Christina Hachikian

- Are you seeing the right version?

- Yeah, I can see your
notes aside as well.

- How about that?

- [Kara] There we go, perfect.

And then I'm going to do,

I'm going to mention Civic
Scholars in the beginning,

because we did a special invite
to those that are interested.

And then at the end,

I'll probably pitch you a
question about why an MBA

with nonprofit government
experience things like that

during Q&A if we have time, okay?

- Great.

- [Kara] Cool.

- Always.

- All right, people are
starting to come in.

Hi, everybody, welcome.

It'll take just a few minutes
for everybody to log in,

so thanks for joining us today.

If you are inclined,
feel free to let us know

where you're joining us from in the chat.

The chat should be enabled for everybody.

I am downtown Chicago at
our Gleacher campus today.

What about you, Christina?

- I'm at home, actually.

It's my home office.

My kids are running a little

race at their school,
so I stayed home today

to go to the race, so.

- That's great.

All right, perfect.

There, I just want to make sure,

so the chat was working.

Okay, so we got from India.

- Good, here they come.

- [Kara] Fantastic.

All right, there we go.

Global group, that's great.

All right, and for those
that are just joining,

it'll take just a couple more minutes

before we'll get started

for everybody to be able
to enter the webinar.

Feel free to let us know
where you're joining us from.

It's got a very
geographically diverse group,

which we appreciate.

It's one great thing
about the master classes,

and if you want to respond
to everyone in the chat,

that's great too so
others can see it as well.

We have that enabled for
everyone to be able to view.

I saw a couple in D.C.,

I'll be in D.C. next
Thursday doing a lunch

about our Civic Scholars Program

that I will mention a little bit.

So if anyone is interested,

I'll put my email in the chat later.

You can always reach out to
me if you haven't already.

I've been made aware of that,

just an in-person sort of lunch and learn

with a couple of our alumni
of our Civic Scholars Program.

All right, so quite a
few people are coming in,

so again, we'll take just
another minute or two.

- Kara, do you want me to
stop sharing for a moment?

Will you do intro, or you
want to keep the sharing?

- You're totally fine,
that's totally fine.

Super great, yeah, thanks for checking.

Okay, it's starting to
taper off a little bit

with people entering, of course,

individuals will still be
able to join throughout.

Hello, everyone, my
name is Kara Northcutt.

I'm a Senior Director of
Admissions here at Chicago Booth,

and I'm pleased to welcome
you to today's masterclass,

"Measuring and Maximizing the Impact

of Mission-Driven Ventures"

with Professor Christina Hachikian.

So today, we'll run
about 90 minutes or so.

Professor will present
for maybe 60 minutes,

and then we'll do some open
Q&A if time allows at the end.

Everything's being recorded,

we'll get it posted and everything,

so feel free throughout
if there's some questions

you want me to pose during
the Q&A, put them in the Q&A,

or put them in the chat.

I will keep an eye on those throughout,

and then I just want to make a note

to how really excited we are

that there are so many of you
interested in social impact,

and for some of you that
might be working in nonprofit

or government currently,

I wanted to bring up our
Civic Scholars Program,

which is part of Chicago Booth's evening,

weekend, and full-time MBA.

So it is a full scholarship program

for those currently working
in nonprofit or government,

and who will either return to
or remain in those industries

during and post-MBA,
depending on which format

of the program you're going
for, so really think about,

for scholars and those really dedicated

and see a long-term career

in the nonprofit and government space.

I will post some links in
the chat about the program

in general and some of
our upcoming events,

but since this topic is very

of interest to those individuals,

I wanted to make sure you all were aware

in case you happen to be interested

and eligible for that program.

So again, I'll post some
of those links throughout.

But today, we're going to hear

from Professor Christina Hachikian,

who holds an MBA here from Chicago Booth

with a focus in strategic management,

and managerial and
organizational behavior.

She also earned an AB in public policy

from the University of Chicago.

Professor Hachikian is a
Clinical Associate Professor

of Strategic Management here at Booth.

She teaches several of
Booth's social impact courses,

focusing on topics including
scaling social innovation,

and social enterprise strategy.

It's my pleasure to now turn it over

to Professor Hachikian, thanks, Christina.

- Thank you.

I'm really delighted to be here.

So, thanks for that, that
comprehensive introduction.

I also just want to mention,

so between, or while I
did my MBA in the evening,

the evening program,

and while I was in the MBA
program sort of before,

during, and after, I worked
in community development.

So I spent about a decade
before actually coming to Booth,

I've been at Booth 11 years.

Before coming to Booth, I spent
about a decade in banking,

and sort of community development banking.

So, I've lived both sides
of the operating roles

in social ventures,

as well as sort of more on the
impact and teaching impact,

and on social entrepreneurship
kind of both pieces.

So, I bring a little bit of both

to kind of this conversation

and what we're going to talk
to about today in terms of how,

in particular, organizations that are

trying to have impact through
market-based strategies,

think about codifying and
sort of valuing that impact.

So I just want to start though,

before I jump into the content,

I really want to start with a quick poll.

As you see, my poll question is up there,

just to get a feel for who's out there.

We see where you're coming from,

but I'd love to know a little
bit about like what it is

that you are thinking about
doing with your lives,

that's leading you maybe to this

idea of getting an MBA, and
what you might do with it.

Always love watching the polls,

sort of, I get to see like
the numbers go up, and the...

Okay.

Sort of slowing down a little.

One more.

Couple more seconds.

Okay, I'm going to go
ahead and end the polls.

You can see the results.

Give you a feel.

You guys can see those, right?

Oh, there we share results, there we go.

Everyone's seeing that?

I need like a thumbs up,

somebody tell me that you're seeing that.

- [Kara] Yeah, I can see it.

- [Dr. Hachikian] Excellent, okay, great.

Yeah, so a lot of people
thinking about funding ventures

via impact investing,

almost 50%, which is probably why I knew,

so that's kind of what we're
going to talk about today.

And many of you also thinking about

starting a social venture, and
maybe many of you are doing,

thinking about both of those things.

So, that's great.

And really, like one of the things,

I mean, I've been working at
Booth, as I said, 11 years,

kind of worked building
out a lot of Booth's

infrastructure around social impact,

including a lot of the work we've done

around impact investing,

and the programs available to students

thinking about impact investing.

And I think the tools of

that you learn in getting an
MBA are really instrumental

in where the sectors are right now,

and sort of the ability to
kind of take that leap further.

And a big part of that is, as
we're going to talk about today,

impact, and sort of impact management.

So, I'm going to jump into
what we're going to talk about.

So, this idea, the words, by the way,

impact management are not my words.

This is actually like the sort of

the term that's being
used most frequently,

especially in the impact investing world

to talk about impact measurement,

rather than impact
measurement or evaluation,

which, in especially in
the impact investing world,

people are moving away from,

they're starting to talk about this idea

of impact management, like a
tragic term of art, if you will.

Or talk a little bit about
how startups think about that,

or early stage companies,
even as they grow.

And then also the impact investors side,

the people who fund them.

Okay.

One more poll.

Actually, I have two polls,

but I'm going to do one now,
kind of one in a little bit.

I'd love for just to hear

what you all are thinking about.

So there's lots of challenges

facing the development of
the impact investing market.

I think there's been some
work done on this question,

whether it's about, so
the poll asks you to

draw a pine on kind of where you think

some of the biggest challenges are.

Is it really in

sort of the impact
frameworks that are lacking?

Is it about guidance
from regulatory bodies?

What do you see as sort of
some of the biggest challenges,

lack of deals or investment vehicle?

Or even professionals
with relevant skillset?

Like, where do you see some
of the biggest challenges?

Great, I love it.

Everyone's pruning away.

Be clarifying data,

looks like the leading is
integrating impact management,

that's interesting.

In financial, although
they're like neck and neck.

I love it.

And we'll go maybe like
another 5 seconds, 10 seconds.

We got most people slowing down.

End our poll,

and share the results.

So as you can see, okay.

If you're seeing all of them.

Yeah, this sort of middle group,

lack of clarity with
measurement frameworks,

regulatory bodies and
integrating management,

financial management and impact management

kind of being the top three.

Interesting to think about.

I'm going to show you some data,

what the market says about
this here in a second.

I think one of the things I see in this

is these three middle ones,

especially the clarity on
frameworks and regulatory bodies

is I think indicative of
something that I hear from people,

which is like, "We're
looking for guidance,

like just tell us what
to do and we'll do it,"

and I think there's a little
bit of a need for that.

