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HOME SN-BRIEFS SYSTEM
OVERVIEW
EFFECTIVE
MANAGEMENT
PROGRESS
PERFORMANCE
PROBLEMS
POSSIBILITIES
STATE
CAPITALS
FLOW
ACTIVITIES
FLOW
ACTORS
PETER
BURGESS
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Date: 2021-10-17 Page is: DBtxt001.php L07-00-TVM-BRIEF-02
TRUE VALUE METRICS ... BRIEF 2
image missing Numbering the Triple Bottom Line

Accounting for ALL the Capitals
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PROBLEMS & POSSIBILITIES
MANY POOR OUTCOMES / MUCH AMAZING POTENTIAL
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MANY MASSIVE PROBLEMS
ALL SORTS OF SOCIAL DISASTERS
Terrible Poverty Malnutrition Terrorism Genocide
EXTREME WEATHER
Somalia Drought Mozambique Flood Eye of storm USA Hurricane
ENVIRONMENTAL DEGRADATION
Deforestation Strip Mining Power Emission Traffic Pollution
Bottom line ... my generation of leaders has made it possible for a lot of very bad things to happen, and very little action to address these issues and hold the key actors responsible.
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MANY AMAZING POSSIBILITIES USING TECHNOLOGY
MEDICAL SCIENCE MATERIALS ELECTRONICS
Genetic code / DNA Antibiotics Composites Specialized steel IBM Microsoft
COMMUNICATIONS SOCIAL MEDIA PASSENGER TRANSPORT
Apple Print Media Facebook Twitter Passenger Rail Passenger Car
LOGISTICS AEROSPACE DIGITAL TECHNOLOGY
Container Ships Freight rail Jet engines Passenger Aircraft AI IoT
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PROGRESS & PERFORMANCE
HOW MUCH HAS THE NEEDLE MOVED?
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SOCIAL CAPITAL
GDP UP ... GPI FLATLINE PRODUCTIVITY UP, NOT WAGES TOP 1% ... HAS IT ALL
  • DESTABILIZING INEQUALITY
  • INADEQUATE WAGE RATES
  • OUTSOURCED LABOR
  • WEAK SOCIAL SAFETY NET
NATURAL CAPITAL
CATASTROPHIC DEPLETION AND DEGRADATION
  • EXPLOITED LAND
  • DEGRADED WATER
  • POLLUTED AIR
  • DEPLETED RESOURCES
  • LOSS OF BIODIVERSITY
  • UNSTABLE ECOSYSTEMS
ECONOMIC CAPITAL:
  • FINANCIAL CAPITAL
    EXCESSIVE CONCENTRATION OF WEALTH
  • PHYSICAL CAPITAL
    OBSOLETE AND DEGRADED INFRASTRUCTURE
  • INTANGIBLE CAPITAL
    STRONG KNOWLEDGE / WEAK EDUCATION
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SYSTEM OVERVIEW
SOCIO-ENVIRO-ECONOMIC SYSTEM
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IT'S A COMPLEX WORLD!
Managing complexity is difficult. In modern times, the system has been managed by and for the benefit of those who own financial capital, now referred to as financialization. Nothing else has been seriously managed.
TRIPLE BOTTOM LINE ... ALL THE CAPITALS
PEOPLE PLANET PROFIT
SOCIAL CAPITAL NATURAL CAPITAL ECONOMIC CAPITAL

SOCIO

ENVIRO

ECONOMIC
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CONSIDER ALL THE PERSPECTIVES ... EMPOWER ALL THE ACTORS
TECHNOLOGY

Enabler of progress
ORGANIZATIONS
More than profit
PEOPLE

Men, women & children
PLACE

Where people live
PRODUCTS

Quality of Life
One of the biggest priorities should be to change the metrics of progress and performance so that they are no longer dominated by corporate profit growth, national GDP growth and the growth of stock market valuations. If you change the way you score the game, you will change the way the game is played!
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STATE / CAPITALS
THE STATE OF ALL THE CAPITALS
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SOCIAL, NATURAL & ECONOMIC CAPITAL ... NOT JUST FINANCIAL CAPITAL
SOCIAL CAPITAL NATURAL CAPITAL ECONOMIC CAPITAL
SOCIO ENVIRO ECONOMIC
HUMAN CAPITAL RELATIONAL LOCATIONAL CULTURAL SPIRITUAL LAND

WATER

AIR

RESOURCES

BIODIVERSITY

ECOSYSTEMS
PHYSICAL
LAND & BUILDINGS INFRASTRUCTURE PROCESSES EQUIPMENT
WORKING CAPITAL
FINANCIAL
CORPORATE PROFITS CAPITAL MARKETS
INTANGIBLE
KNOWLEDGE EDUCATION GOVERNMENT SECURITY
Top line summary reporting has three components
(1) impact on social capital;
(2) impact on natural capital; and,
(3) impact on economic capital.

