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Meaningful Metrics for a Smart Society
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Date: 2017-09-21 Page is: DBtxt001.php L07-METRICS

METRICS
BETTER METRICS ARE FUNDAMENTAL TO SUCCESS
YOU MANAGE WHAT YOU MEASURE
CHANGE THE WAY THE GAME IS SCORED WILL CHANGE THE WAY THE GAME IS PLAYED
Quality of Life / Natural Capital / Financial Capital / Physical Capital / Industrial Detritus

MEASURE WHAT MATTERS
Financial metrics are powerful ... but on their own, they are insufficient and produce the wrong results
GO TOP
Peter Drucker famously said 'You cannot manage what you don't measure'
This is undounbtedly 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 ... this is what True Value Impact Accounting (TVIA) is all about

When numbers about progress and performance are missing, then there is no conversation that is grounded in reality and it becomes easy to promulgate 'fake news' and the appearance of good performance without much reality.
MODERN METRICS ARE DANGEROUSLY DYSFUNCTIONAL
It is widely accepted that you manage what you measure. The modern world has impressive data about corporate profit performance and the growth of financial wealth. These metrics dominate the conversation in the media, and important decisions being made in politics and business.
The measures for social performance and environmental performance are intellectually and methodologically weak compared to the data systems deployed for accounting for, managing and reporting profit.
The dysfunction of modern metrics is one of the key reasons why so much in the modern world is wrong ... but by no means the only thing that is wrong!
GDP (Gross Domestic Product) is one of the better known economic metrics, but it is deeply flawed because it ignores too many of the things that make life worth living. Open L0700-MT-GDP

CONVENTIONAL FINANCIAL ACCOUNTING
CONVENTIONAL FINANCIAL ACCOUNTING AND RELATED MANAGEMENT SYSTEMS ARE VERY POWERFUL

BUT ONLY ABOUT PROFIT PERFORMANCE AND FINANCIAL CAPITAL
Corporate financial management and management information enables rapid decision making about everythiong associated with corporate profit performance.
There is nothing like it for the impact on society and the impact on the environment ... the externalities are ignored.
The concepts of double entry accounting are ancient, but they are the key to the effectiveness of accountancy as an analytical tool.
Open L070-CFA-CONVENTIONAL-FINANCIAL-ACCOUNTANCY

TRUE VALUE IMPACT ACCOUNTING
ACCOUNTABILITY FOR EVERYTHING USING DOUBLE ENTRY ACCOUNTING FOR EVERYTHING
Conventional financial accounting uses money as its unit of account, and concerns itself mainly with money revenues, costs and profits without taking into account the 'externalities' which impact society, natural resources and the environment.
The True Value Impact Accounting (TVIA) initiative builds on the powerful well-established double entry accounting construct to account for everything, giving accountability for ALL of CAPITAL (i.e. HUMAN CAPITAL, NATURAL CAPITAL and CREATED PHSYICAL AND INTANGIBLE CAPITALS) and not just FINANCIAL CAPITAL.
TVIA uses multiple UNITS OF ACCOUNT rather than only money and STANDARD VALUE PROFILES for the PRODUCTS that flow through the system
TVIA has a comprehensive architecture that enables coherent progress and performance reporting for ORGANIZATIONS, PEOPLE (Individuals and families), PLACES, PROCESSES, PRODUCTS and STREAMS.
The purpose of TVIA is to enable better decision making to build better societies and a sustainable world. An important part of the initiative is to facilitate better timely decisions by individual people.
Open L07-TVIA

