Conches

Manage What Matters

Originally posted on Social Capital Markets 2011 Conference Blog, Aug 29, 2011

Maximize Impact

Markets : Capitalism :: Physics : Ideology

Markets have natural laws, like physics.  Capitalism is an ideology.  Ideologies can be changed.

All social enterprises want to know if they are producing positive social outcomes.  They closely monitor their financial performance to maintain sustainability and closely monitor their social performance to see if they are achieving their mission of doing good.  This blog focuses on the questions “Am I any good?” and “What is the good I am producing?”

There is no quantifiable unit of good

I have always found it strange that social performance is predominantly perceived as a measurement problem.  The reality is that great social enterprises don’t focus on measuring what matters; their priority ismanaging what matters.  Measurement is an artifact of good management.  To a large extent the obsession with measurement is a problem unique to socially-funded entities (by that I mean organizations with capital provided at a rate of return between -100% and about 6%.)  Because the money is not earning as much as it might otherwise, it needs additional justification to be invested. An investor/funder wants to ensure that their money is well spent, that it earns a valuable return that includes both money and social impact. The social impact or non-monetary component of the return on the investment comes in the form of social metrics or measurement.

Return Value

Originally posted at Social Capital Markets conference Blog, Aug 17th, 2011

This is the first of three blog posts that will focus on the intersection of meaning and money. Today’s post will examine return value, while future posts will look at how to maximize impact, and how to disrupt and distort.

Return Value

Recently, a lot of great thinking has happened around the idea that business – and by extension the economy – should return value, in addition to generating profit.  For example, Mark Kramer and Michael Porter wrote a very interesting piece on creating shared value that was also discussed in this New York Times article, “First make money. Also, do good.”  Nestle Corporation is one of a growing number of companies that see shared value as an evolved form of corporate social responsibility.  Customer capitalism (which focuses on providing value to the customer before the shareholder) is described in the Harvard Business Review as the third stage in the evolution of capitalism.  (Professional management and shareholder capitalism are the first two.)  And Umair Haque’s book, the New Capitalist Manifesto, describes “thick or authentic value” as the subtraction of total or real cost from the price a product can demand.

This is a good thing; however, it is still within a largely amoral paradigm, where the mythology centers on the primacy of profit while – potentially, maybe, hopefully – “doing good”.  This can also be seen in how we (social enterprises and investors) use the words “sustainable” and “profitable” interchangeably, depending on who we are talking to. “Sustainable” implies a primary focus on doing good, while “profitable” implies a focus on profit.

A Brave New World of Social Impact Data

Originally posted on Change.org July 14, 2009

It is my intention to provide a practical explication of systems for social impact data collection and reporting. I will try not to make it as dry as it sounds.
The Direction in Which we Must Err

I believe that despite the enormous odds which exist, unflinching, unswerving, fierce intellectual determination, as citizens, to define the real truth of our lives and our societies is a crucial obligation which devolves upon us all. It is in fact mandatory.

If such a determination is not embodied in our political vision we have no hope of restoring what is so nearly lost to us, the dignity of man.

* Harold Pinter Dec 7th, 2005 Nobel Prize for Literature acceptance speech

I love the above quotation from Harold Pinter because, for me, it clears the fog. It makes clear the "why". Why do we do this work? Why does it matter? Why do we care? I believe that it is important for us to make all of our mistakes in the direction of greater social impact, that we share too openly, that we place our humanity in front of our economy, that we transact specifically as our contribution to evolution.

Declaring the change you want to see

Measuring social impact is not like measuring height or counting dollars. I tried to address this in depth in my last Change.org post: Reimagining "Value" For A Post-Crisis Economy. Because there is no standard yardstick, one must be created for every ecosystem. There are a number of ways to do this. Creating a theory of change is one way. Strong alignment around a vision and mission can be effective as well. Without going in to detail, a theory of change creates a vehicle that moves an organization's daily actions towards meaningful outcomes.

