Holy Grails of System Change:Outcomes, Measurement &

Collaboration

RESEARCH & EVIDENCE SYMPOSIUM

AUGUST 2013

2

INTRODUCTION

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QUESTIONS

• If your organisation improved outcomes delivered by 30% this year . . . ?

• Is your evaluation . . .

. . . program-focused or community outcome focused?

• NFPs: Do you find accessing government data easy?

• Govt: How confident are you that you have the information you need to make great decisions about future resource allocation?

• For every $100 spent on services, how much is spent on measurement?

• How confident are you that we are trying to measure the right things?

• How confident are you that our measurement is meaningful?

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Context: Introducingthe Australian “Social Impact

System”

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THE SOCIAL IMPACT SYSTEM

NFP$100bn1

$30bn1

Govt (Social)$200bn

For-Profit Total?Top 500: $1,543 bn

All Govt: $500bn+

For-Profit(Social): $?

$2bn?

The turnover of the “Social Impact System” is over $250 bn pa.

12006-07 PC Report data aged at 4%

?

Governments• 1 federal, 6 state, 2 (largish) territories,

564 local governments• Many departments across Health,

Welfare, Education, Justice . . .• Multiple roles - sets policy, funds

programs, runs programs . . .

Not-for-Profit• 700,000 NFPs• 60,000 economically significant

Corporate• Philanthropy, corporate social

responsibility, creating shared value

Evolving forms• Social enterprises, B-corps . . .

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How are we(the “Social Impact System”)

doing?

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HOW ARE WE DOING?

1980 1990 2000 2010

Out

com

es/$

Inve

sted

1. Exponential growth

2. Slow and steady

3. Status quo

4. In reverse

System Effectiveness

5. Consensus?

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EXAMPLES

• In Australia, disadvantage has a postcode.– Despite an increase of funds allocated to Australia’s most

disadvantaged localities, their positions on rankings of disadvantage have remained stable for over ten years.

Ingrid Burkett 2011; Tony Vinson 2009

• The proportion of children living in jobless households is higher in Australia than in all but four of 27 EU member states.

Australian Social Inclusion Board, 2009

• Australia is half as successful as other OECD countries infinding employment for people with a mental illness.

OECD, 2003

• Indigenous Australians are significantly less likelyto finish school or university.

ABS, 2011

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A System Challenge

It is the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed.

- Charles Darwin

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SYSTEM CHALLENGE

The number of working age Australians (15-64) per older Australian (65+) is decreasing from 7.5:1 to 2.5:1 over 80 years.

• The implications for our workforce are significant

• The implications for our tax dollar are significant

Source: Australian Treasury Intergenerational Report, 2010 and CSI Research Fellow Ingrid Burkett

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SYSTEM CHALLENGE

1970 2000 2030 2060

Out

com

es/$

inve

sted

Effectiveness

100

200

2010

2050

20% of Commonwealth outlays on health, welfare & education*

56% of Commonwealth outlays on health, welfare & education

*David Murray, The Australian

• # working age Australians per older Aust falling from 5 to 2.5• Expenditure on Ageing increasing from 25% to 50% of govt spending

Effectiveness “target”Actual/projectedFuture target/need

CHALLENGE:Exponential growthA learning system

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AUSTRALIA – THE LUCKY COUNTRY?

“America – the greatest country in the world.”http://www.youtube.com/watch?v=9zZxBNRTkd4

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Meeting the Challenge . . .

We have learned to create the small exceptions that can changethe lives of hundreds. But we have not learned how to make theexceptions the rule to change the lives of millions.

- Lisbeth Schorr, Social Analyst

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INTRODUCING . . .

The Centre for Social Impact

This is a Centre which can bring together research, teaching and cross-sector partnerships to create positive social impact at the intersections between government, business and community life. I am confident that the Centre will be a great source of answers and of practical initiative.

- The Hon Julia Gillard 28 February 2008

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THE CENTRE FOR SOCIAL IMPACT

• The Centre for Social Impact

– University partnership:

– Federal government support+ 8 founding funders:

– 2008-2012: Organisation established, research & teaching programs created.

• Our Mission: “to create beneficial social impact in Australia through teaching, research, measurement and the promotion of public debate.” Cross-sectoral focus.

• 2012 strategy consultation question:

What are the keys to improving social impact in Australia?

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So what ARE the keys toimproving social impact in

Australia?

