Productivity improvement has been one of the keys to improved quality of life over the past 200 years. Structural changes in production processes as labor use declines and energy and equipment use increases are having major impacts on society (PEOPLE) and the environment (PLANET) while making it possible to improve PROFIT. With money metrics most productivity improvement benefits profit without commensurate improvement in people and environmental benefit.

1. MULTI DIMENSION IMPACT ACCOUNTING
File: MDIA-p3-14-PRODUCTIVITY-150707.odp Peter Burgess (c) All rights reserved
MDIA
PRODUCTIVITY

2. MULTI DIMENSION IMPACT ACCOUNTING
WORK-IN-PROGRESS.
SLIDESET STILL IN DEVELOPMENT.
UPDATES WILL BE POSTED OVER
THE NEXT SEVERAL WEEKS

3. PRODUCTIVITY has been enabled by
technology … not so much by information
technology, but by machinery and equipment
that uses data to make production productive.
MULTI DIMENSION IMPACT ACCOUNTING

4. PRODUCTIVITY is measured by comparing
output to the amount of labor that is used in
producing the output.
This is a metric that had utility when
production was constrained by a limited
supply of labor … valid until around 1970 but
since then not a significant constraint on
amount of production.
MULTI DIMENSION IMPACT ACCOUNTING

5. However … using money as a measure of
SOCIO-ENVIRO-ECONOMIC ECONOMIC
PERFORMANCE creates an unacceptable level
of distortion.
MULTI DIMENSION IMPACT ACCOUNTING
Note: Households are earning a lot more money … but when discounted for the reduced
buying power of money the income is almost the same as it was 50 years ago

6. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
THE MONEY ILLUSION

7. One thread of history suggests that most
factory owners have ALWAYS made
investments to improve their own profits.
Nothing else!
These owners did not embrace the idea that
impact on SOCIETY (PEOPLE) is an important
part of business purpose.
Nor did they consider ENVIRONMENTAL
matters to be of any concern for the business.
MULTI DIMENSION IMPACT ACCOUNTING

8. Another thread of history is that some
combined investment for PROFIT with the idea
that workers could live in decent conditions
and be able to live a quite good life.
Lord Leverhulme who started the company that is now
Unilever built a factory and community at Port Sunlight.
The Cadbury brothers did much the same, building
Bournville to be a factory in a country atmosphere.
MULTI DIMENSION IMPACT ACCOUNTING

9. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
WORKERS' HOUSING AT PORT SUNLIGHT

10. There were impressive improvements in
PRODUCTIVITY in the 19th century. Individual
production was replaced by the factory system
which produced much more with less labor.
Mechanical energy replaced purely human
energy.
MULTI DIMENSION IMPACT ACCOUNTING

11. Manufacturing 100 years ago was already quite
mechanized … quite organized …
MULTI DIMENSION IMPACT ACCOUNTING

12. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
SPINNING COTTON MORE THAN 100 YEARS AGO

13. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
FACTORY SCENE FROM THE 1920S

14. TECHNOLOGY is part of the reason for
increased PRODUCTIVITY since the 1970s
Another part is the fact of GLOBALIZATION,
which itself has been enabled by technology.
MULTI DIMENSION IMPACT ACCOUNTING

15. CONCRETE
PRODUCTIVITY improvement in pouring
concrete … from wheelbarrow to very versatile
concrete pumping systems.
MULTI DIMENSION IMPACT ACCOUNTING

16. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
CONCRETE USING WHEELBARROW

17. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
CONCRETE USING A BUCKET SYSTEM

18. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
CONCRETE USING A PUMPING SYSTEM

19. SHIPPING
PRODUCTIVITY improvement in shipping has
been enabled by containerization … and very
much larger ships.
MULTI DIMENSION IMPACT ACCOUNTING

20. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
CARGO SHIP STEVADORING … CIRCA 1950

21. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
CONTAINER SHIP LOADING … CIRCA 2010

22. AUTOMOBILE ASSEMBLY
PRODUCTIVITY improvement in the assembly
of automobiles has been enabled by robotics
and very much finer tolerances in the
production of sub-assemblies.
MULTI DIMENSION IMPACT ACCOUNTING

23. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
AUTOMOBILE ASSEMBLY … CIRCA 1950

24. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
AUTOMOBILE ASSEMBLY … CIRCA 2014

25. PAVING
MULTI DIMENSION IMPACT ACCOUNTING

26. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
MACHINE FOR LAYING BRICK

27. The ability of LABOR to have a bigger share of
the incremental gains from productivity has
been gutted in the past 40 years …
MULTI DIMENSION IMPACT ACCOUNTING

28. In this graph the growth of corporate profit
(green) is on a log scale while the growth of
household income (blue) and real output per
hour (red) are on a standard scale.
MULTI DIMENSION IMPACT ACCOUNTING

