So, is it really necessary to measure impact?

They say when it rains, it pours. And here in Rocinha, it’s no exception. After 5 days without running water (a new record since we have been here) I came home to find half of the apartment flooded. I guess the water came back, which was great. But unfortunately, a tap had been left open…

Life at work has pretty much followed the same pattern. A main part of my research for Pipa has been to reach out to experts in the field in Brazil and beyond to find out how they have designed their own impact thesis and strategy, and to see how they use metrics to drive their mission forward. After weeks of playing phone tag and sending out one-way emails that never received a response, all of the sudden my luck seems to have changed. My inbox is full with messages from investors, fellow accelerator programs, and academics, and I now have three interviews a day scheduled for the next week straight.

From the interviews I have already managed to do in the previous weeks, I have heard a range of different perspectives: investors who put impact vs. finance first, who focus on measuring outputs vs. outcomes, who believe in customized vs. standardized metrics, and some who do not believe in impact metrics at all. Everyone has had a slightly different combination of perspectives on these trade-offs, and I do not think I have heard the same story twice. The only thing that seems to be strikingly clear from each interview is that there really is no one way of approaching how to create and manage impact.

If anything, talking with the experts has only made me less sure that there is a good way to measure impact, and even less sure that there is even a reason why. Impact is really such a broad concept, and trying to force it all together onto one comparable scale is really not feasible or helpful.

Just like a total dollar value does not actually indicate the real health of a company (i.e. what about its governance? presence of corruption? value of human capital? company culture, etc.), there is probably not any metric or even set of metrics for that matter that can paint a perfect picture of impact. And after all, if you are truly making an impact, does it really matter how much?

Don’t get me wrong. I am entirely 100% impact-first myself. For me, the impact is what matters the most; but it does not matter how much because there is no limited value of impact that you can make. The world has an unlimited number of problems, and every problem is a new opportunity to make impact. The only issue with holding this approach to investing is that an investor does have limited resources, and he or she has to make choices on how to spend his o her money and time. In this case, I think metrics can be very valuable. Not as a way to indicate real total impact, but as a way to find some method of making choices and setting priorities on what to invest in and how. These metrics do not have to be perfect. A dollar value isn’t either. But they just need to give some indicator of direction to move ahead– not necessarily down the one right path, but down a path that will make a difference and make an impact regardless.



This post was originally written on Wednesday, August 27, 2013.