Two Metrics for Impact Management
Lagging and leading indicators will change the way you measure — and manage — impact.
What is impact?
Social change is hard. In fact, it’s complex. How can we make it easier to create social change? How can we make social change work more likely to succeed?
This article proposes a simplified process for more effective social change work. It proposes using measurement to make better evidence-based decisions toward clearer social change goals. It proposes a system for managing social change work by managing its effects, managing its impacts.
But first — what is impact? In most contexts, an impact is just an effect. In the current context, we means something different:
►IMPACT: Benefits, less harms, to people and planet generated by an organization.
Of course, we hope that our impact will be beneficial. Beneficial impacts increase the well-being of people and the planet. However, if these effects decrease well-being, they are harms. Both harms and benefits are types of impact, though most impact metrics track benefits.
What does it mean to manage impact?
When we say we want to manage impact, we mean that we want to make decisions such that benefits are maximized while harms are minimized. Because we care about these outcomes, we want to be rigorous. Because we want to be rigorous, we need information. One way to collect information is to measure.
►IMPACT MANAGEMENT: Decision-making to maximize generated benefits and minimize harms.
In recent years, impact management has been tied explicitly to measurement. The name for this combination of data and decision-making in social change is called Impact Management and Measurement (IMM).
►IMPACT MANAGEMENT AND MEASUREMENT (IMM): Decision-making to maximize generated benefits and minimize harms, coupled with the data collection necessary to ensure those decisions are evidence-based
How should I measure impact?
So, how to make evidence-based decisions about impact? Many options exist to account for benefits and harms, including GIIRS, the GIIN’s free IRIS+ metrics, Impact Genome Project, PRISM, and bespoke metrics and ratings systems. The problem, however, is knowing whether you’ve selected the right metric from all these options.
The problem, however, is knowing whether you’ve selected the right metric from all these options.
Fortunately, regardless of the system you use, you will need two types of metrics: a lagging indicator that specifies the ultimate benefit to people and planet and leading indicators to track progress toward that objective. Without a lagging indicator, you won’t know where you’re headed. Without a leading indicator you won’t know where you are.
► LAGGING IMPACT INDICATOR: Backward-looking metric used to evaluate impact that has already occurred.
► LEADING IMPACT INDICATOR: Forward-looking metric used to manage activities that lead to future impact.
Without a lagging indicator, you won’t know where you’re headed. Without a leading indicator, you won’t know where you are.
For example, you may have the environmental goal of reducing carbon emissions. This is a lagging indicator. It will take years to know if your investments have had that effect. However, you can know the carbon reduction that can be achieved by a single unit of a new technology. You can know how many have been manufactured. You can know how many have been purchases. These are leading indicators you can use to manage the business and manage impact.
These are leading indicators you can use to manage the business and manage impact.
Are these indicators connected to the SDGs?
For most investors, increasing the well-being of people and planet is too vague. They prefer to specify what these benefits are. For that purpose, the best — and certainly the most popular — system is the list of 17 Sustainable Development Goals (SDGs), promulgated by the United Nations in 2015.
There are many social benefits —artistic expression, freedom of religion, and the cultural integrity of indigenous people among them — that are not part of the SDGs. So we don’t want to think of the SDGs as the be-all, end-all of social and environmental well-being. Still, for those who want a list of what constitutes the well-being of people and the planet, this is the best.
For those who want a list of what constitutes the well-being of people and the planet, this is the best.
How does this connect back two our two metrics? A lagging indicator should track an increase in the well-being of people and/or planet. The lagging indicator may also be connected to a specific SDG. Leading indicators will track progress.
Which indicator should I choose first?
Because the lagging indicator tells you where you’re going, this is the first metric you want to pin down. Having a numeric impact goal is extremely useful in impact management. It allows you to make decisions toward a precise outcome.
Having a numeric impact goal is extremely useful… It allows you to make decisions toward a precise outcome.
Can’t I just use a lagging indicator?
It may be tempting to stop there, to only have a lagging indicator. Yet this is impractical.
It may be years before you can actually collect data associated with your lagging indicator.
It may be years before you can actually collect data associated with your lagging indicator. This is because creating social change takes time. It can take years of vaccination before child mortality rates change, years of better educational opportunities before incomes increase, and years of planting seeds before carbon-capturing trees grow tall.