I actually think what's really happening

is that people are actually trying to,

like it's more organic
internally in some ways,

some people are sort of
waiting on the sidelines

to be told what to do,

and other people I think are waiting for

kind of understanding from kind of,

they're driving the change.

But actually, it's interesting,

the data, here's the data.

So this is actually, this is a great,

a great article.

So, impact investors are
really focusing more and more

on the impact piece.

Some of this is like the
evolution of impact investing.

When impact investing first,

like kind of the words were that label,

I mean, impact investing, to be clear,

and impact companies have been
around for a very long time,

for at least a hundred years, if not more.

And impact investing has been a thing

that the foundations and others
have been doing for like,

just as long.

Whole industry community
development where I came from

was basically built,

microfinance built
through impact investing

through social entrepreneurship.

So it's not a new thing,

but about two decades ago,

a group of people kind of got together,

kind of coined this term impact investing.

And at the time, they really
did so with this like,

"The investing world is over there,

and we are over here, we're
the impact investors."

And over time,

that idea,

the like separation
from the investing world

and the impact investing world has really,

actually in many ways,

that same sort of group of people

have been trying to erode
that differentiation and say,

"All impact, all investments have impact,

positive or negative."

And so part of what we want to think about

is how do we actually
capture that positive,

and do more of that?

This is the GIIN,

which is the Global
Impact Investing Network

does every couple of years
a impact investor survey.

So they did one in 2020,

but actually this data,

as you can see from the
notation at the bottom,

is really actually from their 2023 report,

which just came out.

And here, what you can see is

sort of the most significant challenges,

that if you look at the blue,

significant and moderate, right?

Are really these first two, right?

Comparing impact results to peers,

and not having sort of standard

impact measurement framework.

So I think, this is sort of
what I was talking about is like

the kind of compared to the poll results

as you guys view them,

where these sort of things in the middle,

guidance and integrating,

and being given clarity,

people are seeing,

they're definitely
seeing it as a challenge,

but maybe a little bit
less of a challenge than

really people, the sector itself,

the investors have to get their
act together more or less.

And they're really seeing
it as a critical path,

like getting themselves aligned,

of being able to compare to each other,

having more like,

deciding as an industry

what impact measurement
frameworks we're going to use,

so we're going to talk a little
bit about what that looks like.

But this idea of measuring
impact, impact management,

has become the conversation
in impact investing.

If you're interested in this field,

I would highly recommend
subscribing to Impact Alpha,

or get, they have a free version,

and then they have a paid version.

It's the kind of newsletter
for impact investing,

impact investing field.

And you can certainly,

like it talks about deals,

and things that are going on.

It talks about people
working in the sector,

but one of the interesting things for me

is that as I look at the, like,

I mean, I read it every day,

as I look at the kind of
conversation that's happening,

and it's been around a couple of years,

I've been reading it a couple of years,

you can really see that in
what they're talking about,

in what they're highlighting,

measurement and management of impact

has really risen to the top.

It's a regular conversation,

so I think you're really seeing this

as kind of a big piece of what's going on.

Okay, so what I want to
talk about then is like,

how do you actually do this?

(Professor Hachikian chuckling)

Because it's nice to know
that we need to do it,

and a little harder to say like,

"Okay, so how, what do you do?"

One of the things that,

and I just, I actually was
just talking to my MBA students

about this yesterday,

is that when you think about
measurement and evaluation

writ large, so the stuff that we're doing

in the nonprofit sector,
the stuff we're doing

in the for-profit social venture sector,

in many ways the nonprofit
sector is way ahead,

and has been like created
a lot more frameworks

and approaches for developing
a theory of change,

creating outcomes,
measuring all the way up

to randomized control trials,

which are really able to isolate,

so a randomized control
trial is like an AB test.

You have a control group
and you have a test group,

and you're really able to use that tool.

And actually, several people,

several economists won a
Nobel Prize a couple years ago

for the use of this tool
in combating poverty.

But what you can do with
a randomized control trial

is actually separate

and isolate cause, causality,
and therefore impact.

But many social entrepreneurs,

and certainly their investors,

the kinds of things they're investing in

don't lend themselves

to randomized control trials, naturally,

and that they're very expensive.

And so it may be
impractical and impossible

for the group of social entrepreneurs

and their investors to really
think about that level of,

that level of impact measurement.

And so then the question becomes like,

okay, well what do you do, right?

Okay, so what do you do?

One thing I want to just

kind of create is this distinction

between the measurement.

When we talk about
randomized control trials,

we often are referring to evaluation.

So evaluation is the idea that like,

at the end of something,

you go back and you look,

and you isolate your
role as an organization

in driving outcomes.

So like, did it work?

Did it work alone?

Or are there other things going on?

And really, why did it work?

And I think that level
of evaluation is great,

and there are certainly organizations,

I mean in microfinance for sure,

who have done evaluative studies,

or summative studies as
we sometimes call them,

on their work.

That's great.

It is for most nonprofits, frankly,

until you get to really big scale,

and for almost all the social enterprises,

the for-profit social enterprises
that I've worked with,

evaluation of that kind is really,

like now,

it's not necessarily sort of sought after,

and it's oftentimes from cost perspective

or from a impractical perspective.

So then we get into sort
of the measurement side,

and that's why making this distinction

between sort of more evaluative work

and more measurement work,

so measurement is often
about like the day-to-day

tracking of outcomes,

using those outcomes to
improve continuously.

And this is how I think about it,

whether it's a for-profit or nonprofit,

but really like managers and leaders,

CEOs need to get much better
at tracking their outcomes,

looking at that data,

and using that data kind of
to do continuous improvement.

And I think knowing then,
did your work contribute

to the outcomes that
you are seeking, right?

That's a critical piece of the puzzle,

so starting with this idea

of what are you trying to accomplish,

and then can you isolate some outcomes?

And I'm going to talk about
what that means in a minute,

that help you know you're getting there.

And this piece, this
measurement piece I think is,

many of the nonprofits that I work with

are much better at this than
the for-profit social ventures

that I work with, even
though many of the same

underlying ideas apply to
both types of organizations,

but the nonprofits I think
are kind of ahead of the game.

The sector has a lot to
learn from those frameworks,

so I'm going to talk a little bit

of what some of those frameworks are,

so we're going to really
focus on this bottom half

when we talk about what social impact,

like for-profit social ventures
are thinking about doing.

Okay.

So, the basic framework I
want to share with you today

is a two-part approach.

If you are a social entrepreneur,

so I'm going to spend about like,

for our time together, I'm
going to spend a little bit

more than half talking about
if you're a social venture,

what do you do?

And then I'm going to talk about

if you're an impact investor,
how do you think about this?

We're going to talk about these
kind of two things in parts.

So this is really, if you are a startup,

if you're a social
venture, this is even like,

as you get along in your
growth, what do you need to do?

So the first thing you
need to do is actually

you need to set up your
measurement system,

and then you need to use it.

Pretty basic, and there's
some pieces to that

we're going to talk through.

And why you should do this,

not just because it's like a nice to have,

or your investors are
asking you to or whatever,

but really because you
think that improving your,

it will actually improve your performance,

it will help you make better decisions.

I am not a fan of collecting
data for data's sake.

The goal is really about
making better decisions,

creating better incentive structures,

being able to talk about your
work with your investors,

and a lot of it's about doing better,

better work for the populations
that you're trying to serve.

And I think this is a really
important piece in particular,

because for startups, I think
they often sort of feel like,

"Well, we'll get around to
that when we get around to it,"

and because it feels like something

that's like somebody else is asking for.

But if you're going to call
yourself an impact company,

a social entrepreneur,
then you need to have,

you need to track metrics

that are not just about financial success.

You need to track metrics
that are about impact success,

and you need to do that
for your whole team.

It's really part of building
a culture around impact

within your organization

if that is something you are prioritizing.

You're not a social venture

if you're not managing your impact,

if you're not paying attention to it,

then you're just a venture
who likes to talk about it,

like some other, some impact
you think you might have.

Social ventures are organizations
that manage and measure

and finance themselves in
order to have that impact.

So you have to build these systems,

and here's how you might think about it.

I'm going to keep going here.

So, the first thing you
need to do is you need

to decide what you're trying to achieve.

And you would be surprised at how little,

how infrequently this
step actually happens.

People think about why this big mission,

okay, that's fine, but actually like,

what are you really trying to achieve?

