How do you know if you are making business or just placing Impact Investing at the forefront? You would like to believe that you are framing measurable environmental, social and governmental impact at the core of all the investments. But, let's begin by defining and differentiating the two fundamental concepts - Impact measurement and Impact management. Yes, you may debate that Impact management is a non-existent concept of impact measurement in an ideal utopian world. But times have changed. Let's pan to Capitalism Circa 2017.
“A Business That Makes Nothing But Money is a Poor Business”
- Henry Ford.
This is the concept of Impact Measurement - Measuring the quantitative aspects of inputs of outputs. You provide clean, packaged drinking water to people to keep diseases away. But, the bottles have an environmental impact. As the specialists say, you pick the most economically viable option to incarcerate it. However, this can have an overall negative Impact due to the environmental consequences.
In short, a business with a positive intent may have an unfavorable Impact. To negate it, you might change ways in which you do business.This brings us to the question of how well you are able to manage it.
In simple terms, Impact Management is where we start aggregating all the data points across all possible outcomes of an organization's processes and policies and making sense of it. Understanding the data to gain insights and creating opportunities in achieving business value to all the stakeholders involved. Patagonia is a classic example of successful Impact Management in the last decade. They have successfully managed to collect every relevant data point across the supply and operations chain, gained insights from aggregating such data and used it to create a compelling story to the buyer. Thus, increasing sales and doing good business. Everyone involved in this ecosystem, right from the investor to the customer, gains. It is no rocket science. It is simple Impact Management.
I truly believe in the importance of Impact Management and the affect it will have in driving more money towards businesses that create a sustainable impact around us. The age of Impact Management is here and we are able to channelize our organizational Impact towards creating sustainable business value across all stakeholders.
Is your organization ready to Manage Impact?