Quantifying success

I’ve been having a lot of conversations recently about impact measurement.

“Impact” here means the social benefit you want to have through your work. It seems like that could be hard to measure, for lots of reasons. Maybe it happens only in the long-term, or in parts of people’s lives you don’t have access to? Or is just inherently hard (or impossible!) to put a number on - like “wellbeing”?

This can make it hard for impact-led organisations to quantify their success, because they have to think about impact as well as value.¹

At first glance, this seems very different from the world of purely for-profit organisations, which only have to be concerned with value-generation. And value is simpler to deal with than impact.

But how true is this?

“Value generation” is kind of synonymous with “financial performance”.

All organisations have to think about their financial performance. Cash is king². Without money, organisations die. This is just as much of a risk for charities as it is for joint-stock companies.³

Financial performance is easy to measure and fairly unambiguous. You know how the organisation is doing. You can make a clear business case for anything you want to do in terms of income and expenses.

So life for for-profit companies seems like it should be simple.

But when I say that value generation is kind of synonymous with financial performance - “kind of” is doing some work.

Financial success is the result of being good at generating value. Value is not the same as income or profit. Money is just a way of measuring value.

Here is the definition of value I find most powerful:

“Value is what the customer cares about, as measured by their willingness to pay for it.”

This definition points to how understanding the customer better is a route to long-lasting organisational success. Money is the quantifiable output, but the goal is something deeper and more human - more qualitative.⁴

This begins to look a lot like impact measurement, which is about taking nebulous bits of the human experience and finding concrete outputs that can be taken as a proxy for them.

In the next few posts, I’ll develop this theme further, and talk about the approach I recommend to measuring impact, before looping back to the implications for measuring things in general.

Until then - take heart that impact is not so strange a beast as it might seem.

1. A common source of culture-shock for people coming into the sector for the first time!

2. Or perhaps it would be more 2025 to say “cash is monarch”?

3. Perhaps even more so, since there can be an allergy to “thinking like a business” in the impact sector.

4. Money is the key result; value is the objective.