And there is a framework
from the nonprofit sector

popularized by Bridgespan,

which is called,

there's a concept called
an intended impact,

which tells us who,

what, and where we're
trying to do our work.

And then a theory of change,
which is kind of like the link

between what we're trying to achieve,

and the things that we do.

So you just start by building
out your theory of change,

and increasingly, this
is what you're seeing

in the impact investing space

and in the for-profit social
entrepreneurship space

is that people are
really prioritizing this.

Why do we think what we're doing,

and we'll see this kind of
throughout a little bit,

why do we think what we're doing

is actually going to lead
to the change that we want?

Theory of change actually comes

from the theory-based evaluation
work where you sort of say,

what evaluation can I,

sorry, what outcomes can I expect to see?

And then evaluating to see like,

what's kind of my hypothesis?

And that's essentially what it is.

There's a great article
actually by a Booth PhD

called "Unpacking Theory of Change,"

which talks a lot about this,

and we can share some of
these articles afterwards.

So that's the first step,

is to develop out your theory of change.

The second step is really about building

simple data collection
activities into the business,

and this is really important.

It has to be built into the
operations of the business.

Okay, so I want to just,

I want to share with you an
example of an organization

I think is doing a
pretty good job of this,

but I'd love to hear if you
know of any organizations.

So if you know any organization,
for-profit social ventures,

so there's probably many,
many, many nonprofits

you know that are doing
a good job of this,

would love to hear if
you know of any ventures,

for-profit social ventures
you think are doing

a good job of impact measurement.

Throw it in the chat.

I'd love to see

what you...

60 decibels, that's a great one.

I don't know WEF.

I'll still look into that.

And please do it to everyone,
not just those and panelists.

Basecamp, oh that's a good one.

They have a whole, they have a very,

they have a very strong
opinion about that.

Patagonia, I don't know,

I don't know what the internal
metrics are of Patagonia.

And I bet they do some
good publishing, right?

That's a good one.

I'll have to look-

Oh, World Economic Forum,
that's WEF, got it.

Great.

TBG, yeah, the IMM model.

We're going to talk a little
bit about the TBG rights

when we're talking about the
Impact Multiple of Money model.

I actually am a little skeptical
of it to be really honest,

but I'll show you, I'll
talk to about that.

Lafayette Square, that's a great one.

That's a great organization,
I have a friend there.

They're doing some really
interesting things.

Oh, Volvo, huh?

I'll have to look into that one.

Ikea, that's a good one.

Great.

Keep jumping in if you have other ideas.

I'm always interested
to see what people are,

what people have seen.

I mean, part of this is like,

you don't always know these are,

many of these are like
very public companies,

or out there, not necessarily public

in the stock market way,

but public in that they talk
a lot about their impact.

Oh, the NFL.

That's an interesting one.

I have to think about that.

Fun fact, the NFL used to be
a nonprofit a long time ago.

Interesting, anyway.

Okay, so what I want to
talk about is LuminAID.

So, this is a case study
we're going to talk through.

So LuminAID is a Booth founded company.

The founder, a woman named
Andrea Sreshtra came to Booth,

she went to

Columbia for architecture school.

While she was there

the first of the big
earthquakes in Haiti occurred.

This would've been in 2010, 2011.

And she and a colleague
really were impacted by this,

and realized that in a
post-natural disaster context,

when all the infrastructure, whether,

I mean, certainly Haiti is a country

without necessarily a widely
developed infrastructure,

but even in countries with
a lot of infrastructure,

or like kind of post hurricane
Katrina, for example,

you lose a lot of that
at least easy access

or near-term access to
that infrastructure,

including electricity and light.

But because of the way we
respond to natural disasters,

because part of what you also
lose in that infrastructure

are things like roads and airports,

it is hard to get supplies on the ground

in a post-natural disaster context.

So the way that most companies,

most sort of natural disaster responders,

like ShelterBox, Doctors
Without Borders, the Red Cross,

the way they think about actually solving

for a post-natural disaster context

is to send food, water, shelter.

Actually, it's not in that order.

It's water, food, and then
shelter, in that order.

Those are the three most important things

that need to get on
the ground immediately.

And what is not in that
list is electricity, light,

flashlights, access to,
you know, because why?

Generators are large,

flashlights or even lanterns are large,

and so it's hard to
prioritize taking up very,

very scarce space on like
an airplane or a truck

to try to get something that
is big and bulky on the ground.

And so, Andrea and her friend
or colleague at Columbia

come up with this idea of a solar powered

inflatable light, lantern.

So, you can see a couple pictures of this.

The picture on the left
is their original version.

It looks like a pillow, but it actually,

that lantern packs down to
the size of your iPhone,

and it like, it sort of straps together.

I wish I had one in,

I have a bunch of them
in my house somewhere,

but it's very small when it's deflated.

And part of what they figured out

is you could create
this very small package,

and then you could blow it up

and it would create this
lantern like effect,

and it's totally waterproof.

So the image on the left
is their first version,

image on the right's actually
their predecessor version.

This one, that one on the,

sorry, I guess it's

the one on the, sorry,

the one on the left is your,

is the original version.

The one on the right that
has the phone attached to it

is actually looks more like a box,

so this one, that one also packs down.

It's a little bit bigger than your iPhone.

It's like maybe, but it's
the thickness of an iPhone,

but it's like a little
bigger kind of footprint,

and it also, it like blows
up so that it expands upwards

to create a box-like product

that you can then plug your phone into.

There's one USB charger.

So this idea, so LuminAID was really born

of this idea that they could
create lighting products

that really were particular
to people who needed,

like lack of power infrastructure.

And they did for a long time, I mean,

their main customers
continued to be the UN,

Doctors Without Border, ShelterBox,

the Red Cross, Convoy of Hope,

but they also do sell to some

like hiking and other sort of outdoor.

Well, of the reasons they do that

is because natural disasters,
as you might imagine,

are very, they kind of,

they're very unpredictable.

And so part of what they do
to smooth out their revenues

is to actually sell regularly
to more outdoor enthusiasts,

and then they're ready to go,

because they have good
inventory management systems

that allow them to like
really ramp up production

in a post-disaster context.

So, that's LuminAID's great company.

You may know them also because
they were on Shark Tank

and they got invested in by Mark Cuban,

which is a very interesting story.

And Andrea was at Booth, and
then has taken this company

and actually sold it
a couple of years ago,

and continues to be involved.

She won the Social New Venture challenge

here at Booth in 2012.

Okay, so what I want to talk to you about

in terms of this case study is like,

how are they doing this?

So again, first thing is you
really need to think about,

what are you trying to achieve?

What's your theory of change?

So quickly on this,

an intended impact

is really describing your
point of accountability,

like what is your company going to do,

and what are you going to
hold yourself accountable for?

And then what you need to do is,

so once you understand

what you actually are trying to achieve,

and the words intended impact,

you can't be general.

You need to be specific,

so what are you actually going to do?

And then, who are you going to do it for?

And what are your most
priority populations?

So, I'll give you an example of LuminAID.

So LuminAID's mission

is that they're committed
to providing light

for those without access to a safe,

reliable lighting source, right?

That's about as general as it gets,

and most mission statements are,

but the intended impact
that they have defined,

and this is like a little old,

I've talked with Andrea about this before,

so the numbers are actually
determined by them.

But, to make available, let's say,

in like a particular year,

to make available a million
lights and charging products

to nonprofits, NGOs,

and governments working in
underdeveloped communities,

especially in disaster relief, education,

rural development, and
women's empowerment.

So that is a different,
it's a much clearer.

So we know who, right?

We know nonprofits, NGOs,

and governments are their customers.

They're going to work
with those organizations,

especially in these particular industries.

They're thing that they're going to hold

themselves accountable for

is a million lights and charging points.

Very clear, right?

It helps you really see what
they're trying to achieve.

So we have to start there,
that's your intended event, okay?

And then you build a theory of change.

If you're going to do that,
you're going to achieve that,

what activities do you have
to undertake to achieve that?

That's what's really important,

that's your theory of change.

And then once you define your
activities and approaches,

what outcomes are you going to seek?

Okay, so this is an example,

this is a center for
employment opportunities,

this is their theory of change,

just to give you another example.

So they're a program model,

they've got life skills training,

they have transitional jobs,
they have job placement

and they have post-placement support.

And those activities drive job readiness

and initial engagement with workforce,

and those are their short-term outcomes.

Really simple, right?

