Can we measure the impact of thinking?

Within organizations, agencies and consultancies, thinking is currency. Strategies. Ideas. Implementation. These are the building blocks of business, whether in product, operations, marketing or finance. For the sake of brevity, in this post, I will refer to all types of thinking, whether that be creative, operational or strategic, as “ideas”.

Is there an opportunity for professional services firms to have a clearer way to measure the impact of their ideas? Companies that operate in this space, like consultancies or agencies (creative / digital / design / innovation / etc) will often scope fees based on expected employee hours. This is a lengthy, detailed but necessary step to ensure the firms’ profitability. Yet clients (and their procurement teams) exert downward pressure on service providers’ margins. Clients think they’re paying too much. Service providers feel they’re under too much financial strain.

Performance based contracts are notoriously difficult to align on for many lines of business in professional services, particularly those with a strategic or creative output. There are too many intangibles, halo effects or longer term payoffs for this to be viable for many agreements.

In addition, intellectual wastage is astronomical in professional services. Some of this is by design (especially in creative pursuits), but much of this comes down to poor planning and alignment.

Patrick Garvey, Partner at We Are Pi, outlined the opportunity to improve both the quality of work and its effectiveness in his forward-thinking 2018 white paper for the advertising space, titled Fairtrade Creativity:

If creativity can be fairly rewarded for real impact, engagement (or amazement as my business partner Alex Bennett-Grant likes to call it), and effectiveness can be transparently and confidently measured, then surely this is a great solution to getting rid of ad fraud once and for all.

Not only that, it will improve the quality of creative output, to shift the industry from forcing advertising down people’s throats to advertising that is more welcomed. It means that brands and creative agencies will have to work more closely together, and create work that people truly want to engage with.

Ultimately, this is about aligning incentives for service providers and recipients. For clients not to overpay for subpar work and for consultants to be rewarded for impactful thinking. The trick is making that an efficient and automated process. My hypothesis is that blockchain could be an unlock.

A short detour to parametric insurance

This will makes sense in a moment, I promise.

InsurTech is a sector in the midst of massive disruption, suffering from legacy inefficiencies thanks to outdated tech and many middlemen. Able to piggyback off broad adoption of blockchain by supply chain and logistics companies, Otonomi is automated insurance for cargo. Goods are tracked, on-chain, from door to door. Chainlink’s oracles will cross reference the movement of goods against data points that detect supply chain disruption such as port delay data, climate conditions and other risk factors. If this data identifies a condition which would require an insurance claim, that claim is immediately and automatically executed by smart contracts, with payouts made on-chain instantly. It’s a system that reduces claim times from weeks (or even months) to 5 minutes and saves countless hours of employee time.

Although tracking cargo isn’t quite the same as tracking the impact of ideas, this system is indicative of a meaningful change and points to a possibility of what an efficient comparison could be modeled off for professional services.

Measuring ideas

Actions taken by a business are rarely informed by an isolated piece of thinking. Rather, they are based on a patchwork of context, intelligence and hypotheses. There may be legacy strategies, collaborations, or political influences at play. Yet this patchwork will inform a line of action, which could take form as a strategy, a creative idea or the implementation of a plan.

Generally, these organizational actions will begin with some sort of material output. An artifact like a report, a deck or a video. These artifacts are mere containers for the thinking within them, to help communicate the ideas and provoke the audience to take action. Yet these artifacts cannot represent the impact that their content creates. Hence the difficulty in aligning on performance based contracts.

Could we attribute value to any of these discrete actions? Could we categorize them, quantify them, track them, measure their impact and therefore automate a payout based on a particular outcome?

This is certainly doable in some industries. Sergey Nazarov, founder of Chainlink states:

“Blockchains can create a definitive truth about what’s inside them already… but blockchains do not know nor cannot create definitive truths about things outside of them”.

The job of Chainlink is to generate definitive truths about real world events, by proving that they happened to a sufficiently high standard, that they can be used by blockchains. These events could include specific actions that take place in the real world, a market price changing, a delivery of a good, or someone approving something. Of course, these all require data points to indicate that these events have taken place.

Bringing it back to professional services, we immediately are faced with a problem. What could be the data point for an idea? If it’s a creative idea for an advertisement, that’s more straight forward. That goes into the world, is looked at, engaged with, commented on, etc. Mediaocean, a media agency, partnered with IBM to improve media spend transparency by recording everything on-chain. That said, it has been years since any updated news of this has surfaced. But the logic stands.

That example is tracking ads to ensure spend transparency. But what about tracking the impact of a particular strategy project? Or a workshop that resulted in the development of new product lines or service models? This becomes less clear.

Can concepts be captured as a ‘definitive truth’, where they can be used by blockchains and lead to the efficiencies that we’ve seen in Insurtech?

If that’s possible, how would we measure the impact of those ideas?

I don’t have answers to these questions, but I believe that if we find solutions to them, it could revolutionize the $160 billion global consulting market and the $380 billion global advertising agency market.

I’d love to hear opinions from folks working in professional services. Would this be a good thing for your industry? I’d also love to hear from builders in web3. How would you tackle putting ideas on-chain?