Reimagining "Value" For A Post-Crisis Economy

Originally on change.org March 14, 2009

(Social) Value: Love
"Money can't buy me love" is both cheesy and true

The reason why money can't buy love is because, ultimately, love is the value that money represents. Money is a proxy for value and value is that which holds us together and makes us relevant, love. This feels cheesy or even embarrassing because we have broken our social contract with value. Specifically, we have inappropriately imbued money with a value of its own, disassociating money from its role as an intermediary, as a temporary representation of value in a chain of transactions. Money has become the object as opposed to the expedient. It is my thesis that value creation must be the frame within which wealth creation fits; that our humanity can no longer be subjugated to our economy due to a false primacy of our intermediary for value, cash. I believe that our economy should serve our humanity.

Proxies for Value
In order to have an explicit currency we need to believe

A dollar is not a standard in the same way a foot or a meter is. (Or at least it hasn't been since we left the gold standard.) While there is broad agreement that one dollar represents an approximate or relative amount of value, that amount is far more mutable than is the distance that correlates to one meter. If I buy a house, the appropriate total value would be derived from the sum of the values that comprise the house; the materials, the land, the labor, etc. The seller can then take the currency she earned from the sale and exchange it for goods or services that she needs, and so on down the chain. This works because we have agreed on a currency to act as a proxy for value between disassociated transactions.

Radical Transparency

I used to be a high school teacher.  Nine years in the classroom and in the front office working with disenfranchised youth. There was only one thing nearly universally abhorred by every young person I have ever met, censorship. I spent a lot of my time as an educator making the case for nuance, that there are occasions where censoring or withholding information is necessary. 

In the way of the world, I have come full circle. I am a nearly unyielding advocate for radical transparency. With radical transparency we would not be at war in Iraq.  With radical transparency our economy would not have been floated by imaginary value where investment is more like gambling. 

In 2005 Harold Pinter was given the Nobel Prize for Literature. He just died on Christmas eve, 2008. There are two quotations from that speech that add the nuance that is necessary to this discussion.

'There are no hard distinctions between what is real and what is unreal, nor between what is true and what is false. A thing is not necessarily either true or false; it can be both true and false.'

A misunderstanding that I struggle to overcome is that transparency does not equal truth telling. The assumption that I, or anyone, hold the truth and the hubris to assume that I can calculate with any certainty the conditions under which that truth is to be withheld is absurd.  As Pinter says above, there is no truth, no reality.  I believe the best we can do is to aggregate our collective experience and understanding.  Only with radical transparency can this aggregation divine what may be real or true.

I believe that despite the enormous odds which exist, unflinching, unswerving, fierce intellectual determination, as citizens, to define the real truth of our lives and our societies is a crucial obligation which devolves upon us all. It is in fact mandatory.

If such a determination is not embodied in our political vision we have no hope of restoring what is so nearly lost to us, the dignity of man.

    - Harold Pinter Dec 7th, 2005 Nobel Prize for Literature acceptance speech

Only with radical transparency can we hope to respond to this challenge.

Social Impact Metrics

I just wrote a post over at the Salesforce.com Nonprofit Blog on Social Impact Metrics.

http://blogs.salesforce.com/nonprofit/2008/12/social-impact-a.html

Web 3.0: WE can't let THEM decide it for US

Here is how Wikipedia defines it:

Web 3.0, a phrase coined by John Markoff of the New York Times in 2006, refers to a supposed third generation of Internet-based services that collectively comprise what might be called 'the intelligent Web'—such as those using semantic web, microformats, natural language search, data mining, machine learning, recommendation agents, and artificial intelligence technologies—which emphasize machine-facilitated understanding of information in order to provide a more productive and intuitive user experience.

Nova Spivack defines Web 3.0 as the third decade of the Web (2010–2020) during which he suggests several major complementary technology trends will reach new levels of maturity simultaneously including:...