And part of this is like

once you define this thing over here,

your long-term outcome,
that's your intended impact.

What are you really trying to do?

And to be specific about that,

part of what you need to
do is then back up and say,

"What do we need to do?

What is our work?

And what can we expect to see from that

in terms of the outcome?"

So, this is a basic theory of change.

This is just one, there
are many, many out there.

And really, the outcomes pieces
becomes really important.

What you really want to do is think about

defining your outcomes in a
way that helps you understand

how you're contributing to the impact

that you'd like to see.

And I will tell you, I mean,

I worked with hundreds of startups,

most startups are unable

to achieve this level of sophistication,

but it's not that hard.

They can do it.

It's really thinking about,

what is it that we're like,

what is that change in behavior status

that we're trying to achieve

for the organizations

and the people that we're working with?

So, what is a good outcome?

A good outcome is framed in this way.

It starts with a directional word,

so improve, reduce, advance, lower,

fixed, whatever, that's fixed,

it's probably not a directional word,

but like, whatever your
directional word is,

combined with the thing you
would like to see changed.

So, just measuring activities

that we held classes, like
counting classes, not helpful,

that we improve parenting skills

is actually what we're after.

And there are some basic ways

that organizations can
do this by surveying,

by talking to their customers.

It doesn't have to be like some big fancy,

pre and post-test thing.

Part of this is you're trying to get

an approximate understanding

of that change in behavior or status.

So as LuminAID thinks about this work,

their theory of change really prioritizes

the activities that they
see linked to the outcomes.

So this thing on the right,
you're seeing this sort of

set of image is actually their outcomes.

These are the things that
they are trying to achieve,

and each of these if
you go on their website,

I think this is still there,

I pulled this a couple years ago,

each of these things,

and you can see that
these elements are all,

they start with that directional
word, for the most part.

Like the on the bottom left,

improve access to healthcare,
health services, right?

The idea is that these lights

actually improve people's ability
to access health services,

breaking down barriers for
girls, women, and girls,

like showing them, that
you, a lot of this,

their lights get used for helping girls

in terms of being able to
help people study at night

and be safer, right?

Especially in a post-disaster context.

If there's no light, you can't
go outside and walk around

without worrying about your safety.

So each of these boxes,
and if you click on these,

they have sort of stories
that go along with them,

these are great outcomes.

Part of what's interesting

is that they also have
built into their operations

elements that may be unique to them

simply as a result of the way

that they're thinking about their work.

Okay, so what does that look like?

Here are some of the things that they do.

So one thing they've done is they had this

Give Light Get Light campaign
where people, if you buy one,

they will give one, which
helps to kind of further their,

I mean, I talked about their sort of

smoothing their revenue streams by selling

to the outdoor enthusiast market,

but also they offer people
an opportunity to buy two,

and make sure that one of them supports

some of these outcomes that they're after.

They have an NGO subsidy program,

so it increases, reduces
either the cost per light,

and therefore, or they have
like bulk purchasing essentially

that allows organizations,

including some of their
big clients, like NGO,

the kind of,

like I said, the Red Cross or others

to be able to purchase in quantity.

But the smaller the nonprofit,

the more of a subsidy
they can get in terms of

buying lower cost lights.

They do a lot of bringing
awareness to the value of light,

so part of their work is not just saying,

"Hey, we're going to just
sell to our customers.

We're actually going to go out and talk

to people like the Red Cross.

The Red Cross is all over the world.

We're going to talk to
people like the Red Cross

and explain why light increases
safety and productivity,

and why it's really a necessary ingredient

in the work we're doing."

They are not the only ones

providing these kinds of products,

and I think part of what
they're trying to do

is actually build the whole sector.

And then they do a lot of sales
to these large intermediate,

larger intermediaries,
like I said, the Red Cross.

What's interesting about that,

and you can kind of double
click on that last one,

one of the things that they do,

they manufacture these in
China, as you might imagine,

and they have large warehouses

where they keep these products,

they actually have chosen as a company

to keep a lot of lights in storage,

to essentially increase their
inventory carrying costs

as a company, which is like,

generally speaking,

not something you ever
want to do as a company,

but they have chosen to actually increase

their inventory carrying costs

and have unused lights sitting around,

because you never know
when a natural disaster

is going to happen,

and so they want to be
prepared and ready for that,

to be able to ship those
lights immediately,

and then crank more out,

but to be able to have some
inventory just sitting there

so they can get it out the door

whenever a natural disaster might occur.

And they don't do that

because it's going to
make them more money.

In fact, it's a drain on their resources.

They do that because it's
part of what their mission is.

So there's these nuances to how

the way you run your business in order,

so this is really what
that theory of change is,

like what activities,
like why do we need to do

these certain things?

And these things can
kind of feed each other.

Like once you decide what
you're trying to achieve,

you can think about how it's
going to impact your activities.

Okay, so then you need

to build simple collection activities,

and there's lots of ways to do this.

Certainly you can just
actually track activities,

thinking about what are those metrics

that then lead to the
outcomes that you're after.

You can look at financial metrics.

There are often financial,
especially if one sale,

the sale of one widget or one light

or whatever you're selling
is equal to impact,

actually looking at financial
metrics and who's buying,

what the margins are linked to that

can often be a great way
to understand impact.

You can definitely do benchmarking

and we will talk a little bit
about some of that in a bit.

And really in the longer
run, I think kind of

trying to do a little more
on this outcomes basis.

So, that's the first part.

So first thing you gotta
set up the system, okay?

Then the second thing you
need to do is actually use it.

So this is an example of,
this is from LuminAID's

annual report from a couple years ago.

They're reporting data to
investors and stakeholders.

It helps them increase
their accountability

for kind of the activities

that they've said they want to do,

and it really provides
some of that transparency.

So, this is, again,
from several years ago,

so it's much older data,
not a million lights.

They've gotten a lot bigger since then,

but this gives you a
little bit of a sense of

the kinds of organizations
that they've been able to get

lights in the hand of kind
of post emergency response,

and that kind of transparency

and really collecting this kind of data

can be really helpful for our company

as it holds itself accountable,

and you only can do this by
having good measurement systems.

Okay, so that's,

that is sort of on the
social entrepreneur side.

It's collecting the
data and then using it,

and continuing to have that data

feed into the decision making

that you are doing as you think about

the overall work of your organization.

Okay, so that's the
social entrepreneur side,

so I want to switch over
and talk a little bit about

the impact investing world.

So, these are now the people who fund us,

so we've talked about
social entrepreneurs,

and now I want to talk about
the people who fund them.

So a colleague of ours, Jessica Jeffers,

who's at the time was at Booth,

and did some work with
some folks at Wharton

and Georgia State on
understanding what's happening in

the implementation of contract,

contracts in impact investing.

So what they wanted to under,

they actually looked at
hundreds of examples,

like real examples, actual documents

from impact investors who,

and what they were able to look at

were essentially their term
sheets and their contracts.

And so, what they found in
looking at these contracts,

right, like what gets put in the contract

often gets focused on

is that the way that a lot
of the impact was happening

or getting codified
was in what they called

operational impact.

So funds would actually,

the investors themselves,

as they were making investments
in these organizations,

and they would

look at what was being
tracked and measured

in their diligence process,

and would set up sort of some requirements

around impact measurement.

I will say, I've seen some of this data

that they were working with,

and a lot of it was like there's
kind of a main term sheet,

and then there's an addendum,

and most of this work was being captured,

the impact that was being kind
of captured in the addendum.

So it was part of the package,

but what they often were looking at is

what are the ways in which we can measure

the sort of operational impact?

So some of that was like, what
do we want you to measure?

Like identifying, measuring,

and reporting on some kind of goals.

So again, this is like

what I just talked about

the social entrepreneurs need to do now,

here you're seeing
actually impact investors

are asking for that upfront

as they're making these investments.

But there were other things
too around like veto rights

on changing the business model,

thinking about like what other, right,

what other sort of rules, rights,

and responsibilities they
were going to be expecting

from the entrepreneurs,

from the company in pursuit of impact.

There also was sort of this like

what the authors of this called
kind of aspirational impact,

which was much more this
like big sort of vision,

and not so much, there was not,

that aspirational impact
was tied down a lot less.

So, high rates of operational impact,

lower rates of like really this sort

of codifying the aspirational impact.

And I think you see
this in the real world,

so this is again from that same
recent survey from the GIIN,

and this is at like
incorporating impact goals

into investment terms and
the frequency of that.

