Measuring (and Hiring) for Social Impact

A lot of the students we work with and people in our audience are relatively familiar with the idea of how do you measure financial performance? But for those who are interested in thinking about going into social enterprise or creating not an enterprise that wants to do good and measure against that in this quantitative world, what do impact investors look for and how should social enterprises be measuring in ways that aren't financial to balance that tension a little bit?

It's a really great question, and it's not an easily answerable question because finances are easy to measure. They're singular. We have clear measurements. But when you talk about impact, it's so dependent on what are you trying to impact and who. And a really good example of that is we've worked with a number of organizations in education, and when we've asked about impact measurements, they tend to come and talk about test scores or impacting, and that seems obvious. That's what we're trying to do. But here we are on the administrative side where we work with superintendents and the impact we're trying to have. First of all, measuring test score is a very, very lagging indicator of some of those things. And second of all, we have all these proxies we're trying to improve around equity and around. And I think we can see that even some of the past measurements around test scores hid some of the inequities. So if your goal is to impact inequity, you can show a school rising test scores, but actually having worse, you know, less equity. And so I, I think that the key is not that there's universal measures, but more that you as the founder, make some early decisions and adjust them over time about what is the impact you're trying to have and, and how are you driving towards that? How are you speaking loudly about that to your investors, to your company and allowing them to hold you accountable. Now, the most likely people to hold you accountable to that are your employees. And the way that you make sure they do that is by hiring people that really care about the things that you're trying to impact and telling them that that's your goal and you will, you will tend to hear from them if they, if you start to drift away from that. I find that, like a healthy tension that is difficult as a leader, but a super healthy tension. So. Cause a lot of. I think as a CEO, that is the hardest thing to balance is you. You have these schizophrenic like, I've got to drive the business, I need to drive revenue, I need to raise money, I need to do this. I'm also trying to have impact and really understand my customer. And in the case of K12, I think where this is hyper exaggerated is if you were to ask what is the fastest way to make the most money in K12? You could find things. You could definitely find some various things. But if you were to ask what are the most pressing problems they're facing? Those are like a very narrow Venn diagram.

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And if you just chose the things in the intersection, then you're leaving out so many things that need addressing, that clearly any kind of social enterprise, like, if we are trusting social enterprise to help fix education, it cannot do that unless it has a loose definition, unless it has a broad definition of financial success, because there's just too many problems in education that are not going to lead to unicorns.