This stuff makes great sense and it is a logical extension of web 2.0; actually, I would suggest that it IS web 2.0.  We will see the rise the semantic web and various sense making tools will emerge to help us filter and discover.  However, what I see in the definitions above is really, really, really interactive television where the USER has great control of the information that they can digest.  What is massively wrong about this definition is that it's nothing new.  It's a feature set. 

It is unreasonable to version the Internet in terms of features.  If features were the only variable then we are surely well past web 3.0.  So what do I think web 3.0 is...

Possibility

Benjamin Zander and Roz gave me an A. The single condition was that I project myself in to a better future and understand my contribution to that future.  Who am I not to be worthy of that A.  Dare I aspire to be graced with the responsibility to lead, to declare an A for others.  I project myself to be more than an obstacle, not the stick nor the carrot. The greatest difficulty is that I can only be I while owning that it's not about me.  I can only be I and so much more than me is what is needed. 

Benjamin Zander, Conductor of the Boston Philharmonic, believes in a world of possibility, possibility as opposed to scarcity, scarcity being the world of winners and losers, a world where judgment oppresses.  In order to understand a world of possibility, to live in the  abundance of potential, Benjamin Zander assigns his students to project themselves in to the future, a future where they have earned the praise that he gave to them the moment they met.  They do this with a letter, a letter from themselves as they stand in the future.  Roz, Benjamin's partner, help him craft this scheme.

So, Benjamin and Roz, here is the future in which I stand....

I have not sacrificed rigor.  I have not sacrificed rigor as evidenced by the reality of a better world. I have engaged deeply with love and wonder (Marian Bantjes) and I have not sacrificed rigor.  I got the answers right to questions that I didn't know we had to problems that I knew we could not solve. 

I found a way to value love.  Not with a cash equivalent but with Love.  As art is distinguishable from skill or artifice, as love is distinguishable from affinity or choice, I found a way to understand Love and its expression, as valuable.  Actually, exchangeably, cognitively valuable.

I had the courage to accept the grace of responsibility.  A responsibility to not claim my space, to not declare a truth, to not decide.  It was not me but I played a role. I can only be I and I was not the answer.  That was difficult to own. I did not know what the answer was.  I only knew that the answer was not found, which is not to say that it was not known, or was not emergent. 

Hearing signal from noise, seeing patterns in chaos, happened at the edges, where the network is new, where connections are being formed.  I only knew that there is great value in solving real problems and worked, with love and wonder, to magnify possibility.  I believed that we had not accounted for the value of  lives at the edges.  I believed that increasing the capitalization of human potential (Malcolm Gladwell) would not occur with winners picking winners.  I understood that the unknown was fertile.  I worked in the unknown. I said out loud what I did not know, what I was trying to understand, what I thought might be.

Something about the Chekovian (heart) string that finds resonance in each of us, regardless of our callouses, is what defined meaning and sourced the future.  And I did not sacrifice rigor.  I played a role.  I am content with my participation, with my contribution.

Social Capital Markets Conference Season

Tomorrow the Social Capital Markets conference begins at Fort Mason in San Francisco.  This seems to be conference season or at least I have been getting around recently.  I recently attended the Online Giving Markets conference put on by SSIR and BarCampAfrica on Google's campus last weekend. 

Given all this activity, I thought I would trace how I got here.  I was a teacher.  Then I was a community technologist.  Then I was a nonprofit technologist.  Then I got obsessed with effective data management.  Then I got obsessed with measuring social impact.  Then I got really frustrated.  I joined the cult of the quest for the perfect proxy.  Then I found social investment.

Perfect Information

After a conversation with David Geilhufe (www.digitaldivide.net/blog/geilhufe) about perfect information, specifically in its relevance to philanthropy, I got to thinking.  I googled.  I wikipedia'd.  and...

I found a fascinating post that provides a critique of the "perfect information" or economic equilibrium theory that states that the better (or more predictable) our information is, the more efficient (equitable?) our markets will be.  The author, astutely I believe, critiques this lens as irrelevant in a world where change, both subtle and grand, is the norm.