This is from 307 impact investing funds

that were self-reported.

They are actually codifying impact targets

within their legal documents,
but that's still only 50%.

And there's other things they're doing,

thinking about adjusting
their time horizon,

providing flexible repayment structures,

lowering the cost of capital,
like those are great,

but a full 36% in terms of
incorporating impact goals

into the actual investment
terms are not doing anything.

And most, you know, about a
half are are doing something.

So, it's still a work in progress

kind of in terms of what actually gets

legalized in the actual legal documents.

So much of this then is
on kind of the more of a,

a, you know, kind of a
informal maybe basis.

Okay, so I want to just,
in that informal-ness,

I want to have one more poll.

This was just sort of because it's fun.

What do you think,

how frequently do you
think impact investors

actually measure their social
environmental performance?

Oh my god, I love it.

Nobody has said never, I love that.

Literally nobody has said,

that makes me happy.

Okay.

Oh, one person.

Oh, slowing down here,

so I'm going to end the
poll and share the results.

So most of you are saying quarterly

with a big chunk of annual.

I appreciate nobody said, like
only one person said never,

and that makes me sort of happy to hear,

because you would think that there's

not very many people that never.

Okay, so most people quarterly,

lot big chunk annually,
some, the other ad hoc.

So, let me show you what the actual is.

So, quarterly and annually
is exactly where you see

the biggest concentrations,

I think if actually the
biggest is in annually.

So kind of once a year,

they ask their portfolio
companies to report,

and then they are reporting as well,

or they're looking at measurement.

Almost nobody is actually never
doing it, so there you go,

but I think that's where you're seeing,

and very few are doing
it on an ad hoc basis,

which I think is great,

which means this both
never an ad hoc feel like

they're like kind of secondary thoughts,

so I think most people
you're seeing doing something

either quarterly or annually.

Okay, so what are people doing?

What is the method that most funds,

again, this is now we're
talking about funds

and impact investors, what are they doing?

This is from a couple years ago,

this is from their June, 2019 survey,

the GIIN again.

And at the time, so this
was a little while ago,

but my guess is, and I
have a little more data

I can show you.

My guess is this has gotten
a like a little bit better,

but most are using
qualitative information,

so 66% are using qualitative information

to measure social
environmental performance.

Some are using these

are using their own proprietary metrics,

but they're not really aligning those

with internal framework.

And this is the one that I
think is changing the most,

because as more frameworks have
started to get put out there

and more have gotten adopted,

I think you're seeing some movement here

in the sort of this
proprietary internal metrics.

But kind of the big
things that are happening

even between 2019 and now,

so these are some of the big players.

If you are interested in this work,

I would highly recommend going

into this Impact Management
Project, their website,

and spending a little time
understanding this organization.

So the Impact Management Project,

I believe it's outta the UK,

is a group of the kind
of the biggest players

with the biggest dollars
in impact investing.

So there are a lot of little funds

that are part of the
Impact Management Project,

but there are a lot of the big guys too.

And they have sort of said,

and they're mentioned a lot of ways

the sort of pusher of this,
these words impact management

in this industry.

They have a set of sort of,

I don't like call them something,

but I would essentially
call them doctrines,

like sort of things that they believe,

and there are a handful of them.

And you can go read about
kind of what they recommend,

and they're relatively high-level,

but they provide some real guidance on,

what does it mean?

And I think this is kind
of that like, you know,

if you're going to call
yourself an impact investor,

you should probably have impact.

And so that's where, and
positive impact in particular,

is really where they're coming out.

We want to make sure we're measuring

to really understand both the positive

and the negative impact
of what we're doing,

and what we're doing as an investor.

So, the Impact Management Project

is kind of this high-level orientation,

and I think the GIIN is a big part of that

and has been doing a lot of
work in this area as well.

In terms of more

the like underlying
sort of infrastructure,

Impact Management Projects more
like a sort of a framework,

the infrastructure,
the two biggest players

in the infrastructure are GIIRS and IRIS.

And now IRIS is now called IRIS+,

so they've like added a plus,

which has to do with some additional

standards and reporting.

But the way you can think
about this is IRIS is like...

If you ever spend any time
looking at 10-Ks or 10-Qs,

which are the publicly reported data

that public companies in the United States

have to report 10-Ks and 10-Qs.

If you look at a 10-K or 10-Q,

you will see in there that
part of what is required

is that every section has
a standard definition.

So when you look at one 10-K

and you look at one for one company,

and a 10-K for another company,

it's the same definition
when they talk about things

like inventory carry,

or (inaudible) or whatever.

Okay, so that's what IRIS is trying to do.

They're trying to create
a set of definitions

for impact terms that are
the same for everybody.

There's also SASB being the stand,

the sustainability,

the sustainability,

it's like the accounting
terms but for sustainability,

but that's just sustainability,

whereas IRS has definitions
that are like those,

much wider than that, includes
a lot around social outcomes

and governance outcomes.

Okay, so that's IRIS,
is like the definitions.

And then GIIRS, you can
go to them and actually

ask them to rate you,
and it's a little bit

like getting like an S&P credit rating.

You can get a determination from GIIRS

about how you're doing.

Okay, so these are some of the big,

you know, the big players.

The other big thing that's happening,

and I think this is so fascinating,

is the UN's sustainable development goals.

And if you were in, if you were,

I would like be super
interested that I have,

next time I do this, I'm
going to do a poll on this.

Who's heard of these?

Because it's becoming much,

much more common that
people know what this is.

So, these are the sustainable
development goals.

There's 17 of them.

There used to be something

called the Millennial
Development Goals, the MDGs.

Most of you probably don't
remember that because maybe were,

I don't know, it depends
on how old you are,

but most of my MBA
students don't about those

because they were millennials,

so they were from like the 2000
to 2015 or something, right?

Right in there, and the way that

the millennial development
goals were set up,

which is kind of a fun fact,

is the UN, like seven
people at the UN were like,

"We should have some goals that

the whole world can get behind."

And so they sat in a
room, like seven people,

and they came up with seven,

I think it was seven or eight goals,

and they like put them out there.

I don't actually know
this, but I suspect that

even the UN was surprised by how much

people got excited about these.

So the millennial development goals

really had a lot of uptick, and they,

people really got behind

kind of reporting and
thinking about these goals,

and thinking about how we
were going to get there,

and it kind of became
this organizing system,

so that was the millennial level goals.

And then when they kind
of came up for renewal,

so to speak, and I think it was 2015

was kind of the end of that,

the end of those goals with
when they wanted to reach them,

and they ended up
reporting on how they did,

and some of them they did better,
and others they did worse.

Anyway, the UN undertook a
much more comprehensive process

to come up with this
sustainable model goals.

And this is really what you
see are these seven teams,

so it was very collaborative process,

not just seven people sitting in a room,

which is probably the best,

but really collaborative process
across many organizations

to kind of come up with these goals.

And what's particularly
cool about these goals,

and you can go on their website
and play around with them,

if you click on say number nine,

industry, innovation, and infrastructure,

behind each big goal are a set of outcomes

that they're after, and a set of metrics,

remember, back to our
theory of change, right?

So, a set of metrics that guide those.

So part of what you can
do is you can think about,

okay, if I am going to,

what a lot of organizations
will do is they'll be like,

"I'm going to claim

my organization is
working on like 8, 9, 10.

Those are the three things

that most align to what I'm doing."

And then what you can say
is you can start to report,

because you go in, you
double click on number nine,

and you see like, these are the outcomes.

Okay, I'm going to start
tracking those outcomes.

Here are the metrics that
correlate with those outcomes,

I'm going to start tracking those metrics.

And then you can actually report to,

there's each of these goals
has kind of a home agency

where you can report your data.

That's very cool.

It's kind of the first time, I mean,

I've been doing this
work for, I don't know,

25 years or whatever, it's the
first time I've ever seen a,

any kind of consensus
about what we're measuring

and what we're after as like, globally,

I mean, and it really is globally.

So this is something
worth understanding more,

and I think one of the things
you can see in the data,

so this is back to that same survey,

it's really the SDGs and IRIS+

that are gaining the most traction.

So, what this is this is the survey,

the same survey from 2003

that I showed you earlier from the GIIN.

This is they're asking this question

about use of standardized
frameworks and principles,

so as a kind of framework
for guiding strategy,

you see, I know like the
number is really tiny.

I can't get it to be bigger.

