DIALOG - JC - VZ - MP
About the development of True Value Acccounting / Multi Dimension Impact Accounting
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Jonathan Cloud / Victoria Zelin / Matt Polsky
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Gmail Peter Burgess
DRAFT: New Directions for 2017
25 messages
Jonathan Cloud
Wed, Jan 4, 2017 at 2:46 PM
To: Victoria Zelin , Peter Burgess , Gus Escher , matthew polsky
I’d like to publish something like this on CRCSolutions.org if no one has any objections, along with some links to our new initiatives:
New Directions for 2017
CRCS will be moving in several new directions this year, which we think will be of interest to a wider audience than just those of us interested in financing clean energy. We’ve been focusing more on communities in the past year, and on the values and vision that led to our mission, to assist local communities and neighborhoods to become more resilient in the face of the widening impacts of a changing climate.
We are proposing to work with one or two towns in New Jersey on their revitalization and self-renewal. Culture actually holds the key to greater local resilience, alongside the physical transformation of communities into eco-communities. And organization is what’s needed to transform culture. We are planning to create “civic cooperatives” that will lead these communities into a positive self-generating future. Many communities are today experiencing decline, or struggling to ignite a self-renewal, within the broader context of the need for a world for a world that shifts carbon from the atmosphere back into the soil. The cooperative model has proven itself to be more enduring, more beneficial, and often more valuable to communities than the conventional marketplace business model.
What makes this possible is that we have a number of tools with which we can assist groups in organizing their communities with more sustainable development. To begin with, we have the clean energy financing tools mentioned earlier, one of which — DREAM financing — is in principle able to be utilized today, though it has not yet been tried or tested. This innovation fulfills our goal of bringing financial resources to communities and groups to enable transformational change. Specifically, we think that DREAM can provide the starting-point for a clean energy co-op that could undertake solar, energy conservation, and resiliency projects, and return the profits to the community.
More broadly, we seek to apply regenerative design and permaculture principles to community redevelopment, and act as catalysts for more rapid evolution. Together with other organizations and professionals we are able to bring inspired planning and action, whether it is to the creation of an ecovillage or cohousing community or of cooperative enterprises in food, energy, the arts, and finance.
We invite you to join us in this adventure, in one of several ways. We are thinking of re-animating the Sustainable Leadership Forum (which we had put on hold to work on PACE) as a new CRCS Institute for Transformational Leadership. Download our program information sheet to see what’s available (attached).
Alternatively, if you are ready to collaborate with us on meaningful work, we invite you to join one of our cooperatives-in-development programs, and get involved in restoring ecosystems and remaking communities. Stay tuned for more information.
And of course we invite you to join our major sponsored programs, Ecovillage New Jersey and the new Ecovillagers Alliance.
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
CRCS-TransformationalLeadershipInstitute-4Jan2017.pdf
174K
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Gus Escher
Wed, Jan 4, 2017 at 6:28 PM
To: Jonathan Cloud , Victoria Zelin , Peter Burgess , Gus Escher , matthew polsky
J –
I’m OK with this approach to broadening our objectives and providing more (and better) information to potential collaborators.
While these ideas and initiatives are related (in some grand intellectual manner), I suggest we set them forth as stand-alone endeavours that people can join as they wish.
So, yes, let’s all work on it and get it up at CRCS.org.
G
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matthew Polsky
Wed, Jan 4, 2017 at 9:44 PM
To: Jonathan Cloud , Victoria Zelin , Peter Burgess , Gus Escher
Jonathan:
Some thoughts:
let's not be blind to possible issues with co-ops (or anything else that is unlikely to run perfectly). I sent you an article yesterday about thefts at a Brooklyn co-op, allegedly by members. Qualities like monitoring, flexibility, adaptability, resiliency will be important if we're going to (heavily) use hugely significant words like 'community,' 'transformation,' 'thrive,' and increasingly now 'regeneration,' let's give attention to whether our audiences are getting them (I would bet they don't); what we even mean by them; whether our own assumptions in a range of areas are consistent with them, and, if they're not, while it doesn't necessarily mean we change anything right away (as it's probably impossible to go full flight into these things), at least be aware of it.
