The Blunder Of Professor Porters Social Progress Index - Aditya Yadav


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The Blunder Of Professor Porters Social Progress Index - Aditya Yadav

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The Blunder Of Professor Porters Social Progress Index - Aditya Yadav

  1. 1. “Running an Agile Fortune 500 Company”Aditya Yadav,*
  2. 2. **A Typical Global Company*Fortune 500/1000*200 Divisions*40 Countries*25000 Employees
  3. 3. @ Acme Inc.*
  4. 4. **Original Question “Has Professor Porter Nailedit with the Social Progress Index?”*The Correct Question - “Hmmm! Actually no,he committed quite a few blunders. Allow meto explain.”
  5. 5. And The Philosophy Behind The Answer*
  6. 6. ** The Social Progress Index ranks 50 countries and placesSweden as #1. The UK is ranked second, above Germany,which ranks fifth, the United States #6. See the list below.* A new organization, the Social Progress Imperative, has beencreated to support the development of the SPI and help tointegrate it into corporate and governmental thinking.* Michael Porter, introduces a new platform for measuringprogress in a hope to bring environmental and socialconsiderations to the top of the policy and corporate agenda.In this way the SPI has some similarities with The HappyPlanet Index (HPI), introduced by Nic Marks, but it puts moreemphasis on Basic Human Needs.***
  7. 7. ** The Social Progress Index is based on three dimensions of social progress:* Basic Human Needs: Does a country provide for its people’s most essential needs?* Foundations of Well-being: Are the building blocks in place for individuals andcommunities to enhance and sustain well-being?* Opportunity: Is there opportunity for all individuals to reach their full potential?
  8. 8. ** Some of the Biggest Blunders in the field of Management &Strategy have been (for example) when…* A Strategy was lifted from Manufacturing (Blue & WhiteCollar jobs) and applied to Gold Collar Organizations* When Strategies and Tactics (Or even definitions ofLeadership for that matter) were picked up from the ArmedForces and Applied to Organizations who DO NOT face LifeThreatening Emergencies* Or When One Strategic Management Framework is used toaddress Blue, White & Gold Collar Work Comprehensively.* Or A Framework is applied to Multibusiness Firms when it wasprimarily successful with single Business Firms* …
  9. 9. ** Too Prescriptive!!!* The Golden Rule is – Finance can be standardized pretty much across the world e.g. GDP and that toostarts having problems BUT Non-financial stuff is all the more impossible to prescribe across the Globe* R’ber – Consumer Price Index calculation for calculating Impact of Inflation?* OK you are asking me – So Whats the Problem with that?* Well for one which Idiot spends 60% of his income on Food?* And when the CPI predicts Inflation of lets say 13%. I’m facing a 20-50% increase in expenses on things Ireally spend my money on which is Real Estate, Cars, Electronics, Appliances, Vacations…* Which when Benchmarked in India are 2x-3x the Cost (OF EXACT SAME MODELS AND BRANDS) in the USA* The CPI is completely useless even in a country across the entire population let alone across the world.* The Golden Rule – Avoid “Prescription” when Standardizing Things (Especially non-financial things)across the World.* Professor Porter; Happiness & Progress For Me Is Completely Different from what you are proposing, andeven in the best case absolutely different from the Weights you will Prescribe to the Measures.
  10. 10. ** One Standard SPI!!!* If we Assume SPI to be indicative and not prescriptive* Then we will need to manage the real progress of our country usingTrends of our own Multiple Sets of SPI’s* But which like Cost Accounting practices will be specific to ourCountry.* Which basically means It Will Be Very Difficult To Compare AcrossCountries.* Each Country Will Probably Have To Use Multiple Sets of SPI Indicatorsaccording to Demographics, Geography, Income Levels amongst otherfactors in the least* That will enable Countries to Best Exploit The Concept for theirdevelopment benefit in their unique situation.* Companies would also self define one or more set of Consistent andStable SPI’s and track their Trends
