New Metrics for Today's Social Entrepreneurs

I quite agree with the principles articulated above. One issue I want to address is the mission issue. It's encapsulated with the following quote from above.

"When asked what those metrics should be, he replied that they should be tailored to the mission of the firm. This spotlights the dilemma of social entrepreneurial metrics."

Actually, this is not just a dilemma for social entrepreneurs. Every industry has its own measures, tailored to its mission (you could say, its business). If I'm in the landlord business, I have a bunch of metrics tailored to being a landlord: vacancy rates are one example that make sense in that business and few others. If I am a subscription based business, people will want to know my renewal rates. So, I want us to get away from this idea that businesses have this one measure (bottom line) and social entrepreneurs are somehow odd because we think it's important to have mission-related metrics. The performance of bottom lines is also radically different if I'm a software company, a development-stage biotech company (which are expected to go a decade losing money), a regulated utility and so on.

I think that many nonprofits operate in areas, verticals as we used to call them in the tech business, where it is possible to compare performance (and manage an operation) by tracking the indicators appropriate to that vertical. If your enterprise is subsidized child-care, I bet there are a handful of metrics that the best-respected operations use to keep track of how they are performing. The same goes for most social enterprise fields.

This leads to the application of bench marks. If it cost my operation $50 to deliver a quality vaccine inoculation to a child, and it costs your operation $20 to do the same service at the same quality and timeliness (and any other parameters of note), that says something about our relative performance.

You have to be careful that the benchmarks are measuring something that's tied to mission fulfillment, though. If my overhead costs costs are 1% and yours are 10%, that doesn't necessarily mean I'm 10 times better than you in efficiency. It might mean I'm under-investing in my employees and we have big management challenges. Or, that we do very different things...

I think the thrust of my advice here is twofold:

• do use mettrics that are indicative of your mission
• use standardized metrics for your vertical whenever possible, rather than creating your own.

This gives you the ability to track your progress in meeting your objectives, and to compare yourself against others doing the same thing.

Your point about efficiency is also well-taken, but may be easier said than done. As you said, large cost per /overhead differences may idndicate that two organizations that appear to be in the same business are really doing different things. Or it may mean that one of them has to absorb costs the other does not have to absorb. I.e., urban schools may have to add a transportation and security component into their costs that SUV-heavy safe uburban schools do not. This would increases the urban school cost per student for the same performance output measures.

I wouldn't disagree with any of the above, Patrick. I would only add that, over here at the School for Social Entrepreneurs, we take our students through a storyboard / impact map process even before we get into ROI / SROI, and before we hit Jargonville in the form of output/outcome/impact/displacement/attribution etc...

It's proves pretty useful for all of them, regardless of what stage their organisation is at. Indeed, it can be particularly useful for those at a very early stage, enabling them to understand their theory of change better, and plan accordingly.

As a side benefit, as a support organisation, the more of our Fellows engaged in evaluating / measuring theor own success, the more data we have for our own overall measurements of impact.

The UK has been ahead of the US in SE for some time and it appears that at SSE you have an excellent approach to bringing potential SE's up to speed. Is there a PowerPoint or notes n your introduction available outside of the classroom. Also, will you publishing those statistics when you have a credible sample?

Thanks Patrick - my delayed response is actually because we were launching the evaluation over here in the UK. You can download an exec summary and the full report here on the website. Although this is an evaluation of SSE's impact (via students / Fellows).

I'll put the powerpoint on slideshare and add a link when I get a moment, but it's based on the New Economics Foundation's work (see Prove and Improve).

Cheers

This is an interesting discussion. However, it seems that most or all of the metrics analysis is directed at direct service organizations.

It seems that there is a tendency to apply similar metrics expectations where they may be less applicable (or need to be structured quite differently) such as advocacy organizations. Impacting for example, global warming, through legal action, stakeholder engagement or administrative lobbying seems less a fit for this approach.

What I find most intriguing about social ventures is that the most promising ones—those destined to change the world-- keep reinventing themselves. Success breeds opportunity breeds innovative responses breed new success breeds new opportunity, etc., etc. Outcome metrics are fine for capturing how well the venture has performed in that static place that it now has outgrown and moved beyond.

One could, of course, suggest that these dynamic ventures should simply keep adjusting their outcomes measures to keep up with their ever-expanding playing field, and try to pick outcomes that are more long-term and mission-focused; but even then, these measures would suffer from their relative static nature in relationship to the dynamism at play.

A solution for such ventures, I would suggest, lies in creating a measurement system that, first and foremost, is particularly strong for growth guidance, and secondarily provides the accountability assurances that stakeholders rightly demand and expect. Such a system would balance diagnostic and prognostic measures, gauging performance while pinpointing areas of unmet potential where high-yield social opportunities are waiting to be activated.

By prognostic measures, I am referring to tools such as the DICE Scorecard that was devised by staff from the Boston Consulting Group and has uncanny predictive accuracy when applied to change management processes; and grading systems based on the traits that Jim Collins has identified with sustainable success.

In our own work at SEED, we make use of a seven-tool battery to guide and report the growth of social ventures. Included in this battery are the two tools referenced just above and five others that we have fabricated based on theories and best practices associated with systemic transformation. The nice thing about this battery is that it can be completed in two hours and provides all the numbers, grades, scores, and visuals that any dynamic venture will need to guide the next steps of its journey. We suggest repeating the diagnostic every six months to pinpoint successes and to identify the next most promising unmet opportunities.

We have converted the results of using this battery into a dynamic scorecard. You can view a version at http://www.seed-ny.org/PerformanceScoreCard.htm. If you click on the Score Card, its dynamic features are activated and you can see how the various scores and grades are derived.

There are many complications regarding how to build social and other mostly-intangible assets. I have found one of the best ways to approach this is looking at risk management in these domains.

If anyone wants additional information, I can send a .pdf of a piece I did for the Institute for the Future's Ten-Year Forecast. It includes an interview with Jed Emerson, who some of you know.