President & CEO of Junxion Strategy, an international social impact consultancy that helps leaders build the success stories of the next economy—one set on foundations of environmental regeneration, social justice, and shared prosperity. Reach him via [email protected]
The rapidly growing movement toward social purpose in business holds the promise of better ways of doing business, leading to healthier communities, restoration of our shared environment, and better outcomes for companies’ staff, customers, and other stakeholders. In fact, the embrace of purpose is the very heart of business strategy in the 21st century.
Yet naming your purpose is just the first step. To put purpose into practice in your organization requires new ways of thinking about performance, engagement, and communication. And each of those requires a new way of thinking about what we measure at work. There are many ways to measure and monitor your performance toward your social purpose, including various sector-specific benchmarks and indicators, evaluation methodologies, and reporting standards. Yet the diversity of social impacts companies aim to deliver makes the selection of frameworks and methodologies feel complicated. Here are five steps you can take as you embark on your social purpose journey.
Rethink Performance with a ‘Theory of Change’
About 15 years ago, Junxion started to bring some core principles of brand strategy from the world of business to the non-profit sector. In some of those early conversations, we were dismissed as heretics! ‘Branding’ was seen by some as a manipulative activity incompatible with non-profits’ ‘authenticity.’ We saw it differently, having pioneered a values-based approach to branding and a model that starts with authenticity.
About five years ago, we started to bring some core principles of social change-making from the non-profit to the for-profit sector. First among those has been Theory of Change.
Theory of Change is a framework and methodology to map intended social change outcomes to short term organizational plans and decisions. It’s a theory, because it makes explicit our hopes and aspirations for how the outputs we control will lead to the outcomes we desire.
Think of outputs as your company’s deliverables—products shipped, revenues earned, and if you’re already thinking deeply about sustainability, carbon and other ‘externalities’—the negative impacts your supply chain has on the environment, community, workers, or customers. To go beyond outputs to outcomes is to expand your company’s responsibility from its KPIs to its impacts beyond the walls of the organization.
Fundamental to the social purpose of business is the acceptance of responsibility both for outputs and outcomes—and indeed to prioritize positive outcomes in strategy, planning, operations, and management. The exercise of developing a Theory of Change will help you to define ‘the change you seek.’ This is the first step toward embedding purpose in your operations.
Select the Right Metrics
You’re already measuring your outputs, but measuring outcomes might be new. Choosing and maintaining a suite of metrics against which you’ll evaluate your social impact are valuable, important, and strategic tasks. Fortunately, there are well established targets and indicators that you can use to support your social purpose efforts.
A great many organizations globally are mapping their organizations’ social purpose to one or more of the Sustainable Development Goals (SDGs).
The SDGs are a collection of 17 connected aspirations, collectively a “blueprint to achieve a better and more sustainable future for all.” As the global standard for shared aspirations across humanity, they should be part of your performance assessment plans. However, aligning your purpose with the SDGs isn’t sufficient to have a comprehensive measurement approach.
Within each of the 17 goals are as many as 15 ‘Targets’ and ‘Indicators’ that are easier to use to assess your organizational contribution to the SDGs. For example, SDG 8 is focused on ‘Decent Work and Economic Growth.’ The overall goal is to “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.” That’s a big, lofty goal, to be sure—hard to put into practice in any one organization.
The individual targets and indicators within SDG 8 are perhaps more helpful in shaping your work. Consider Target 8.8: “Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment.” It’s easier to see the role of any one enterprise in supporting this SDG—and it’s even easier when we consider the associated indicators: Frequency rates of fatal and non-fatal occupational injuries, by sex and migrant status; and increase in national rates of compliance with labour rights.
One way to look more deeply at your company’s specific social purpose goals is to use the widely respected B Impact Assessment (BIA)—the assessment tool that underpins the B Corp Certification. The BIA is a dynamic rubric that varies based on your company’s size, industry, location, and other factors. Whether or not you aspire to achieve the B Corp Certification, completing the BIA can surface significant opportunities for you to enhance your company’s impact.
