Prof. Edgard Barki, FGV-EAESP Brazil, explores how theory of change can be used as a tool to define the storytelling of an organization’s impact and manage and monitor its social impact in a simple and effective way. From an interview by Prof. Adrian Zicari, ESSEC Business School.
Theory of Change: Monitoring and managing the social impact of your organization, by Edgard Barki and Adrian Zicari. Edited by Tom Gamble. Related work: TEORIA DA MUDANÇA – O que é e para que serve? Edgard Barki, Haroldo da Gama Torres, Octavio Augusto de Barros, March 2023.
Adrian Zicari: Your first idea is intriguing: social impact is far from evident. We dream of a magical figure that captures the social change made by any intervention, but this is not that simple. Could you elaborate on this?
Edgard Barki: A social enterprise initiative might have different outcomes. Some of them might be easy to evaluate – for instance, the growth in income of the population. However, others might be far from easy. There are some initiatives and actions that change things completely for the better, and improve people’s lives. Others might save lives.
Although, many organizations try to standardize their evaluations with metrics such as SROI that analyze the Social Return On Investment of an initiative, most of the time it is difficult to have one single metric to evaluate social impact as there is, for instance, profit required to evaluate financial performance. Usually social impact evaluation has to be done in an individualized way and based on the social objectives of the organization. Moreover, not everything and every social impact can be stated in numbers or in dollars. As Einstein is purported to have said: “Not everything that counts might be counted, and not everything that might be counted, counts”.
Social impact: Deep dive into what your market and end-users need
Adrian Zicari: You emphasise the importance of a correct definition of the target population. Could you remind some examples of wrong or inaccurate definition of this target population?
Edgard Barki: More than an inaccurate definition of the target population, what happens many times is a misconception of the needs and demands of the population. Mainly, when dealing with the base of the pyramid, organizations sometimes base their interventions on paradigms that are not always true. As such, it’s essential to deep dive into the market you are serving to understand the needs and wants of the population and the true impact of your interventions.
For instance, when TOMS created the strategy of one pair of shoes bought means one pair of shoes is donated for a person in need, it appeared as a great action that could help many people. However, after analyzing the data, it was possible to perceive that, as a matter of fact, these donations were inhibiting the development of local industries and local retailers. Thus, it is relevant to have a holistic view and perception of your target population and the possible impact of your social impact initiative.
Social enterprise: A tough challenge in the long run
Adrian Zicari: Another interesting point is that you begin from objectives, then activities, and finally move on to the structure. This seems logical, because we are talking about impact, but sometimes it is not the case. How many times one can see social organisations that are too much attached to their structural constraints and struggle to achieve impact?
Edgard Barki: It’s very tough to manage a social enterprise. The ideal of making money while doing good is not always a simple task. Many organizations struggle to deliver a social impact consistently and have financial sustainability at the same time. In many cases, what happens is that companies must pivot their strategy, changing a little their impact model or benefitting people that are not so vulnerable in an attempt to be more profitable.
Moreover, even NGOs often struggle to maintain their fundraising and have to allocate important resources for this activity. In sum, creating and maintaining a sustainable business model that has social impact or an objective to fundraise is time and resource consuming – which makes it difficult to ensure the longevity of a social organization.
Theory of Change: Creating the story of your impact
Adrian Zicari: What message would you give to practitioners of social enterprise that want to implement Theory of Change successfully?
Edgard Barki: Theory of Change is a simple, but powerful tool for social organizations to define the impact they want to accomplish and which steps are needed to reach their goal. The impact presented in Theory of Change is the cause that the organization and its members are going to die for, but will not be able to solve in their time life. But based on that quite utopic dream, Theory of Change defines the outcomes and outputs that might solve at least part of the problem.
Moreover, and more importantly, Theory of Change has a graphic view that allows every stakeholder to understand the social strategy of an organization, how it aims to reach its goals and the assumptions and indicators that might monitor its results. In other words, it is a tool that defines the storytelling of the organization’s impact and, at the same time, it is an essential mechanism to monitor and manage the social impact of the organization in a simple and effective way.
- Link up with Edgard Barki on LinkedIn
- Discover FGVcenn – the FGV-EAESP Center for Entrepreneurship and Business
- Read a related article: For a pragmatic approach to social impact assessment
- Apply to one of the postgraduate degree programmes at FGV-EAESP Brazil
- Download the publication Theory of Change (in Portuguese).
Learn more about the Council on Business & Society
The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.
Member schools are all “Triple Crown” accredited AACSB, EQUIS and AMBA and leaders in their respective countries.
- ESSEC Business School, France-Singapore-Morocco
- FGV-EAESP, Brazil
- School of Management Fudan University, China
- IE Business School, Spain
- Keio Business School, Japan
- Smith School of Business, Canada
- Stellenbosch Business School, South Africa
- Trinity Business School, Trinity College Dublin, Ireland
- Warwick Business School, United Kingdom.