TEDxHayward.Measuring.Life.Margolin

Measuring Life

Cats CradleIn Kurt Vonneguts book Cats Cradle, theres a great quote: "No wonder kids grow up crazy. A cats cradle is nothing but a bunch of Xs between somebodys hands, and little kids look and look andlook at all those Xs...""And?""No damn cat, and no damn cradle."A cat. And a cradle.This lead kids to think of Comfort and safety, and theyre disappointed when they expect to ﬁnd it, but instead see something else.As adults we also want comfort and security.Were taught that if our economy is doing well, and we work hard, well be able to achieve comfort and security if we want it.So we measure our economy, and the "health" economy is given to us as GDP, Gross Domestic Product.But "GDP" excludes things we need to actually BE safe and secure.It doesnt include taking care of a sick kid, unless you buy medicine or pay a doctor.It doesnt include taking care of elderly parents, unless you pay someone else to do it.It doesnt include trees, unless you cut down the trees and make something, and sell that.It doesnt count whats in the ground, unless you take it out and make something and sell that.It doesnt include clean air or clean water, unless we make it dirty and spend money to clean it up again.This is THE PROBLEM: We pay attention to things we measure. And we arent measuring those things that make us feel safe and secure. /

So how did we get to this place where we pay a HUGE attention to money, but not directly to the things we value in our lives?Interesting story!A man named Simon Kuznets created the forerunner to GDP in order to track production in advance of our going into World War 2.He immediately said not to use it as a measure for welfare.He gave several reasons for this, but notably, he pointed out that GDP excludes whats done in the household - a substantive part of the economy - and whats done in the community as relief or charitywork.

Community Financial FamilySo we have this fragmented measurement. And weve been looking at and tweaking the ﬁnancial part of it for the past 75 years!We know a lot about the health of our ﬁnancial livesBut what do we know about the health of families and communities?

Part of the community is organized into non-profits, and these groups do measure outcomes, and sometimes even impact on a community.When they measure outcomes, theyre typically specific to the mission of the group or the goal of the project.They might measure:pounds of clothing collectednumber of kids who show up at a health clinicthe amount of food distributed at a food shelf, and the number of families theyve servedthe miles of beach cleaned up during a cleanup effort.To the extent a community knows what its needs are and it knows how well these needs are met, it can judge to some degree how "healthy" it is, but this is still veryImprecise.Separate from financial measurements.

Community Financial FamilyWe pay attention to what we measure.And we have had one of the most powerful economies in the worldBut we also as a country have one of the worst homicide rates in the world, and we are 49th in the world in terms of mothers dying in childbirth.I could go on - China has a booming economy and also a booming pollution problem - but the issue is that weve built up a world where we measure one thing - "the economy"... and a separate thing - thecommunity... and somethings not at all.Its very difﬁcult to SEE how health the world is, or what to do to improve it because its divided up into different realms.But Im in a family, and Im part of a community, and I produce things at work! Its all of one fabric.We are just looking at each part separately and we cant see the connection.

Traditionally, the way weve been thinking about this in the past, is that businesses are filling market needs, and these needs exist because a community or a person needs to buy a good or a service.A person may needGood tires in order to get around safelyFood servicesClothesbicyclesIts important to realize that traditional financial people -- not greedy criminals -- really do feel protective about the health of the financial world and are as devoted to this type of health.There are two major problems with the idea that the market solves all problems:First, theres a delay in recognizing a need and creating a good or service to fill it (think: alternative energy)Second, companies are most profitable serving a lot of people with nearly the same need, and the companies of course need to recognize the need. If you are not part of the mainstream, or if you dont havemuch money, its clear that companies would have less interest in developing goods and services for you, lets say theyll get to you last. Well, its quite possible, to be "gotten to last" so often that thegoods and services just arent there.

On the other side, Non-proﬁts doing work in communities do get tax breaks, as do people with dependents.But theres a limit to how well business and community are FORMALLY tied together.

