We thought ventures’ impact measurement and management would start simple and get more complex as they scaled. Turns out it’s more complicated than that.
Kenyan affordable childcare venture Kidogo is a perfect case in point. Less than six months after Sabrina Habib founded Kidogo, the startup received its first major grant. It was a game-changer for Habib and her team.
“If we hadn’t taken this money, we wouldn’t have been able to continue Kidogo,” she says.
But there was a catch. The grant demanded a significant research component: a case-control study to prove that the Kidogo model would positively impact child development.
Looking back, Habib regrets it. “Our model stalled for two years because we couldn’t change anything,” she says.
Once Kidogo was free to iterate again, the team simplified its approach, which enabled them to respond quickly to feedback, improve and grow.
“We did it wrong at the beginning,” acknowledges Habib.
Over the past year, our team of impact measurement and management, or IMM, practitioners and researchers heard different versions of this story: early and sincere efforts to measure impact with all the rigor they could muster, followed by shifts to more straightforward and integrated measurement as they matured. Along the way, ventures pursued pivots that raised new questions and frequently returned to the drawing board.
In short, the venture IMM journey is not a linear path from simple to complex. Instead, it is an adaptive and iterative process responding to ever-shifting questions.
We began to liken this experience to sailing through uncertain waters. As conditions change, sailors adjust their sails and direction, increase or decrease their speed, drop anchor, or change their route altogether. A tool that is right for one phase of the journey will be wrong – or possibly even harmful – at a different phase. The autonomy to act and adapt is critical.
The current conversation on IMM is dominated by the information needs of investors. Investors need visibility into ventures’ IMM approaches and performance so they can perform due diligence and actively manage their portfolio. They need consistency so that they can compare impact performance across a portfolio and against industry benchmarks. They require sufficient rigor to maintain accountability to their own stakeholders, assuring against impact washing.
The industry has rallied to meet these needs, prioritizing the development of standardized metrics and prizing highly technical methods of measurement.
But the qualities that help investors get what they need – consistency, methodological rigor, a focus on long-term outcomes – do not always drive value for their portfolio ventures. In fact, investor-centric IMM often does just the opposite.
Ventures that are “locked in” too soon to a set of metrics have limited space to iterate and evolve, and often find themselves optimizing for the wrong KPI. Pressured to rigorously measure outcomes, ventures can be saddled with onerous research studies. They can become hamstrung by the questions that their investors are asking and unable to focus on the questions that are relevant to the ventures themselves.
What could it look like if ventures had the support, realistic expectations, and leeway to make their own IMM choices?
Ventures at the Helm is a new guide that helps impact ventures identify – and advocate for – the IMM strategy that will serve them best in the moment and ultimately help them drive impact. The guide was developed by retracing the IMM journeys that ventures have traveled, and examining how they have grappled with constraints and made choices and adjustments along the way. As IMM practitioners, we sought to identify which choices really drove value, and at which moments.
Charting the IMM journey
We identified four phases that ventures pass through along their impact-creation journey. These phases are non-linear: they don’t always happen in the same order, and ventures may pass through the same phase again and again.
Instead, ventures enter, exit, and revisit phases in response to their needs, inflection points, resources, and changing contexts.
- Orienting is an intentional, defined moment of framing and goal setting. It often happens in a venture’s early stage or during a time of intentional pause and reflection.
- Navigating is a continuous period of exploring new opportunities and testing questions. It often takes place in the early stage as a venture is seeking proof of concept and product-market fit.
- Sailing is a continuous period of moving and managing towards a streamlined and optimized set of goals, often during a time of greater demand and momentum.
- Tacking is an intentional, time-limited pivot or adaptation to a new opportunity, need or question, often in parallel to the core business.
In each phase, ventures are grappling with different key questions. Ventures in a strategic “orienting” period may pose questions like, “What is our impact goal?” and “Who is our target user?”