To manage impact, you need ongoing information about your progress. You need information now.
Yet one can’t wait until the end of a project to measure impact. That would be like running a race blindfolded. You might reach the finish line, but you also might end up in the grass with a twisted ankle. To manage impact, you need ongoing information about your progress. You need information now. This is the purpose of leading indicators.
Where can I find these indicators?
So we know something about lagging and leading indicators. We want to use them to manage impact. Where do we find them?
IRIS+ is my favorite place to find impact indicators. You can create an account for free at https://iris.thegiin.org access their database of well-curated indicators. Here are some examples of lagging indicators I found on IRIS+:
★ EXAMPLE: Lagging Impact Indicators
Lagging Indicator 1: Area of Land Reforested (PI4907)… a measure of well-being of life on land
Lagging Indicator 2: Child Stunting Prevalence (PI3594)… a measure of health
Lagging Indicator 3: Average Student Test Score (PI9024)… a measure of education
Lagging Indicator 4: Length of Coastline Restored (PI2538)…. a measure of well-being of life on land and below water
IRIS+ uses the term “metric” and we’ve mostly been using the term “indicator.” In case you were wondering, indicator and metric have different meanings. An indicators measures a concept (poverty, well-being, inequality, etc.) that can’t be measured directly.
►METRIC: Quantitative unit of measure
►INDICATOR: Quantitative unit of measure used to measure change that cannot be counted directly
Since the SDGs and “well-being of people and planet” are concepts that can’t be measured directly, most impact metrics are indicators. Since metric is the broader category, IRIS+ is correct, just less precise.
How can I use indicators to manage impact?
Finally, it’s time to get into impact management! One simple and popular management tool is Objectives and Key Results (OKR) and it intersects very well with lagging and leading impact indicators. OKR was invented by Andy Grove when he was working at Intel in the 1970’s.
► OBJECTIVES AND KEY RESULTS (OKRs): Short list composed of a final goal (objective) and preceding subsidiary goals (key results) that, when accomplished, result in the achievement of the final goal.
OKR…is a short list composed of a final goal and subsidiary goals
Here’s an example OKR from www.whatmatters.com, a website by OKR evangelist John Doerr, who once worked for Grove:
★ EXAMPLE: OKR
O: Win the World Cup.
• KR1: Average scored goals rate of 2.0 throughout the tournament.
• KR2: Average conceded goals rate of 0.5 throughout the tournament.
• KR3: Ball possession rate of 75%.
As Doerr writes in his book Measure What Matters (2018), “Well done OKRs are a motivations management tool that help make it clear to teams what’s important….”
How do I identify my objective (O)?
As any fan of OKR will tell you, a simple and precise objective is much easier to manage toward. This is partly because the meaning of the objective is clear and partly because quantification makes it harder to bullshit.
A simple and precise objective is much easier to manage toward.
To use OKRs to manage and maximize impact, your first step is to define which lagging indicator to use for your objective.
► OBJECTIVE: A goal that is precise, measurable, and time-bound.
The examples below show how to turn the four lagging indicators from the previous section into objectives ready to lead an OKR:
★ EXAMPLE: Objectives
O1: Increase area of land reforested in X region by 10–15% in three years.
O2: Decrease child stunting prevalence in X hospital by 30% in two years.
O3: Increase average student test scores within a single cohort by 15%, from grade five through grade eight, starting with the incoming fifth grade class of 2020.
O4: Restore 30–50 km of coastline in X region within 16 months.
You’ll notice that some objectives have targets and some have ranges. Either is fine. Sometimes people are so scared of not meeting a target that they won’t create objectives at all. Other times, there is not enough information to create a realistic target. In both cases, it’s best to create a range.
You’ll notice that some objectives have targets and some have ranges. Either is fine.
The numbers in the range should be the upper and lower bound of what you consider success to be. Your expectation is that your actual impact will fall somewhere in the middle.
Turning indicators into objectives makes impact less vague, more actionable…. This is how you begin to manage impact.
Turning indicators into objectives makes impact less vague, more actionable. You can hopefully now see the basis for planning and role assignment, decision-making and prioritization. This is how you begin to manage impact.
How do I identify my key results (KRs)?