I think it says 76%

are saying they're using
the UN STGs as a guide

for their strategy, which is great.

Then you also see these info,

so there it is impact management norms,

so that's not doctrines, norms,

although I would say the UN SDGs

are much clearer and much more detailed,

the norms are a little
bit more high-level,

so I think you're really seeing

these two types of

frameworks kind of lead the pack.

And then in terms of tools and systems,

IRIS+ is just like the breakaway winner,

relative to any of the,

like the GIIN has their own reporting,

and not actually, the GIIN
helped to create IRIS+,

but sorry, not the GIIN, the
Global Reporting Initiative,

SASB, there's a bunch of others,

but you're really seeing
IRIS+ kind of be the breakaway

underlying infrastructure
that's being used.

Okay, last thing, and then how am I doing?

Am I doing okay on time?

- [Kara] Yep, absolutely.

We have great questions,

so we'll do those at the end, thanks.

- Great, so last thing
I just want to bring up

is this Impact Multiple of Money.

Someone mentioned this in the chat.

So, this is another framework
that's getting some traction,

although I would say really
with much bigger funds.

So this was developed by the RISE Fund,

which is a PE platform, so
private equity platform,

and developed with, in
conjunction with Bridgespan.

And the idea behind the
Impact Multiple of Money

is that you use a theory-based approach,

so you sort of say, "Okay, in theory,

what kinds of outcomes would
I expect from the literature?"

I'll give you this, this
is the example comes

from the article about this.

So they, the RISE Fund
is an investor in EVERFI.

EVERFI, it provides online
training for a whole host

of types of interventions,

and one of the interventions
that EVERFI offers,

one of the products is called Haven.

Haven is a online training to
try to prevent sexual assault,

in particular with a
focus on college campuses.

So, we know from data that
10.3, and this is in the US,

10.3% of undergraduate women,

and 2.5% of undergraduate men

experience sexual assault every year,

and so Haven is designed to try
to prevent those encounters.

Okay, so we know from according to,

so this is the way the Impact
Multiple of Money works.

I'm going to explain this.

So, what they start with
is the data, the research.

So according to a 2007
study that evaluated

the effects of an in-person course

on preventing sexual
assault that was taught

a northeastern United States University,

people who got the in-person
training at that university

saw sexual assault at the
university decline 19% for women,

and 36% for men.

That's amazing, that's great.

We want to see those kinds
of results in interventions.

So then what EVERFI is saying is,

okay, well we know this in-person
training in the northeast

had these impacts, so
let's try to understand,

if we know they did,

how do we extrapolate that for our own,

to quantify our own impact?

IE, to create a Impact Multiple of Money.

So, this is essentially what they do.

So what we know is,

sorry, that's a K, should be an M.

Data tells us that an intervention that,

like if you can reduce sexual assaults,

for every sexual assault you reduce,

you save 3 million in sort
of savings to society.

So you try to quantify what
the savings to society is

in the context of that intervention,

and we know that 10%, 10.5%
of those receiving this,

receiving the benefit actually,

or benefit from the intervention,

and the company reaches 3 million people.

If you multiply those things together,

you essentially get a value
for every dollar invested.

I'm sorry, hang on.

You first you have to multiply these,

and then you have to divide
by the amount of money

that was required to get to that point.

So if it took $20 million
to get to EVERFI breakeven,

then you say it's $20 million.

So you take the value at the top,

and then in the numerator,

and then you divide by the amount of money

it took to launch the company, 20 million.

The impact multiple money is 47,000

for every dollar invested.

And I made these numbers
up, just to be clear,

like these are totally made up.

But just to give you
an illustrative example

of how you would create,
how you would calculate

an Impact Multiple of Money.

And if you're the investor,

and you put in 25% of that 20 million,

you get to claim that 25%.

So, that's the Impact Multiple of Money.

I think it's a really clever idea.

I think what is challenging,

and I think this is
something that the RISE Fund

is trying to do better at, is, you know,

EVERFI is, or Haven is a
program that is online, right?

Not in-person, and the last I checked,

the northeastern United States

did not look like the whole
rest of the United States,

and so you're departing from the data

about a particular place in context

to make an assumption about
what's happening everywhere

with an online course.

And so, the thing about
an IMM is that the,

you have to have good underlying research

that very closely linked with your theory

of change at your particular investment

in order for it to have meaning,

because otherwise, it's just
garbage in, garbage out.

So it is something that's
getting subtraction,

the problem I think with this is that

you have to have this clear,

like the research has to be pretty aligned

for it to really be meaningful.

Okay, so my last point is just to say

all of this is critical,

both what the social
entrepreneurs are doing

inside their organizations,

and what the impact investors are doing

in terms of impact
management and measurement,

because it's a critical
management function,

it's a critical thing we need to do,

because without it, a
little bit of this like,

if a tree falls in the
forest doesn't make a sound,

if we're an impact company,

if we're going to claim
to be an impact investor,

we're going to claim
to be an impact company

and we're not measuring
and managing our impact,

then are you really an impact company?

So it's all in the DNA of the company,

and really kind of doing
that measurement work.

So, that's what I got.

I will stop sharing,

and I'm happy to take questions.

- Yeah, thank you.

I'll let you catch your
breath for a second.

That was really fantastic.

Thank you, Christina.

So I'm going to do a couple in the chat,

and then it might be helpful
if you just want to look

at the Q&A yourself, Christina,

because some are kind of
long, and some acronyms,

things like that.

But there's a comment on in the chat

maybe about 10 minutes ago or so,

"Comparing the aspirational
and operational impacts

or valid indicators of
achieving the intents,

are there certain approaches
to do such comparisons?"

It's on the right-

- I didn't totally
understand the question.

- [Kara] Yeah, that's okay.

- [Dr. Hachikian] But the...

- [Kara] It's from Dr. Bermane,

if you're still on, feel free to repost

on the right there.
- Are there any aspirational,

operational.

Yeah, I think the thing about
the aspirational impacts

is that they,

what the researchers found in the data

was an aspirational didn't have much,

like, it wasn't tied down,

it was sort of more like
a mission statement.

You know, "We're going to end hunger,

we're going to, you know,

whatever, solve poverty."

And it was much more of
the operational impacts

that actually gave grounding,

but there was a pretty wide
difference between those, right?

The operational impacts are
going to be much more like basic,

so, yeah, I think that's
where you're seeing

some of the differences

in terms of what those
two different kinds of

codification in the legal document is.

Okay, so.

So we talked-

- The first one that was

right at the beginning
of the presentation.

- Yeah, and we talked a
little bit about the STGs.

Yeah, I'm like a big fan.

I think what's hard about the STGs,

and now you'll see,

I mean, I don't know,

I spend a lot of time in this space,

so I see them everywhere now.

I mean, they're just like,

it's like when you buy a blue car,

then everyone has a blue car.

You know about the STGs, and
then you see them everywhere,

and people are putting
them on their website

and talking about how
they're aligning their work

to these like, the little boxes.

The problem is I think a
lot of people are skeptical.

It's an easy thing to be like,

"Oh yeah, I totally do the
STGs, like I had this,"

and not actually do the reporting work,

or aligning your work to the measurements.

So it's, like a lot of
things, it's in the details.

Impact investing firms
can effectively gauge

impact derived from
second level beneficiary.

Yeah, actually there's a great,

so the one of the questions
in the chat was about

the sort of second level beneficiaries,

or what I sometimes refer to as

value spillover effects.

So there's actually a great, it's old,

and here again I'm happy to share,

we can go back and sort of share articles

if people are interested in the details,

but there's a great article called like,

"Making Hybrids Work,"

and there's a framework that talks about

how aligned are your customers
and your beneficiaries?

Like, is the person who pays

the same as the person who receives?

So that's like one dimension,

either they're the same or they're not.

And then it's a question of like,

is the benefit you're getting direct?

So think about like,

if it's a healthcare intervention,
you get the healthcare,

you are better, like it's
immediate, it's direct.

Then there's value contingent spillover,

they like spillover effects.

So, spillover effects are like,

microfinance is a great example of this.

If you get a loan, the thing
they do, if you get a loan,

like that's nice, but it
doesn't actually create

the impact you want to have.

The loan helps you improve your business,

and by improving your business,

then you can do things like
invest in your kids' education,

invest in your house, have a safer house,

move to a nicer place, whatever.

So these are these kind of spillover,

and what you have to do to
the question that was asked,

you gotta track those spillover effects.

