Measuring Social Returns …and Outrunning Bears

comments 12/02/2013

Measuring Social ReturnThis month’s theme will focus on Measuring Social Returns. To frame the discussion, we’ll take a critical look at both the actual measures of social return and how we measure; that is, we’ll consider the underlying tools, systems, and architectures for results measurement.

 Now, let’s heat the pool with a quick look backward.  (Oh, that odd-looking bear? Be sure to read to the end.)

A Brief History of “Measurement as We Know It”

Over the past few years, we have been besieged from within and from outside of the social sector by talk of impact, results and measurement. All good. Serious improvement is needed in each of those areas. Nevertheless, you might be surprised to know that, at the scale of industry, measuring return is relatively new territory for any organization, not just for those in the social sector.

In the broad sense of establishing a culture of measurement, we have the first modern impetus coming from William Deming, about 50 years ago. He introduced data-driven quality management and turned business thinking on its head with unique measurement schemes that exposed the over-reliance on “gut feel” in decision-making. But, that was in Japan; in the U.S., Deming wasn’t welcomed with open arms. Many managers shunned the data approach and chose to continue relying on the common wisdom that  improvements in quality could only come at the expense of lower productivity and higher costs.

Paradoxically, the next wave of improvement in the U.S. private-sector was “largely in response to Japan’s economic resurgence.” The shift then began toward customer-focused, employee-driven continuous improvement.

That cultural shift proved to be a congruent platform for refining such private-sector standards as common GAAP accounting methods for measuring corporate profitability and Total Shareholder Return for publicly traded companies.

Interestingly, we should note that, at the outset, movements toward better measurement were not intended to be limited to the private sector. Deming himself insisted that his approach was “applicable to institutions generally, even those in service and nonprofit businesses.” Yet, measurement in the social sector now sits in the spotlight due to the fact that data-driven management practices have gained traction more slowly among U.S. nonprofits and social-service organizations, as evidenced by the lack of certain standards, practices, and measures.

However, before invoking the “run it like a business” refrain, business writer Jim Collins applies the brakes: “When you compare great companies with good ones, many widely practiced business norms turn out to correlate with mediocrity, not greatness.” As such, adapting best practices from the private sector is not something to do in a reflexive broad stroke.  We should seek best practices from all corners.

That said, there are a few distinctions that make it challenging to introduce measurement of returns in the social sector:

  • Social returns are, indeed, difficult to measure

  • The social sector is highly fragmented and often poorly resourced, which makes driving adoption of new practices difficult

  • The bright spots in social-sector measurement can easily be clouded by widely held stigma. The Social Return on Investment (SROI) Network takes this topic head-on, providing multiple examples in an attempt to dispel “a variety of misunderstandings” about measuring social returns.

This month, we’ll focus on these unique challenges, giving our contributors an opportunity to comment on how they are addressing—and often surmounting—them. And that means we’ll talk about bears.

Bears??

It’s said that you don’t have to outrun a bear, just the guy next to you. However, the social sector is charged with outrunning bears: big, hairy social problems.  So, while fundamental improvement is needed, let’s not think in comparative terms, but collaboratively, and within the frame of solving social problems. Proper measurement is what gives us traction for better decisions, better operation, and compelling communication of outputs and impact.

How are we measuring social returns today? What tools are we using to do that? Which capabilities are missing? Are we measuring to improve, or just measuring?

Here’s how we’ll take on these questions, and more:

  • The Language of Social Returns: There is continuing discussion on the difficulty of measuring returns in the social sector. We’ll examine the complexity of finding consistent measures that provide insiders and outsiders a basis for attracting investment, driving improvement, and communicating performance.

  • The Tools for Measuring Social Returns: Heightened conversation about measurement of social returns has resulted in a proliferation of tools to do so. However, working against these advances are the diminishing returns of measurement tools and practice. We’ll take a look at how tools are being put to use, as well as how we’re sorting through the noise to prioritize measuring what matters.

  • The Enterprise View: We’d like to keep the whole enterprise in mind throughout the discussion. Measuring returns is now a standard call. But what about measuring the organization itself? There is significant movement on this question, driven by the need to find better ways to attract and allocate limited resources, and by the argument that measuring an organization’s overall effectiveness may be more powerful than measuring the return of any one of its standalone programs.

We’ll hear from professionals in direct service capacities (nonprofits, technologists, evaluators) as well as those with industry-level views (foundations, businesses, intermediaries) – all weighing in on measuring social returns. The lineup includes blog posts ranging from such diverse entities as the telecom multinational, Telefónica, Bridgespan, and The Somaly Mam Foundation to The MPULE Institute for Endogenous Development, headed by Mpule Kwelagobe, former Miss Universe – now, a respected social advocate and think-tank leader. We hope you’ll enjoy your time with friends and family during the holidays that are now upon us. In between those moments, be sure to join us as we keep the conversation going!

We welcome relevant, respectful comments. Please read our Community Guidelines.
  • Kristi Langdon

    I have to say that I’m extremely excited to read all of your social return and measurement posts this month! I’m particularly interested in the enterprise view. I think there is a lot to explore here.

    Over the course of the last year, I have had countless discussions with social sector leaders about measuring social impact. I have come upon a lot of naysayers and people who say it’s an impossible task. In response, I say that like so many things, the value is in the process. It’s about getting the right people around the table to understand where we are today vs. where we want to be in the future and talking about how we’re going to get there.

    I also believe that if we want to truly connect with a younger donor audience, we are going to have to better demonstrate impact.

    • Eric J. Henderson

      Many thanks, Kristi: Solid point made re valuing Process and about connecting to younger audiences. The language of the day, whether among younger or older donors, is one that assumes impact – i.e. what is achieved through iteration of viable business models run by the right people around the table. We look forward to your comments on future posts!

Top