See my comment today on a Tom Friedman article, particularly the section on 'communities,' as well as the overall need to change how we think about some fundamental things.
http://www.nytimes.com/2017/01/04/opinion/from-hands-to-heads-to-hearts.html?comments#permid=20987110
consistent with re-launching 'the Sustainable Leadership Forum...as a new CRCS Institute for Transformational Leadership,' which includes 'A Possible New Jersey' component, consider mentioning the document I framed and asked you to co-write on 'A Clean Economy for NJ,' possibly to offer to NJ Gubernatorial Candidates. You had conditions for writing it, which we are 1 1/2 steps or so from fully meeting. We just need Marnie to commit to writing it with you, and you and her need to co-decide how to work together. Possibly we'll have her commitment by the time you go to press with what you want to send out
relatedly, if there are other activities either you or Victoria are doing that are reasonably related to all this, why not mention them too? I'm thinking of the significant role Victoria is playing recruiting the new ED for the re-launch of the American Sustainable Business Council--NJ Affiliate. There might be others. Are you still doing some writing from time to time? Keeping a hand in anything from the old days?
Matt
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c: Victoria, Gus, Peter
From Hands to Heads to Hearts
www.nytimes.com
Remembering what makes us human is how to show economic value in the age of smarter and smarter machines.
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Victoria Zelin
Wed, Jan 4, 2017 at 10:24 PM
To: matthew Polsky
Cc: Jonathan Cloud , Peter Burgess , Gus Escher
I am pretty sure people don't get the possibility of community that we see. good point. It took me a long time, after leaving Deloitte, to grok 'community.' And I was looking for the distinction of what community meant. Most people aren;t looking and have no idea.
Suggestions?
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
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matthew Polsky
Wed, Jan 4, 2017 at 10:37 PM
To: Victoria Zelin
Cc: Jonathan Cloud , Peter Burgess , Gus Escher
Perhaps start with the paragraph on communities in my comment on Friedman's article.
Some of the other comments on the article may contain some good examples of community; perhaps note and build around those.
The sociologist Robert Putnam has written about losing community.
P.S. 'Grok' is a new one for me.
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Peter Burgess
Thu, Jan 5, 2017 at 1:14 AM
To: matthew Polsky
Cc: Victoria Zelin , Jonathan Cloud , Gus Escher
OUCH ... I am sorry I did not see all of this earlier in the day
I very much like the idea that you are thinking about pushing forward in a variety of ways in parallel ... and that is good, indeed very good.
But at the same time I am incredibly disappointed that the matter of metrics is nowhere to be found. As I often mention, in my early career we would often use the phrase 'Show me a company with poor management information ... and I will show you a company with poor performance!
For decades now, every major company on the planet has incredibly sophisticated management information and for all practical purposes they have the efficiency (in making profit) that they run the world! Unfortunately, conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
I have been interested and involved with not for profit work in international development, humanitarian relief, community development, sustainability, climate, etc and the metrics dimension of management was almost entirely missing ... and to the extent metrics were there, they were expensive to use and of dubious value ... usually very late. I was appalled at the numbering methods used by the World Bank, the UN, USAID and the rest and it came as no surprise when in depth performance analysis showed poor performance!
Getting really useful metrics for every dimension of the socio-enviro-economic system within which everything functions is a critical tool ... and my work on True Value Accounting (TVA) is, I believe, heading in the right direction. I am not the only one working towards better metrics ... GRI, SASB, IR, SROI are some of the better known initiatives but TVA has a much more elegant data architecture together with better integration with the conventional money accounting data elements.
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community. Gus made reference to Fund Accounting as used in municipalities, governments, etc. last Friday, but we did not get into much discussion about this ... but it is such a weak system of accounting that it was made illegal for companies to use about 150 years ago ... yet persists throughout the public sector. One reason is that the system is very easy to game ... and that has suited politicians in the past, and in experience to this day ... and of course it only deals with money flows and does nothing for the non-money value flows that are important for a living community. There are reasons why so many cities have been economically and socially gutted during the past 50 years ...yet the numbering of this process has been conspicuous by its absence. I worked on national level government financial management in the 1990s with the aim of moving from cash basis accounting to accrual accounting and more appreciation of the 'assets' and 'liabilities'. This has been an ongoing battle since the 1960s when the UN System of National Accounts was introduced for countries but little was done to update the accounting for public sector entities.
