Why it will increasingly be about impact
Towards a method to measure the impact of innovations
What do we mean for others? Are our innovations changing something about society, about people's lives? Do we make our customers happy, and does the world get a little better from our work? Everyone wants answers to these questions. For Novum, that was reason to investigate whether we can measure the impact of our innovations. We have been working on this for half a year, and now we realize that it is not only desirable, but also possible in the long term. We only have a lot to do before we get there. The biggest stumbling block is the availability of usable data.
Measuring impact, a new phenomenon
Every company, every company creates value. You create or purchase a product and add value to it, after which you can sell it for a profit. In the past, as a company, you could manage that, as long as you kept in mind that the added or created value was also experienced by the buyers. If that was a good match, you could enjoy your profit as an entrepreneur. If that didn't happen, you went bankrupt. Now more is needed. Perhaps also because - due to the growing sustainability issues - we are less interested in growth and profit. In the twenty-first century, more than just money matters: it is also about what we cause in society to bad, but especially good things. That is called impact, and it would be great if we could measure it in detail, as we can now measure costs and benefits in numbers shown in the annual accounts.
Gross National Happiness
There are now more and more countries that focus on social welfare and gross national happiness. After the mountain state of Bhutan had its scoop earlier, the daily newspaper Trouw reported on Friday, January 24 that now also Iceland, Scotland and even Germany want to chart the happiness of their citizens. It is therefore a trend, which has also been made visible by the UN, which has set up the Sustainable Development Goals: seventeen sustainable development goals that make the earth a better place.
It is already very common for companies to calculate the impact of a logistics business process. In this way they can provide insight into the actual price of a physical product. This does not yet happen for services in the public domain. Novum has therefore started this exploration. We want to investigate whether it is possible to develop a not too complicated tool for measuring impact. Such tools are already available for companies, and the big question is whether you can also use such tools for innovations and services from a benefit agency such as the SVB.
The SVB provides many services that can actually only make people happy: the birth of a child, already a happy event, also leads to child benefit. When you reach the retirement age, you will receive AOW. Also not something to immediately mourn. But even with some sad life events, the SVB comes into the picture, such as the young death of a partner. If that happens you are entitled to ANW in certain cases, but there are many conditions attached to this. And you can imagine that in the stress situation surrounding the death of a partner, someone is less able to make clear decisions.
In the overviews of the benefits of the SVB, it is noticeable that the number of customers who have wrongfully received a benefit, and who are therefore confronted with recovery, is relatively small at the ANW. However, the average amount per recovery is the highest there.
Reason enough to start our research into measuring impact with an exploration of the ANW. Small interventions can have a major impact there. The most important question was how we could get the data from which you could determine the impact of the existing system at the table. That was not really easy, it turned out. The amount of data collected around the ANW is huge. It is a mess that requires specialized data specialists to develop searches. With those searches, or queries, you discover which data points are relevant for quantifying impact factors. So that you can ultimately build a measuring instrument. For example, how many receivables are outstanding and what amounts are involved? We collaborated with Impact Institute for that analysis. After all, they have already developed a measuring instrument for business. Novum is now working on designing and testing a derived measuring instrument.
With such an instrument you come to (intangible) factors that you want to measure. We want to determine the value of that. If that is possible, you can develop calculation trees in which you make clear which variables with associated units influence the final values. The calculation tree also shows which values and factors we as SVB have influence on and which are beyond our control. This way you can develop formulas that give you insight into a possible impact. But that is not that simple.
Reliable data points
Something stood out with the chosen data points. For example, we wanted to gain insight into the satisfaction of the defined target group with the services provided by the SVB based on the number of complaints. So the question was how we could quantify this value. To what extent does the number of complaints from a customer say something about how satisfied you are with the service? We discovered that that data point cannot be retrieved properly from the requested data sets, because complaints are registered in different ways. During this exploration we experienced the limitation of working with aggregated data only. The number of complaints per se is not reliable enough to be used as basic information.
For example, we had to look for a way to arrive at a more reliable data point. This also applies to required data from outside the SVB, from scientific studies. We discovered that something like that applies to every topic you want to investigate.
A lesson learned is that it is necessary to determine the data points that you need as a minimum if you want to embed impact measurement in your organization. This may mean that data will have to be incorporated into systems differently in the future. Subsequently, the question of those points is how you are going to ensure that those points are achieved. In the case of an intervention, you will collect new data and want to include this in your research. What kind of registration process do you need for this, which data definitions? How do you familiarize the entire implementing organization with those data definitions? That's where it starts. If you see that definition differently from someone else who also works with it, it will not work out. So we are not there yet. But a way has been shown. Ultimately, it would be great if Novum could be able to quantify certain impact factors per project. This allows us to show other parties, and of course especially the SVB itself, that it works. That you can indicate, for example, a picture of a thermometer what the intended impact of a particular intervention is on which group of stakeholders. With such an impact indicator you can make much better decisions about the further development of interventions and prototypes, because you also have a clear indication of the impact on the various target groups and stakeholders.
If you think further, such a tool could also be useful for other organizations. That is of course what we do it for: making the world a little better with innovation.
We have now looked very specifically at recoveries, which of course is not very nice in the basics. You do not want to be faced with a recovery. You can also throw it in the opposite direction: measuring the positive impact of the fact that you may receive benefits in the Netherlands at all. We actually do not know exactly what the impact of a benefit is on the lives of the people who desperately need it.
You actually measure the impact that is the basis of your existence as an organization. That can provide a lot of great insights, regardless of the costs and benefits. Then it is no longer about money that you receive and money that you spend. In the end we only tested one method. That is something other than validating a prototype or minimal working product with customers. Measuring impact starts at the very beginning of design thinking. The method we develop here will contribute to the innovation process. That is something completely different than when you let the measurement of impact be part of an existing organization with all the tuned and ingrained processes that entail.
Just like the euro?
Politicians and bankers once determined what the value of the euro would be. Everything has been taken into account. How nice would it be if - thanks to the methods we develop - you not only count the economy, but also the well-being of the people, the happiness we experience? Could you link a unit of measurement to that that everyone accepts, just as we accept the euro? That would be ideal.
Measuring impact is mainly about stakeholders, people who experience the importance of our actions, and less about shareholders, the shareholders who provide the financing. How nice would it be if, as an organization, you ultimately receive investments based on how much impact you make? That the interest of a shareholder, that is someone who invests, depends on how much impact an organization makes? Then you no longer talk about return on investment, but about return on impact, and ultimately 'return on innovation'.