“Efficacy” is my new favorite, social-impact word
Efficacy is defined as “the ability to produce a desired or intended result”.
It is often used to describe the effectiveness of pharmaceuticals. Does this drug demonstrate the expected impact on a certain disease? And is the drug effective in a large percentage of the treated patients?
The Southwest Angel Network, which focuses on social-impact companies, sees many companies who are working earnestly and diligently to address significant societal or environmental challenges. The questions that I ask of the companies include, “Can you provide evidence of the impact-efficacy of your product or service?” and “What is the magnitude of your impact on society?”
For example, most of us would agree that early STEM education for diverse populations is beneficial to society. Such training should increase the lifetime earning of those diverse individuals who are today under-represented in technology fields. And technology companies should benefit by having a larger and more diverse employee pool to draw from.
Consider a company that comes to us waving the STEM impact flag. They state that their STEM education lab tools are significantly cheaper than those of their competitors, and so our network should fund them. Our requests include:
- Please show us evidence that your product offering has higher efficacy in terms of improving educational outcomes compared to competing products. When a market segment has many competing products to choose from, what is the impact on educational outcomes of adding one more product to the mix?
- One requirement for having a significant impact on STEM educational outcomes is being able to have a company’s offering adopted by the largest possible number of classrooms. So please show us evidence us that your sales plan has efficacy in terms of penetrating the tough-to-sell-to education market.
Consider a company that comes to us and states that they can reduce prescription medication prices for low-income individuals, allowing millions of individuals to pay for the medications that they need. What a wonderful idea! The efficacy question is, “Can you reduce the prices far enough to actually enable significantly more people to pay for their meds?”
Consider a company that comes to us and states that they can improve financial security in retirement for people who are today in their 50s. They accomplish this by offering a comprehensive and well-thought-out online retirement planning tool. Efficacy questions include:
- Do you have evidence that your tools change the spending, savings and/or investment behaviors of your tool users? Without a change in behavior, there is no societal impact.
- Consumers today have a wide range of retirement products and services available to them. Can you demonstrate that your tools have higher efficacy than the plethora of competing options in terms of improving financial retirement outcomes?
- After you have demonstrated that your tools have high efficacy, can you now please describe the efficacy of your go-to-market plan? If not many folks use your tools the overall social-impact is small.
Bob Bridge, Executive Director