Measuring social impact has always been a challenge for companies. “Companies seeking to create scalable social businesses need a measurement system that monitors their progress in delivering social benefits and economic value,” FSG’s Greg Hills and Marc Pfitzer wrote last month on HBR. “Only by tracking both the social and business results and how they’re connected can firms hope to have a large-scale social impact.”
Hills and Pfitzer referenced Coca Cola and how the company measured the shared value of an initiative it developed in Brazil. But what about small social enterprises working at the base of the pyramid without the resources companies like Coca Cola have? How can these entrepreneurs effectively measure their progress and impact? Well, Grameen Foundation is here to help.
Headquartered in Washington, DC, Grameen Foundation works with social enterprises to “better determine their clients’ needs, the effectiveness and efficiency of their programs, and how quickly they are able to help people move from poverty to financial self-sufficiency.”
How does it do it and what services does it offer exactly? To learn more, I spoke with Steve Wright, Grameen Foundation’s VP of Poverty Insights, whom I first heard at the Social Innovation Summit last month in New York. Here’s an edited version of the interview:
TriplePundit: Can you tell us what services Grameen Foundation provides?
Steve Wright: Grameen Foundation provides financial services, information services, poverty tools and insights to reduce, and one day, eliminate abject poverty. We develop, customize, and deploy these services in Asia, Africa and Latin America.
A few examples of the services (interventions) we’ve developed include a mobile financial services incubator in Uganda that is designing mobile financial products with, and for, the poor, the Fair Trade Access Fund, in conjunction with Incofin and Fair Trade International (and backed by Starbucks), that provides financial services and information services for poor farmers and through TaroWorks we’re supporting better business management, data collection and data analysis for social enterprises like VisionSpring, D.light, Sanergy and HoneyCare Africa.
Grameen Foundation builds these programs from the outset so they can achieve widespread scale and impact by using an open-source approach that makes it easy for other poverty-fighting organizations to adopt them broadly. Unlike many well-intended programs to help the poor, we do so in a way that does not require long-term subsidy and that allows us to track the extent to which the poor are actually improving their lives.
3p: What is the PPI and how does it work?
SW: The Progress out of Poverty Index® (PPI) is a poverty measurement tool for organizations and businesses with a mission to serve the poor. The PPI is statistically sound, yet simple to use: the answers to 10 questions about a household’s characteristics and asset ownership are scored to compute the likelihood that the household is living below the poverty line – or above by only a narrow margin. With the PPI, organizations can identify the clients, customers, or employees who are most likely to be poor or vulnerable to poverty, integrating objective poverty data into their assessments and strategic decision-making.
3p: What is the response you receive from organizations that have used the PPI tool? How valuable did they find it?
SW: Most PPI users who we work with find the PPI very valuable because the poverty data will either confirm or refute their assumptions about who they are serving — either way, there is a certain relief in knowing rather than guessing.
Sometimes poverty measurement confirms that the organization is meeting its poverty outreach goals, which is rewarding for the staff, leadership, and funders. But even if the organization is not on track, the data is valuable because it allows them to benchmark where they are now and track their progress after making changes to the design or delivery of services. We have seen development practitioners become very focused and proactive regarding their poverty outreach as a result of having reliable and objective data on hand.
3p: How important is smart use of data in efforts to eradicate poverty compared to other factors?
SW: I guess it is necessary to define “the smart use of data.” In the Grameen context, this is very specific. For organizations that intend to alleviate poverty, we help them make those intentions real. The smart use of data is using data about how the poor are consuming products and services in the design and provisioning of those products and services. If you are not doing this, then you do not know if your products and services are even reaching the poor, let alone providing a positive benefit.
Not using data smartly is, as Melinda Gates relates in her TED talk, “like bowling in the dark.” She refers to “real time data” as shining a light on our interventions so that we can see what we are doing as we do it. This is the explicit purpose of TaroWorks - to increase efficiency through the application of appropriate technology (browser and mobile) to manage poverty-alleviating businesses and to increase efficacy by providing real time data from these tools when they are used to manage the activities that are intended to alleviate poverty.
3p: I guess this is not the first time NGOs have been offered tools to analyze data in a more efficient and smarter way to achieve better results – why do you think this time it has a chance to work?
SW: Two main reasons outside of the obvious one, that we, Grameen Foundation, have over ten years of experience in mobile technology and we are really good at what we do.
1. The evolution of technology: the mobile phone is now nearly ubiquitous and the price point for advanced smartphone functionality is accessible for businesses that are growing and approaching scale. Additionally, the Internet is available nearly everywhere, so data is easy to aggregate in “the cloud” and make accessible to anyone to democratize insight.
2. The dramatic advancement in customer-centric methodologies (specifically human-centered design) and lean methodologies (specifically the lean startup). The popularization of these very practical customer-centric approaches has codified the best practices that we try to employ in our tools. We provide tools and services that are built by iterating against the experiences of the poor, and we help our customers that work with the poor to do the same.
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.