So thinking a little bit about like,

are your impacts direct?

For every widget you sell,
you have a direct impact,

or is there a couple of steps forward?

And if you're going to do that,

I think this is why microfinance has had,

microfinance as an industry

has had such a hard time
quantifying its impact,

because much of what it does
is actually a spillover effect.

Okay, there's question about
traditional corporations

utilizing frameworks for measurements CSR.

I mean, I see very
inconsistent use of this.

I mean, I think quite frankly, like,

we're just trying

to get the impact
investing folks to do it.

I think you see, like the
CSR as a whole other world.

If anything, I think where
you're seeing public companies

align is much more on the SASB,

like the sustainability standards,

because, I mean, it's
like not just coming,

it is already here that the companies,

public companies in particular

are going to have to report on
their environmental impacts.

That ship is like not just,

like it set sail and it is
like coming into the harbor.

So, when you talk about
traditional companies,

I mean, that's just coming
down the pike quick.

They tend to use more the SASB,

the the sustainability standards,

because it is just focused
on environmental impacts,

and it is focused on sustainability.

Okay, intersection of sustainability

and mission driven ventures.

How can organizations

effectively balance profit and purpose?

Onuh, is that how you say your name?

Onuh?

I spent a lot of my energy,

my brain energy thinking
about this question.

I actually wrote an article

for the Booth Review on this
topic of how as a manager

do you keep your team all
rowing in the same direction

when it comes to this
purpose and profitability?

And I was on the board of a company,

actually a company that came out,

another one that came out of Booth,

and I spent a lot of time,

and I talk about this in my article,

I spent a lot of time working
with the CEO on this problem,

because invariably, there
are people on your team.

So even if you as the leader can kind

of hold these two ideas at the same time,

frankly, like in a lot of ways,

some of your team is going to pull you

more towards the financial profit side,

and some of your team

is going to be pulling you
more towards the impact side,

and they both are there for both reasons,

but invariably, you're
going to get pulled.

And so part of what you have to do,

and so I'm going to talk
about this a little bit

in the article, you have
to teach the other side

why the other one's
important, more or less.

So on the impact side,

you have to explain to
the impact pulling people

that if we don't make money,
we can't do any of the impact.

And you have to show them,
you can't just tell them that,

you have to show them in the numbers,

explain how the numbers work,

and help them understand
levels of threshold

where numbers get to be too important,

versus where impact gets lost.

So, that's the impact side.

On the financial side,

what you have to explain to them

and show them in the details

is that if we screw up the
impact, we will actually

destroy the financial
value of our company,

that the financial value of the company

and the impact are actually tied together.

And so you can see these numbers
in the financial statements

will go down if we essentially
screw up the impact side,

and we therefore lose
trust, lose credibility,

lose our reputation, lose our team,

et cetera, et cetera, customers.

So a part of what we need
to do is actually come at

helping people on your
team understand both sides

by helping them see why
what they care about

will be impacted by the
choices that they make

in the kind of day-to-day decision.

So, that's in the Booth Review.

I just summarized the article,

but you can read the whole thing.

I think it's great.

- I can pull that and post it, yeah.

Just a couple from the chat,

I can just read a couple
quick ones probably.

Do you see data scarcity
being a common barrier

for measuring outcomes?

- The sort of scarcity piece imply,

to some extent, implies that like,

you're only looking at data
that's sort of out there.

Companies have tons of data internally,

and that's mostly what they're using.

So, I don't think data
scarcity is the issue,

I think data, willing
to mine your own data

and investing in mining your own data

is probably the bigger barrier.

- I'll read one more, and then
you can go back to the Q&A.

I'll pull some links to
Chicago Booth Review.

What role can or should AI
play in impact investing,

such as measurement, any innovations?

Are there any innovations
happening in the industry?

It's kinda a two-part.

- Yeah, so I mean, AI is everywhere.

I spend most of my time in this,

in sort of impact investing,
social entrepreneurship,

social entrepreneur or
social venture space,

but I do spend a little time working

with our traditional ventures.

I mean, you're not,

like, I don't know how any of you

are in the venture
capital space right now,

or private equity for that matter,

those markets have really dried up.

There's not nearly as much
money going out the door

as there used to be, and sort of a slip.

But the companies that are
getting funded are those with AI,

like almost everybody's got
AI in what they're doing now,

it's just in inevitable.

What's interesting when you like,

like the intersection
of measurement in AI is,

what people are starting to talk about

is doing like predictive,

so the Impact Multiple of Money,

which we just walked through,

is essentially a way of thinking
about predicting impact,

and what is AI and or machine learning,

but predicting what's going to happen?

So, this idea of like a theory based,

so understanding what's the theory behind,

"If do X, I will get Y,"

and getting better and better at that

through the sort of machine
learning or AI tools

that we have available to us now,

being able to predict,
and therefore being able

to make better investment decisions,

make better decisions in our companies

about where we put money,

because we're able to see

what that potential impact will be.

And then you have to kind of follow up

and make sure it's happening,

but that's kind of where
I see the intersection.

People are talking about
like predictive impact

and predictive analytics for impact,

like if you go on the Stand
for Social Innovation Review,

you can read a little bit about that.

Okay, I'm going to do one
that's not about this topic,

but interesting one about an MBA.

- Yeah, I was going to ask
that at some point anyway,

that would be really great.

- So, somebody asked this question

about going into for-profit
impact with or without an MBA,

what type of person do
you think makes sense for

to get an MBA first,

and then the biggest benefit of an MBA?

So, I really,

I don't,

you know,

I am biased, obviously.

My belief is that

it is the tools you learn
in business school today

that are the most needed in the sector.

Whether we're talking about
the for-profit social ventures

or the nonprofit sector,

or quite frankly the traditional
profit maximizing sector,

what do we need to do
to solve like, you know,

the world has a lot of problems,

which I often will break
down into just two,

which is climate change and equality.

At the end of the day,

that is probably the two
giant biggest forces,

and many of the other problems
that we see in the world.

And we need a lot of,

we need a lot of smart people to help us

move the needle on those two issues.

When you think about what
it is that needs to happen

to move the needle on those issues,

we need more resources going into those

to solving the problems.

And quite frankly, we need
to be much more efficient

in how we tackle them.

So it's not just more dollars,

it's actually like how do
you ring out of every dollar

that's available more impact?

So that's about efficiency,
that's about use of data,

that's about operations,
that's about supply chain.

That's about how you use your
financial management tools

to be able to understand,
like it's, you know,

if we teach you anything at
Booth, it's that stuff for sure.

The other piece of it is that we need

to know what we're doing is working.

We need to prove the
efficacy of what we're doing,

and we need to keep doing that,

and we need to keep managing to that.

And again, same idea.

Having the tools to be able to understand,

what am I trying to
achieve, and am I doing it?

Those two pieces,

proving efficiency, I'm
sorry, improving efficiency,

proving efficacy are the exact things

that you learn in business school,

and I think more and more those tools,

whether you want to go work
in no profit or for-profit,

you want to do something into
corporate responsibility,

or just like embedded in a company

trying to help make it a traditional

profit-maximizing company better,

or even the government, right?

I mean, we need those tools.

So I'm a big proponent, again,
I am biased, I will admit,

but I've been following the
sector for a very long time.

I think more than ever, it is those tools

that are really going to drive change.

So, I don't have a strong opinion

about the second part of this question,

which is the type of person

that makes sense to get an MBA first.

There's lots of reasons I always advocate

that you should get an MBA

because you know what
you want to do with it,

not just to get an MBA.

So that's my opinion,

but I think we need more
people who care about

the big issues that have the tools

that we can teach you in business
school to be in the world.

- Yeah, and that's a lot
of what you're saying

is I have to think the impetus

of our Civic Scholars Program back in 2016

with the Neubauer Family Foundation,

who funds that for those
to have more people,

great leaders with these
backgrounds and skillsets

in nonprofit and government,

again, I talked about the beginning,

I can repost those links as well.

So, I really appreciate that answer.

So I will, yeah, probably
have about 10 more minutes,

and then,

so you can-
- Yeah, I'll try

to do a couple more.

There's a question about kind of which

reporting standard to follow.

I would ask the other people
in your peer set which,

what they're doing.

If you're focused on energy climate,

change in sustainability, I mean,

I think IRIS+ is probably
the one that's going to win.

That'd be my guess over SASB,

and I think, again, I thinks SASB's

going to be much more important
when it comes to like,

the public companies and
public company reporting,

and the SEC,

but if you're a relatively small company,

and you're looking for

in VC or impact investing dollars,

I think IRIS is the way to go.