  11. 11. ** Managers Putting Comparisons On The Top Of Their Priority Leads To Sub-Optimal Solutions For TheCompany/Country!!!!* The Problem is that Managers always insist on Comparisons. Professor Porter also loves to RankCountries. But I’m sure he means no harm. He is way above and beyond what ills of Managers I’m goingto talk about.* In Agile (Software) Engagements - I have heard Top Managers ask so many times “But We AbsolutelyNeed To Be Able To Compare Efficiency and Productivity across Teams and Divisions. How do we do it ifwe use Velocity & Story Points”* Managers can’t seem to be able to get over their obsession of Comparing. I prefer to shoot suchmanagers in the head (No Offences anyone, I’m trying to make a point)* Comparisons are almost always associated with Negative Accountability in organizations atleast. It isthe first start of a blame game and the pitching of individuals against individuals and teams againstteams and the ruining of the company.* While it is quite proven that the best management of success are based on Trends of a teams ownperformance.* I’m not sure Comparisons across Countries for SPI should be needed. And it would be hugely suboptimalto create One Standard Prescriptive SPI just to be able to do comparisons.* But if for some remote reason powerful people decide to do it anyway. We should have one StandardSet Of SPI Measures and Weights for Global Comparisons, just like we have Financial AccountingStandards (More or less Standard) but every country/company/state/… should implement multiple setsof SPI’s measures and weights for their Internal Operations, analogous to Cost Accounting* That’s the best way to Succeed w/ Social Progress
  12. 12. ** Doesn’t SPI Address All The Basic Measures of Universal Progress?* We need Critical Thinking around (i) What are Necessary and Sufficient Measures, (ii) The argument of measuresbeing collectively Exhaustive, and (iii) also the weights for the Measures in the Index being uniform across theworld. Let me try answering the question now.* What is happiness or progress for me? While Basic Human Needs, Foundations of Well Being and Opportunity areNecessary conditions, I assert they are not Sufficient. My happiness is more correlated to the #times I have sex in aweek, #international vacations I take in a year, being able to consume the Top Goods produced anywhere in theworld, Immigration Laws that restrict my mobility, the frustration of dealing with corruption every day, theproblem that women are being raped (crime) left right and center in major cities in india, the poor infrastructurein the city, ... I dont even think the SPI measures even reflect my Happiness w/ Progress. SPI will end up just likethe CPI which is used by the government but has no correlation with reality. (I also think an analogy with theineffectiveness of the Consumer Price Index to the SPI would be a good start to understand my objections to it)* The flaw with the CPI is exhorbitant and let me explain its disconnect with Reality (In India, In my context) UsingCPI organizations position salaries at 1/3rd that of US. The disconnect is so wide that the reality is that I earn1/3rd the US Salary and for everything that matters to me I have to pay 3x the price of US. The middle class inindia is at a 9x disadvantage to the middle class in US. Thats the uselessness of the CPI which simply says 13%inflation.* My second assertion is that a Prescription across the world WILL BE A COMMON MINIMUM SUBSET!!! We have learntthat the hard way in Strategic Management.* My third Assertion is that even if an Exhaustive Universal Set of Comprehensive Measures are found for the SPI. Theweights for those measures in the Index will in almost all certainity will never be the same across the world.* My fourth assertion is that (Again drawing from Strategic Management) everything we do to optimize for the bestcomparison across groups is the most sub-optimal in terms of benefit for one group for it to manage its progress.
  13. 13. **And then we build the Argument*Standardizing Finance across the Globe isvirtually easy. Everything else is a #Fail*That Prescription is Virtually Useless across theGlobe*We need Multiple SPI’s*Maybe one Standard SPI for Comparison
  14. 14. ** Ref: Common Minimum Subset across the Horizon.* Question: Why do you think Managers ask for and are obsessed with Mindless CostCutting, Efficiency and Productivity?* Answer: Because asking for that requires a One Line Email to the entire Organization.That’s a common minimum subset that applies to everything in the organization.* While Optimizing for Benefits is a really hard task.* Question: In Organizations why do Managers insist on Comparisons across Teams?* Answer: [Sadism and Perverted Gratification] Comparisons rarely serves anyconstructive purpose in an organization. The more constructive approach is to optimizeeach team for success in their own specific context.* Question: Does Everything We Do Across the Horizon Have To Be A – Common MinimumSubset?* Answer: Yes it literally ends up being that! The only way to succeed seems to be tohave every team manage itself with its own Trends of their own relevant measures.
  15. 15. *Aditya!!!