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CSI: SOCIAL IMPACT FRAMEWORK

Transparent reportingof social outcomes

Social Outcomes

Purposes/strategiesdefined in terms

of social outcomes

Social Impact: resilient, inclusive, healthy society with positive wellbeing

Funding rewardssocial outcomes

SocialOutcomesEcosystem

Social innovation

pipeline

Collaborative and participative

approaches

Great governance, leadership and management

Effective Implementation

Effective Measurement

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THREE HOLY GRAILS

1. Define outcomes

2. Measure (and transparently report) outcomes(and change resourcing decisions based on this)

3. Collaborative (and participative) approaches

From Monthy Python and the Holy Grail:

Then shalt thou count to three, no more, no less. Three shall be the number thou shalt count, and the number of the counting shall be three. Four shalt thou not count, neither count thou two, excepting that thou then proceed to three. Five is right out. Once the number three, being the third number, be reached, then lobbest thou thy Holy Hand Grenade of Antioch towards thy foe, who, being naughty in my sight, shall snuff it.

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1.Define outcomes

2.Measure (and transparently report) outcomes(and change resourcing decisions based on this)

THREE HOLY GRAILS

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WHAT IS THE VALUE OF MEASUREMENT?

• Jeremy Nicholls (SROI, UK) – what is the most important benefit of outcome measurement?

– “Maybe that it forces [management] to revisit and define and focus on their social outcomes in the first place.”

• Morino, M. Leap of Reason1:

– “<It’s> not about pushing nonprofits to drink the metrics Kool-Aid, implement fancy reporting technologies, or adopt complex measurement methodologies. It is about encouraging nonprofits and funders to cultivate for themselves an outcomes-focused mindset and the passion to be as effective as we possibly can for those we serve!”

• Peter Drucker: “You can’t manage what you can’t measure.”

• Typical (US) Foundation Manager:

– “You can achieve incredible progress if you set a clear goal and find a measure that will drive progress toward that goal . . . this may seem basic, but it is amazing how often it is not done and how hard it is to get right.”

1Venture Philanthropy Partners in partnership with McKinsey & Company, 2011. 2The Wall St Journal January 26, 2013.

Bill Gates2

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THE VALUE OF MEASUREMENT

What is the value of measurement?

Let’s calculate it.Consider this scenario . . .

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THE VALUE OF MEASUREMENT

Imagine a system:

• A funder has $100 pa to spend on social outcomes.

• 10 organisations each receive $10 funding.

• The organisations’ effectiveness varies.

Funder$100

Org 1

55

Org 2

65

Org 3

75

Org 2

85

Org 3

95

Org 1

105

Org 2

115

Org 3

125

Org 2

135

Org 3

145

100Outcomes

Effectiveness:Outcomes per $100 funded

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THE VALUE OF MEASUREMENT

• There is a cost of measurement - 5% of program funding – in all scenarios (except the base case).

• Measurement has a 3 year time-delay before it improves internal effectiveness and a 5 year delay before it results in funding reallocation.

Scenario CommentInternal

EffectivenessFunding

Reallocation

BaseWithout measurement, there is no reallocation of funding between organisations. Organisations improve internal effectiveness gradually.

1% pa -

1a 3% pa -

1b 5% pa -

2a 3% pa 5% pa

2b 5% pa 5% pa

Measurement is used within organisations to improve programs and/or reallocate resources.

Measures are transparently reported; the funder reallocates resources from the bottom half to the top half of effective organisations at the rate of $5 per year.

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THE VALUE OF MEASUREMENTO

utco

mes

Base case3% pa internal improvement

5% pa internal improvement

Typical funding period

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THE VALUE OF MEASUREMENTO

utco

mes

5% pa improvement, no reallocation

5% pa improvement, with reallocation

3% pa improvement, no reallocation

3% pa improvement, with reallocation

Base case

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THE VALUE OF MEASUREMENT

What is the value of measurement?

With a combination of internal improvement in effectiveness (4% pa) and systemic resource reallocation (4% pa) we can double system effectiveness in 20 years.

ScenarioInternal

EffectivenessFunding

Reallocation2033

OutcomesDiscounted

ROI

Base 1% pa - 122 -

1a 3% pa - 162 1.8

1b 5% pa - 224 3.4

2a 3% pa 5% pa 192 5.3

2b 5% pa 5% pa 266 7.3

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So why aren’t we doing this already?

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BARRIERS TO MEASUREMENT

Barriers

• Cost

– Someone has to pay for it – it’s a cost now for a benefit later

– In some cases, it can be a show-stopper; example social investment where even 1-2% change kills the business case

• Timeframes

– Typical govt funding timeframes and budget cycles not conducive

• Perceptions

– “You can’t measure what we do”

– Fear of focus on “the number”; you are heartless

• Methodology debate - lack of agreement about methods/tools

Solutions?

