ABC of Enterprise Impact | Comparing Impact PerformanceBy aligning impact measurement to the five dimensions of impact, enterprises have an opportunity to compare their impact performance relative to their peers.
How to assess the depth of an outcome
Depth is the difference - absolute or relative - between the outcome in current periode and the baseline.
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Comparing impact performance
Enterprises can benchmark their performance across the five dimensions against other enterprises – for instance, of all enterprises working to reduce poverty (What) in underserved communities in Nepal (Who), which enterprises are making the deepest change and/or reaching the largest number of individuals?
Using the five dimensions of impact helps avoid “bad benchmarking”
Imagine two interventions, both aiming to improve educational outcomes for children by increasing the student transition rate from one level of school to the next. Both provide counselling to 11-16 year-olds and both operate in the same city. Enterprise A offers a proven intervention to re-motivate teenagers who are skipping school, while Enterprise B is testing a new approach to helping teenagers with learning disabilities. A’s transition rate shoots up from 50% to 85% and generates attractive financial returns, while B’s moves from 50% to 65% and the financial return doesn’t justify the risk taken on purely financial grounds. If a manager were to benchmark A’s performance versus B’s (i.e. the student transition rate and the financial risk-adjusted return), she would not be able to infer that A is more efficient than B – and resources should therefore be diverted away from B. Rather, she would learn that B’s goal was to take a higher level of risk – both financial and impact risk – to impact a harder-to-reach demographic.
Bad benchmarking risks diminishing an enterprise’s impact: it could lead to avoiding investment in Enterprise B, pulling resources away from the toughest problems and away from reaching particularly vulnerable people.
By contrast, benchmarking across the five dimensions of impact enables a meaningful comparison of the two interventions: understanding what important outcomes are being experienced, who is most underserved, the contribution compared to what the market would do anyway, and the level of risk taken to reach the specified population, rather than focusing on one how much indicator like scale or depth, out of context.