CORE CONCEPTS
CORE CONCEPTS FROM ACCOUNTANCY, ENGINEERING THERMODYNAMICS AND SCIENCE
There are several core concepts in science, engineering and accountancy that have been embedded into the design of True Value Impact Accounting.
The Double Entry construct is one of the most important. This idea ensures that there is a rigorous connection between the change in STATE and the associated activities or FLOWS. This idea mirrors some of the basic thinking in engineering thermodynamics and science.
The accountancy profession enagaged in assurance in large part to ensure that reported performance reflected the facts and the related data about the facts. This remains important as the proligeration of data makes validation of the data and the associated analysis and reporting more and more critical ... and perhaps even moreso as AI and Big Data become more widely deployed.
Open L07O-CC-CORE-CONCEPTS
L0700-CC-CONTINUOUS-IMPROVEMENT
L0700-CC-CONTINUOUS-IMPROVEMENT
Open L0700-CC-CONTINUOUS-IMPROVEMENT
COMPARISON TVIA -V- CONVENTIONAL-ACCOUNTANCY
L0700-CFA-comparison-with-TVIA
Open L0700-CFA-comparison-with-TVIA
L0700-CC-COST-MNGT-ACCOUNTING
L0700-CC-COST-MNGT-ACCOUNTING
Open L0700-CC-COST-MNGT-ACCOUNTING
L0700-CC-COST-PRICE-VALUE
L0700-CC-COST-PRICE-VALUE
Open L0700-CC-COST-PRICE-VALUE
L0700-CC-DATA-AT-THE-CENTER
L0700-CC-DATA-AT-THE-CENTER
Open L0700-CC-DATA-AT-THE-CENTER
L0700-CC-FEEDBACK
L0700-CC-FEEDBACK
Open L0700-CC-FEEDBACK
L0700-CC-PROFIT-AND-LOSS-ACCOUNT
L0700-CC-OPERATIONS-PandL-ACCOUNT PLACEHOLDER
Open L0700-CC-PROFIT-AND-LOSS-ACCOUNT
L0700-CC-PROCESSES
L0700-CC-PROCESS
Open L0700-CC-PROCESSES
L0700-CC-PRODUCTS
L0700-CC-PRODUCTS
Open L0700-CC-PRODUCTS
L0700-CC-PROGRESS-PERFORMANCE
L0700-CC-PROGRESS-PERFORMANCE
Open L0700-CC-PROGRESS-PERFORMANCE
L0700-CC-BALANCE-SHEET
L0700-CC-BALANCE-SHEET PLACEHOLDER !!!
Open L0700-CC-BALANCE-SHEET
L070-RE-REPORTING ENTITIES
L070-RE-REPORTING-ENTITIES
Open L070-RE-REPORTING-ENTITIES
L070-UA-UNITS-OF-ACCOUNT
L070-UA-UNITS-OF-ACCOUNT
Open L070-UA-UNITS-OF-ACCOUNT

REPORTING ENTITIES
REPORTING FOR ORGANIZATIONS, PEOPLE, PLACES, PROCESSES, PRODUCTS, STREAMS

Also PROJECTS, PROGRAMS and POLICIES

In conventional accounting there are established rules for reporting for the reporting entity. For example, all corporate business organizations report financial performance including the transactions that relate to the organization but excluding transactions that are outsie the 'reporting envelope'. Rules have been established to handle complex corporate structures involving subsidiaries that are both wholly owned, and those with outside stockholders. In TVIA these ideas are expanded to enable coherent reporting not only for the business organization but for all the various entities that make up the complete socio-enviro-economic system.
Open L070-RE-REPORTING-ENTITIES
ORGANIZATIONS
PURPOSE SHOULD BE MORE THAN JUST MAXIMIZING PROFIT
Open L0700-RE-ORGANIZATIONS
PEOPLE
THE MAIN PURPOSE OF EVERYTHING IS TO IMPROVE QUALITY OF LIFE FOR PEOPLE
Open L0700-RE-PEOPLE
PLACES
WHERE EVERYTHING COMES TOGETHER ... THE PEOPLE LIVE. ORGANIZATIONS PRODUCE AND POLLUTE
Open L0700-RE-PLACES
PROCESSES
WHERE AMAZING TECHNOLOGY SHOULD BE APPLIED FOR COMPREHENSIVE EFFICIENCY
Open L0700-RE-PROCESSES
PRODUCTS
PRODUCTS FLOW THROUGH THE SYSTEM, AND THROUGH USE DELIVER VALUE TO PEOPLE AND SOCIETY
Open L0700-RE-PRODUCTS
STRANDS
EVERYTHING HAS AN IMPACT ON EVERYTHING ELSE
PORTFOLIOS
Investor decisions are critical for better business ESG performance
Open L0700-RE-PORTFOLIOS
PROJECTS
Appropriate for activities that are time limited
PROGRAMS
Needed for program accountability
Open L0700-RE-PROGRAMS
POLICY
Needed for accountability with respect to policy
Open L0700-RE-POLICY

