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Date: 2018-11-20 Page is: DBtxt001.php L070-PP-PROGRESS-PERFORMANCE

PROGRESS AND PERFORMANCE

Measure Change in State and you Measure Progress

TVM CORE CONCEPTS ... PROGRESS AND PERFORMANCE
What is Progress? What is Performance?
Open L0700-TVM-PP-PROGRESS-PERFORMANCE

SOCIO progress and performance Open L0700-TVM-PP-SOCIAL
HUMAN CAPITAL ... an INDIVIDUAL perspective Open L0700-TVM-PP-Individual
RELATIONSHIP CAPITAL ... the collective / community perspective Open L0700-TVM-PP-Community

ENVIRO progress and performance Open L0700-TVM-PP-ENVIRONMENT
Atmosphere / Clean Air / Emissions / Pollution Open L0700-TVM-PP-NC-Air
Clean Water Open L0700-TVM-PP-NC-Clean-Water
Sustainable Land Open L0700-TVM-PP-NC-Land

ECONOMIC progress and performance Open L0700-TVM-PP-ECONOMIC
Economic Trends Open L0700-TVM-PP-Economic-Trends
Measuring Progress Open L0700-TVM-PP-Measuring-Progress
Measuring Progress and Performance Open L0700-TVM-PP-Measuring-Progress-Performance
PHYSICAL CAPITAL
Perspectives of INFRASTRUCTURE, ENGINEERING, TECHNOLOGY
FINANCIAL CAPITAL Open L0700-TVM-PP-Financial-Economy
An INVESTOR perspective Open L0700-TVM-PP-Portfolio
KNOWLEDGE CAPITAL
INSTITUTIONAL CAPITAL
An ORGANIZATION perspective ... Commercial Organization
Open L0700-TVM-PP-OG-Commercial
An ORGANIZATION perspective ... Not for Profit Organization
Open L0700-TVM-PP-OG-Not-for-Profit
An ORGANIZATION perspective ... Governmental Organization
Open L0700-TVM-PP-OG-Governmental
PROGRAM perspective Open L0700-TVM-PP-Program
PROJECT perspective Open L0700-TVM-PP-Project
CULTURAL CAPITAL
LOCATIONAL CAPITAL
The PLACE perspective Open L0700-TVM-PP-Place

STATE, FLOW and CHANGE in STATE
CHANGE in STATE is a very efficient way to measure progress
GO TOP
Compared to POTENTIAL
Extremely poor PROGRESS and PERFORMANCE
GO TOP
The POTENTIAL of modern KNOWLEDGE
The amount of knowledge has been growing exponentially for a very long time ... and in the past 50 years the amount of new knowledge has exploded.
Compared to the growth in knowledge the actual progress of the socio-enviro-economic system has been very modest.
Worse ... far too much of the knowledge has been applied in ways that have had the effect of impeded socio-environment progress for many while giving excessive benefit to a limited group of beneficiaries. Over time the level of inequality has become dangerously unstable.
The UTILIZATION of modern KNOWLEDGE
Modern knowledge has been applied in many ways that have been good for some and very bad for others. There are many examples:
(a) The increasing power of technology to destroy, and the relative weakness of technology to achieve and maintain peace
(b) The gaming of the system in order to creater financial capital while social capital and natural capital are exploited and destroyed
(c) The increased abiity to communicate rapidly and the growth of dataflows without much related growth in understanding
(d) Too much information enables users to choose their information to suit their prejudices. Freedom of speech being abused to misinform without limit.

Huge and Complex
Activites in the real world are very, very complex, and quite disorganized.
What is the best way to manage progress and performance in the reality of complexity?
Start by measuring progress.
Progress is the CHANGE in STATE between the BEFORE situation and the AFTER situation.
Look at the following graphics.
Understanding and measuring anything meaningful in the squiggles that represent the multitude of activities that are going on in any period is a huge task ... but measure the STATE before and after in comparatively simple and gives a very clear indicator of progress.
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 Relationship between Before State, Period Activities and After State
PROGRESS is the increase in VALUE (of the STATE) from beginning to end of the period
Steady State Good Progress Bad Results
PROGRESS is the change in the total of the values or everything


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.
This is a huge simplification
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
The problem with conventional accounting
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 financial wealth has come about 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.
TVM takes into account ALL the CAPITALS
TPB Note: This conceptual framing was articulated a long time ago with a slightly different naming convention. The current framing of the capitals is (1) Social Capital, (2) Natural Capital, and (3) Economic Capital.
Social Capital is a slightly broader definition than Human Capital, but esssentially much the same;
Natural Capital incorporates the idea that the Sun is the source of all energy on planet earth; and
Economic Capital includes both Financial Capital and what is called here, Man Built Capital. The current framing of Economic Capital includes Financial Capital, Physical Capital and Intangible Capital.
Financial Goodwill and financial intangibles straddle both the financial capital subset and the intangible capital subset.



The text being discussed is available at


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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