Introducing the evolution of impact within entrepreneurship
In order to improve our understanding of impact in entrepreneurship, it is necessary to understand its origins.
Why do we need to measure impact?
Impact has become a critical focus for a wide variety of individuals, businesses, not-for-profit organisations, policy makers, governments and researchers.
The need to know our impact is driven by various factors, such as:
- Scarcity of resources (eg you need to show how economically you are working with resources)
- Availability of information on how resources are utilised (eg you need to indicate what value you are adding to society)
- The importance of social responsibility and sustainability within the world (eg do you harm the environment using too much plastic or do you have a positive impact on the environment utilising degradable materials).
We are living in an environment where innovative actions are needed to address social and business issues, including skewed income distribution, youth unemployment, and crime and corruption. Social and business issues are not mutually exclusive concepts, which makes the call for innovative actions by entrepreneurs even more urgent.
In this context, impact has become increasingly relevant over the last decade to inform stakeholders in a transparent manner on how important issues are being addressed by entrepreneurs and institutions. It is safe to say that people support what they observe and if the narrative is positive, more support can be expected.
How is impact measured?
Over the last decade, more and more impact measurement approaches have been developed and implemented by entrepreneurs, organisations and even governments. Change is occurring continuously on a global scale and new approaches and innovations are quickly designed and executed in order to solve some of the world’s most pressing issues.
As a result, a uniform approach to impact measurement is neither appropriate nor possible. After all, it is not the process of measuring impact that is important but whether your stakeholders understand what you have achieved. To enable impact to be communicated as effectively as possible, an adaptable approach is required.
The future of impact measurement
The global environment is characterised by various phenomena:
- The rich are ageing, the poor are not
- Weak economic growth will persist in the near term
- Technology is accelerating progress but causing discontinuities
- Growing global connectivity amid weak growth will increase tensions within and between societies
- Governing is getting harder
- Risk of conflict will increase due to diverging interests among major powers, an expanding terror threat, continued instability in weak states, and the spread of lethal, disruptive technologies
- Climate change, environment, and health issues will demand attention.
(National Intelligence Council 2017)
Entrepreneurs and their stakeholders find themselves in the midst of these phenomena and it is expected that they collectively work together to stimulate sustainable socio-economic development.
So, how do we know when that development has been achieved? The answer is through measuring impact, but how it is done is still up for debate.
Some organisations aim to measure immediate outputs, for example, how many mosquito nets they produce and distribute in areas where malaria is a health risk (Ebrahim 2013). Others focus on long-term outcomes in the lives of individuals, for example, ongoing quality of life and health following the use of a mosquito net. Other organisations aim to measure both individual outcomes and broader impacts on society such as the reduction in the number of deaths caused by malaria.
We have provided some examples of organisations or businesses that might want to measure impact, with a particular focus on social impact.
Can you think of any examples of organisations that might have quite different views on why they want to measure impact?
Share your ideas in the comments.
Ebrahim, A. (2013) ‘Let’s Be Realistic About Measuring Impact’. Harvard Business Review [online] available from https://hbr.org/2013/03/lets-be-realistic-about-measur.html
National Intelligence Council (2017) Global Trends: Paradox of Progress [online] available from https://www.dni.gov/index.php/global-trends-home
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