For efficient, effective operational management there all must be sufficient disaggregation along the same lines so that every activity is subject to measurement, analysis and improvement.
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FLOW / ACTIVITIES
EXTRACTION / PRODUCTION / LOGISTICS / USE / WASTE / POLLUTION
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SECTOR / INDUSTRY / PROCESSES
SPECIALIZATION IS VITAL FOR EFFICIENCY AND ECONOMIC PRODUCTIVITY
MINING LOGGING ENERGY STEEL
REFINERIES
PULP & PAPER
SHIPPING RAIL PIPELINES TRUCKING ROADS RAIL
MANGROVE FISHERIES AGRICULTURE RETAIL FUEL
WASTE
Sector specialization most always improves corporate profit performance, but over the years, impact throughout the product life cycle has not been accounted for. This has to change.
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STREAMS / STRANDS / STRINGS
ACCUMULATED IMPACT IS EMBEDDED IN EVERY PRODUCT
NATURE EXTRACTION
SUPPLY CHAIN PRODUCTION
USE
POST USE
Everything that is used to support a high standard of living and quality of life has a long supply chain, then production and distribution, then use, and then a post use waste chain. For metrics to be meaningful, all of these stages must be brought into account.
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CONSIDER ALL THE PERSPECTIVES
TECHNOLOGY

Enabler of progress
ORGANIZATIONS
More than profit
PEOPLE

Men, women & children
PLACE

Where people live
PRODUCTS

Quality of Life
Better results will be achieved when decisions are based on impact not only for corporate financial profit, but for all the dimensions of the socio-enviro-economic system.
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FLOW / ACTORS
THERE IS NATURE ... AND THERE ARE PEOPLE
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THE ESSENTIAL CONTRIBUTION OF NATURE
THE ENABLING FOUNDATION FOR EVERYTHING
MANGROVE EXTRACTION
BIODIVERSITY ATMOSPHERE WATER RAIN-FOREST
Left to itself ... nature adjusts and is sustainable ... but it takes time. Humankind is in a hurry, and this process is being disrupted. It will not end well! People need to make better decisions.
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PEOPLE
PEOPLE ARE BENEFICIARIES, CONTRIBUTORS AND DECISION MAKERS
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PEOPLE MAKE DECISIONS ABOUT CONSUMPTION
People make decisions that optimize quality of life for themselves and their families. For most people, consumption is a big part of quality of life.
Food - Vegetables Food - Meat Housing Clothes Mobility Recreation
CONSUMPTION DRIVES ECONOMIC ACTIVITY
Livestock Crop agriculture Petrochemicals Steel Auto Production Logistics
CONSUMPTION ALSO DRIVES ENVIRONMENTAL STRESS
GHGs Use of energy Extreme weather Deforestation Water shortage Plastic pollution
More consumption correlates to a better quality of life up to a certain level. Beyond that level more consumption may well have negative consequences, as for example too much food may result in obesity and diabetes or worse.
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PEOPLE ARE AT THE CENTER OF EVERYTHING
AS INDIVIDUALS

Doing the work
AS MANAGERS

In organizations
AS INVESTORS

In finance
AS CUSTOMERS
buying stuff
AS LEGISLATORS
In government
AS PARENTS

Parenting
IN COMMUNITY

Friends / Society
HELPING OTHERS

Volunteering time
HELPING OTHERS

Donating money
SPEAKING OUT

on Social Issues
Everything should be about people. Unfortunately the focus of decision making for many decades has been more on profit than on people, and the environment has been ignored. This has been good for a few, but too many have not seen any benefits.
In poor economies there is a correlation between quality of life and consumption, but as the population gets a better quality of life, this correlation weakens, Neverthless, if there is going to be more consumption, there is also going to be more production, and with this more environmental degradation, unless production processes are improved.
People have made enormous technological progress but very little of this has been applied to improving the social and environmental performance. Almost all of the effort has gone into applying technology to improve profit performance.
This can be changed. This must be changed.
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PETER BURGESS
A LIFETIME OF VARIED ACCOMPLISHMENT AND EXPERIENCE
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Blundell's