This past year, I have been flirting with some work on this subject in Baltimore and deeply concerned that most of the proposals to improve the situation can only be sustained by massive flows of new money into the area, and no system of numbering that can justify this ... the ideas may do good, but if they won't make money profit, how do they get justified! We absolutely have to get to grips with a numbering system that makes sense so that we can easily make investment for social and environmental return as well as just profit returns!
So while I am happy that CRSC is going to reach out in 2017 ... doing it without a metrics dimension will likely mean that nothing very much of value will actually happen.
With very nest wishes
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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Jonathan Cloud
Thu, Jan 5, 2017 at 1:21 AM
To: matthew polsky
Cc: Victoria Zelin , Peter Burgess , Gus Escher
Hi Matt:
I agree that nothing’s perfect, and I don’t expect co-ops to be either. But I would bet there’s much less of this kind of knavery in co-ops than in regular businesses, and that’s part of what the article shows as well — the “shrink rate” for the co-op is about half of that of a regular grocery. And of course we’re not talking about a food co-op here, but something more difficult to steal or finagle, especially if we’re managing the money…
I think your points on “community” and many of the other words are also well-taken. We need to know what we mean by them. And we need to know if they are resonating with our audiences.
At the same time, it appears that in many cases it’s not the precise meanings (denotations) that matter; it’s the connotations, the way the heart responds to them. As Jon Shure puts it, we have a very different reaction to “affordable homes” (we all need them) than we have to “affordable housing” (which we think of as being for the poor). And I don’t think it’s misleading to shift our language in order to get our audiences to respond in more positive ways. People may not know (and even we may not know) precisely what we mean by “thrive,” but people resonate to “thriving communities” much better than “sustainable” ones — they’re more interested in living in them. Yet to thrive they must be sustainable, so we’re getting them hooked on the right things.
This having been said, I wonder what it looks like when you get “off the sidelines” and into the game. Because nothing is perfect, it’s easy to criticize. But when you are a player and not a commentator you have to accept imperfection and move forward anyway. You’re not going to hit a winning shot every time; in fact you won’t most times. But you’ve got to take the shot anyway, and sometimes you do win, and it’s the wins that count, not the losses.
I’m willing to take a bet on the co-op model because what we’re doing today (either for-profit business or nonprofit community service) isn’t working very well. Being a member of a cooperative gives you an “ownership stake.” In fact, it gives everyone in the organization an ownership stake. That’s what we need for a better set of outcomes for everyone. Stay tuned. I think we’re going to make something happen.
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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matthew Polsky
Thu, Jan 5, 2017 at 1:59 AM
To: Jonathan Cloud
Cc: Victoria Zelin , Peter Burgess , Gus Escher
I have some minor and some non-minor philosophical differences. I'd put 'thrive' in the first category as it is something we not only can't promise (indeed I'm fresh off a conversation with Andy Revkin about Elizabeth Kolbert's work, as she offers no hope--the opposite of thrive, which bothers us both), but also because the inventor of the concept couldn't explain it to me what I asked what he meant by it.
So, yes, it sounds good, but seems empty to me.
But you're probably right that it resonates better than sustainability. And your link of sustainability to it is actually the first and best substantive thing I've heard about it.
Also, what do you mean by 'sidelines' and ' game?' As I define it, I am a 'player' in many ' games.' And to the degree I am on sidelines, it is a strategic choice I made to leverage my efforts to help many efforts.
We all have a role to play and mine is different than yours--although of course there are some overlaps.
Not crazy about 'easy to criticize' either. I often see things others don't, often gained through painful failures, and am a major practitioner of critical thinking. Those are big parts of what I do. I'm not going to not say things as then there would be no point to being involved.
