The path to impact

Are you an impact-oriented entrepreneur, then it is a good idea to make your impact transparent in an impact pathway. Especially if you are looking for funding and reaching out to impact investors, an impact pathway (or "Theory of Change") is often a requirement in your business plan. A good impact pathway shows whether your proposition is right, and helps you tell your impact story. In this article, we explain how to build an impact pathway.

Impact what-way?

An impact pathway is the route from (business) activities (for example product or project) to societal impact. It is also called Theory of Change and describes how and why a desired change occurs with respect to a particular problem. Such a change could be, for example, more circular use of raw materials or combating climate change. The Theory of Change methodology was devised by sociologist Carol Weiss and initially used for evaluation research in the social domain and in development aid, among others, where effect measurement has always played an important role. Now the tool and the way of thinking are used more widely and deployed by organizations that want to make their impact transparent and measurable, including social enterprises, impact startups and investors.

An impact pathway has multiple benefits: it makes it clear what you need to do as an organization to realize impact and it asks you to determine which impact-oriented KPIs you can use to measure your impact. This, again, is particularly relevant for impact-driven startups, who are increasingly asked to quantify their impact.

The elements of an impact pathway

In the image below you can see the different elements of the impact pathway. At the highest level is the change you want to achieve, your impact. That impact is realized through certain outcomes, or effects, that follow from your (business) activities and the outputs created with them, the direct (and usually countable) results. Your activities require resources (such as people, buildings, technology, knowledge and funding), which are inputs. That sounds like a fairly simple linear process, but social change is of course a complex set of causal relationships and also dependent on context.

Source: DIY10 Toolkit - diytoolkit.org

Let's get started: creating your impact pathway

To create an impact pathway, go through the following steps:

- Step 1. Determine the impact goal / goals: what is your company striving for, what is the desired situation? You can also do this using the SDGs: for which SDGs do you want to make a difference? This often goes hand in hand with the vision (or purpose) of your organization.

- Step 2. Determine what effects are needed for this. And clarify the interrelationship between them.

- Step 3. Determine how your product(s) or service will cause these effects to occur - what outputs are relevant?

- Step 4: What are your relevant business activities, and what inputs are required for them? What are the key resources needed?

- Step 4. Finally, make explicit what the assumptions are regarding the different parts of the ToC. What assumptions do you make when it comes to the desired changes?

Tips for an even better impact pathway

Ideally, you want to test your change model to check whether your impact path and associated assumptions are correct. How do you do that? By talking to your relevant stakeholders. On whom does your product or service have an impact?

You can interview these stakeholders and ask them about the biggest changes they experience as a result of your proposition. Or what changes they hope to see in the long term. You can also organize a session where multiple stakeholders come together. Involving and questioning stakeholders is of course the best way to start measuring impact.