Five dimensions of impact | How muchHow significant are the outcomes delivered by enterprises, across scale, depth and duration? We explore the data categories under the ‘How Much’ dimension to answer this question.
The ‘How Much’ dimension covers the extent of the impact — across scale, depth, and duration.
Knowing the number of people reached (i.e., scale) is only one part of the equation. To fully understand the extent of the impact experienced by stakeholders, enterprises and investors need to consider all three data categories under the ‘How Much’ impact dimension:
- Scale: the number of people experiencing the outcome
- Depth: the degree of change in the outcome level experienced by the stakeholder
- Duration: the time period for which the stakeholder experiences the outcome
Collecting data across the ‘How Much’ categories provides complementary insights. Consider a solar energy company with operations in three East African countries. Reporting that 500,000 solar home systems have been distributed, reaching 450,000 households, gives some insight into the magnitude of the outcome; however, it does not reveal whether the solar home systems improved customers’ productivity, or for how long those improvements lasted. Conversely, knowing that customers’ productivity increased by 20% provides meaningful information about the degree of change that target stakeholders experience. But without scale and duration data to back the depth results, the enterprise is missing two important points for understanding and improving its impact performance.
In an ideal scenario, enterprises would generate important positive outcomes that affect many people, bring deep change, and last for a long time. But none of these is necessarily more important than the other. Some enterprises and investors will prioritize a deep, enduring outcome for relatively fewer people, over a more marginal outcome for many – or vice versa. Others will see scale, depth, and duration as equally important.
In the sections that follow, we explore the three ‘How Much’ categories, focusing on how each one plays a role in understanding the significance of an outcome and improving impact performance.
What is scale?
The scale category captures the number of people — whether that is employees, customers or distributors — who experience the outcome. Scale data provides insights about the significance of an outcome delivered by an enterprise. All else equal, an enterprise that affects 100,000 lives would be producing a more ‘significant’ outcome than one that reaches 50,000 lives. (When the stakeholder is the planet as a whole, this category is not applicable.)
Beyond serving as one of the elements to understand the extent of the impact, scale can be used for two strategic purposes:
- (Re)setting scale targets: Comparing scale performance data against specific targets and the addressable population can yield useful information for (re)setting scale targets.
- Understanding the value proposition: Comparing scale performance year-on-year can provide insights into whether customers (or other stakeholders) are satisfied with the enterprise’s products (or policies). This is the same as calculating customer growth and churn rate.
What is the depth?
The depth of an outcome captures the degree of social or environmental change experienced by the stakeholder. As opposed to scale, available as raw data, depth is derived from comparing the level of outcome that stakeholders are currently experiencing against the baseline. Depth can be a 10-point improvement in test scores, a 30% increase in salary, or a 5,000-tonne reduction of CO2 emissions. The diagram below illustrates the concept behind the depth of an outcome.
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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Along with scale and duration, the depth category is an essential data point for understanding the significance of an outcome, providing an insight into the extent to which outcomes improved or deteriorated.
Enterprises and investors can also leverage the depth category in combination with other data categories such as:
Since depth is the difference between the outcome in the current period and the baseline, it can be calculated as relative change or absolute change. No one type analysis is better the other. Both should be assessed as they provide complementary data points (see diagram below for a simple illustrative example). For guidance on selecting indicators for depth, visit the outcome and baseline indicator.
What is the duration of an outcome?
Duration refers to the time period for which the stakeholder experiences the outcome.
The duration of an outcome is intuitively important: just as stakeholders want positive outcomes to be long-lasting, they want negative outcomes to be short-lived. Society’s collective investment in education illustrates the point. Parents invest significant resources in educating their children under the assumption that the payoff will be positive and last for many years to come — a belief backed by World Bank research which shows that every additional year of schooling returns a 9% increase in hourly wages.
Given the value of duration from the perspective of the stakeholder — and that impact may be realized over time — this data category is necessary to understand the significance of an outcome. It pushes enterprises and investors to think about sustainability, reflecting on how their activities can affect stakeholders in the short-, medium-, and long-term.
Three facts shape the calculation of the duration of an outcome. First, outcomes have different durations. Some may last only a few months, whereas others may persist for years (as with the education example above). Second, outcomes may materialize immediately, or in the medium- and long-term. Third, many outcomes go beyond the end of the intervention. This means that the affected stakeholder may still experience the outcome even after the enterprise stops its initiative (or policy). The diagram below illustrates the concept behind the duration of an outcome.
Outcomes have different durations
Illustrative example of outcomes generated by a cash transfer program
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Deriving a duration estimate can be done through a few methods, with varying degrees of rigor. At one end of the spectrum, enterprises can survey the affected stakeholder on a recurring basis, from the start until the end of the intervention (or for even longer periods). While this method usually yields accurate duration estimates, it can be cost-prohibitive for many organizations.
On the other end of the spectrum, enterprises can use existing research (e.g., impact evaluations) or market research (e.g., government or think tank reports) to estimate how long a particular outcome may last. When using either of these methods, enterprises should assess the validity of the estimate by considering how well the research study reflects their own intervention (e.g., was the study conducted in the same country or in a completely different setting? Did the evaluated intervention have a similar set of inputs or target a similar population?).