integrating measurement into wealth creation work presented by melissa levy, senior associate,...

Integrating Measurement into Wealth Creation Work

Presented byMelissa Levy, Senior Associate,Yellow Wood Associates www.yellowwood.org

Yellow Wood Associates, Inc.www.yellowwood.org © 2012

1. Measurement Vocabulary2. What is Wealth?3. The Wealth Creation Approach4. Measuring Impacts on Wealth

Outline of Presentation


Measurement Vocabulary

Part 1


• Measurement defines success. What is success? How would you know it if you saw it?

• Measurement creates a common language and helps keep resources focused on outcomes

• Measurement provides a feedback loop for continuous learning and improvement

• A measurement framework is a powerful planning tool

• Measurement provides real data and improves the quality of discourse and analysis

Why Measure?


GoalA goal is a condition that you wish to achieve. A goal is not an action. It is not about doing or making; it is about being. Achieving a goal requires a change in the way your organization, community, or value chain looks, feels, and acts.

For example: Creating jobs is an activity; being a community in which everyone who wants a job has one is a goal. Goals are usually broadly stated. A well chosen goal should reflect what you really want, not what you think someone else, like a funder, wants to hear.



IndicatorAn indicator is something that must be changed, or a condition that must be achieved, in order to claim that progress is being made toward a goal. Since goalsare generally quite broad, there are many possible indicators that could suggest progress toward the goal.

A discussion of indicators is a discussion of values — it reveals how different people interpret the goal. Indicators are mostpowerful when created and agreed upon within the context of the community or organization where they have real meaning to participants.



MeasureA measure provides a way to actually count or value the status of an indicator. For example, things may bemeasured in terms of “number of,” “percent of,” “quality of,” “frequency of,” or “rating of.” To track a measure over time, you must have a unit which defines what you are counting - inches, people, quarts, hours, etc., and a baseline which defines the value of the measure at some predetermined starting point in time.



AssumptionAn assumption is a hypothesis about some aspect of the way the world works that we believe to be true. Assumptions can be difficult to recognize because they are often deeply imbedded in the way we think about the world. The tendency to treat our assumptions as unquestionably true allows them to shape our world and become barriers to innovation and creativity.

For example, it was once assumed that an electrical signal could not travel more than 100 meters. If Marconi and others had not challenged that assumption, we wouldn’t have wireless communications, among many other things



InterventionAn intervention is something you DO in order to achieve your goal. The intervention should be defined broadly enough to involve people in a variety of different tasks and provide opportunities for participants who don’t normally work together to do so.

Successful interventions build energy and produce spin-offs. They broaden our perspective and suggest new relationships and possibilities.


You Get What You Measure® Process


What is Wealth?

Part 2


Governments usually consider wealth as net worth, i.e., the value of physical and financial assets minus liabilities.

How is wealth typically defined?

Businesses may also consider the value of intellectual property, such as patents and copyrights, as part of their wealth.

These definitions all focus on marketable wealth, that can be measured with a monetary value.


Wealth connotes power for those that have it.

How is wealth typically understood?

Wealth is commonly understood as an attribute of individuals and families or communities comprised of “wealthy” individuals and families.

We often overlook the individual and shared wealth the rest of us have.


The World Bank has estimated that “intangible capital” constitutes most of the capital of nations – esp. developed countries – accounting for most of the differences in economic performance.

Are these definitions sufficient?

WORLD BANK


We define wealth broadly as the stock of all assets, net of liabilities, that can contribute to the well-being of an individual or group.

What is wealth?

As a stock of assets, wealth is durable and can be accumulated or depleted through investment and consumption decisions.

Wealth stocks generate flows of goods and services (“income” or “earnings”) that contribute to well-being, though not all of these flows can be monetized.


Seven Forms of Wealth

Individualcapital

Socialcapital

Financialcapital

Naturalcapital

Builtcapital

Intellectualcapital

Using the wealth creation approach means being intentional about creating wealth that sticks.

Politicalcapital

What do we mean by “Wealth?”


INCOME

EXPENSE

WEALTH

Understand the difference between wealth and income

Most economic development activity focuses on income (a flow) instead of on building wealth (a stock).


The Wealth Creation Approach

Part 3


What is the Wealth Creation Approach?

The Wealth Creation approach provides a framework for creating wealth that is rooted in rural parts of larger regions, including those of persistent poverty, by using a systems approach to:

intentionally connect people, resources, and markets;

make investments that create multiple forms of wealth; and

develop new models of local ownership and control of investments and returns.


A value chain is a business model based on shared economic, social, and environmental values, in which buyers, processors, producers and others work together for mutual benefit to create value in response to market demand.

Value chains


Traditional Supply Chain

Chain starts with producer supply

Measured by net income produced

Everyone is in it for him/herself

Power determines who gets paid how much for their role

Participants try to pass on costs to others within or outside of chain

Tries to influence policy to create advantage and maximize short-term income

Wealth Creation Value Chain

Chain starts with consumer demand

Measured by wealth created/retained

Everyone is in it together

Intentionally balances mutual benefit of all in chain

All known costs are considered and addressed

Tries to influence policy to level the playing field and maximize long-term and widely shared wealth

Value Chains vs. Supply Chains


Results

Supply Chain

Value Chain

Individual Capital

Social Capital

Intellectual Capital

Natural Capital

Built Capital

Political Capital

Financial Capital

The Wealth Creation Approach


Value chain construction with partners in Central Appalachia

Energy efficient housing, energy efficiency, food, forestry

Value chain exploration and selected construction grants with partners in the Alabama Black Belt and Mid-South

Renewable energy, investment, forestry, food, community-based tourism

Value chain exploration grants in the Lower Rio Grande Valley region in Texas

Green housing/neighborhoods, literacy

Where are we working on the ground?


