MDIA p3 00 WHY SOCIETY NEEDS BETTER METRICS

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Society needs better metrics because the complex modern global socio-enviro-economic system is not achieving sustainable results. The data are clear that the singular focus on profit for the corporation and wealth for owners is not giving a good result for most people nor the environment. Better metrics will be a start to solving this problem of systemic dysfunction. The system is complex. There is no perfect answer, but it is possible to achieve a better world by getting a large number of people to make better decisions. A starting point for that is better metrics. system is complex. There is no perfect answer, but it is possible to achieve a better world by getting a large number of people to make better decisions. A starting point for that is better metrics, and, as Peter Drucker famously said, you manage what you measure!

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MDIA p3 00 WHY SOCIETY NEEDS BETTER METRICS

  1. 1. WHY SOCIETY NEEDS BETTER METRICS File: MDIA-p3-01-1-WHY-151005.odp Peter Burgess (c) All rights reserved TRUE VALUE ACCOUNTING TRUE VALUE ACCOUNTING
  2. 2. CONTEXT This slideset is a Work-in-Progress and will be updated from time to time. It is part of a series that aims to describe the extremely complex socio-enviro-economic system that we live in, and how this system can be made to work better. TRUE VALUE ACCOUNTING
  3. 3. The GOAL is to design and deploy a system of metrics for management that accounts for impact on people and planet as rigorously as double entry accounting accounts for money transactions that impact profit MULTI DIMENSION IMPACT ACCOUNTING
  4. 4. Corporate profit performance over the past fifty years has been impressive … MULTI DIMENSION IMPACT ACCOUNTING
  5. 5. GDP growth over the past 50 years very strong … MULTI DIMENSION IMPACT ACCOUNTING
  6. 6. But labor income over the past fifty years … not so good. MULTI DIMENSION IMPACT ACCOUNTING
  7. 7. And environmental issues getting worse … not better. MULTI DIMENSION IMPACT ACCOUNTING
  8. 8. This is an unsustainable trajectory for our complex global socio-enviro-economic system MULTI DIMENSION IMPACT ACCOUNTING
  9. 9. SOCIO … PEOPLE ENVIRO … PLANET ECONOMIC … MAN BUILT CAPITAL MULTI DIMENSION IMPACT ACCOUNTING
  10. 10. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOPSOCIO - PEOPLE
  11. 11. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOPSOCIO - PEOPLE
  12. 12. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOPENVIRO - PLANET
  13. 13. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOPENVIRO - PLANET
  14. 14. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOPECONOMIC – MAN BUILT CAPITAL
  15. 15. MULTI DIMENSION IMPACT ACCOUNTING Sun BOP Sun Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOPECONOMIC – MAN BUILT CAPITAL
  16. 16. The balance between PEOPLE, PLANET and PROFIT is most likely unsustainable … MULTI DIMENSION IMPACT ACCOUNTING
  17. 17. The following slides reflect what has happened over the past millions of years … MULTI DIMENSION IMPACT ACCOUNTING
  18. 18. YELLOW: The PEOPLE piece … Human Capital (NC) DIRTY BROWN: The ECONOMIC piece … Man Built Capital (MBC) GREEN: NATURE, ENVIRONMENT … Natural Capital (NC) MULTI DIMENSION IMPACT ACCOUNTING COLOR KEY
  19. 19. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital
  20. 20. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital
  21. 21. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital
  22. 22. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital
  23. 23. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital
  24. 24. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital
  25. 25. Trajectory to disaster! This must be changed to this … MULTI DIMENSION IMPACT ACCOUNTING
  26. 26. MULTI DIMENSION IMPACT ACCOUNTING Hum an Capital Man Built Capital Natural Capital