UNITS OF ACCOUNT
MORE POWERFUL THAN MONETIZING IMPACT
Conventional financial accounting uses money as its unit of account, and there are established methods for the use of multiple currencies when this is needed because of the nature of the business.
With TVIA, multiple UNITS OF ACCOUNT are used in a similar way to account for the way in which different activities impact ALL the CAPITALS that make up the SOCIO-ENVIRO-ECONOMIC SYSTEM. This is more powerful and more flexible than the idea of valuing everything using money and markets
Open L070-UA-UNITS-OF-ACCOUNT
MONEY
Long history as the foundation for ALL economic measurement ... but in need of complementary metrics to address all issues
Open L0700-UA-MONEY
A UNIT OF ACCOUNT FOR LIFE AND QUALITY OF LIFE
LIFE and QUALITY OF LIFE are the most important measure of PROGRESS and PERFORMANCE
Open L0700-UA-HUMAN-CAPITAL
A UNIT OF ACCOUNT FOR NATURAL CAPITAL - LAND
LAND IS LIMITED and there are many alternative uses that are required in a sustainable system.
Open L0700-UA-LAND
A UNIT OF ACCOUNT FOR NATURAL CAPITAL - WATER
WATER is vital for human life as well as for production in both people built systems and in natural systems
Open L0700-UA-WATER
A UNIT OF ACCOUNT FOR NATURAL CAPITAL - AIR
Degradation of CLEAN AIR has consequences including deterioration of human health
Open L0700-UA-AIR
A UNIT OF ACCOUNT FOR NATURAL CAPITAL - CLIMATE / GHG
Changes in the ATMOSPHERE as a result of Green-House-Gas (GHG) emissions are changing climate behavior with huge existential implications.
Open L0700-UA-CLIMATE-GHG
A UNIT OF ACCOUNT FOR NATURAL CAPITAL - BIODIVERSITY
Changes in the ATMOSPHERE as a result of Green-House-Gas (GHG) emissions are changing climate behavior with huge existential implications.
Open L0700-UA-BIODIVERSITY
A UNIT OF ACCOUNT FOR NATURAL CAPITAL - ECO-SYSTEM SERVICES
Changes in the ATMOSPHERE as a result of Green-House-Gas (GHG) emissions are changing climate behavior with huge existential implications.
Open L0700-UA-ECOSYSTEM-SERVICES
A UNIT OF ACCOUNT FOR NATURAL CAPITAL - NATURAL RESOURCE DEPLETION
Changes in the ATMOSPHERE as a result of Green-House-Gas (GHG) emissions are changing climate behavior with huge existential implications.
Open L0700-UA-NATURAL-RESOURCE-DEPLETION

STANDARD VALUE PROFILES
AN OPEN ACCESS DATABASE FOR STANDARD VALUE PROFILES FOR EVERYTHING
Open L070-SV-STANDARD-VALUE-PROFILES
STANDARD VALUE PROFILE DATABASE
CRITICAL DATA ABOUT THE TRUE COSTS AND VALUE OF EVERY PRODUCT ON THE PLANET
Well managed companies know a lot about every product that is flowing into their organizations and being produced for sale. There is nothing like this level of knowedgle about the products that are flowing through society and having impact on people and the environment.
In companies one technique for documenting knowledge about products is the idea of Standard Costs which is powerful and relatively low cost. In the TVIA data architecture, the equivalent are STANDARD VALUE PROFILES.



METRICS
WITHOUT MEASURES, THERE IS NO MANAGEMENT / MEASURES FOR EVERYTHING ... NOT MERELY MONEY

How we talk about progress and performance ... or not? When numbers about state, progress and performance are missing, then there is no conversation that is grounded in reality and it becomes easy to promulgate 'fake news' and the appearance of good performance without much reality.

BETTER METRICS - TVIA
ABOUT TRUE VALUE IMPACT ACCOUNTING ... STATE, PROGRESS AND PERFORMANCE FOR EVERYTHING
GO TOP
TRUE VALUE IMPACT ACCOUNTING (TVIA)
A COMPREHENSIVE COHERENT ARCHITECTURE FOR THE METRICS WE NEED FOR THE 21ST CENTURY
Open L07-TVIA

INITIATIVES DEVELOPING METRICS
SEVERAL HUNDRED ORGANIZATIONS INVOLDED IN DEVELOPING / APPLYING METRICS
GO TOP
METRICS ... A COLLECTION OF INITIATIVES RELATED TO METRICS
SEVERAL HUNDRED ORGANIZATIONS INVOLDED IN DEVELOPING / APPLYING METRICS
Open L0200-METRICS
n8-METRICS-ByOrganization
n8-METRICS-ByOrganization
Open n8-METRICS-ByOrganization
n8-METRICS-ByPeople
n8-METRICS-ByPeople
Open n8-METRICS-ByPeople
n8-METRICS-ByTheme
n8-METRICS-ByTheme
Open n8-METRICS-ByTheme

THE MONEY METRIC
How we talk about progress and performance ... or not. When numbers about progress and performance are missing, then there is no conversation that is grounded in reality and it becomes easy to promulgate 'fake news' and the appearance of good performance without much reality.
GO TOP

What is money?
When money serves as both a medium of exchange and a store of value it cannot also serve as a measure of the value and have much measurement meaning.
Money is efficient as a medium of exchange.
Money also works as a store of value as long as the idea of money is trusted to have value. The importance of this trust cannot be overstated.
In order to measure the value of intangibles of all sorts, the solution is to use UNIT OF ACCOUNT specific to the characteristic of the intangible element and what it does.

