Jed Emerson on Impact Investing: The Rise of the Multilingual Leader

By Marta Maretich, Maximpact

To mark the publication of Impact Investing 2.0, a watershed study of 12 successful impact investing funds, Maximpact talks to one of its authors, Jed Emerson, about the report.  In the first of a two-part series, Emerson reveals the reasons behind his personal interest in “multilingual leadership” and why the very nature of leadership in impact organization is changing.

Maximpact: At SOCAP13 you presented about “multilingual teams.” Why are multilingual teams so important to impact investing funds and why are they so interesting to you?

Jed Emerson: This is a really critical issue, first because all organizations need leaders and I think that there have been profound changes to the concept of leadership in the last 10 to 15 years. In some ways, the Impact Investing 2.0 research is one more step forward in that progression, and in other ways it’s a new way to think about leading impact organizations.

Maximpact: In Impact Investing, your seminal book with Anthony Bugg-Levine, you write about the need for a move from charismatic to collaborative leadership. Do you see evidence in this report that an evolution is taking place?

JE: I think it’s clearly taking place! It’s interesting, because in 2000, when I published my first working paper on blended value during a faculty appointment at Harvard Business School, I talked about “mutant managers.” At the time, I said we need these oddly genetically modified people that could play "both/and" rather than "either/or" in social investing. The term “multilingual leaders” is probably a more accurate way to describe what these new kinds of leaders do—cutting across silos to draw connections between business and the social/development finance sectors.

For me, this term holds special meaning because in some ways that’s the background I come out of. I started my career in social work and youth work and morphed from that into venture philanthropy, community development, sustainable private equity and then on into the areas I’m active in now, in impact investing. In an important sense, this is a very personal kind of observation for me.

Part of this insight was formed simply from watching the sector develop over time. I’ve spent the last 20 years observing both the field and its practitioners emerge into this “new” space. It’s been striking to see the finance-first people, who’ve come into the conversation with traditional banking and investment skills, needing to get up to speed with the social element of impact investing. Meanwhile, you see people coming out of the more traditional development backgrounds who are really sucking up the skill sets around investing and finance while recognizing that if your ventures are not sustainable on financial terms, they won’t be sustainable in impact terms.

Whether you’re giving your profit to shareholders and investors or using it to build community equity, if you don’t know how to play this type of dual game you won’t be effective.

As we were going through the two-year process of identifying the 12 funds we wanted to profile and then beginning the deep-dive analysis and case study work, we did multiple interviews with investors and managers making use of the various products and strategies these funds were bringing to market. It was really interesting to see our research team as a whole realizing this issue of leadership was central to the success of the funds we looked at.

I was surprised myself because I think the focus of a lot of the discussions around impact investing in the last five to ten years has been “we need to improve our skill set around financial structuring,” or “we need people who have done deals who know how to invest.” We’ve heard a lot of this kind of rhetoric.

However, what we found during the course of the research was, in fact, what funds need are more people who can play in the muddy middle, first, without losing track of the financial discipline that one needs and, second, without losing the focus on impact, which is the reason we’re applying those financial skills to begin with.

The research process reminded us what a lot of us already knew: that funds need both financial and impact discipline to be successful. On the other hand, our research has shed new light on the idea of multilingual leadership.

For us, at the level of fund investment teams, this means a kind of leadership that includes various individuals that speak the language of various parts of the practice. The funds that have performed most effectively are those that have teams and individuals who can really play across perspectives and silos rather than come in as representatives of a particular, individual perspective or silo.

Maximpact: Who is on the multilingual management dream team?

JE: We speak of it as themes rather than directives in the report because in each case, the constellation and makeup of the teams is different. Yet, at the end of the day, all of them reflect this multilingual orientation.

For example, you may have a fund with a leader who has more expertise on one side or the other but who has the ability to understand all the perspectives and the language of all the different silos he or she is drawing upon. The leadership team might be made up of individuals who are each fully multilingual, or be comprised of folks who come into the conversation with a deeper expertise in one or the other silos.

The important thing is that all team members have an understanding of the humility with which multilingual leadership comes forward. By that, I mean an awareness of the fact that, though you may be really great in your area, you won’t be successful unless you’re able to take your expertise and marry it with that of the other experts in your team in an effective way.

Read part 2 of this interview, Jed Emerson on Impact Investing 2.0: The Impact Leaders of Tomorrow, on Thursday.

A longer version of this interview first appeared on the Maximpact Impact Investing blog.

Jed Emerson is widely recognized as an international thought leader on impact investing, performance metrics and sustainable finance. Jed is Chief Impact Strategist for ImpactAssets and chair of the ImpactAssets 50, a field-building strategy that promotes leading impact investing firms. He is co-author of Impact Investing 2.0.

Marta Maretich is Maximpact’s Chief Writer and Blog Editor. Maximpact is a free global portal for the social, impact and sustainability sectors. It operates as a secure web-based listing service that allows sustainability, philanthropy and CSR professionals, as well as entrepreneurs, intermediaries, and funds to share information about initiatives and impact investment deals, online. For more information on the platform or to review latest impact projects visit: www.maximpact.com 

Read the full Impact Investing 2.0 report.

Watch the video of Jed Emerson, Cathy Clark and Ben Thornley introducing Impact Investing 2.0 at SOCAP13.