Impact by Sir Ronald Cohen

Every now and then a book comes along at just the right time. Impact by Sir Ronald Cohen is one of those books. It was written before Covid (there’s an inserted page at the beginning that references as much) but everything that has happened in 2020 just goes to strengthen the argument.

Ronnie starts by telling a little of the history of impact investing – how it had many beginnings but really gathered momentum after the term was coined at a meeting in 2008. But part of the story is also about ‘social investing’ – a term that goes back to the 90s – and ‘ESG investing’ which really started back in the 80s with activist investors attempting to get funds to divest from stocks that they felt were harmful to the planet or whose ethics they disagreed with. Sir Ronnie has been involved in many aspects of this history from helping to create the first social impact bond to chairing government task forces on the topic and as founding chair of Big Society Capital. He’s certainly made his mark on many of the important building blocks of the impact investing world.

But I think it’s the logic and argument of the book that really resonates right now. Lots of people feel that our current form of capitalism is destroying itself and that the relationship between government, finance and social and environmental progress needs to change.

For investors the idea of measuring returns is obvious. From ancient times, the idea of lending or investing capital in order to gain a return has been one of the foundations of our economic system. Businesses raise money, put it to work, and then pay back their investors with a return. 

In the 20th century, the concept of risk became much better understood – how can we measure the risk to the return that is being promised by taking into account volatility, political issues and so on. The financial services industry got better and better at measuring the risks of various types of investment so helping them to make better decisions.

In the 21st century, Cohen argues, impact will be added to the equation. All investment decisions will take into account return, risk and impact. He argues that technology has enabled us to calculate and assess all of these much more accurately and impact is in many ways easier to measure than risk. 

I was lucky enough to interview Ronnie a couple of weeks ago for our Practical Optimist newsletter. You can see that interview below.

Start With Why

But probably don’t bother reading the book


My second ‘book a week’ of the year was ‘Start With Why’ by Simon Sinek. It’s linked to one of the most viewed TED talks of all time which I watched after reading the book (I’m not sure which came first — the book or the talk).

My short review would be ‘watch the talk rather than read the book’. I ploughed through it but didn’t enjoy it much. It’s very repetitive and the tone of voice is a bit grating. There’s no elegance to the writing compared to Black Box Thinking which I read the week before.

Digging a bit deeper into why I didn’t like it, I think it’s because when you work in the tech for good world, everyone starts with why. All the founders we work with have a social purpose and if they need convincing they should start with why, you’ve got something to worry about.

The strange thing is that Sinek often talks about companies that he says focus on the why but doesn’t say what their reason is for existing. I don’t disagree with the examples — Southwest Airlines, Apple, Microsoft are all good companies — but he doesn’t say what their real social ‘why’ is. It’s all a bit vague. Southwest is about letting people travel more. Apple is somehow about creativity. Microsoft about ‘a PC on every desk’. But the why of all those companies is much more dominated by ‘to make money’ than any real social purpose.

The other section of the book that I didn’t like was the one about mixing ‘why’ and ‘how’ . It’s very muddled. Sinek seems obsessed with the idea that the charismatic leader who defines the why can’t be involved in the how. Walt Disney needed his brother Roy. Steve Jobs needed Steve Wozniak. Maybe that was the case for those companies but it’s not a universal principle. The idea that as a ‘visionary’ you can just ignore all the practicalities and hand those over to someone else is a bit 20th century.

Of course you should start with why. I wholeheartedly believe that the world of business is gradually shifting to that conclusion but I don’t think this is the book you should read to help you on the journey.

Book of the week: Black Box Thinking


I’m giving the Book a Week thing a go and thoroughly enjoyed my first one of the year. It was Matthew Syed’s Black Box Thinking about the theory and practice of continuous improvement and marginal gains.

The opening story is a heart-rending example that shows how little is done in medicine to systematically learn from errors — a theme Syed comes back to throughout the book. As an aside, Freakonomics Radio’s series on Bad Medicine — which I just happened to listen to the same week — makes a great companion to Black Box Thinking. If anything Stephen Dubner is a little more positive about some of the initiatives that have been put in place. Syed is in no doubt that there’s still a massive cultural problem in health systems all around the world. We still live in an era of ‘eminence’ rather than ‘evidence’ based medicine.

Syed then goes on to explore the idea of cognitive dissonance. He writes about the US justice system and how difficult prosecutors found it to admit they were wrong when DNA evidence came along and showed that they’d sent thousands of people to jail who were innocent. There’s also a section about an experiment that examined why cult members can’t admit that they’ve been duped even after the cult leader’s predictions (alien invasion, end of the world etc) doesn’t come true. There’s some evidence that people are less likely to be able to recognise that they’ve made an error if the process of being convinced was traumatic or extreme in some way. It’s how initiation ceremonies work.

