The Impactor fall kicked off last week with a workshop held at the Finnish Innovation Fund Sitra. Impact has clearly grown into a topic with a broad audience: the group of 14 participants represented 10 different organizations from the private sector, NGOs and municipalities. Despite their different organisations, common challenges emerged in modelling, measuring and communicating about generated impact.
Orientation into the global environment
To start out, each participant framed the challenge they were solving in the context of the UN Sustainable Development Goals (SDGs or Agenda2030 for short), to be reminded of the fact that we all operate in a global environment and could also potentially be coming up with solutions to global challenges. Choosing just one out of the 17 SDGs proved challenging for most participants, and illustrated the interconnectedness of the issues at stake: for example, an organisation’s mission may be to provide quality education (SDG #4) to a certain target population to help them achieve decent work and economic growth (SDG #8) and reduced inequality (SDG #10) in an ecologically sustainable manner (SDG #13).
Apprenticing with the problem
Preceding our already “regular” tools, the impact model and impact business model, we delved into “apprenticing with the problem” with the Impact Gaps Canvas. Especially if one has not experienced the target group’s problem first hand, it is crucial to gather all possible knowledge about the problem before setting out to provide a solution to it. This means mapping out the problem and its causes, current solutions as well as future opportunities and gaps between the two. The gaps in between the problem and current solutions are where it is possible to find an impactful market niche that has been previously unaddressed. First and foremost, the Impact Gaps Canvas illustrates if there are any gaps in your knowledge about the problem you are solving. Thanks to all participants for their comments about how to clarify and improve our version of the model in the future!
So how do social or impact enterprises differ from regular businesses?
Naturally all business have an impact, whether net positive or net negative, and whether they define themselves as impact enterprises or not. The key difference to regular businesses is the motivation driving the impact enterprise and entrepreneurs: growth is pursued first and foremost to enable scaling impact, not for making money. Nevertheless, growth and profits are pursued, distinguishing impact enterprises from philanthropy. Money is needed to scale impact and therefore operations, and the most sustainable funding source is of course increasing your own profits.
This means that a proven and scalable business model is as key for impact enterprises as it is for “regular” market-driven businesses. On top of this, leading to increased complexity, impact enterprises need to have a proven impact model, which illustrates and measures how they realise the positive social or environmental impact they set out to generate.
Impact business models usually have a few key characteristics to them that differentiate them from “regular” business models:
Whereas a regular business model has customer segments, an impact business model may additionally have beneficiary segments, which are not necessarily one and the same. The beneficiary or user of the product or service is the one who benefits, and the customer the one who pays. Therefore the customer value proposition is accompanied by a social value proposition: the value that the business generates for its beneficiaries or society at large.
The one-day workshop clearly only provided time to scratch the surface and set the scene for actual impact measurement and why it is done. Suggested follow-up topics like creating impact metrics, finding impact investors and matchmaking between “hard-core businesses”, impact businesses and NGOs to create shared value happen to also be ones that will be taken up in the upcoming Sitra impact accelerator fall batch. More on that in the next weeks!
Enjoy the beautiful fall sunshine!
P.S. Want to delve deeper? Check out