Co-authored and edited by Britney Hamm
Success is not delivering a feature; success is learning how to solve the customer’s problem – Eric Reis
We could easily agree that a business isn’t a successful business without achieving a profit. Traditionally, businesses have been deemed successful if they create value for the shareholders, e.g., bring financial profit to the owners.
But in recent years, even the most traditional of business schools have agreed to widen the definition to include all stakeholders, which means creating value for customers, clients, vendors and the entire ecosystem. Now with the rise of socially conscious business, or transformational enterprise, the achievement of the Triple Bottom Line is the measure of business success.
For many social entrepreneurs, the TBL is defined as profit, people, planet. For us at Agora, our Triple Bottom Line is profit, social impact, and spiritual transformation. To put it another way, a profitable business is established, a social problem is solved, and individual lives (and hence entire communities) are transformed.
Yet the question then becomes, how will we measure success? We start and build socially conscious businesses for reasons beyond the Profit and Loss (P&L) Statement. How do we measure what we set out to do? How do we know we are successful?
Measurable Goals and Pragmatic Metrics
In order to measure our success, we must have measurable goals and pragmatic and precise metrics by which we can assess our advancement toward the goals.
That’s why the P&L statement is effective. Every business person can read it and understand the progress – or lack of it. The goal is clear and quantifiable: have more profit than loss. The P&L statement is a pragmatic and precise metric that shows whether that goal has been achieved or not.
The same two elements are true for measuring the success of the other strands of the triple bottom line. We must begin with figuring out what we are measuring – what are the specific, measurable goals we are hoping to achieve? Then we must figure out how we can measure it – what metrics will tells us if we are successfully reaching our goals?
Begin by Setting Measurable Goals
Every social entrepreneur has at least a foggy idea of why he is starting his business. They know they exist to solve a certain problem or make a certain impact. Yet an astonishing number of social entrepreneurs don’t have concrete, quantifiable goals. As the fog becomes concretized, measurement is possible.
Sometimes that is easier said than done, but it is important that it be done at the outset. There is no way to know if you are accomplishing something if you don’t know what you want to accomplish – duh! It is hard work – but it is the necessary starting point.
When setting measurable goals, start by identifying the social problem you wish to solve. Then begin broadly with your big picture goals and move toward the specific until you’ve identified goals you can actually measure. For instance, perhaps your business exists to help reduce poverty in a particular region. You want to create jobs as a way to reduce poverty. You could develop several specific goals out of this: create x number of jobs in the next year, provide job training to x number of people, reduce the unemployment rate by x percent, etc.
Define Pragmatic Metrics
Once your measurable goals have been set, you need a way to track your progress on those goals. Sometimes this is very simple – such as quantifying the number of jobs you have created, or using the local unemployment rate as a metric for the difference your business has or hasn’t made. Other times you may have to get more creative – metrics for measuring social and spiritual transformation are not as clearly quantifiable.
[bctt tweet=”Don’t forget that stories are a powerful metric…metrics don’t always have to be numeric. ” username=”AgoraEnterprise”]Ultimately social enterprise is about real people with real stories. Therefore the stories of transformation of those your business has impacted are just as vital success indicators as numbers on a page. When a father in your community tells of how the job you have provided him has saved his children from the hands of traffickers, you know your business has made a real difference. His story is now a metric of your business’s success in achieving one of its goals.
To determine if our social enterprise is achieving true triple bottom line success, we need to clearly identify the problem and figure out if we are making progress in solving it – whether it be poverty, corruption, human trafficking or otherwise. That starts with setting short, intermediate and long term goals related to human change. Then we must define the metrics that will be used to measure the progress of these goals.
Only when we have set measurable goals and defined pragmatic metrics can we truly answer the question, “are we achieving success? Are we accomplishing what we set out to accomplish?”