Although Black Box Thinking starts with plenty of examples of how not to do it, most of the book is very positive and Syed goes on to give some company-based examples of evidence based performance improvements. I knew a bit about Dyson, Team Sky and the Mercedes F1 team but the Unilever example was new to me and pretty compelling and clear cut. I’m all in favour of using tests as often as you possibly can and regularly iterating and trying out improvements.

Overall it’s a great book — excellent story-telling and a really good explanation of up-to-date innovation theory and practice. Highly recommended.

Here’s to the quiet ones

Quiet by Susan Cain is a very good book. The central theme is that we’ve designed many of the structures and systems of society around extroverts — people who are outgoing and ‘team players’ in the business jargon — at the expense of introverts. You might have seen Cain’s TED Talk — but even if you have, I’d recommend the book. It’s an example of a book that is better than the talk because it manages to add much more detail and subtlety.

There’s some debate about what constitutes an introvert but at a basic level people who get their energy from being around and interacting with other people are extroverts. People who get their energy from time spent alone are introverts. There’s a spectrum to some extent and just being quiet and shy isn’t necessarily the best sign to look for. As Cain writes:

Introverts may have strong social skills and enjoy parties and business meetings, but after a while wish they were home in their pajamas. They prefer to devote their social energies to close friends, colleagues, and family. They listen more than they talk, think before they speak, and often feel as if they express themselves better in writing than in conversation. They tend to dislike conflict. Many have a horror of small talk, but enjoy deep discussions.

I’ve often been frustrated by business thinking that elevates the extrovert CEO to god-like levels of respect and even worse, ignores the evidence about the risks of the decisions they take. In some industries (and startups) that can be a good thing, but very rarely I’d argue. I also think it’s very easy to abuse extroversion if you have it and I think people are beginning to recognise that. Perhaps it’s one reason why politicians are so untrusted.

The other reason I found the book interesting is that it helped me make some sense of my own behaviour. I really don’t like large group meetings and I’m much more comfortable one to one or in small groups. In some ways I’m more comfortable speaking to a large group than ‘networking’ at conferences because it allows me to prepare and I’ve had quite a lot of practice over the years.

It’s probably a bit dangerous to generalise about personalities which is always the risk with books like this. But when you combine it with more extreme books like Jon Ronson’s The Psychopath Test and books about the combinations of personalities behind great innovations like Steven Johnson’s Where Good Ideas Come From, I think there’s a lot to be learned about how to build great teams and great organisations.

Related articles

Whole Earth Discipline

Stewart Brand’s book Whole Earth Discipline is one of the best books I’ve read in the last few years, partly because it’s very well written and researched but mainly because it made me change my mind about some important issues.

Perhaps the easiest argument for me to accept (although I still learned a great deal) was the section on cities. It’s always made sense to me that cities are more efficient use of resources and are the driving force behind new ideas and problem solving. I’m a pretty big believer that new things happen when you bring people together who have different skills and experiences. You can either design those situations — as things like the Manhattan Project show — or you can just sit and watch as it happens in cities — the more cosmopolitan and connected the better. Of course, as cities grow they develop new problems, but they solve them just as quickly as they produce them.

The next section is about nuclear power. I think I’ve been through my own mini-version of Stewart’s conversion story. He was properly involved in the environmental movement, in fact with the Whole Earth Catalogue you could say that he, more than many people, invented it. But over the decades he’s come to be frustrated with the side of the movement which ignores science which is something I’v noticed too. For me, there is just no strong enough argument against nuclear power, especially in the UK. We have all the experience, we even have a whole bunch of sites that are already suitable and we’ve actually developed some of the best reprocessing technology in the world.

From my reading around, there is enough nuclear fuel to last us until the end of the century which should hopefully be enough to come up with something else. Chernobyl couldn’t happen again, because nobody is proposing building that type of reactor. Over the next 25 years I think it’s going to be cheaper than renewables and will take up much less space too. My only caveats would be that we should spend as much on energy efficiency as we do on new generating capacity and that all nuclear facilities should be open to the public.

Next Stewart takes on the opponents of genetically engineered crops. This is where I get a little bit more uncomfortable, but in the end he and a lot of other things I’ve learned over the past few years have won me over. We don’t know enough yet but the basic safety questions have been answered and we should find out more so I’m in favour of more field trials and in the cases where there is good safety information and economic or health benefit we should go for it.