MONEY-CURRENCY
L0M00-MONEY-CURRENCY
Open L0M00-MONEY-CURRENCY

Open L0700-MX-MONEY-CURRENCY

SPECIALIZED SYSTEMS FOR ACCOUNTING AND REPORTING
Examples of many different types of accounting and reporting
GO TOP
CARBON-ACCOUNTING
L0M00-CARBON-ACCOUNTING
Open L0M00-CARBON-ACCOUNTING
ENVIRONMENTAL-ACCOUNTING
L0M00-ENVIRONMENTAL-ACCOUNTING
Open L0M00-ENVIRONMENTAL-ACCOUNTING
SUSTAINABILITY-ACCOUNTING
L0M00-SUSTAINABILITY-ACCOUNTING
Open L0M00-SUSTAINABILITY-ACCOUNTING
ECONOMIC-PERFORMANCE
L0M00-ECONOMIC-PERFORMANCE
... GDP
... GPI
Open L0M00-ECONOMIC-PERFORMANCE
FINANCIAL PERFORMANCE of the ORGANIZATION
L0M00-FINANCIAL
Open L0M00-FINANCIAL
MANAGEMENT METRICS
L0M00-MANAGEMENT
Open L0M00-MANAGEMENT
NATIONAL LEVEL PERFORMANCE
L0M00-NATIONAL
Open L0M00-NATIONAL
ECONOMIC-PERFORMANCE / GDP (GROSS DOMESTIC PRODUCT)
L0M00-GDP
Open L0M00-ECONOMIC-PERFORMANCE
ECONOMIC-PERFORMANCE / GPI (GENUINE PROGRESS INDICATOR)
L0M00-GPI
Open L0M00-ECONOMIC-PERFORMANCE
WORLD BANK / UNITED NATIONS / OECD METRICS
A huge amount of data at the country level ... rather little below this level
GO TOP
UNITED-NATIONS
L0M00-UNITED-NATIONS
Open L0M00-UNITED-NATIONS
UNITED NATIONS - MDGs
L0M00-MDGs
Open L0M00-MDGs
IMITED NATIONS - SDGs
L0M00-SDGs
Open L0M00-SDGs

OVERVIEW
EARLY HISTORY OF THINKING ABOUT BETTER METRICS

A recognition that conventoinal money based financial accounting could not do accountability for a complex system
OVERVIEW / HISTORY
OVERVIEW HISTORY
OVERVIEW-HISTORY-0
Open L070-OVERVIEW-HISTORY-0

STOCK MARKET METRICS
The business media reports on movements in stock markets every 15 minutes ... there is nothing remotely like it for the performance of people, society or the environment
GO TOP

New York Stock Exchange (NYSE)
Dow from 1998 to 2016
An impressive increase in the index ... but what does it really mean?
In large part the profits of business increased while the wealth of society as a whole was diminishing.
This is the behavior that one must expect when the only management measure that is used everywhere is money profit performance for organizations, and money income and financial wealth for individuals.
Open exernal link
Dow from 1927 to 2017 adjusted for consumer prices (CPI)
The Dow index has increased by an impressive amount over the long term ... but it hardly represents any significant reality. There are only a very few large cap stocks and these are changed from time to time in a way that eliminates the failing companies. The S&P 500 is a singificantly more represeantative index.
The Dow ... We’re Already at Dow 30000, You Just Don’t Know It
The blue-chip index is a poor measure of what investors are doing
By JAMES MACKINTOSH Updated Jan. 25, 2017 2:06 p.m. ET
It’s time to ditch the Dow. After 120 years, the venerable Dow Jones Industrial Average is an embarrassing anachronism, abandoned by professionals and beloved only by a media ...
'https://www.wsj.com/articles/were-already-at-dow-30000-you-just-dont-know-it-1485362316'
Open exernal link
The S&P Index from 1956 to 2017

THE FINANCING OF THE BANKING SECTOR
The financing of the banking sector is underwritten by the unusual arrangements that are Central Banks
GO TOP

Central Bank asset growth from 2006 to 2016

'http://inflation.us/central-bank-balance-sheet-assets-hit-record-high/'
Open exernal link

THE FINANCING OF INTERNATIONAL DEVELOPMENT ASSISTANCE
The financing of international development assistance has been both rather modest and also quite ineffective. More and better are both needed.
GO TOP

Segmentation of FDI fund flows
The financing of international development assistance has been both rather modest and also quite ineffective. More and better are both needed.
Remittances are one of the most important area of growth and likely one of the most efficient in terms of delivering poverty reduction at a low cost. It can also be noted that the banking sector and financial services industry charges very high prices for a service that is vital but low cost for the banks!