  27. 27. PEOPLE progressing MBC* efficient PLANET healthy MULTI DIMENSION IMPACT ACCOUNTING * Man Built Capital … Man Built Structures and Systems
  28. 28. For the past 50 years, using conventional metrics, the system has optimized for performance of FINANCIAL CAPITAL but while ignoring everything else ... MULTI DIMENSION IMPACT ACCOUNTING
  29. 29. ECONOMIC GROWTH 1970 to 2011 CORPORATE PROFITS ... GDP … LABOR INCOME ... MULTI DIMENSION IMPACT ACCOUNTING 3,600% 1,500% 1,100%
  30. 30. MULTI DIMENSION IMPACT ACCOUNTING
  31. 31. According to Federal Reserve data, wages and salaries as a % of GDP has declined steadily since 1970 MULTI DIMENSION IMPACT ACCOUNTING
  32. 32. MULTI DIMENSION IMPACT ACCOUNTING
  33. 33. In the 1950s and 1960s wages and salaries were gaining moderately while profits were declining. Since the 1980s profits have increased strongly while wages and salaries have been decreasing as a share of GDP. MULTI DIMENSION IMPACT ACCOUNTING
  34. 34. MULTI DIMENSION IMPACT ACCOUNTING
  35. 35. Robert Reich … former Secretary of Labor in the 1990s … shows pay rose with productivity until 1969 and then it didn't ... MULTI DIMENSION IMPACT ACCOUNTING
  36. 36. MULTI DIMENSION IMPACT ACCOUNTING
  37. 37. Since 1950 world PER CAPITA GDP has grown more rapidly than at any previous time ... MULTI DIMENSION IMPACT ACCOUNTING
  38. 38. MULTI DIMENSION IMPACT ACCOUNTING
  39. 39. … but this is an average that does not mean very much … MULTI DIMENSION IMPACT ACCOUNTING
  40. 40. Rich countries and rich people have increased their income and wealth much more significantly than poor countries and poor people as these data for the USA and the UK show ... MULTI DIMENSION IMPACT ACCOUNTING
  41. 41. MULTI DIMENSION IMPACT ACCOUNTING
  42. 42. … but the metrics are not getting it right … MULTI DIMENSION IMPACT ACCOUNTING
  43. 43. The growth in GDP for the USA over the period from 1945 to the present has been phenomenal … but the HAPPINESS of Americans has deteriorated in this time. MULTI DIMENSION IMPACT ACCOUNTING
  44. 44. Corporate money profit performance over the past fifty years has been impressive MULTI DIMENSION IMPACT ACCOUNTING
  45. 45. The growth in GDP also has a strong correlation with increasing stress on planetary resources and the environment. MULTI DIMENSION IMPACT ACCOUNTING
  46. 46. The growth in global population is not as serious a problem as the growth in GDP … MULTI DIMENSION IMPACT ACCOUNTING
  47. 47. MULTI DIMENSION IMPACT ACCOUNTING
  48. 48. THE CHALLENGE … MULTI DIMENSION IMPACT ACCOUNTING
  49. 49. There has been an amazing improvement in productivity over the past 40 years … and almost all the benefits derived from the increases in productivity have accrued to owners. MULTI DIMENSION IMPACT ACCOUNTING
  50. 50. This is what Business Schools teach … and they do it very well. MULTI DIMENSION IMPACT ACCOUNTING
  51. 51. In order for the socio-enviro- economic system to be optimized for people and planet and profit, an improved system of metrics is an absolutely essential prerequisite. MULTI DIMENSION IMPACT ACCOUNTING
  52. 52. … and this is what Multi Dimension Impact Accounting (MDIA) is all about. MULTI DIMENSION IMPACT ACCOUNTING
  53. 53. REMINDER This slideset is A WORK-IN-PROGRESS. It will be upgraded periodically. It is part of a series of more than 100 slidesets. Navigation to these is available here: FEEDBACK is welcome. Please email to Peter Burgess … peterbnyc@gmail.com … with a catchy phrase in the subject line so that it gets attention, and please identify the specific slideset(s) involved. http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3 TRUE VALUE ACCOUNTING
  54. 54. THANK YOU Some links and contact information: Email 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 to other resources: http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav#1 TRUE VALUE ACCOUNTING

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