– Build business case with examples & cases

– Educate Boards and funders

– Give more attention to the cost of NOT measuring – the opportunity cost

– Choose when to apply measurement – and grow from there

– Advocacy. Funding has to move from low cost to long-term outcomes

– Great case studies in a range of fields

– People make decisions, not spreadsheets. Measurement is an input

– Build best practice guidance; focus on the bigger picture

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MEASUREMENT – KEY TO IMPROVING IMPACT

• Measurement starts with defining outcomes

• We need effective measurement – AND transparent reporting– Governments must open data– Shared measurement will reduce cost– Reward those who are open and future-focused

• Measurement is pointless unless we change behaviour– Resource reallocation must follow – funding and

people– Funders (including governments) must be brave– We must support them

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THREE HOLY GRAILS

1. Define outcomes

2. Measure (and transparently report) outcomes(and change resourcing decisions based on this)

3. Collaborative and participative approaches

Politeness is the poison of collaboration.

- Edwin Land

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COLLABORATION MATTERS

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COLLABORATION MATTERS

Partnerships and Collaboration

A partnership is an arrangement where parties agree to cooperateto advance their mutual interests

Collaboration is working with each other to do a task. It is a . . . process where two or morepeople or organizations work together to realize shared goals

Wikipedia

Assumption #1: We have mutual interests and/or shared goals

Assumption #2: For our purposes, this alignment of interests is associated with the achievement of better social outcomes <for people in a community>

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PARTNERSHIP AND COLLABORATION

Partnership

• Cooperate to advance mutual interests

• To continue to improve performance (eg improving referral or delivering contract outcome)

• Some short-mid term interests

• A few percent of our organisation budget (or less)

• A good working relationship with another organisation or manager/s

Collaboration

• Work together to realize sharedgoals

• To address our most significant social issues (eg third generation unemployment in difficult region)

• Our mission (or a good slice)

• Whole programs, or even the potential to re-think what we do

• Cultural fit with a collaborative group of organisations (from different sectors)

Partnership and collaboration are not the same thing.

Define

Needed

Alignment of

Involving

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COLLABORATION MATTERS

• Collaboration is hard. At the very least, it’s inefficient.

“Collaboration should not be seen as a goal in itself. Collaboration is only required when no one entity has the resources or authority to make the required change.”

Liz Skelton (SLA) in Pro-Bono Australia, 2013

• . . . but it’s the only way:“Most of the most complex social problems <in the UK today> . . . cannot be solved by services that work in isolation.”

Daniela Barone Soares, CEO, Impetus Trust

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BARRIERS TO COLLABORATION

Barriers• Misalignment of “mission” or

objectives– Lack of outcome focus– Competitive approaches

eg winning a funding contract

• Decisions, Structures & Systems– Lack of established heirarchy for

decisions– Disparate data and communication

systems

• Funding– Short-term, competitive, activity,

low cost and compliance focus– Fragmented (govt siloes)

Solutions?– Create joint understanding of the problem BEFORE

determining activity to fund/deliver– Co-design solution– Shared goals, shared measurement– Culture change: outcome before organisation

– Well defined project management and governance– Differentiated roles. Each org does what it does

best.– The Cloud, modern technologies– LOTS of communication -> Trust

– Creative funding models. Longer term.– Fund approaches, not just program. – Non-government funders to get us started?/

layered funding

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BARRIERS TO COLLABORATION

Barriers• Time

– It takes too long!

• Ego– My organisation does it better– My objectives are ABC (misalignment

of system vs organisation aims)

• Skills– Collaboration requires different

leadership and management skills

Solutions?

– Change our definition of success(we’re spending a lot of time not achieving much the current way)

– Change our organisation definition of success – . . . and flow on to individual metrics/

definitions of success– Empower collaboration (government?)

– Invest in skills for collaboration

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COLLABORATION – KEY TO IMPROVING IMPACT

1. Collaboration starts with defining shared outcomes– Agreeing the problem (in its entirety)– Co-designing the solution

2. And continues with shared measurement– Governments must open data– Use technology effectively

3. Collaboration requires communication and trust– Investing time in relationships – building trust– Communicate often, led by the leaders, and empowering others– Skill development

4. Collaboration requires investment – In organisation capacity, people and systems . . . in collaboration

5. Collaboration requires a long term view

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FOR RESEARCHERS: TAKE THE SYSTEM VIEW

System optimisation & local optimisation are not the same thing.

• From program-by-program justification to shared measurement, community outcomes

• From retrospective analysisto proactive definition of outcomes, great logic frameworks, embedded measurement, cultural change

• Attribution important – but secondary

• Ask the big questions

• Seek openness.

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In Conclusion

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MEETING THE CHALLENGE

1970 2000 2030 2060

Out

com

es/$

inve

sted

100

200

• We must create a learning, evolving system to move from fragmented progress of the past 30 years to meet the challenges of the next 30.

• Without clear outcomes, effective measurement and transparent reporting, we cannot achieve this.

• Funding another program will not address complex, sustained social issues. We need new collaborative and participative approaches.

• The research community can playa critical catalysing role:– Demonstrating collaboration– Doing great work in measurement– Focusing on shared outcomes and

measurement.

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CONCLUSION

The secret is to gang up on the problem, rather than each other.

- Thomas Stallkamp