Now you probably realize the role of leading indicators in impact management. A leading indicator is used to create the KRs in an OKR. They are they key results that will add up to achieving the objective. And a reminder:
► LEADING IMPACT INDICATOR: Forward-looking metric used to manage activities that lead to future impact.
Unlike a lagging indicator, which can take year to achieve and measure, a good leading indicator can be measured now.
Unlike a lagging indicator, which can take year to achieve and measure, a good leading indicator can be measured now. It represents incremental progress toward the objective. There is only one lagging indicator, the objective. There are many leading indicators, the key results.
► KEY RESULTS: Subsidiary outcomes that, when achieved, signify that the objective has also been achieved.
Key results are harder to identify than objectives. While an objective is a single final outcome, key results form a sequence of outcomes....
Key results are harder to identify than objectives. While an objective is a single final outcome, key results form a sequence of outcomes that must occur before the objective is realized.
To identify the key results, you must first define the sequence of outcomes you need to pass through to achieve your objective. This is where theory of change comes in:
► THEORY OF CHANGE: Series of dependencies that lead from the present to the achievement of an objective.
This deck provides a deep-dive into theory of change, if you’d like more context. You can also view the deck here.
As you’ll see from the deck above, there are many kinds of theories of change. Four purposes, we propose the Impact Cascade.
► IMPACT CASCADE: Theory of change diagram developed by Do Big Good for identifying impact metrics.
The Impact Cascade is a theory of change diagram we developed in 2019 for our client Code for America. They gave us permission to publish it and we later updated it with phases suggested in Dr. Alnoor Ebrahim’s recent book Measuring Social Change. You can download the Cascade for free here. We’ll use the Impact Cascade to map our a sequence of key results.
We’ll use the Impact Cascade to map our a sequence of key results.
The Impact Cascade brings together leading and lagging indicators with objective and key results. Still, that’s a lot of moving parts. Let’s make sure the role of each is clear.
Looking at the Impact Cascade above, where would a lagging impact indicator go? Remember that…
- The lagging indicator plays the role of objective (O) in an OKR.
- It is the final impact that a business or nonprofit intends to achieve.
I’ll give you a moment….
That’s right! Lagging indicators go in the box in the lower right end of the diagram titled Ultimate Outcomes. This box contains the objective.
Now, where do leading impact indicators go? Remembers that…
- Leading indicators play the role of subsidiary key results (KRs) in an OKR.
- The key results precede the objective.
- The diagram’s temporal flow is from upper-left to lower-right.
Yes! Key results, composed of leading indicators, go in the preceding three boxes, labeled Activities, Outputs, and Intermediate Activities. Just in case the diagram is difficult to read, here’s the text of each box, starting with Activities. (We’ll deal with stakeholders in a future post.)
★ FIGURE: Phases of the Impact Cascade
Activities: Actions to improve beneficiary well-being
Outputs: Value delivered to beneficiaries
Intermediate Outcomes: Resulting behavior change (usually by beneficiaries)
Ultimate Outcomes: Resulting change in beneficiary well-being
That’s pretty complicated. Can we do an example?
Now, let’s do an example of how to use the Impact Cascade to identify objectives (composed of a lagging indicators) and key results (composed of leading indicators.
In a previous section, we identified four objectives (O) based on lagging impact indicators. I’ve reproduced that list here:
★ EXAMPLE: Objectives
O1: Increase area of land reforested in X region by 10-15% in three years.
O2: Decrease child stunting prevalence in X hospital by 30% in two years.
O3: Increase average student test scores within a single cohort by 15%, from grade five through grade eigh, starting with the incoming fifth grade class of 2020.
O4: Restore 30–50 km of coastline in X region within 16 months.
Let’s choose one of these objectives (O) and use it to build out a full OKR using the Impact Cascade. I chose the second: Decrease child stunting prevalence in X hospital by 30% in two years. (In this context, “stunting” means physical underdevelopment.)
Remember that you plan backward and implement forwards.
Below is one way you could fill out an Impact Cascade for this objective, written in the yellow-tinted box.
Remember that you plan backward and implement forward, so you would fill in the Impact Cascade from right to left (starting with the objective) and would implement it left to right (ending by achieving the objective):
★ EXAMPLE: Impact Cascade Logic for Childhood Stunting
1. Before you can prevent childhood stunting, you need infants to get consistent nutrition.
2. Before infants can get consistent nutrition, they need to get nutrition at least once.
3. Before they can get nutrition at least once, their mothers need to sign them up to receive nutrition.
This cascade of outcomes can be used as key results.
