Profit or Impact: A False Choice
It seems to me we’ve got it wrong. Like the one-eyed man in the land of the blind, we’ve used profit as the sole arbitrator of success. Used in this way profit becomes a tool to suck the life out of the system. The other eye, if you will, is impact. I’ve explored a juicy vision in a recent video and what makes a vision juicy is impact. What makes work meaningful is impact. What makes a company usefulis impact.
In the financial services industry, the impact has been all but lost. Take predatory lending, what a conundrum that is. Lending money to poor people has been the justification for increased interest to mitigate the risk, but that comes only be decreasing the impact. We recognize the need to offer the less well off credit. It is good for them and good for the economy. Putting them at risk when extending them credit is bad for them and bad for the economy. If credit was extended and measured by impact, AND the amount of profit was restrained to enough to make it possible to lend again, then all parts of the system would be served.
Using impact as a measure makes clear the need and reason for involvement. Using enough as the measure for profit prevents business practices like loosing money in one area only to make it up in another, so that competing on price forces the need to become predatory – in the financial realm.
We struggle to determine what makes a good teacher, what would happen if we looked at impact instead of just grades or memorizing facts? What is joy of learning became a measure, or how about staying in school instead of dropping out, or maybe learning to read (measured by the number of books read) might be more important than test scores, especially in the early grades? What should the impact of education be? Are children better served when they learn to make their playground equipment or if they are provided with state of the art equipment? Where is the greatest impact on their lives going to come from?
Measures are necessary and good, but only if they measure what is valuable and useful. Our fixation on profit as measure has been neither. W. Edwards Deming worked for years to get managers to see that there were other measures that were forward predictors of success, whereas profit is only a past indicator and offers no information for improvement. Impact is a forward predictor.
A loan that would triple the business potential might have more impact than a loan that would return triple ROI, for instance. A teacher that was loved by students might be improving more lives than one that got the best test scores. What is the point of test scores anyway? They are one way (too often the only way) we measure ‘learning’ but like profit they are lagging indicators. What might leading indicators look like?
Both profit and test scores have their place, but we have been asking them to carry too heavy a load and in so doing corrupted their usefulness. By adding in impact we can use both of our eyes and see what we are looking at much more clearly! The unending quest for profit has robbed our world of meaning and confused the issue. The acknowledgement of impact and the commitment to measure it brings the promise of a new and vibrant world.
Other Posts by Kathryn Alexander
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