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Date: 2019-05-20 Page is: DBtxt001.php L07-08-MANAGEMENT



OVERVIEW #8
MANAGEMENT
MOVING THE NEEDLE ON IMPORTANT ISSUES
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Peter Drucker famously said you manage what you measure ...
This is undoubtedly true ... in the corporate world, the components that go into making profit are measured intensely in order to improve profit performance ... and it works!
Unfortunately, we don't do anything like the same amount of measuring in order to improve society and avoid degrading the environment ... and we don't have any easy way of talking about social performance and environmental performance in the same way that we are able to talk about corporate performance and investment portfolio performance.
This has to change
We argue that you had better measure the right things
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ABOUT THE TVM INITIATIVE
image missing Numbering the Triple Bottom Line

Accounting for ALL the Capitals
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TRANSPARENCY and ACCOUNTABILITY
METRICS TO MAKE THE WORLD A BETTER PLACE
  • TVM uses the core concepts of conventional accountancy.
  • Enhances the concepts to address the issue of social impact.
  • Also incorporates impacts on the environmental.
  • Considers other perspectives beyond the corporate organization.
  • Accounts for energy use impacts flowing through processes and embedded in products.
  • Accounts for good and bad impacts associated with payroll.
  • Accounts for impacts of gross material flows through the system.
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DATA TO DRIVE DECISIONS
Data at the Center Data Everywhere
These schematics were drawn around 1995 early in the days of electronic data collection. What was expensive then, has now become relatively low cost. However, the challenge remains to make use of data in a meaningful way so that better decision get made.
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CONVENTIONAL FINANCIAL ACCOUNTING EMBRACES
BALANCE SHEET & PROFIT AND LOSS ACCOUNT
TRUE VALUE METRICS ENHANCES ACCOUNTING TO
INCLUDE IMPACT ON SOCIETY AND THE ENVIRONMENT
ANOTHER IMPORTANT IDEA IN ACCOUNTANCY
Balance Sheet (B/S) improvement over time is progress.
Measure B/S changes, and you measure progress.
NO CHANGE IN BALANCE SHEET
STEADY STATE
GROWTH IN THE BALANCE SHEET
POSITIVE PROGRESS / VALUEADD
DIMINUTION OF THE BALANCE SHEET
VALUE DESTRUCTION
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ACCOUNTING FOR EXTERNALITIES
ALL THE SOCIAL, NATURAL and ECONOMIC CAPITALS
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THE MACRO TRENDS ARE CATASTROPHIC
ACCOUNTING FOR SOCIAL, ECONOMIC AND NATURAL CAPITALS
COLOR CODE DISTANT PAST PRESENT NOT GOOD FUTURE COLLAPSE
These are the aggregated Socio-Enviro-Economic Trends
What has been happening and what needs to happen to have a better future
THE WHOLE SYSTEM THE ACTUAL PAST A NO CHANGE FUTURE A BETTER FUTURE
More and more DEPLETION and DEGRADATION
of NATURAL CAPITAL is UNSUSTAINABLE
  • ECONOMIC CAPITAL has increase substantially over decades because there have been productivity increases.
  • At the same time there has been a massive increase in inequality that has compromised SOCIAL CAPITAL.
  • There has been dangerous degradation of NATURAL CAPITAL. There is an almost universal scientific consensus that massive changes are essential.
What science shows is that nature is the foundation for everything. Most of the time there is a complex natural balance or equilibrium, but periodically it gets out of balance and many changes take place very rapidly until another equilibrium is found. Because of humankind's economic activity we have arrived at a tipping point and the equilibrium has been disturbed. It is impossible to predict what future the changes will be .,.. but we do know that there will be massive change and it is unlikly that humankind will have the capacity to do very much about it. BE WARNED! GDP growth will aggravate this crisis, not solve it, but smart policy and technological investment and deployment might mitigate the problem significantly. Inaction is criminal.
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MANAGEMENT IS ABOUT MOVING THE NEEDLE
MORE EFFICIENT ACTIVITIES / BETTER DECISIONS BY ACTORS
  • ALL ACTIVITIES MUST REDUCE NEGATIVE EXTERNALITIES
  • ALL ACTORS MUST DO THEIR PART AND BE HELD TO ACCOUNT



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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.
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