Ventures in an exploratory “navigating” phase are actively testing assumptions and gathering feedback, tackling questions like, “What do our customers think?” and “What outcomes are we observing so far?”
Once they’re “sailing,” more streamlined ventures may shift to questions that integrate impact with business performance, like, “Can we lower costs and still preserve impact?” And “tacking” ventures facing a new challenge or opportunity may ask, “Can we preserve – or deepen – our impact under these new conditions?”
Logically, each of these questions demand different strategies. A “sailing” venture with a stable business model can collect standardized metrics like IRIS+ as part of integrated, tech-enabled operations, whereas a “navigating” venture may prioritize collecting qualitative, open-ended data directly from users. Ventures that are “tacking” may benefit more from a time-limited deep-dive on a specific question, while an “orienting” venture might call a staff retreat to revamp its theory of change.
When ventures’ IMM is out of sync with its phase, IMM does not drive impact – it actually hinders it. And yet, misalignment is rampant: ventures frequently find themselves using IMM strategies that are out of sync with the phase they are in and ill-suited to the questions at hand, like Kidogo did in its early days. This wastes resources, stifles innovation, and ultimately prevents these ventures from delivering impact.
When ventures align their IMM approach with the appropriate phase, IMM drives impact creation. In the best case, IMM data provides the venture with precisely the information they need to make critical choices as they develop, answering questions about customers’ needs, efficient operations, or unexpected outcomes. And when IMM provides value to the venture, it will also pass that value along to the venture’s stakeholders – its customers, employees, and yes, investors.
Getting in sync
Kidogo started gaining traction after it made changes following its initial study. The team updated their measurement system, finding simpler and more streamlined ways to track their impact. Kigodo focused on proxy measures for children’s development, like center quality and parent satisfaction.
As Kidogo grew, the team’s questions evolved. They began asking not what impact they were having but also about the cost-effectiveness of that impact – for instance, measuring to what extent they could shorten and simplify their teacher training without seeing a dropoff in outcomes for providers and children.
This style of impact measurement and management allowed Kidogo to continue to adapt its model, lowering costs while maintaining the same level of impact.
Seven years after that first study, Kidogo is the largest childcare network in Kenya. Habib has new questions. She wants to understand the impact of Kidogo not only on the children in Kidogo’s care, but also on their mothers and on the “mama-preneurs” who run their childcare centers. She’s ready to return to more rigorous methods to answer these questions.
“At times, it might be more important to prioritize iteration and innovation than it is to prioritize research,” she reflected. “Where we are right now, we are absolutely needing some type of rigorous independent impact measurement, but we were not at that place seven years ago.”
For ventures to sync their IMM practices with their appropriate phase of growth, they must first situate themselves on the journey. That starts by identifying the phase they are in, and the most important questions at hand.
Next, they can assess whether their IMM system is appropriately aligned with the phase they are in and what IMM approaches might best (or better) suit their current needs.
Finally, they can advocate for a style of IMM that will bring value to them.
Ventures at the Helm offers a series of worksheets with exercises to help walk ventures through these steps, and to make aligned choices.
Importantly, they aren’t in this alone. Our research reaffirmed that IMM is not just a technical exercise – it’s also a political and behavioral one that is influenced by power dynamics and industry norms. Investors, IMM practitioners and other ecosystem actors have a critical role to play in guiding and equipping ventures on the journey to create impact.
Laura Budzyna is an independent consultant who works hand-in-hand with impact-driven organizations to design measurement strategies that can adapt to evolving projects with emergent outcomes, and she collaborates on initiatives that help to build and demystify the impact measurement field. Previously, she led the monitoring, evaluation and learning strategy at MIT D-Lab.
Karim Harji works with investors and ventures to describe, measure, and improve their social impact. He is the Programme Director of the Oxford Impact Measurement Programme at the Said Business School, University of Oxford; and Managing Director at Evalysis, an impact measurement and management consultancy.