In Conversation with Douglas Beal: On Measuring Sustainable Development

Q: What was the genesis story of Boston Consulting Group’s Sustainable Economic Development Assessment (SEDA)?

We created the Sustainable Economic Development Assessment (SEDA) in 2012; during that time we were working with governments on their broad based national development strategies which cut across different sectors. Our clients were asking for a way to benchmark themselves against a relevant peer-group.

To determine how to create this benchmarking, we then asked ourselves what the reason for achieving economic development was, and we came to the conclusion that “if you’re not improving the overall well-being of the population, then why do it?” From there, the next step then was to say “how do you define well-being?”

So there is economic well being, social well being, and then there is well being related to big investments that countries generally need to make, such as education and infrastructure. And we came up with ten dimensions, which gave us the ability to rate how each country is doing along these ten dimensions – it even allows us to look at where these countries are today and what their trajectory might be.  SEDA therefore measures how well any country is doing doing from an economic and socio-economic standpoint, as well as the whether they are improving or falling further behind against their peers.

We’re now able to take this assessment to any government leader, any new prime minister who might have just just taken office, and to help them to benchmark themselves against a relevant peer group. It’s more helpful to pick a peer group that is more relevant and which you can aspire to (rather than the world’s leaders) so you can decide on what you can do moving forward. (As an example), while it might be easy to go to an African country and say “Look at Norway” because that is best practice, that might not really be helpful.

Q: How challenging was it for you and your team to set the parameters that would come to define “well being?”

It was a bit of a challenge, even if we knew what the topics should be. Some of areas are pretty obvious. Education is important; healthcare is important. Income equality is something that you should consider. Governance, the quality of governance and the level of corruption, civil society, and so forth.

But I think question really is about how you organize those topics because underneath each of those ten dimensions, we’ve got different metrics that we use to actually measure those dimensions. So over time, we tweaked it a bit; at one point we had eight dimensions, and then we had 12, then ten, then we reorganized them as they became more and more logical.

Beneath each of these ten dimensions, the biggest challenge was actually finding data that was both usable and measurable. What we did NOT want to do is to measure something vague – we’re not trying to measure happiness for instance. That’s a very subjective thing; we wanted to be more fact-based, so that if we brought the SEDA before senior government officials, they couldn’t argue with the subjectivity of it.

So we used data from the World Bank, from the IMF, the Economist and other global organizations that collect this type of information on an annual basis for as many countries in the world as you could include. We didn’t want this to be just about the OECD or developing countries, we wanted it to be as inclusive as possible.

Q: How far-reaching is the assessment?

We’ve assessed just about all of the countries – the exceptions would be some small Pacific islands that you can’t get data on; SEDA has been received very positively. There may be some countries that don’t come out looking so well on this assessment but we’re not doing this to publicly shame anyone, neither are we doing this to create an index. When we talk to the world about this, we don’t present it by saying “here are the top ten countries.” We instead extract some of the most interesting insights that we’ve been able to find.

I think the way you present the SEDA to governments is important. When we privately go to a president or prime minister with the information about their country and how well they are doing, it’s a private discussion and they are generally very open, whether it is good, whether it is bad, or what their development needs are, and they are usually not surprised by what we say.

Q: What role does the private sector play in all this?

I think the role of the private sector in economic development is extremely important. It is the private sector that can create jobs, the private sector that can usually execute projects more efficiently than a government could without some sort of partnership. So yes, the private sector has been quite receptive to this. We’ve actually used SEDA with large organizations and large foundations that are looking to become better integrated with the socio-economic development of the countries they operate in, and this is especially true of developing economies. This is also particularly important for the extraction industry, for financial institutions, for telecoms companies, and for large technology companies, for example. These are companies that, based on their business practices, can actually move the needle in both economic and social-economic development. And I think historically, the traditional corporate-social responsibility has been a bit misguided. It tends to be thought of as “ok, we have to do CSR, so let’s set up a women’s weaving cooperative in the village next to where our mine is to keep people happy.” And then its on the website, and it makes the employees feel good.

But it is much more important to integrate and use the core business of the company to support both the economic, and socio-economic development of the country – so for example, if you’re in the extraction industry, a mine, or an energy company, how do you set up a cluster of SMEs that you train in best practices in how to run a company and then make them your suppliers?

Or, if you’re a financial institution, how do you use new technologies and new channels like mobile for example, to reach new customers and create financial inclusion opportunities in a way that’s sustainable (profitable for the company that’s doing it). So its not just corporate social responsibility, its also their core business.

We have used SEDA with a number of these companies as well as with foundations that look to identify, along our ten different dimensions, where they are actually having an impact, both to look at the countries they are operating in, to see where the need is, but also, once they do something, to measure the impact and then go back to their host government to call their attention to the impact the organization is having.