Managing Trade-offs: The Importance of Impact

In business school, we’re taught that CEOs should maximize profit and increase shareholder value. As the co-founder and CEO of an early childhood education company, this lesson is central, but I also want to ensure that the work we do is socially impactful. My team is fortunate to work closely with academics to ensure that our platform reflects the best in class research on how children learn. Through this approach, our work is inherently impactful for learning. Moreover, by serving large and diverse communities, we ensure that every child has the opportunity to live up to their potential.

One question I often get asked is how to manage trade-offs between maximizing revenues and impact. What I learned, was that with the right business model, we do not need to make these trade-offs. The right business model for a socially-minded company is one in which the social impact is embedded within the business impact. As one of my advisors puts it, “social impact business models need to pass the most evil CEO test: if the most evil CEO were to run this company, would she choose the same business model, because it is the best path towards maximizing revenues?”

At Cognitive ToyBox, we take this guiding principle seriously. Our platform is sold on an annual subscription basis to districts and community-based organizations. We chose this path because it represents the largest market size and has the most straightforward distribution channel. This path also happens to have impact embedded within it: because districts and community-based organizations serve income-qualified children through a combination of federal and state funding, we are able to reach the children who can benefit most from our research-backed solutions.

I am still learning a lot as I continue on my entrepreneurial journey, but one thing I do know is that impact should never come at the expense of revenues. Social impact happens because of business impact.

Tammy Kwan of Cognitive ToyBox