Impact Investing Impotence & Finite vs. Infinite Games
Over the weekend I was thinking about two things that I'd love to hear your thoughts on:
A- the challenges of Impact Investing so often falling short of great impact – lots of reasons for this but my colleagues at Mulago Foundation explore the topic really well, here if you want to take a look.
B- Finite vs Infinite games a concept by James Carse but often woven into keynotes by Simon Sinek (like this one).
The question for us to consider:
Is one reason that so many well-intended Impact Investment endeavors fall short of producing great social impact have to do with our business culture approaching the opportunity as a Finite Game when the other stakeholders are engaged in the problem as an Infinite Game?
To Perpetuate the Game
Relationship to Goal
Goals are identical for all players
Goals are diverse among players
Both known and unknown players
Rules are fixed
Rules change and develop over time
Each player is needed and must finish the game
Any single player is not needed and players can enter and exit the game
Reference to Time
Looks to replicate the winning strategies of the past
Looks to the future and does not assume the past will reoccur
Relationship to Rivals
Compete against rivals
Challenged by rivals to learn and grow
Compete for mature markets
Develop NEW markets
Yes, its true that some of the social causes can easily declare there is no market for some of the injustice that needs to be addressed . . . but there are many plausible scenarios where business could reasonable engage. The challenge, may be - is that business is so oriented . . . . perhaps wrongly oriented around a Finite Game approach. Social problems, however, refuse such confinement.
If we want to see better results from Impact Investing and Market-Based Social Enterprise . . . they must move to an Infinite Game modality.
The work I lead in Uganda is facing this tension right now. We spent more than a decade providing charity-based water projects with great short term impact but long-term challenges as the burden of operations and maintenance transitioned to the beneficiary communities. We began to formulate a plan for market-based maintenance service to support the water projects long term and fund that maintenance entirely from the communities served. The initial water projects (hand-pumps, rainwater systems, etc) were still funded by generous donations but the ongoing maintenance would be covered by monthly fees paid to cover preventative maintenance and emergency repairs. As soon as we began exploring covering the long term operational expense on fee-for-service basis we were asked persistently asked about how soon we could potentially recover the entire cost or perhaps even fund the work from investor debt-financing and deliver a financial return.
The challenge isn’t whether or not the social good of water development brings a significant return or not. Rather it’s the reality that the biggest return . . . the most meaningful return on that investment is on the lives of those vulnerable men and women who now have safe water. Trying to pull that return all the way to the donor (wanting to be the investor) means withdrawing that return from the beneficiaries who, frankly, need it more than we do.
If we apply an Infinite Game paradigm we aren’t seeking the same balance-sheet win but rather the ongoing advancement of the people we serve. If we seek a pay-out in economic development for the vulnerable rather than economic pay-out for ourselves, then the Infinite Game makes room for those we are serving to become players on their own behalf . . . I dare say, they may even begin to play for my benefit if they choose to do so.
How does this land for you? Where do you see the tension in your life between finite and infinite games? Tell me your experience that demonstrates I'm wrong about the less-than-perfect track record of Impact Investing... As my Ugandan friend, Jockus Zamari says "bring your additions, subtractions, and multiplications . . . but please, no divisions"