Community Financial Community FamilyBut as we know, these areas of life arent separate pillars; theyre just groups that have developed different measurement systems.Its important to remember that were focused on one piece.So, for example when we hear "Recession" thats only part of the story.Our communities might actually beneﬁt. Maybe people take time to focus on their individual health, help each other do things around the house, tutor kids in school, refresh their skills on their own...Maybe the do, maybe they dont. But the problem is we dont know.

However! I have Good news.People have been working on ways to see the whole picture for a decade or more.You know about Corporate Social Responsibility, but what you may not know is that companies follow emerging standards, for example those at GRI or the Carbon Disclosure Project.That information now goes to the very largest ﬁnancial data providers, such as Bloomberg and Reuters, via Asset4.Then Investors look at this data if they want to, and many have their own mechanism for analyzing this new type of data, which can range from child labor to water usage. For example, HIP Investor.There are also new types of business structures, such as B LabsThen there are groups bringing these communities to life, such as Social Capital Markets and Skoll Foundation.And news agencies that help people keep abreast of whats going on, such as Responsible Investor.And ﬁnally, an increasing number of schools that teach this new type of perspective on business.

All these different mechanisms are looking for the common threads ofhealth, trust, love, happiness, process, inﬂuence, creativity.: security and comfort

"The More the Merrier!" Intangible Assets Baruch Lev NYU - Stern SchoolThere is actually a technical term for those things, called "intangible assets"There are a few things to know about Intangible Assets.First, like trust, Intangible assets are the things for which you can imagine "the more the better" (network effects).Second, also, thinking of trust, Intangibles are not a pie - I dont have to divide it up! If I have one friend I trust, and then I get a new friend and begin to trust that person, I dont have to lessen the amount Itrust the first person.Now another thing about Intangibles that is important: you cannot write a contract that fully describes them. This is not a failure of creativity, this is just their nature. But because you cant completely definethem, theres no way to exchange them on the financial markets. Knowledge is intangible - I might think somethings interesting, then I explore a bit and learn some more, and then one of the things I learn might be that theres a need in the community, so I mightinvestigate further... and think some more about it... and finally I get to the point where I can start thinking about a product, and maybe I try to build that or pull together a patent. But until its a product orpatent, its intangible, and the part thats "monetizeable" in terms of putting it into a knowledge base is very far along in that process.Think about this when you hear the work "monetize". Not all intangible assets can be monetized, not because of lack of cleverness but because theyre not ready yet.

We can think of Health, trust, knowledge, compassion as the building blocks of our lives.If we feel secure and comfortable its because we are healthy, have trusting relationships, and have the knowledge we need to be productive and fulfilled.In fact, we need intangibles to make any product or serviceThink of it this way: you have five people in a room. They get along well, they have some knowledge, maybe access to more knowledge through their relationships, theyre healthy enough to be productive. Youask them to solve a problem, and they very well might do so. But if you take away any of those things: they cant stand each other; or maybe theyre so sick they just want to sleep; or theyre not veryknowledgeable or skilled and dont know how to learn - then theres no way the problem will be solved.In fact, if a product or service is made, or a problem solved, you KNOW there were intangible assets that had been built up first!Thats crucial: the existence of products and services depends on the existence of intangibles.

And whats also very important: Intangible assets are everywhere in our lives. Theyre built up (or torn down) in our families, communities, and businessesMaybe its obvious that families and communities pay attention to things like compassion, health, trust, and learning. But businesses have people, and those people trust each other -- or dont. They have goodprocesses - or not. Theyre physically healthy and emotionally whole - or not.Those things deeply affect the success of the business. So businesses WANT to track intangibles in order to be able to manage their own productivity.

Theres another reason why businesses need to pay attention to intangibles, and its a bit more subtle:If youre INSIDE the company, you know how motivated people are, whether they tend to be healthy or sick a lot, how much people respect and trust leadership.But in general, investors DONT know that - and thats a problem. It means when investors make investments, they dont have the full sense of whats going on.That gap between what insiders know and what investors know is an "uncertainty," and uncertainty typically pushes down stock prices and makes them more volatile.So businesses who have investors have the incentive not only to manage their intangibles well, but to report on their status as transparently as they do their ﬁnancial status, and for the same reasons.

