The Blunder Of Professor Porters Social Progress Index - Aditya Yadav

1. “Running an Agile Fortune 500 Company”
Aditya Yadav, aditya.yadav@gmail.com
in.linkedin.com/in/adityayadav76
*

2. *
*A Typical Global Company
*Fortune 500/1000
*200 Divisions
*40 Countries
*25000 Employees

3. @ Acme Inc.
*

4. *
*Original Question “Has Professor Porter Nailed
it with the Social Progress Index?”
*The Correct Question - “Hmmm! Actually no,
he committed quite a few blunders. Allow me
to explain.”

5. And The Philosophy Behind The Answer
*

6. *
* The Social Progress Index ranks 50 countries and places
Sweden 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 been
created to support the development of the SPI and help to
integrate it into corporate and governmental thinking.
* Michael Porter, introduces a new platform for measuring
progress in a hope to bring environmental and social
considerations to the top of the policy and corporate agenda.
In this way the SPI has some similarities with The Happy
Planet Index (HPI), introduced by Nic Marks, but it puts more
emphasis on Basic Human Needs.
*** rebuild21.org

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 and
communities to enhance and sustain well-being?
* Opportunity: Is there opportunity for all individuals to reach their full potential?

8. *
* Some of the Biggest Blunders in the field of Management &
Strategy have been (for example) when…
* A Strategy was lifted from Manufacturing (Blue & White
Collar jobs) and applied to Gold Collar Organizations
* When Strategies and Tactics (Or even definitions of
Leadership for that matter) were picked up from the Armed
Forces and Applied to Organizations who DO NOT face Life
Threatening Emergencies
* Or When One Strategic Management Framework is used to
address Blue, White & Gold Collar Work Comprehensively.
* Or A Framework is applied to Multibusiness Firms when it was
primarily successful with single Business Firms
* …

9. *
* Too Prescriptive!!!
* The Golden Rule is – Finance can be standardized pretty much across the world e.g. GDP and that too
starts 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 I
really 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, and
even in the best case absolutely different from the Weights you will Prescribe to the Measures.

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 using
Trends of our own Multiple Sets of SPI’s
* But which like Cost Accounting practices will be specific to our
Country.
* Which basically means It Will Be Very Difficult To Compare Across
Countries.
* Each Country Will Probably Have To Use Multiple Sets of SPI Indicators
according to Demographics, Geography, Income Levels amongst other
factors in the least
* That will enable Countries to Best Exploit The Concept for their
development benefit in their unique situation.
* Companies would also self define one or more set of Consistent and
Stable SPI’s and track their Trends

11. *
* Managers Putting Comparisons On The Top Of Their Priority Leads To Sub-Optimal Solutions For The
Company/Country!!!!
* The Problem is that Managers always insist on Comparisons. Professor Porter also loves to Rank
Countries. But I’m sure he means no harm. He is way above and beyond what ills of Managers I’m going
to talk about.
* In Agile (Software) Engagements - I have heard Top Managers ask so many times “But We Absolutely
Need To Be Able To Compare Efficiency and Productivity across Teams and Divisions. How do we do it if
we use Velocity & Story Points”
* Managers can’t seem to be able to get over their obsession of Comparing. I prefer to shoot such
managers 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 is
the first start of a blame game and the pitching of individuals against individuals and teams against
teams and the ruining of the company.
* While it is quite proven that the best management of success are based on Trends of a teams own
performance.
* I’m not sure Comparisons across Countries for SPI should be needed. And it would be hugely suboptimal
to 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 Standard
Set Of SPI Measures and Weights for Global Comparisons, just like we have Financial Accounting
Standards (More or less Standard) but every country/company/state/… should implement multiple sets
of SPI’s measures and weights for their Internal Operations, analogous to Cost Accounting
* That’s the best way to Succeed w/ Social Progress

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 measures
being collectively Exhaustive, and (iii) also the weights for the Measures in the Index being uniform across the
world. Let me try answering the question now.
* What is happiness or progress for me? While Basic Human Needs, Foundations of Well Being and Opportunity are
Necessary conditions, I assert they are not Sufficient. My happiness is more correlated to the #times I have sex in a
week, #international vacations I take in a year, being able to consume the Top Goods produced anywhere in the
world, Immigration Laws that restrict my mobility, the frustration of dealing with corruption every day, the
problem that women are being raped (crime) left right and center in major cities in india, the poor infrastructure
in the city, ... I dont even think the SPI measures even reflect my Happiness w/ Progress. SPI will end up just like
the CPI which is used by the government but has no correlation with reality. (I also think an analogy with the
ineffectiveness 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) Using
CPI organizations position salaries at 1/3rd that of US. The disconnect is so wide that the reality is that I earn
1/3rd the US Salary and for everything that matters to me I have to pay 3x the price of US. The middle class in
india 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 learnt
that 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. The
weights 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 best
comparison across groups is the most sub-optimal in terms of benefit for one group for it to manage its progress.

13. *
*And then we build the Argument
*Standardizing Finance across the Globe is
virtually easy. Everything else is a #Fail
*That Prescription is Virtually Useless across the
Globe
*We need Multiple SPI’s
*Maybe one Standard SPI for Comparison

14. *
* Ref: Common Minimum Subset across the Horizon.
* Question: Why do you think Managers ask for and are obsessed with Mindless Cost
Cutting, 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 any
constructive purpose in an organization. The more constructive approach is to optimize
each team for success in their own specific context.
* Question: Does Everything We Do Across the Horizon Have To Be A – Common Minimum
Subset?
* Answer: Yes it literally ends up being that! The only way to succeed seems to be to
have every team manage itself with its own Trends of their own relevant measures.

15. *
Aditya!!!