If you’re keen for an even more focused range of metrics, you might consider using IRIS+, the “generally accepted system for measuring, managing, and optimizing impact.” Developed to support the work of impact investors, IRIS+ presents sets of metrics that are associated with one another to support evaluators’ measurement of organizational progress and impact. They also align to specific SDGs and other common ‘impact themes.’ The IRIS+ platform provides a great tool to quickly assemble an impact measurement framework.
Collect the Right Information
Many of these frameworks will give you clues about what information you should collect. Chances are that like most companies, you’re already collecting all kinds of data. Are you using it to inform your progress against some of the indicators you’ve selected? Is that information accessible to those who need it?
Most companies today generate more data than they can use. It tends to be archived on shared drives, on local hard drives, or ‘walking around in people’s heads.’ These rich stores of data can be valuable assets—but only when they’re translated into useful information, which we would define as information decision-makers can use to take action against a social purpose.
It can be useful to map your information needs, deciding what you need ‘to know and show,’ mapping information sources to your metrics or indicators, and prioritizing information based on what real stakeholders need and want. You can then force rank information sources, so that the mountain of data you have is more readily translatable into the molehill of information you need to make meaningful progress. Have a look at our quick guide to impact measurement to help get you started.
Assess Your Performance
You might say that information, metrics, and indicators are the raw material, and evaluation is the ‘value add.’ Rigorous evaluation of available information, set against your social purpose and your Theory of Change, can create a learning loop your organization can use to refine your approach and enhance your social impact.
To be clear, we’re not talking here about the ‘after action reviews’ common in many project-based work environments. Helpful as they are for short term learning, what we’re describing is an integrated, enduring approach to measurement, evaluation, and learning (MEL). This is another model that has been used for many, many years in the nonprofit sector. It is now an emerging practice in social purpose business as well.
Ongoing evaluation respects the complexity of social impact work. Consider that the financial success of a large enterprise might be measured at the bottom line, as return on equity, or in the share price, or in any number of other ways; the myriad influences on those indicators are what make management and leadership complicated. In social impact work, we’re adding another set of imperatives. Positive community impacts have even more influences, so learning and adapting to those influences in as close to real time as possible is imperative to success.
Communicate with Context-Based Reporting
Transparency is fundamental to a purpose-based economy. And in a time when public trust in institutions—including business—continues to fall, openness about your progress, including your shortcomings, is a vital prerequisite to retaining stakeholders’ engagement with your company.
Transparency helps people to make judgments about your business: is what you are reporting ‘good enough?’ And for that, you need to be considering context-based sustainability (CBS), “an open-source performance accounting method that measures and reports the impacts of organizations… against norms, standards or thresholds” for sustainability—where sustainability is defined to include environmental, social, and governance (ESG) criteria. As our friends at the sustainability knowledge platform r3.0 have pointed out, reference to these norms is essential if we are to judge the sustainability of any organization. Otherwise, we cannot know if your organization is making the requisite contribution to the world we need.
This context principle isn’t new; it was introduced in the Global Reporting Initiative’s (GRI’s) 2002 framework. In 2017, the CBS-based MultiCapital Scorecard was endorsed by B Lab, the non-profit behind the benchmark B Corp Certification and the Benefit Corporation corporate form. And it must anchor your goal-setting, inform your measurement, and drive your reporting if you’re to be seen as credible, sufficiently ambitious, and tracking meaningfully to your social purpose.
How Should You Get Started?
All this may be new to you. Certainly, the various models, frameworks, standards, and tools can be confusing, and choosing between them may not be easy. One of the things that most excites us about the movement toward social purpose in business is that it brings to executives’ attention the negative impacts that far too many companies have ‘externalized’ (or failed to account for) since the dawn of the industrial era. These are the very impacts that have driven us into the climate emergency and that continue to exacerbate the gap between the ‘haves and the have-nots.’
Development of a Theory of Change, operationalization of measurement, evaluation, and learning, and a commitment to transparent, context-based reporting are essential ingredients of an authentic commitment to social purpose business. While you’re not expected to have all the answers all at once, your stakeholders are watching to see you’re making progress.
In fact, it’s fair to say stakeholder engagement is the glue that holds all these steps together.
Need help? Give us a call. Junxion can help your company to self-assess where you should start and to build on your strengths as you measure your purpose and set new standards for the role of business in society.