What I hope Ive conveyed clearly to you at this point is the inevitability of moving towards measuring and reporting intangible assets and incorporating that in our sense of how healthy our world is.Everyone gains by looking at intangibles and being clear about what builds them and what degrades them.

Financial Community Family innovationThis inevitability means that, as a society, were innovating.In fact, were innovating around the mechanisms and systems that are at the core of our society. This is complicated.For example: We use the word "sustainability" or "thrivability" but these are not objects or goals. We dont attain sustainability... its much more complex than that.To get an idea of how that works, imagine: I should get a full nights sleep - its important for my health. But my friends are getting married, and I want to share this event, build trusting relationships, feelcompassion. Or maybe I want to get some work done - there are many reasons I might trade some of my health for something else like social relationships, or knowledge or to just be more productive. But Ihave an intuitive sense of what works.... or if I dont yet, Ill get sick after awhile if I push my health too far, and then I wont even have the choice of trading off a social event for my health, because Ill be in bed!As society - though - we dont. We dont understand these tradeoffs at all, and sometimes they are necessary. There is deﬁnitely some great research, but these results arent included in our overall economicpoint of view.So were innovating.

innovationAnd to learn, we have to experiment.and then we have to communicate both what DOES work, and what DOESNT work.This is going to be a bit scary, as we push aside production as the measure of comfort and security and instead understand how these things we cant even completely define -- intangible assets -- are the corebuilding blocks of our economy.Specifically, we need to be aware that the people whose livelihoods have been about preserving financial health are going to be challenged in letting go of something very well studied for something that isnew and evolving.

Financial Community FamilyLuckily, as I showed in my earlier slide, this has been under way for quite a while, so the original "out on a limb" experimentation is already under our collective belts.There is a lot of work to be done here: - focus on producing goods and services for community health - focusing on measuring the impact in communities and homes - being a good experimentalist - staying objective, trying new models, and publicly saying what is working and what isnt.It will take some time, but eventually we will have a model that can show us the status of our lives. It will be focused on an individual as they move from one role to another: whether they are focused on theirfamily, their role in the community, or their jobs or businesses.We wont be under the illusion that if we have a strong ﬁnancial economy well be safe and secure, only to be put on an emotional rollercoaster with each change in the GDP.An example of this is the climatological model. It wasnt all that long ago when we had to look out our window and think: hm. Cloudy, November; Im going to bring an umbrella. Now we know if the PaciﬁcOcean warms up, thats going to affect next years weather in London in a fairly well-understood way.

Measure See LifeThen some day, though it will take a while, we will clearly understand tradoffsmake much more sound decisionsbuild our communities productivity and resilience,and directly measure our comfort and securityand in that way, step by step build the precursors to peace.

Jessica Margolin @ kitodeJessica Margolinemail: jessica@margolin-consulting.comTwitter: @kitodeLinkedIn.com/in/margolinPhoto credits:Clothing drop box: http://www.flickr.com/photos/daquellamanera/1695280377Michelin Tire ad: http://newagemarketing.wordpress.com/2010/07/31/neuro-marketing/Heart-cloud: http://www.flickr.com/photos/lel4nd/4277978437/Team working: http://www.flickr.com/photos/hackny/5685655056/Lego bricks: http://www.flickr.com/photos/hackny/5685655056/Lego city: http://www.flickr.com/photos/enerva/5481390314/Cubicle-land: http://www.flickr.com/photos/ste3ve/521083416/Paintball-art: http://www.flickr.com/photos/roens/2479987272/

TEDxHayward.Measuring.Life.Margolin

by Jessica Margolin on May 31, 2011

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TEDxHayward.Measuring.Life.Margolin — Document Transcript