By Sumantra Sengupta
A few years back, I was fortunate to attend a multiday World Economic Forum meeting in Tianjin, China, where a majority of the discussions centered on the topic of business impact and societal change.
It was not a rehash of the standard discussions around sustainability, nor was it a corporate earnings/greed-bashing session. Entrepreneurs and business moguls discussed methods companies are using to create incremental shareholder value while also maximizing their impact score. In many cases, increasing impact score has a net positive multiplier effect on the company’s total value.
There is a dearth of good approaches that companies can use to measure their impact in various areas. In 2002, I developed a framework for a Sustained Value Measure that can be used to measure impact.
In today’s global world, businesses should engage in four key practices outlined in this framework:
• Keep a running total of the socioeconomic impact.
It is very easy to forget the varying degrees of a business’ impact. It starts with the creation of employment, including for those who are underemployed since the market sets the price for demand and supply. It goes on to include enabling the locale to become a hub or part of an ecosystem, improving the welfare of families by creating long-lasting rather than transitionary work, and helping the extended value chain of employers that will provide hospitality, health care, financial and other services for the people working at your company.
This should all be cast under the broader umbrella of an impact score pillar that would form the basis for the corporation’s socioeconomic value.
• Ensure the thinking permeates in the early stages of product/service development.
Oftentimes, we overlook the various parts or processes that can be great candidates for reuse, basing designs on more commercially oriented factors rather than creating a win-win that trades off impact and commercial desires.
These days, it does not have be to be either-or, as demonstrated by sustainable agricultural practices, component and process reuse, streamlining, and global reverse-supply chains that take the burden off the consumers and incentivize all parties to participate.
I heard that the movie set of “Ford v. Ferrari,” which earned more than $64 million worldwide in its first five days of release, had a more than 80 percent reuse/recycle rate.
• Enable and invest in the right PPT for operational delivery.
People, process and technology are the tried-and-tested enablers for execution. The best-laid plans and designs will not result in successful delivery of a product or service globally unless we empower the people involved, create processes that allow for incorporation of impact ideas and deliberate design, and invest in technology. While there are no silver bullets in terms of the percent of time or investment required to ensure the right level of impact, my general rule of thumb is an allocation of 40/40/20 for PPT to get the best results.
• Create the message to highlight the accomplishments.
Results motivate all of us, and the external-facing messaging should reflect accomplishments and the path to improving the overall impact score.
Creating a set of metrics that can be published and monitored without divulging competitive advantages is a great step and allows for the resources of the extended ecosystem to become a part of the journey. As an old friend once told me, being a hidden gem is fine, but focus on the fact that you are a gem and put less emphasis on remaining hidden.
We need to continue our journey toward higher impact scores for our respective organizations.
There will soon be a day when Wall Street and Main Street will continually reward companies that have high impact scores with increased shareholder value.
• Sumantra Sengupta is the assistant dean of the School of Management at California Lutheran University.