29. MULTI DIMENSION IMPACT ACCOUNTING
SunSun
EOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
SunSunSun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
THE MONEY ILLUSION

30. Part of this has been a systematic push back
on the right of workers to unionize and have
collective bargaining.
Part of this has been the reduced demand for
labor as a result of productivity improvement.
Part of this has been the relocation of jobs
through outsourcing to other locations where
workers are available at lower wages.
MULTI DIMENSION IMPACT ACCOUNTING

31. All of this has been possible because the
metrics being used do not inform decisions
makers of the facts in a way that results in
better decisions.
MULTI DIMENSION IMPACT ACCOUNTING

32. Recalling the PC paradox
The PC was the productivity tool of the 1980s.
It brought computer power to everyone and the
commercial world invested heavily in PCs to
improve office performance. After a decade,
little improvement in productivity could be
observed. Behavior change was slow.
MULTI DIMENSION IMPACT ACCOUNTING

33. Post PC productivity
By the early 1990s the technology used for the
PC was being used to drive machines in the
factory (numerical control) and then to
streamline design, prototyping and
manufacturing. Less people and significantly
better production.
MULTI DIMENSION IMPACT ACCOUNTING

34. The start of data everywhere
In the 1990s PC technology started to be
connected to the Internet. Data flows became
automated with customized Personal Digital
Assistants (PDAs) and in turn this enabled
massive improvements in supply chain
management. All of this was use of data to
improve real economy performance.
MULTI DIMENSION IMPACT ACCOUNTING

35. The downside of productivity
The modern economy has some critical
circularity. Consumer demand is driven by
spending power.
Aggregate wages determine sustainable
spending power.
Lower wages and in due course there is
reduced spending power and reduced
consumer demand.
MULTI DIMENSION IMPACT ACCOUNTING

36. The impact of lower spending power on
aggregate demand can be offset to some
extent by enabling credit.
This has been done in many creative ways
over the last thirty years.
Excessive use of this was one of the root
causes of the great recession of 2008.
MULTI DIMENSION IMPACT ACCOUNTING

37. Policy makers have not yet understood the
many systemic problem that have to be faced.
Full employment in an era of rapid increase in
productivity will result in too much production
and not enough demand.
High production and high consumption also
means dangerous impact on resource
depletion and environmental degradation
MULTI DIMENSION IMPACT ACCOUNTING

38. CLOSING OBSERVATIONS:
Productivity has changed the profile of demand
for labor;
Productivity has made higher profit margins
possible;
Wages down, profits up;
High energy use also means a high impact on
the environment
MULTI DIMENSION IMPACT ACCOUNTING

39. Policies to enable a smooth transition to a high
productivity, high quality of life and low impact
on the environment world have not been
formulated;
… and money metrics alone make doing this
virtually impossible … IMPACT metrics are also
needed for decision makers.
MULTI DIMENSION IMPACT ACCOUNTING

40. NEEDS that go unaddressed are huge!
In many 'rich' countries, infrastructure needs
massive upgrading to suit the 21st century
rather than the 19th century.
In 'poor' countries, much of the population
lacks essential infrastructure and access to
services.
MULTI DIMENSION IMPACT ACCOUNTING

41. The technology innovation that is going on at
this time is impressive.
The challenge is to use it in a manner that
delivers progress for people without doing
further damage to the environment … in fact to
achieve substantial remediation of the damage
already done.
MULTI DIMENSION IMPACT ACCOUNTING

42. Up to now, PRODUCTIVITY has delivered good
results for OWNERS but has been an
unmitigated disaster for ordinary people.
This has to be changed … and a key part of
making this change is going to be making
some fundamental changes in the way we do
the metrics.
Money metrics on their own are not enough!
MULTI DIMENSION IMPACT ACCOUNTING

43. Follow up: Request for Feedback
Getting these ideas fleshed out into a clear, simple but
comprehensive structure is a big job and remains a work-in-
progress. Many organizations are making progress with this,
but there is no broad universal framework yet that will enable
all the pieces to come together and work efficiently.
I would like to get feedback from anyone and everyone to
help move this initiative forward. While I have some clear
concepts about much of this architecture, there are many
details that I do not know enough about and need help. So,
please feel free to contact me (peterbnyc@gmail.com).
Please put something relevant and catchy in the subject line.
MULTI DIMENSION IMPACT ACCOUNTING

44. Some links and contact information:
Peter Burgess … peterbnyc@gmail.com
Peter Burgess LinkedIn profile
https://www.linkedin.com/in/peterburgess1
Link to TrueValueMetrics.org website
http://www.truevaluemetrics.org/
Link to navigation for MDIA slidesets
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0200-Burgess-p3-Slidesets
MULTI DIMENSION IMPACT ACCOUNTING