Value and Impact

Impact is how your actions affect other people. Value is how your actions affect you.

Value

I might value exercising or playing music just because I like it. It has zero impact on others, but I’d still do it because it has value for me.

Value is a necessary and sufficient condition to do something.

It’s sufficient. If you value playing soccer, there’s no reason not to. You don’t need to feel guilty about spending hours kicking a circular object into a rectangular net.

It’s necessary because if what you’re doing has no value to you, why are you doing it? It could be positive – like working because you like to, or negative – like working to avoid your boss yelling at you. But it should be there.

Impact

Impact has two dimensions – scale and intensity.

Scale is the amount of people you can affect. Intensity is how much effect you have on them.

In my previous role, a single change I made in a credit risk model would impact over thirty million people. Their eligibility and pricing for a loan would be influenced by the model.

Most of them wouldn’t be aware anything had changed at all. A few hundred might notice a slight increase in the interest charged or their eligibility for a loan. They might not care too much about it though – they could always borrow from somewhere else.

That is high scale, and low intensity. Like an individual developer at Amazon or Facebook – his work affects billions of people, but perhaps not very significantly.

I think most jobs after college are like that because you’re one part of a huge system (exceptions – where you deal with people directly, like sales and HR). It’s unlikely you can significantly shake things up – an organization would fall apart if every person had that power.

And it’s also unlikely you’ll work at a very micro scale because most large firms became large because of their ability to scale. If they couldn’t scale up the solutions they offer, they wouldn’t be where they are.

Whereas, in a lot of roles in government, you do the exact opposite. You could solve one person’s problem – maybe restore his land to him from a powerful person occupying it wrongfully. It’s high intensity because it can change that person’s life.

It doesn’t have the glamour of scale because it’s one isolated incident in one scattered district in a huge country. Here there’s intensity without scale.

Scale v/s Intensity

Why are actors paid so much more than doctors and engineers?

There was a time I used to wonder about this a lot.

The answer isn’t simply “because that’s how the market works”. That’s a very superficial way of looking at it. It’s like saying the square of the sum of two numbers is the sum of their individual squares and twice their product because that’s the formula for (a+b)^2.

If you look at the impact an actor’s actions have on most individuals, it’s extremely tiny. A couple of hours of recreation. Compare that to a doctor who could literally save your life – the value he offers an individual is far more. If the value the actor offers you is X, the doctor’s could be a million times X.

But the doctor treats one person at a time, and the actor entertains millions of people at a time. When you multiply the value per person (impact) and the number of persons (scale), probably the actor comes out on top. This is not to justify the inequalities – I don’t necessarily “agree” that it “should” be this way – but just to understand them.

As an aside – another reason is that the actor takes more risk. An average actor earns far less than an average doctor, it’s only at the top the inequalities skew in the actor’s favour. For an average person, being a doctor is more remunerative. So the total money going to doctors and actors might be equal, but it’s just more unequally distributed in case of actors.

Scale seems to trump intensity when it comes to impact. The founder of a large firm or NGO will always get more attention than someone doing work closer to the ground. You only seem to become famous when you scale; otherwise you remain an unknown.

It’s why the CEO of an organization is often implicitly assumed to be more capable than those under him, or a President more so than a local Mayor. Scale equates with fame which equates with merit. You see it in new start-ups bragging about their millions of users.

So both socially and economically, scale seems to outweigh impact.

Which probably means – if you want to be rich or famous – then don’t do a lot of good per person for a few people. Do a little good per person but do it for a lot of people.

There are some exceptions but these are the result of large numbers of people collaborating and perhaps luck. Take Google. It has both scale and intensity. Billions of people use it, and they benefit a lot from it. Ditto for Amazon. It offers a lot of convenience to a lot of people. In government too, health insurance schemes, or digitalization reforms offer huge benefits to huge numbers.

Though I don’t know if you can say this for the individuals who work on these things. Together, the team might have scale and intensity, but it’s possible the individuals engaged in them have only one.

So maybe a developer at Amazon or a ground level worker in a large government scheme might possibly just feel like a small cog in a big machine rather than someone operating at scale and intensity both.

The Value Impact Intersection

I don’t think value and impact are completely separate.

It’s like an intersecting venn diagram.

A – Things of value without Impact.

Value means it affects you positively. No Impact means it doesn’t affect others much or at all.

I think leisure usually fits here. It’s the stuff you like to do just because it’s fun even though it doesn’t serve any other purpose. It’s like what Yossarian from Catch-22 says about Olympic medals: They signify you did something of no use to anyone else more capably than everyone else. Kicking a circular ball in a rectangular net or hitting it in a rectangular box doesn’t really “benefit” humanity but we still like to play football or tennis.

And that’s fine.

B – Things with Impact without Value

This would be obligations you might feel compelled to do.

No Value – so it’s not something you’d do if left to yourself. Impact – it affects other people, which is probably why you’re doing it.

Essentially it means doing things unwillingly for someone else – family, friends, country or whoever. Maybe traveling only to impress others or marrying only because you think you have to.

C – Everything outside the two circles

It has neither impact nor value.

So neither does it do anything for us nor does it do anything for anyone else. It’s hard to think of what might fit here. It’s something like leisure, except it’s leisure that doesn’t give any pleasure. Like watching TV shows or playing video games you hate.

D – Both Value and Impact

It’s A ∩ B, the intersection of A and B.

Something you do because you like to and it has a positive effect on others. How does anything come to have both value and impact? There are two ways of getting there.

The first is when you start off with value and you get to impact later. The best examples of this are probably in innovation and R&D.

Someone asked Faraday, “Of what use is electricity?” It might have seemed like a pointless toy of an eccentric hobbyist at one time but no one doubts its utility today. A lot of things like that don’t have any visible pay-off, but people pursue them anyway. The impact comes later, and it’s often here where the impact is huge – when it’s achieved unintentionally.

The other way to get both value and impact is to start off with impact. Impact itself can have value for people. Maybe a volunteer might not care about running a shelter or cooking food for the needy, but love the outcomes it creates. In that sense, it’s the impact of the work that has value.

Cooking itself is irrelevant here – he probably wouldn’t cook for a restaurant if you asked him to. And he’d agree to do something besides cooking if it produced a similar impact.

Takeaway

Nothing I’ve written about here is prescriptive.

There’s no reason to listen if someone tells you to seek impact rather than value or vice versa. It’s a choice individuals should make based on their own preferences.

If you choose value, you don’t need to feel guilty for choosing to “enjoy” life and for prioritizing yourself over others. Especially if you’re working, you don’t need to worry about it either because you’re probably creating some impact somewhere, no matter how small – even just paying taxes is impactful.

If you choose impact, you might want to think about the scale-intensity trade-off and how you want to move along it. It’s also a good idea to see that you get some value, because I think you can create more impact if you get value in the process. You’re unlikely to do something that you don’t like well enough to make much impact.