BANK LENDING BY SECTOR
Bank lending by sector is more about credit worthyness than impactfulness
GO TOP

UK Bank Lending by Sector

SOCIAL PROGRESS
SOCIAL PROGRESS IMPERATIVE
GO TOP

Social-Progress-Index-2017-Executive-Summary.pdf
by MICHAEL E. PORTER AND SCOTT STERN with MICHAEL GREEN

Social progress is the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.
Characteristics of the Social Progress measures:
1. Exclusively social and environmental indicators: Our aim is to measure social progress directly, rather than utilize economic proxies or outcomes. By excluding economic indicators, we can, for the first time, rigorously and systematically analyze the relationship between economic development (measured for example by GDP per capita) and social development
2. Outcomes not inputs: Our purpose is to measure the outcomes that matter to the lives of real people, not the inputs. For example, we want to measure a country’s health and wellness achieved, not how much effort is expended nor how much the country spends on healthcare.
3. Holistic and relevant to all countries: We strive to create a holistic measure of social progress that encompasses the many aspects of the health of societies.
4. Actionable: The Social Progress Index aims to be a practical tool that will help leaders and practitioners in government, business, and civil society to implement policies and programs that will drive faster social progress. To achieve that goal, we measure outcomes in a granular way that focuses on specific areas that can be implemented directly.
The 2017 Social Progress Index is structured around 12 components and 50 distinct indicators. The framework not only provides an aggregate country score and ranking, but also allows benchmarking on specific areas of strength and weakness. Transparency of measurement based on a comprehensive framework allows changemakers to set strategic priorities, acting upon the most pressing issues in their societies.
Open PDF ... Social-Progress-Index-2017-Executive-Summary
Social-Progress-Index-2017-Findings-Report
by MICHAEL E. PORTER AND SCOTT STERN with MICHAEL GREEN

Traditional measures of national income, such as GDP per capita, fail to capture the overall progress of societies.
The Social Progress Index rigorously measures country performance on a wide range of aspects of social and environmental performance, which are relevant for countries at all levels of economic development. It enables an assessment of not just absolute country performance but relative performance compared to a country’s economic peers.
Governments and businesses have the tools to track social and environmental performance rigorously, and make better public policy and investment choices.
TBP/TVIA observation: The weakness of the Social Progress Imperative initiative is that it assumes that measurement at the country level gives meaningful incentive to change behavior to achieve better outcomes. The broad concept is very good, but there needs to be complementary granular measurements (indicators) that can be used at specific places, in specific organizations and for individuals and families. This is not easy, but it is what is needed for fast progress.
'http://truevaluemetrics.org/DBpdfs/Metrics/SPI/Social-Progress-Index-2017-Findings-Report.pdf'
Open PDF ... Social-Progress-Index-2017-Findings-Report
Social-Progress-Index-2017-Methodology-Report
by SCOTT STERN, AMY WARES and TAMAR EPNER

Social Progress defined as the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.

Framework comprising three architectural components:
(l) Dimensions represent the broad conceptual categories that define social progress. The Index is calculated as the equally-weighted average of a country’s score on each of three dimensions.
(2) Within each dimension are components: four unique but related concepts that together make up each dimension. A country’s dimension score is calculated as the equally-weighted average of the four components in that dimension.
(3) Each component is composed of indicators that measure as many valid aspects of the component as possible. These indicators are aggregated using a weighted average, where the weights are determined by principal component analysis.
Open PDF ... Social-Progress-Index-2017-Methodology-Report

UNITED NATIONS and MANAGEMENT METRICS
The United Nations does a lot of 'big picture' metrics ... but much less about management metrics suited to making better decisions
GO TOP

SDGs - SUSTAINABLE DEVELOPMENT GOALS
SDGs - SUSTAINABLE DEVELOPMENT GOALS
The 17 Sustainable Development Goals were launched by the United Nations in 2015 together with more than 120 indicators of progress as a replacement fore the NDGs. An important criticism of the SDGs is that they represent discontinuity from the MDGS to the SDGs and too much of an opportunity to lose much of the momentum that was in place for the MDGs. For more on this, see the link ...
Open L0M00-SDGs

MDGs - MILLENNIUM DEVELOPMENT GOALS

1013 507
Open L0M00-MDGs




The text being discussed is available at



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