While the desire for clear-cut, machine-like solutions is understandable, and certainly appealing, the reality of business – or any human endeavor for that matter – is invariably more complex. As Geoff Mulgan discussed in his piece “Measuring Social Value,” our approach must be multi-dimensional, nuanced, and adaptable. In his article, initially targeted at non-profits, NGOs, and foundations, Mulgan sheds light on the notion of “value,” which equally applies to contemporary business ecosystems.

Business leaders, today more than ever, are enthusiastic about measuring “organizational” value. But the challenge persists: they still grapple with the definition of this value, let alone how to effectively assess it. The fundamental obstacle lies in viewing organizational value as an objective, fixed, and stable entity. In the fluid, hyperconnected business world of 2023, this perspective is more redundant than ever. Approaching organizational value as subjective, evolving, and variable leads to the creation of more sophisticated, nuanced metrics to encapsulate it.

Mulgan’s arguments dovetail perfectly with contemporary business ecosystems that aspire to define consistent metrics for evaluating the multifaceted construct of people, process, customers, services, etc. Such elements don’t always align with measurable outcomes. This complexity stems partly from the fact that much of what impacts business is driven more by social sciences than physical sciences — even when the businesses are manufacturing tangible products. The universal truth is that all organizations are influenced by the intricate dynamics of human interaction and social behavior, superseding the precision of physical science.

“But unlike molecules, which follow the rules of physics rather obediently, human beings have minds of their own and are subject to many social, psychological, and environmental forces. The more I get involved in data-driven policymaking, the more I realize that although data should inform all actions, very few domains allow precise predictions about what causes will lead to what effects. The social sciences (including business) simply do not have laws in the way that physics has. Even seemingly solid economic principles, such as the rule that demand falls when prices rise, have many exceptions.” From Measuring Social Value.

As we delve deeper into the world of AI, Big Data, and ever-evolving socio-economic trends in 2023, adopting a complexity-centric, ecosystem framework becomes more critical than ever. To manage the myriad drivers of business decisions, an integrated approach is required, one that combines understanding, measuring, and influencing not only what can be directly impacted but also the deep-seated patterns that shift slowly as the organization adapts to internal and external change.

Mulgan’s article is a marker, suggesting a path forward. The quality of discussion, negotiation, and reflection on what has worked and what hasn’t is crucial to any organization’s progress.

“I describe this tool because it is one approach to operationalizing social value that balances coherence, consistency, and simplicity with the flexibility needed to cope with messy and complex phenomena.” From Measuring Social Value

Navigating between the appeal of predictable, machine-like solutions and the challenges and opportunities of more complex, adaptive, and untidier solutions is how we guide organizations to success in 2023 and beyond.