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Meaningful Metrics for a Smart Society
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Date: 2017-09-25 Page is: DBtxt001.php L070-PP-PROGRESS-PERFORMANCE

PROGRESS AND PERFORMANCE
STATE / FLOW / CHANGE in STATE

CHANGE in STATE is a very efficient way to measure progress

ACTIVITIES DELIVER RESULTS
Details of activities are not needed to measure PROGRESS

PROGRESS is the increase in VALUE (of the STATE) from beginning to end of the period

Simply measure the change in the VALUE or everything

The Relationship Between Original State, Period Activities and New State


In this case the activities of the period do not change the state ... state at the end of the period (EOP) is the same as at the beginning of the period (BOP)
There is GOOD progress when the activities of the period result in a state at the end of the period that is better than the state at the beginning of the period.
There is BAD progress when the activities of the period result in a state at the end of the period that is worse than the state at the beginning of the period.

What this means is that PROGRESS can be ascertained by reference to the state at the beginning and the end of a period, with no need to have any knowledge of the activities during the period that results in the change.
When this is at the core of the progress measurement method, it enables a significant simplification of the data collection and analysis process.


The problem with conventional accounting is that while it does a very good job for money based transactions, it ignores all the impact that is not measured with money and included in the core transaction.
Since the beginning of the industrial revolution, the growth of conventional financial wealth has come while human capital has been exploited and natural capital has been depleted. When the global economy was quite small in size, the natural capital depletion did not represent an existential threat, but the scale of the modern industrial activity has now reached a level where natural capital depletion is a significiant risk.



What is the best way to manage progress and performance in the reality of complexity?
TPB note: My personal experience has been that it helps to have clarity about the goals. Historically companies have been very clear about the goal of improved profit performance, and as a CFO I wanted to be able to report periodically on profit improvement. In order to get to this outcome, the reality of the company's operations was complex and not always in the right direction. The company needed data that would inform ALL the decision makers throughout the organization how they were performing and how this was likely to impact the profit. My experience has always been that everyone will attempt to make better decisions when they have useful facts and know that performance is in fact being monitored in a fair and impartial manner. Better yet, when data about factual reality and performance are visible (transparent) then many individuals will outperform what was teh accepted norm simply because they know better than anyone else what actually works! With visibility, these outperformers can be recognised ... it may be financial reward, but non-financial reward also has important value.




The text being discussed is available at



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