How do you define and measure the social value that your venture creates?

One thing I like is recognizing that different people may value different aspects of social impact based on their unique needs, preferences, and circumstances is essential. This perspective acknowledges the diverse range of values within the communities and individuals one aims to serve. This customised approach is also a very interesting and productive was to approach, it enables to delivery of the most context-dependent nature of social value and fosters a more holistic and inclusive approach to social entrepreneurship, ensuring that your efforts create meaningful and relevant positive change in the world.

1. Clarity of Purpose: Clearly define the social mission and purpose of your venture. Articulate the positive change or impact you aim to achieve in society or the environment. 2. Stakeholder Identification: Identify and prioritize key stakeholders who are affected by or have an impact on your venture. This includes beneficiaries, communities, employees, and other relevant groups. 3. Outcomes Definition: Specify the desired social, environmental, and economic outcomes that align with your mission. Break down these outcomes into short-term, intermediate, and long-term goals.

We define social value in our venture as the positive impact we make on communities, individuals, and the environment. This includes fostering connections, empowering others, and promoting sustainability. To measure our impact, we use both qualitative and quantitative metrics. We track outcomes like improved quality of life, increased access to resources, and environmental preservation. We also gather feedback and engagement metrics to understand how our initiatives are perceived by stakeholders. Our ultimate goal is continuous improvement, ensuring that our efforts contribute meaningfully to society.

A key reason why measuring social value is important is because it helps you to analyse your effectiveness. Being able to measure what you’ve done can help you to have an idea as to where you are at and what else needs improvement.

Within the organizational setup itself, having a clear understanding of the social value created by the enterprise can help the stakeholders craft the roadmap ahead more efficiently, prioritize relevant business processes, and optimally allocate resources to amplify the social value.

Measuring social value is crucial for several reasons, as it helps organizations, initiatives, and ventures understand and communicate their impact on society and the environment. Measurement provides a means to be accountable for the resources invested and the outcomes achieved. By quantifying and qualifying social impact, organizations enhance their credibility.

First, most metrics assume that value is objective, and therefore discoverable through analysis. Yet as most modern economists now agree, value is not an objective fact. Instead, value emerges from the interaction of supply and demand, and ultimately reflects what people or organizations are willing to pay. Because so few of the tools reflect this, they are inevitably misaligned with an organization’s strategic and operational priorities.

The second reason that current measures of social value fail to influence decision makers is that they conflate three very different roles: accounting to external stakeholders, managing internal operations, and assessing societal impact. In the business sector, decision makers use different tools for each of these tasks.

Start by understanding the purpose and mission of your organization or initiative. Why does it exist, and what positive contributions does it aim to make to society or the environment?

Measuring social value is a nuanced endeavor, much like painting a detailed landscape rather than a single brush stroke. Relying on just one approach can give a skewed picture. Combining methods, like SROI for financial impact and outcome measurement for qualitative changes, offers a more comprehensive view. It's akin to using both a telescope and a microscope; one provides the broader context, while the other shows the intricate details. This multi-faceted approach ensures a deeper understanding of the impact, making the measurement of social value not just a number, but a story of real change.

In this context, the term "impact metrics" is often used as well. These metrics serve as tangible indicators that capture the intangible benefits and changes brought about by an initiative or organization. By employing impact metrics, organizations can provide evidence of their social contributions, making it easier for stakeholders to understand and appreciate the depth and breadth of their positive influence on society.

I’ve dealt with social value metrics in a variety of roles: as director of policy and strategy under AJF chaired by Cherie, Lady Blair, CBE; as director of a global foundation, that has created dozens of ventures, some for-profit, some social enterprises, and some public; and as an advisor to many other governments. In these positions, I’ve seen not only why social value metrics are ignored, but also how to make them more useful. One recent project that proved informative is where my team and I had to develop a practical tool for assessing service innovations and guiding investment decisions.

The State organisation had a budget of around $150 billion, a workforce of some 1.2 million employees, and contracts with more than 30,000 social enterprises. It needed a set of tools that would be both robust and flexible, and that could be used for decision making as well as evaluation. We started by scanning existing social value metrics and found hundreds of competing tools, of which foundations and NGOs generally use one set, governments another, and academics yet another. In addition to discovering this segmentation, our survey suggested two more reasons why so few metrics guide real decisions.