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Meaningful Metrics for a Smart Society
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Date: 2017-11-25 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
ESSENTIAL NAVIGATION
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(1) WHAT IS PROGRESS? Go (1)
(2) WHAT IS PERFORMANCE? Go (2)
(3) CORE CONCEPTS ... PROGRESS AND PERFORMANCE Open L0700-CC-PROGRESS-PERFORMANCE
PROGRESS AND PERFORMANCE - THE SOCIETY Open L0700-PP-SOCIETY
PROGRESS AND PERFORMANCE - THE ENVIRONMENT Open L0700-PP-ENVIRONMENT
PROGRESS AND PERFORMANCE - THE CREATED ECONOMY Open L0700-PP-ECONOMY

PROGRESS AND PERFORMANCE - THE SOCIETY
AN INDIVIDUAL
Open L0700-PP-INDIVIDUAL
PROGRESS AND PERFORMANCE - THE CREATED ECONOMY
AN INVESTOR
Open L0700-PP-PORTFOLIO
PROGRESS AND PERFORMANCE - THE CREATED ECONOMY
THE FINANCIAL ECONOMY
Open L0700-PP-FINANCIAL-ECONOMY
PROGRESS AND PERFORMANCE - THE CREATED ECONOMY
THE ORGANIZATION
Open L0700-PP-ORGANIZATION
PROGRESS AND PERFORMANCE - THE CREATED ECONOMY
THE PLACE
Open L0700-PP-PLACE
PROGRESS AND PERFORMANCE - THE CREATED ECONOMY
A PROGRAM or PROJECT
Open L0700-PP-PROGRAM-PROJECT

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

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
Three examples: Steady State / Good Progress / Bad Results


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 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.


In True Value Impact Accounting ALL the capitals are taken into consideration, not just the financial capital.
This graphic shows the characteristics of the capitals




The text being discussed is available at



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