Measuring Impact: Part Three - Linking Activity, Outcomes and Impact

When you think of measurement of impact, particularly in the role of a portfolio executive and especially when seeking to influence organisational operations, you will notice that most organisations tend to concentrate heavily on activities. 

You will notice that they concentrate on questions such as: 

·       What actions are being taken?

·       How frequently are they occurring?

·       How effectively are they being executed?

·       What is the cost involved in doing this?

Beyond the Activity Trap

As a portfolio executive, you may be tempted to measure your success based on activity alone. 

However, I strongly encourage portfolio executives to steer clear of time-and-materials-based relationships with their clients and to position themselves for a fixed monthly fee.  By adopting this approach, you can shift away from a timesheet and activity-tracking mindset, allowing you to focus on how you deliver value to the organisation. 

The KPI (Key Performance Indicator) movement and the OKR (Objectives and Key Results) approach are the first steps to move away from pure activity measurement.  However, you will find they don’t go far enough.

Beyond KPIs and OKRs

As a portfolio executive, you should focus on ensuring that the right things are done and done right.  But how do you determine what the “right things” are? 

This is where you should consider outcomes more strategically.  You can connect those outcomes to the impact — the mandate or change the organisation aims to achieve, whether internally or for clients and other stakeholders. 

Let me give you a concrete example from a recent engagement I had with a portfolio executive who was onboarding one of his first clients.  He was brought in to expedite the investment cycle and to attract new capital for a new offering related to an existing business.

Raising Investor Funding

A great outcome would be to raise £250k quickly and additionally, £2-3million, perhaps delivered in stages, to enable the business to transform and scale massively.  The impact here is all about funding the company’s transformation and scaling. 

The outcomes and impact are quite clear.  However, the activities are less defined.  It would be easy for this portfolio executive, who is serving as a fractional CFO, to concentrate on the number of meetings with investors, the number of investor contacts made, or the number of materials distributed—essentially treating it like a traditional sales pipeline where you’re selling the investment opportunity is being sold. 

But he has been much wiser than that.  Instead, he focused on initial outcomes that strengthened the investor case before seeking more investors. 

Now, the challenge is that he’s working with an existing head of finance and depends on the engagement of others within the organisation.  How can he show that he’s creating value through his activities when the outcome—raising the investment—is still some time away and the impact (organisational transformation) is even further off? 

I suggested that he set monthly goals for achieving the investment outcome and provide regular weekly reports on his progress towards those goals. 

This approach is sensible during the early stages of his relationship with the client (the first couple of months), as it enables him to demonstrate his value by altering the tempo of the environment he is responsible for and advancing progress. 

Moving to Capability Development

As the relationship progresses, particularly two or three months in, I expect him to shift away from weekly activity reporting and instead focus on demonstrating how the investor capability and fundraising capacity he’s building are becoming institutionalised.  This will be evident through a consistent rhythm within the organisation. 

Linking activities, outcomes, and impact is crucial at the start of a client relationship.  However, it’s also essential when you start reviewing the activities of others in the function you oversee.  This ensures that the right things are being done and done right.  Often, this requires reframing the outcomes and adjusting the activities accordingly. 

For example, one of the capabilities the CFO aimed to develop was continuous investor readiness.  This involved maintaining a data room, developing and evolving business financial models, ensuring consistent budgeting and forecasting, and presenting financial results in an appealing format for investors.  This goes far beyond effective management reporting. 

As investor readiness becomes more established within the organisation, the executive can reassess and evaluate the efficiency and effectiveness of the investor readiness process.  This will involve stakeholders from across the business (sales, marketing, HR, product development, and finance) who ensure that the investor pack data is consistently updated. 

Conclusions

When measuring impact, it’s essential to understand how to link activities, outcomes, and impact.  You’ll need to know when to use a top-down approach, examining effects, outcomes, and activities, and when to shift to a bottom-up approach, focusing on the activities and how these contribute to the desired outcomes.  But at all times you must test whether these outcomes will truly deliver the impact you’re aiming for.