Many organisations will aim to improve people's lives. This leads to an important question of how we can understand and better analyse impact being created (eg if we want to compare two strategic choices or two investment options). Impact Frontiers provides a useful framework to break down impact on people into five dimensions. It's important to note that claims for impact against these dimensions need to be evidence-based (or, if based on aspirations, this should be made clear). Evidence might include third-party sources (academia, government etc) or it might include primary data collection from the venture or VC. Read more about impact measurement in the 'Managing Impact Investments' section.
Here is a template based on IMP, which may help you to assess your impact on people.
What changes occur to people's lives?
It’s important to establish which outcomes are changing in people’s lives (including negative and unintended outcomes) and that these are considered material to the user.
Not all outcomes are equal. At a high level this intuitively feels right, but getting into the details demonstrates this is really hard. For example, what is more impactful, treating anxiety or helping someone to buy their first home faster? Despite this complexity it's worth thinking about what outcomes are being targeted and which are more impactful. Sometimes the choice can be obvious. Taking cost as a proxy for impact, for every $1 spent on vaccines, ~$60 of healthcare costs are saved down the line (and that is pre-pandemic).[NB $ not £ used]
Some comprehensive frameworks to think about for social outcomes are the UN's SDGs and Iris+.
Who is experiencing the changes?
A given change in outcomes, say a reduction in weight of 5kg, has different impact depending on who experiences it. Sticking with our weight loss example, for someone who is clinically obese, this is a good thing. For someone who is healthy, it's neither here nor there. For someone experiencing a weight-loss-related eating disorder (eg anorexia) this is negative. Therefore, it's important to think of a product's user groups and their underlying needs, to establish how much impact a product is having.
There are broadly three buckets to consider, when thinking about who experiences the changes:
Their degree of need. For any given issue, there will be people who experience that problem to a higher or lesser degree. For example, the cost-of-living crisis will be experienced more painfully by those in the bottom decile of incomes, relative to those in the fifth decile. Similarly, those suffering from schizophrenia might have higher needs than those suffering from acute stress.
How well served they are by incumbents. Regardless of level of need, if an end-user or group is well served by the existing market, the potential for impact here is less. Underserved users might benefit from more accessible or affordable products, more effective products, or entirely new products where no-one was attempting to solve the problem previously.
How vulnerable they are in a broader sense. If users experience additional vulnerabilities separate from the specific issue in question, this can also increase the impact potential of serving them. These are somewhat case-specific but, for example, when serving people on low incomes, additional vulnerabilities can include being a single parent, having a disability, having severe health issues.
How much change occurs?
This is a function of three levers: how many people (500 vs 5 million); how deep the change is (5% improvement vs 50%); how long the change is sustained (5 days vs 5 months). More impactful products will reach a greater number of people, move the needle further and create lasting change.
How additional is the change?
For something to be truly impactful, it needs to grow the impact pie, rather than displace previously occurring impact. For example, imagine an existing product to improve mental health. Then, a new product offering exactly the same benefits becomes available for $5 a month cheaper. The additionality of the new proposition is to save users $5 a month, rather than creating positive outcomes on mental health (those would have been achieved anyway through the existing product). [again $ used]
How risky is the change?
As with any desired future outcome, risks modify the likelihood that those outcomes are achieved. IMP lists nine impact risks including execution risk (eg inability to build product), alignment risk (eg mission drift) and stakeholder risk (eg users using the product differently from how it was envisaged).
Impact can therefore be thought of as a kind of multiplication of these factors (modified by risk):
Impact = what additional changes occur X who they additionally occur to X how much change there is [how manyadditional people X how deep theadditional change is and how long it is additionally maintained]
All else being equal, any improvement in any of these drivers will increase the amount of impact created. The difficulty is that trade-offs almost certainly exist. For example, it’s easy to imagine high-scale, low-depth products, or low-scale, high-depth products, but difficult to imagine high-scale, high-depth products. These trade-offs trigger some of the challenging questions that the impact sector is wrestling with: where to prioritise and why.
Trying to break these trade-off frontiers is an exciting area for innovation in impact. For example, research has shown that technology-enabled interventions can be effective for treating anxiety and depression. There is even some evidence (see section on anxiety) that the outcome improvements are on par with traditional outpatient care. This would mean that, by using technology, far more patients would be able to access the same degree of positive change. In other words, the what stays the same but the how much is dramatically increased. Of course, things are never that simple, as one can imagine that the who might suffer in this instance (assuming that smartphone-enabled technology is less likely to reach those in greatest financial/health need).
