5 hours a day

It’s one of the most remarkable statistics I’ve heard about social change for a while: life expectancy is growing by 5 hours a day. Put another way, average life expectancy increases by over a year every five years. Nesta have a new report out about the risks and opportunities of an ageing society which argues that the implications are far from simple. As Halima writes:

We must avoid jumping from one ageing stereotype to another: from an image of quiet, incapacitated people sitting in care homes, to a new stereotype of hyper-wealthy, hyper-healthy Baby Boomers reading tablet computers while pedalling in their home gym. The reality is much more complicated.

It’s fair to say that our institutions haven’t kept up with the trend. Pensions were designed for an era when people were only expected to live a few years beyond retirement. Old peoples’ homes were designed to be the exception rather than the norm.

Through Social Innovation Camp and Bethnal Green Ventures we’ve always been interested in how technology can help us adapt to an older society. It’s partly because people don’t associate digital technology with older people that we think it’s an interesting area. Projects like Good Gym, Room for Tea and Here’s a hand have taught us a lot about what works and what doesn’t. And when we open BGV applications tomorrow, we’re really keen to explore the way that tech can help reorganise systems of support for older people.

Measuring your impact for impact investors

As impact investing catches on I think one of the most important things will be how the social and environmental impact of the ventures it invests in is measured.

At the end of last year, our friends at Nesta published their ‘Standards of Evidence’ for impact investing which are really helpful. Rather than trying to define all the different types of impact and setting standards (which would be incredibly difficult and I think could stultify innovation) they’ve defined different levels of collecting data about impact that they expect to see as startups develop.

It’s a bit like the way you can categorise startups into pre-seed, seed, series A etc in financial terms but with the focus on evidence of impact rather than the finances.

Here’s the short summary of the levels:

  • Level 1: Account of impact – this means a potential investee can clearly say what a product or service does and why this may have a positive impact on one of our outcomes in a logical, coherent and convincing way.
  • Level 2: Correlation – at this stage some data is being collected which show a positive impact on the users of the product or service, but it is not confirmed that the investment caused this.
  • Level 3: Causation – here we will expect to see that the positive change amongst the users of the product or service is happening because of the product or service.
  • Level 4: Independent replication – the claims behind a product or service will have been validated, such as through an independently conducted evaluation. At Level 4 we would also expect to see that the product or service can deliver this positive impact at a reasonable cost.
  • Level 5: Scaled – to reach this point it is clear that the product or service can be operated by someone else, somewhere else and on a large scale, whilst continuing to have positive and direct impact on the outcome, and whilst remaining a financially viable proposition.

With BGV we’ll accept teams that are at or below level 1 but our aim will be to help all our ventures get to level 1 by the end of the programme and level 2 by 6–12 months after the programme.

As a social venture it’s well worth getting your head around this because the earlier you start thinking this way, the easier it will be as you go along. The whole impact investing world is getting a lot more savvy and this will be one of their most important tools for differentiating themselves from one another and from more old school investors.

Software’s unbalanced diet

I’ve been thinking a bit more about what’s going on in the economy and its relationship with technology. It was Albert Wenger’s post about whether the rise in consumer debt had something to do with technology’s effect on the economy that got me thinking although I’d been wondering for a while whether technology had something to do with the rise in public sector spending.

Marc Andreessen writes that ‘software is eating the world’ but I’ve started to think that it’s eating a very strange and unbalanced diet which is having nasty consequences. The fact that we’ve used technology to only revolutionise certain industries is a bit like just eating all the fatty, sugary stuff and skipping the healthy parts. The reason we haven’t really noticed that software has avoided making great leaps forward in some of the most important sectors is that they’ve actually been improving without it.

Take education, which in the UK seems to be getting better and better. The statistics are of course a bit controversial, but one example is that 11 year olds have gone from 49% reaching level 4 or above in 1995 to over 80% in 2011. However education is also getting a lot more expensive. It’s doubled in cost since 1997 and some forecasts I’ve seen show it continuing to increase over the coming decades simply because of the increases built into the current system (buildings needing to be replaced, teachers getting more expensive as they get more experienced and qualified etc).

Likewise, healthcare. Between 1997 and 2009, the National Health Service made a 20 per cent reduction in the mortality rates of cancer patients aged under 75 and a 40 per cent reduction in mortality rates of heart disease patients under 75. But, again, it’s getting a lot more expensive. It went from costing £50 billion per year to £120 billion between 1997 and 2011. That increase went into new buildings, new staff and better pay and conditions for those staff. It also went on technology but in such a terrible way that it likely made the system more inefficient overall.

You could blame the increase in cost of both of these on the Labour Government but I think it’s much more systemic than which flavour of politician is in power. Other countries saw similar trends and even in the US where healthcare is run outside of the public sector, the costs rocketed in both real terms and as a percentage of GDP. The truth is that we’ve entered a period of history where we need good education and need good healthcare but compared to the efficiencies that technology has created in other parts of the economy (see Race Against the Machine), healthcare and education remained almost untouched. Even worse, the changes that technology has created in other parts of the economy, left us unable to raise the taxes to pay for the rises in costs.

Now I think if we have any chance of retaining the improvements in quality we need to make public services radically better and cheaper. Some work that Mastodon C did during the BGV programme found over a quarter of a billion of unnecessary overspend in GP prescriptions. Another of our companies, Dr Doctor,  is looking at how missed and cancelled appointments affect the NHS and has found another £900 million of potential savings. The problem is that IT has been seen as a cost in the NHS for the last 20 years whereas we actually should only be using it to save money AND improve outcomes. I think things will get better and I’m bullish about health and education because I know that good people are already working on them and investors are moving into them as areas as well. But there are services that are getting worse and more expensive which I really worry about —  social care, prisons and the courts for example.

Another worry I have is that no matter whether the economy starts growing or not, we’re still going to have a really difficult time creating more jobs. Andrew McAfee and Eric Brynjolffson’s research points to this but this piece for Planet Money is even more stark — economists just can’t find a future scenario where US employment will return to pre-2008 levels. Put simply — society is going to get better but we’re going to have less jobs. On the one hand, that sounds great (we’re going to have to work less). But society just isn’t set up for it (if you don’t work, you don’t count). I can’t pretent I have an answer to the conundrum but for me it means that what your startup does is a much more important decision than it used to be. Software isn’t eating the world, it’s eating the unhealthy bits and unless we rebalance our efforts to use it to make publicly valuable sectors vastly more efficient, we’ll be in even worse trouble than we are now.