Most of us today remain frogs in an increasingly hot kettle of water, observing perhaps that it’s growing rather uncomfortable, but not yet realizing quite how or where to jump. It is true that many people have come to the realization that upward mobility isn’t as easy or likely as it was in the past; many know the even greater difficulty faced by marginalized groups since they’ve been laid barer than ever by the pandemic, the Black Lives Matter movement, and growing political polarization online and in real life; and many more people than ever recognize that it is at least unwise if not unethical for businesses and investors to pretend these realities don’t exist. Yet many still wait to take meaningful action to address these problems in their daily work.
We want to reach out to them and say: “delivering more than profit is no longer optional! A revolutionary overhaul of capitalism is urgently necessary, and the inevitable alternative to this, sooner than later, is violence. And if you can’t take our word for it, will you listen to billionaire and world’s-largest-hedge-fund-founder Ray Daleo? He’s on many business channels telling the world that, even pre-COVID, ‘the state of capitalism in America is a national emergency.’”
…For those of you thinking, I DO listen to you, I’m reading your newsletter! Will you help get Ray Daleo to listen to us? Because it seems that he is not yet aware that impact management is a road-tested and increasingly mature practice you can do to run your philanthropic organization, company and investment fund in a way that ensures that “productivity gains are more evenly distributed.” But if he were, we can see him becoming an impact management champion!
Workforce development efforts illustrate this. WD efforts intend to help current and potential employees, including those facing disadvantages in the workplace– such as low income individuals, people of color, previously incarcerated people, new parents and others– gain the tools and opportunities they need to lead successful careers into the future. The business world increasingly recognizes the value of workforce development organizations as they also come to the realization that upward mobility is not as feasible today as it used to be. Along with this increased awareness is the ever-present and growing threat of automation. As technology becomes more advanced over the next decade, it will get rid of tens of millions of jobs at the heart of the middle class. Having programs to teach new, relevant skills is crucial to an inclusive economy that will make sure the people don’t get left behind as technology advances. Companies like the ones in Techstars’ Workforce Development Accelerator are seizing this challenge by the horns.
Along with the increased importance of these organizations’ work comes the increased importance of measuring, managing and credibly communicating the impact they’re having. Typically workforce development organizations aren’t looking at just cutting costs or maximizing profits for employers, they must also ensure they’re creating value for the people they intend to help– in other words, ensuring that productivity gains are more equitably distributed. Their purpose centers on a social justice issue– meaning they intend to create benefits for more than just their investors– and they want to know if what they are doing is actually helping make that issue better. The organization’s leadership may have a strong belief that they’re making a difference, but having quantified proof not only makes that narrative much stronger, it enables them to identify and eliminate problems and improve their performance over time. It allows them to communicate exactly how and who they’re helping, and continually get better at doing it.
Recently we’ve been working with both investors and a highly-competitive startups to put impact management frameworks in place using these steps (or, if you like, hops):
- Understand whose lives they are affecting (these are their “stakeholders”)
- Define their theory of change
- Map the resources they use, the outputs they generate, and how those outputs result in specific impacts
- Prioritize the most important impacts
- Determine ways to gauge, now and later, that those impacts are occurring
- Collect and use this information to inform and communicate everything they do
This is impact management: the ability to understand and improve your social return on investment. There are well-established definitions, principles (like these and these) and standards for how to approach and communicate about it, and their adoption by business en masse is an absolutely essential part of the course correction. Top workforce development organizations, like the ones at Techstars, know this because ultimately they’re serious about helping more people get into better jobs. Impact management systems that enable them to account for whether this value is happening pave the way to success, and can show us all what direction to leap.