Finally, the book turns to what Stewart admits is the most controversial topic — geoengineering. Here I’m not ready to say we should get stuck in. Research yes, but I don’t think we have any real idea what tools will work, and even if they did work whether the unintended consequences would be even worse than the problems the technologies set out to solve. I find the idea fascinating and want to learn much more but the evidence of successful approaches or of the immediate need to deploy these technologies isn’t strong enough for me yet.

It’s a great book by one of the smartest and most radical people I’ve ever come across. Well worth a read and I think should definitely be read by the new Government who are going to have to grapple with the energy issue in a much more radical way than the last Government ever did.

(I’ve been sitting on this blog post for a while. This article in Wired and realising I’ll probably make it to the Long Now seminar in September prompted me to finish it off.)

The Invention of Air — rainy days and optimism

Invention of Air

About this time last year I went on a little day-trip to Birmingham with my friend Steven Johnson. It was grey and miserable and we had to go and buy umbrellas from Boots to keep dry. It was a fantastic day though.

We were on the trail of Joseph Priestly tracking down the places he hung out for Steven’s book The Invention of Air

which is out today in the UK and is very, very good. I think you’ll hear quite a lot about it next week on the radio and in the papers and so on. Steven is also doing a number of talks including this one at Nesta on Monday.

The thing that got me was Steven’s description of Priestly as a relentless optimist. And when you look at all the things he did you can’t help but be impressed. There’s something about him that just makes you smile.

Among the swans

If you want a good insight into what being a first time entrepreneur is like, Nassim Taleb gets it spot on in this short passage from his book The Black Swan

(the first book I’ve read in months by the way — when I was at Demos I read about one non-fiction book cover-to-cover per week):

“Many people labor in life under the impression that they are doing something right, yet they may not show solid results for a long time. They need a capacity for continually adjourned gratification to survive a steady diet of peer cruelty without becoming demoralized. They look like idiots to their cousins, they look like idiots to their peers, they need courage to continue. No confirmation comes to them, no validation, no fawning students, No Nobel, no Scnobel. “How was your year?” brings them a small but containable spasm of pain deep inside, since almost all of their years will seem wasted to someone looking at their life from the outside. Then bang, the lumpy event comes that brings the great vindication. Or it may never come.”

It’s been the strangest roller-coaster of a year for me. The emotional ups and downs have been more extreme than anything I’ve ever experienced before. I’ve bounced out of investor meetings, laughed myself silly with the team, surprised myself at how angry I can get and, on one occasion, found myself crying uncontrollably in a pub. I’ve been lucky and had an amazing amount of support from my co-founders, family and friends. I don’t know how people who don’t have that support manage it.

And I still can’t say whether it’s going to work or not. On paper — like any other start-up — the chances of us succeeding are tiny. We’re also trying to do something ridiculously ambitious that nobody has ever tried before. But somehow, I know deep down that we’re going to succeed. Don’t ask me how — I just know.

The funny thing is that now I’ve started, I can’t imagine doing anything else.

Be careful when you Google yourself

Jon Ronson had a great little piece in the Guardian Weekend yesterday that illustrates in just a few hundred words what’s changed and stayed the same about journalism in the last couple of decades.

Them

is one of my favourite non-fiction books — way ahead of its time in terms of the characters Jon chose to follow. He was writing about Omar Bakri Muhammad well before anybody else was looking at radicalisation of Islam in the UK. It’s also one of the funniest books I’ve ever read.

Gibsonesque

There’s no escaping the similarities between the lonelygirl15 saga and the plot of William Gibson’s novel Pattern Recognition. From the Washington Post:

“The plot [of Pattern Recognition] centers on mysterious bits of video posted anonymously on the Internet. The shadowy black-and-white videos, called “the footage,” appear to feature a pair of lovers and hint deliciously at a larger, magnetically compelling story. The footage inspires a cultish following on the Web, including chat rooms, parodies and investigations — just like those created around lonelygirl15 — and the novel’s hero is dispatched by an advertising wizard to track down the filmmakers so the phenomenon can be monetized.”

The Wikipedians have done an excellent job of telling the unfolding story of lonelygirl15. It seems to have come to an end for now with a series of public admissions that it was staged, although the scene is set for it to develop more into an ARG.

Gibson blogs chaotically and confusingly, but he’s noticed the Post’s piece likening lonelygirl15 to his book.

I had a few thoughts on Pattern Recognition the first time around, when I realised the ideas in the book wouldn’t go away.

I have to admit lonelygirl15 thing has creeped me out a bit. It made me realise how manipulative compelling storytelling can be in a networked environment. Perhaps it’s because as Gibson himself has said, “Emergent technology is, by its very nature, out of control, and leads to unpredictable outcomes.”

I think we’re just seeing the beginnings of a new form of art and/or business.