Impact-driven startups: If it’s good for them it must be good for us. Or is it?
Can an engineering company say it’s had an impact if it installs a well in an under-developed community? Not if the community cannot use the well, says Mohamed Majapa, Managing Partner and Co-founder of innovation consultancy Bora Growth. The driver behind the impact must be the intention, and the desire, to solve a problem for the end users.
Intention, then, lies at the heart of what defines an impact-driven startup.
Doing good meets doing well
Majapa describes impact-driven startups as businesses that operate at the intersection between doing good and doing well. Intention is the key motivating driver. “A business must have the intention of making an impact, even if it makes a profit as a result. The intention is what sets an impact-driven startup apart from traditional commercial entities. From the outset, it explicitly merges the potential for generating a profit with doing good,” says Majapa.
As an example: a biomedical firm may set an intention to prevent malaria in a community or country, so it creates a new design for more effective mosquito nets. It sells the nets and makes a profit in the process. Over time, it may see that the spread of malaria is reduced or perhaps even eradicated in that community. “The impact becomes a priority outcome over profit,” says Majapa. “That’s where the impact lies. The intention was to solve the problem of malaria purposefully.”
That’s because impact is a two-way street. If the impact is only felt by one half of the impact chain, it’s not impact at all. Consider the example of the well, mentioned earlier, says Majapa: “If the engineering firm had set out to make a meaningful impact, it would have implemented measures to ensure the pump could be used, such as designing playground equipment that could double up as a pump for the well.”
Without intention, impact loses its meaning
If a business makes an impact in the process of making a profit, then it cannot always be said to be an impact-driven business. However, if a business is able to make an impact in the usual course of its profit-making operations, the acid test, says Majapa, is intention: “If you can measure how the work of the business is having a benefit, or if the business begins to identify that a particular impactful outcome is important, then it doesn’t matter at what point the outcome becomes the stated intention. As long as the intention becomes a primary driver behind the activity. Because without the intention, the impact isn’t meaningful.”
Without intention, impact does not always flow from profit-making. “Impact is a reflection of who the company is. Impact has its own DNA, culture and habit that infuses the company. Those qualities don’t have anything to do with profit. They all relate to the company’s intention to make an impact,” says Majapa.
Collaborate to innovate, not compete
However, says Majapa, the most effective way of making an impact is to understand not only the problem that the business is trying to solve, but what caused the problem in the first place. This is where the innovation ecosystem becomes a powerful force for good, says Majapa: “Innovation can lead to better efficiencies and that can, in turn, have an impact. If big business and impact-driven startups seek ways to collaborate with other corporates and startups, the testing pool becomes bigger. That amplifies our ability to solve problems beyond our own borders.”
Majapa also emphasises that collaboration doesn’t mean competition. Greater innovation can be achieved when businesses, especially startups, partner with each other. “Ultimately, to have a global impact on universal issues such as waste management, healthcare or infrastructure development, context doesn’t matter. Vicinity shouldn’t define the scope of innovation. Rather, when we can collectively develop ideas that can scale, we only make the ripple of impact bigger.”