1st XV Rugby
Cambridge

Sidney Sussex
Accountancy

CB&Co
Corporate

CFO
Consultancy

WB, UN and others
Post Career

TrueValueMetrics
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Peter Burgess grew up in post-war Britain. He was born in Lancashire, spent the war years in the suburbs of London, and after the war moved to rural Devonshire. He was educated at Blundell's before entering Cambridge where he studied engineering and economics. Subsequently he articled with Cooper Brothers & Co and qualified as a Chartered Accountant in 1965. Soon afterwards he migrated to the USA and worked in corporate management becoming a very young CFO. After that, as an independent consultant for the World Bank, the UN and corporate clients, he did assignments in over 50 countries. In recent years he has become deeply concerned that modern leadership has failed to address the issues of inequality, the climate crisis and corruption and lacks effective management tools for accountability ... hence his current work on the development of TrueValueMetrics (TVM).
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INTRODUCING TRUE VALUE METRICS
EFFECTIVE MANAGEMENT IS MOVING THE NEEDLE ON IMPORTANT ISSUES
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Peter Drucker famously said you manage what you measure.
TVM argues that you had better measure the right things
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WHAT IS PROGRESS? IT IS CHANGE IN STATE
What this means is that there is no need to have any detail about the activities for the period in order to determine if there has been progress or not. This is a very powerful concept that simplifies everything.
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TVM ENHANCES CONVENTIONAL ACCOUNTANCY
Conventional Accountancy TVM Enhanced Accountancy Full Scope TrueValueMetrics
The conventional financial accounts of a company include a balance sheet and the beginning of the period (BOP), a balance sheet for the end of the period (EOP) and a profit and loss account for the period. The balance sheet shows all the assets and the liabilities of the company. The profit and loss account shows all the revenues and the expenses of the company. As described in the section above, the change in the balance sheet is a measure of progress or profit and the total revenues less the total expenses is also the profit of the company for the period.

TVM enhanced accounts incorporate the conventional financial accounts and in addition include the impact that economic activities of the entity are having not only on the economic capital of the entity but also on social capital and environmental capital outside the entity.

The graphic below shows how conventional financial accounting within the entity together with the impacts on externalities of the entity's activities impact all the capitals. The graphic shows that the impacts caused by entity activities change the capitals from the beginning of the period to the end of the period.
This graphic shows how conventional financial accountancy should be enhanced to incorporate impact on all the capitals, and not simply the capital of the owners of the entity.
The challenge is to 'number' impact on social capital and natural capital as easily and efficiently as is done for the money metric used for impact on economic (financial) capital.
The TVM answer to this challenge is the development of an approach that uses standard value profiles in much the same way that standard costs and variance analysis is used in corporate management.
THREE KEY METRICS
ENERGY PAYROLL MATERIAL FLOW ENERGY ... the use of energy contributes in a major way to the climate crisis.
PAYROLL ... the underpayment of workers is a primary reason why there is crisis of inequality
MATERIAL FLOW ... is associated with all sorts of issues in the supply chain as well as post use pollution.
MULTIPLE PERSPECTIVES
PLACE PRODUCT LIFE CYCLE PLACE ... the performance of place has a big impact on quality of life.
PRODUCT ... products are basis for quality if life and also for the generation of economic profit.
LIFE CYCLE ... every economic activity has costs and benefits at every stage
KEY MANAGEMENT ELEMENTS
SUMMARY DETAIL FEEDBACK LOOP SUMMARY ... mainly for BoD, C-suite and investors.
DETAIL ... and relevant for key people to understand the performance of the operation and enable improvement.
FEEDBACK LOOP ... needed to see whether performance is being improved. If not ... why not?
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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right. TVM is a 'big idea' that has the potential to be a game changer leveling the playing field so the wealth and power is shared on a more reasonable basis between people who work for a living and those that own the economy and the levers of power. In order to be effective, it cannot be funded in the conventional way with a for profit business plan, but absolutely must remain an open access initiative.
WE WANT TO MAINTAIN AN OPEN KNOWLEDGE MODEL
A MODEST DONATION WILL HELP MAKE THAT HAPPEN


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