As organizations set specific, purpose-driven goals, there is a temptation to focus exclusively on new initiatives and their impacts (e.g., dodgy carbon offsets to achieve climate goals). However, it is particularly important to understand the entire organization’s impact and identify potential negative effects and unintended negative externalities of existing operations. Consider Uber, which aims to make transportation reliable for everyone. It has revolutionized ride-hailing, but it must also address socioeconomic challenges faced by its drivers, such as job insecurity and lack of benefits.
Organizations often measure their positive societal contributions by the amount they invest in “good works.” Shifting from merely measuring inputs (resources invested) to measuring outputs or outcomes is necessary but challenging. For instance, Microsoft’s “AI for Good” initiative tracks the number of projects it funds, but it should also assess tangible outcomes, such as the impact on environmental sustainability or healthcare improvements. Similarly, bold corporate statements about climate neutrality through offsetting often fall short of concrete effects on carbon emissions.
It is crucial to determine the extent of an organization’s contributions to these results, as well as possible positive or negative secondary effects. If Google’s sustainability efforts are supposed to reduce carbon footprints, for example, it is essential to measure both the direct impacts and the potential ripple effects on the broader tech industry and connected communities.
Disentangling the causal relationship between an organization’s activities and its effects can be difficult, particularly for long-term outcomes. One solution is for organizations to start measuring outputs that have a reasonable correlation with desired outcomes — they often are directly related to an organization’s efforts, and the data is often internally available (e.g., number of people fed). In contrast, outcomes like “improving food security” often require external information such as polling community members and tracking over time.
As organizations become serious about measuring the impact of their purpose, they need an infrastructure for collecting and tracking impact data. For example, SAP’s Green Token aims to provide an infrastructure connecting battery producers, automotive suppliers, and battery-recycling start-ups (a new approach to circular battery loops). It provides a material account that creates a digital representation of an electric vehicle battery (scrap or end-of-life) to black mass, which is then split into separate components such as lithium and cobalt, enabled by wet chemical processes.
Orchestrating such processes for data on outputs and outcomes can potentially validate an organization’s efforts and inform management dashboards and decision support systems. Some organizations use sustainability data to improve energy efficiency across their supply chain, aligning daily operations with long-term sustainability goals.
However, impactful solutions often emerge unexpectedly, necessitating a dynamic approach to a company’s understanding of its impact.
[For more from the authors on this topic, see: “Expect the Unexpected: Organizational Purpose as an Enabler of Serendipitous Impact.”]