Let’s extract the leading impact indicators from each box of the Cascade, so you can see what they look like. Going from left to right, the indicators in the boxes are:
★ EXAMPLE: Leading Impact Indicators for Childhood Stunting
Leading Indicator 1: Number of expectant mothers signed up for program
Leading Indicator 2: Number of infants receiving at least one nutrition packet
Leading Indicator 3: Percent retention for infants in program
How do I write up the OKR?
Now it’s time to transfer the contents on the Impact Cascade into an OKR. The Ultimate Outcome is the objective (O) and the Activities, Outputs, and Intermediate Outcomes are the key results (KRs).
The Ultimate Outcome is the objective (O) and the Activities, Outputs, and Intermediate Outcomes are the key results (KRs).
Writing the Impact Cascade in OKR format removes the visual element, but it also puts all the pieces in a textual list, which is structurally simpler. To create the OKR list:
★ INSTRUCTION: Impact Cascade into OKR
1. Take the contents of the yellow box and write that out as the objective (O).
2. Take the contents of the white boxes and write them out as the key results (KRs).
Here’s the result from the example Cascade above:
★ EXAMPLE: Impact OKR
O: Decrease child stunting prevalence in X hospital by 30% in two years.
• KR1: Sign up 10,000 mothers for infant nutrition program in first 6 months.
• KR2: Delivery at least one (1) nutrition packet to 95% of infants in program in first 12 months.
• KR3: Achieve 90% retention for infants in program in first 18 months.
And there you have it: one lagging impact indicator (O) and three leading impact indicators (KRs) as a simple list that you can use to manage and maximize impact.
And there you have it: one lagging impact indicator (O) and three leading impact indicators (KRs) as a simple list.
Will these help me measure performance?
One more point before we wrap up. You’ve probably already realized this, but there’s another way to think of leading impact indicators.
Leading impact indicators aren’t only key results. They’re also key performance indicators (KPIs).
Here’s a hint:
- Leading indicators are important.
- One could called them key.
- They measure performance toward an objective.
- They’re indicators…
You got it! Leading impact indicators aren’t only key results. They’re also key performance indicators (KPIs). They’re metrics for managing and maximizing impact.
What’s the TL;DR?
So, what does this all mean? What are your next steps?
If you work for a…
Social Enterprise + Nonprofit:
- Download the free Impact Cascade diagram.
- Use IRIS+ metrics (create your free account here) to identify a lagging indicator for your project. Use this indicator to create an objective (O). Place it in the yellow Ultimate Outcome square of the Impact Cascade.
- Go back to your IRIS+ metrics to identify leading indicators for your project. Use these indicators to create key results (KRs) and place them in the white Activities, Outputs, and Intermediate Activities squares of the Impact Cascade.
- Now use the contents of the Impact Cascade to write an OKR for your project. Use the OKR list to manage and maximize impact for your project. Update your OKRs as needed so they are always helpful and accurate.
Support your investees in using impact measurement as a management process to maximize impact.
If you are an…
Impact Investor + Donor:
- Make sure all investments or projects have a clear objective (O) that uses a lagging impact indicator to defines a social or environmental well-being goal in a precise and time-bound way.
- Make sure they also have at least one leading impact indicator that tracks progress and can be measured now. (These leading indicators are key results (KRs) in the OKR system and can also be thought of as KPIs.)
- Make sure your investee has some kind of theory of change (Impact Cascade, other type of diagram, or just a verbal description) that describes how what they are doing now will achieve the well-being effect they hope to realize in the future.
- Support your investees in using impact measurement as a management tool to maximize impact.
Can I try this and get feedback?
Sure. There are four example objectives (O1 through O4) in this post. I only used one (O2: child stunting) as an example.
If you want to try the full process of creating an OKR list, download a free Impact Cascade at www.dobiggood.com/resources and fill it out using one of the other three objective (O1, O3, O4) or another objective of your choice. Then write up the contents of the Impact Cascade as an OKR list (O, KR1, KR2, KR3) and email it to me at Mary AT dobiggood DOT com. Questions are also welcome.
I look forward to seeing your work!
by Mary Joyce, founder and principal of Do Big Good.