Don't quote me, because
I don't actually know

what the right answer is,

but what I would suggest to you do

is talk to some of the
people in your peer set,

talk to some of the investors

that you're interested in trying to,

like maybe the next, like
in the next round of funding

that you might want to get and ask them,

what are they looking for,
or what are they using?

Charles, I wish I could
tell you how to measure

the social impact of building
hospitals in rural areas,

I do not know enough about rural areas.

That's a big, like rural
United States, rural India,

rural Vietnam, I don't have any idea,

and the sort of, like building hospitals,

and I think one of the
things I will say in general

is that if you don't
have a theory of change,

if you don't know what
outcomes you're after

and why you're doing what you're doing,

then you can't build an impact
measurement system period.

So if you do nothing
else, at least start with

why are you doing what you're doing?

Like why is building hospitals
in rural areas important,

and what does that, like when you do that,

like what outcomes are you expecting?

And that's the sort of underlying,

and the Bridgespan group,

even though much of the work

is really designed for nonprofits,

you can go into Bridgespan,

you can just search Bridgespan,

theory of change intended impact.

They have like a whole cache
of resources that you can use

to do that work, and you can,

there's Stanford Social Innovation Review

also has some good
resources on the application

of theory of change to impact
investing and social ventures.

Okay, let's see.

Are there others in the chat, Kara?

- I'm not seeing anything in the chat,

and I've just been posting
a bunch of links too

to Rustandy, the SNBC
to Chicago Booth Review.

So, I'll keep scanning if you want to do

a couple more from the Q&A.

- Yeah.

So Puja, there are operational mandatory

regulatory reporting submissions
for impact measurement, no,

not in the United States.

There's some proposals in
the UK, is my understanding,

and they really have to
do with tax incentives.

So in the UK, there's some
special tax incentives

if you want to be an
investor in impact companies.

We do not have those in the United States,

but no, there are not any current like,

or mandatory, regulatory,
whatever submissions.

There are starting to be in the,

and again, in public companies,

the SEC is creating new guidance

about what public
companies have to report,

particularly in their environmental risks.

And that is like,

I don't follow it closely enough,

but there's been a lot of movement there.

So, that's the only place where
you're seeing requirements.

Let's see, companies already,

if company product already
provides some form of impact,

for instance, Starlink,
necessary to measure impact,

I think it's always necessary

to measure impact for
this reason, which is...

Well, first of all, I said this already,

you can't call yourself an impact company

if you don't pay attention
to your impact, period.

You don't get to, that's
not how this works.

Social ventures are those
that are managed, measured,

and governed, and financed,

but managed, measured, and governed

to actually achieve some outcome,

to some social or environmental outcome.

So if you're not goin to manage, measure,

or govern in a way that does that,

then you can't call
yourself an impact company.

You're just a company that
happens to have impact,

because that's really
what management is about.

That's my opinion, and I think
that's what you're seeing,

the whole of impact investing, the world,

the whole impact investing world is like,

"Oh yeah, we gotta start doing that."

We really have to with it be more serious

about the word impact, and
like actually have some proof.

So, you're talking about a company

that has some product where the impact

and the product like go together.

You don't have to get crazy
about your impact measurement,

but you should probably count

the number of products you
sell, who's buying them,

and what segments.

Invariably, you might
have different segments.

If you have a product
that creates more impact

for women than men,

and you have a very small number of women,

maybe you want to spend some time trying

to grow that market share with women.

So you can't do that,

you can't think about those questions,

about the way your product has impact

if you don't actually
know where it's going,

who it's having impact on.

And again, this all goes back
to, was your theory changed?

So I'm not advocating for like,

spending tons of money,

or being super crazy

about building some like
system for measuring impact,

but if you're not doing the basics,

then I don't think you
get to call yourself

an impact company.

So, for what that's worth.

Okay, let's see.

Data scarcity, emerging trends.

Let's see.

Do you perceive a gap between
the US versus the EU and UK

new legislation requirement?

Yeah, actually, it's interesting.

I mean, I think the UK
has been ahead of the US

in impact investing really
since the beginning,

even though the term was
actually coined by an American,

on kind of behalf of an
American organization.

I actually think the UK really
took a huge leap forward,

and they have a little more
incentive, like tax incentives.

They've got a little more robust

sort of infrastructure there.

I don't know why that is.

I mean, part of it is
just, there's a guy there,

a guy named Ronald Cohen who
kind of made it his thing

for a while, as it really
like propelled the UK.

So, there is some differences.

There's actually, if you
look up Impact Alpha,

which is that newsletter,

if you go into their website,

they actually have,
someone wrote an article

about the differences
between the UK and the,

the differences between the UK and the US

in terms of impact investing,

and I know this in
particular, because I was just

teaching actually,

we're talking about
impact investing next week

in my class that I teach here.

And there's how impact venture capital

differs between the US versus Europe.

It's from October 5th, 2021, Impact Tech,

but it's the, and it's written
by this guy Paul Miller

who runs an an organization
called Bethnal Green Ventures.

So, he lays out some
of the key differences,

and I do think there's
some key differences,

particularly I think they're
ahead of us in the US.

You see much less activity on
impact investing in Asia and

in Africa broadly.

There is absolutely activity,

I actually think Africa is like
kind of catching up quickly,

but different parts of the world,

and there's like a lot of nuance to that.

So, yeah, I do see some differences.

What else we got?

These are like, some of
these are very specific.

- Good questions, for
sure, you can answer.

Great audience.

- Yeah, I mean, this
is what we want to see

in our MBA student.

My favorite students are the ones

who ask really hard questions.

What tools from the, and
I'll take the last one,

what tools from the MBA

have you used most since
leaving the program?

You know, I mean.

(Professor Hachikian scoffing)

For me, like I'm just like,

I'll take the last two minutes to tell

a little bit of my own story.

I kind of ended up in community
development accidentally.

I wanted to do something with impact,

but I really ended up in that for-profit

social venture space sort of an accident.

A recruiter ended up finding
me, and whatever, whatever.

And I went to business
school a couple of years,

I still worked for a few years,

and then I went to
business school, as I said,

part-time, and it was
totally transformational.

It changed my life,

and I went to the
university to go undergrad.

It wasn't like I didn't know
economics or like whatever,

but business school in
particular was transformational.

And I think, we talk about the idea

of not teaching you what
to think, but how to think,

and I mean I think the frameworks

and the way that I
could approach problems,

I mean, I would literally go to class,

at nine o'clock, I'd be done with class,

and I would go home,

and I would totally change a presentation

I was about to get the CEO the next day

because of something I
had learned in class.

That happened multiple times

over the three years I was in school.

So, for me, it's hard to really
distinguish one thing that,

I mean, I have many
friends from the program.

I think that the network has
been a huge value add for me.

Booth people tend to be very
supportive of each other.

That probably happens in
lots of alumni groups,

but I find that Booth people

are really willing to pay it forward

and almost always talk to you.

But I would say the thing that
I most personally took away

is how to think about hard problems,

and it's like a combination
for me of clear frameworks.

So I just gave you a bunch of frameworks,

like the theory of change framework

that I talked about the hybrid framework,

like there's some really clear ways

to organize your thoughts that I think

I got a lot of when I
was in business school,

but it's then, like how do
I ask the right questions

and how do I think about the right data

to put into those frameworks

that really helped me to be a much,

so I was an operator for years.

I built businesses, I developed products.

I still think of myself as
an operator and a manager,

and I think those tools
have continued to be

the most beneficial for me,

and it's something I try
to bring to the classroom,

because I think that's what people need.

I mean, you got a pretty
good sense of my style

in today's class,

and this is what I teach.

I mean, I try to help you think about

what are the frameworks that
are actually going to help you

organize your thoughts,

and then what do you need
to put into those frameworks

in order to actually get
the outputs you want?

So, that's what I would say.

Good luck to everyone on the call,

and your pursuit of an MBA.

Maybe I'll see some of
you in my class someday.

Thanks.
- If you happen

to be around, it is open
for visits this quarter too

in the evening program.

Keep that in mind.

So, thank you so much, Christina.

That was a phenomenal session,

and we'll continue having
sessions under this topic,

so keep an eye on the masterclass site,

and thank you all for your time today,

really appreciate it.

Please stay in touch.

All right, thanks.

Bye, everybody.

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