New sources of revenue for the company were thus opened up and financial growth was provided for its customers.
When done thoughtfully and well, impact measurement and management have the potential to reveal untapped sources of social, environmental and financial returns and change the scope of business across the globe. Recognising this value, BCtA has built on the BIMS support it provided to 21 companies around the world by creating an online impact lab. This free and easy-to-use resource guides businesses in the successful planning and implementation of impact management, as it relates to the sustainable development goals.
This article was originally published on the Guardian Labs Business Call to Action microsite, Improving lives through business innovation. Photograph: Alamy Stock Photo