Measuring Impacts on Wealth

Part 4


1. Framing measures• create context• establish meaningful targets

2. Measures of progress• relate to strategic interventions• capture behavioral changes

Two types of measures


We measure the baseline conditions related to how the suite of interventions impact the forms of wealth. This works best if the interventions represent leverage points in the system. You Get What You Measure® can be used to identify goals and leverage points in the system.

Baseline measures

Type of Wealth Strategy

Individual How will your strategy impact the stock of skills and physical and mental healthiness of people in a region?

Social How will your strategy impact the stock of trust, relationships, and networks that support civil society?

Intellectual How will your strategy impact the stock of knowledge, innovation and creativity?

Natural How will your strategy impact the stock of unimpaired environmental assets in a region?

Built How will your strategy impact the stock of fully functioning constructed infrastructure?

Political How will your strategy impact the stock of power and goodwill held by individuals, groups, and/or organizations?

Financial How will your strategy impact the stock of unencumbered monetary assets at the individual and community level?

Wealth matrix

Wealth matrix

Type Intervention Indicator Measure Baseline Method

Individual

Social

Intellectual

Natural

Built

Financial

Political


Explore how each intervention impacts each of the 7 forms of wealth.

For each form of wealth, discuss which intervention has the strongest impact.

Determine the strongest 1-2 measures for each form of wealth.

Measurement with Grantees


Determining Strongest Measures

Results

Supply Chain

Value Chain

Individual Capital

Social Capital

Intellectual Capital

Natural Capital

Built Capital

Political Capital

Financial Capital


In the previous example:

All interventions touch multiple forms of capital.

The blue intervention impacts Individual and Social Capital most strongly.

The orange intervention only impacts Financial Capital.

Determining Strongest Measures


Grantees measure baselines within six months of starting their grants.

Grantees re-measure and reflect at the end of year 2.

Measurement with Grantees


Rural Action: 2010 Data on Certified Lands

Framing Measures

Intervention: Create a certification center for the region

Progress Measure: Number of certified parcel owners engaged in value chain over time


CAN

Framing Measures

CAN Producers (wholesale revenue only)

WV Producers (all farm revenue)

US Producers (all farm revenue)

Tier 1 88.8% 79.9% 59.8%Tier 2 5.2% 16.9% 24%Tier 3 6.0% 3.2% 6.2%

Tier 1 – new farm business or new to wholesale, supplemental income, wholesale revenue of less than $10,000 annually

Tier 2 – expanding or small but established farm business, a few employees, balance of direct and local wholesale, wholesale revenue of $10,000 - $100,000 annually

Tier 3 – medium to large farm business, significant number of employees, regional wholesale, revenue over $100,000 annually


Central Appalachian Network

Indicator: more and improved best practices skills by farm and food producers

Measures: number of producers selling into wholesale value chains, amount of sales, relationships between producers and buyers

Framing measure: number of producers selling into wholesale value chains and amount of sales at a greater scale

Measuring Individual Capital


Measuring Individual Capital




Indicator: increased acreage of sustainable production going into value chains

Measures: acreage of sustainable production contributing to value chains, degree of sustainability

Framing measures: acreage of sustainable production in the region, acreage of prime agricultural soils.

Measuring Natural Capital



MeasuringNatural Capital


Rural Action Intervention:Growth of certified acres as a result of the Appalachian Carbon Partnership.

Indicator:Improved forest ecosystem health.

Measure:Number of landowners actively managing and acreage being actively managed.

Baseline Measure:Number of certified acres in region.

Measuring Natural Capital


Rural Action

Framing Measure


This process is not designed to be extractive. This way of measuring should help groups do their work more effectively.

Measurement does not just happen; it needs to be intentional and well considered.

Lessons

Acknowledgements

Thank you to CAN and Rural Action for their contributions to this presentation.

Learn more about their work on their websites:

CAN: http://www.cannetwork.org/

Rural Action: http://ruralaction.org/

228 North Main Street, St. Albans, VT 05478ph: 802-524-6141 • fx: 802-524-6643

For more information

On wealth creation:• Visit www.yellowwood.org/wealthcreation.aspx

for archival reports on the Wealth Creation Approach• Visit www.CreatingRuralWealth.org

for up-to-date descriptions of the wealth creation work

• Contact Melissa Levy at [email protected], 802-524-6141 for more information about the wealth creation approach

On measurement:• Visit

www.yellowwood.org/you_get_what_you_measure.aspx

• Contact Melissa Levy, [email protected].

228 North Main Street, St. Albans, VT 05478ph: 802-524-6141 • fx: 802-524-6643

integrating measurement into wealth creation work presented by melissa levy, senior associate,...

Documents

yellow wood associates

measurement vocabulary

measurement framework

outcomes measurement

chosen goal

discussion of indicators

wealth creation work

wealth creation approach