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Jonathan Cloud
Thu, Jan 5, 2017 at 2:57 AM
To: Peter Burgess
Cc: matthew polsky , Victoria Zelin , Gus Escher
Hi Peter:
This is a wonderful challenge. I believe I agree with precisely 91.7% of your arguments, and will therefore come back to them.
But as in most conversations, making one argument usually evokes in the listener’s mind the unspoken counter-arguments (which probably accounts for some of the interest in the dialectic method). I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
But having said all that…
My challenge to you is to apply what you’re saying to our specific objectives and situations, because this could provide powerful support for our mission. We need to distinguish talking about metrics, and actually applying them in ways that are useful. Certainly I can agree that
...conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
And
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community.
So the challenge is to reverse this, in practice, in our work with communities and ecosystems and organizations. I suggest that as a part of our work you provide the quantitative validation for our interventions, in order to show how they do good, and how much good they do, in addition to being profitable (since they require this in order to be self-sustaining). Are you up for this? If so, we’ll all be able to see whether much of value will actually happen.
In this context I’m attaching the latest version of the Bound Brook proposal, and happy to have you make suggestions as to what we should be adding to it….
Thanks
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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From: vzelin@gmail.com on behalf of Victoria Zelin
Sent: Thursday, January 5, 2017 3:24 AM
To: matthew Polsky
Cc: Jonathan Cloud; Peter Burgess; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
I am pretty sure people don't get the possibility of community that we see. good point. It took me a long time, after leaving Deloitte, to grok 'community.' And I was looking for the distinction of what community meant. Most people aren;t looking and have no idea.
Suggestions?
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
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matthew Polsky
Thu, Jan 5, 2017 at 7:29 AM
To: Jonathan Cloud , Peter Burgess
Cc: Victoria Zelin , Gus Escher
Hence my currently-19 part series on 'The Pitfalls of Sustainable Business Metrics' in which I try to reconcile the use of measurement, while warning of many issues (including those just cited from that book), coming from many places, including some embedded in fixes Peter has already proposed (e.g. going beyond conventional measures).
However, rather than 'in order to show how they do good, and how much good they do, in addition to being profitable,' I'd start with 'If,' in order to flag problems, and 'promote inquiry' and guide us so that we can 'show...
That 'inquiry' is very important and rarely comes up.
Other purposes include more conventional things such as establishing a baseline, re-adjusting priorities, reporting, etc.
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From: Jonathan Cloud
Sent: Thursday, January 5, 2017 7:57 AM
To: Peter Burgess
Cc: matthew polsky; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
A number of organizations, including the new Coalition for PACE in New Jersey and ourselves, have been involved in working with the state legislature to craft a new ...
~ www.CRCSolutions.org
Center for Regenerative Community Solutions | and New ...
www.crcsolutions.org
How would you like the members of your community to work together as part of a thriving and resilient ecosystem, providing for the basic needs of all citizens?
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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Gus Escher Thu, Jan 5, 2017 at 12:33 PM
To: Victoria Zelin , matthew Polsky
Cc: Jonathan Cloud , Peter Burgess , Gus Escher
OK, I’ll bite:
What does “community” mean to you?
Follow-up question: What’s “grok”?
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Peter Burgess Thu, Jan 5, 2017 at 4:42 PM
To: Jonathan Cloud
Cc: matthew polsky , Victoria Zelin , Gus Escher
Bcc: Claudia Freed , John Kiehl
Dear Jonathan
My notes were prepared late at night (early morning) ... and the idea that your response happened even later reminds me of being a student again when a 24 hour agenda was the norm.
I have read (and collected) a host of different IDEAS from a huge number of THINKERS so it is relatively easy to find writing that describes different ways of moving forward to get to a better world.
You had the following in your message to me:
///////////////////////////////
I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
/////////////////////////////////
I have been saying almost the same thing since 1975 ... more than 40 years ago long before the Visa Card was invented. I realized that conventional bookkeeping and financial wealth were not a good enough ways to measure progress and performance ... the money metric does not handle the value destruction associated with death from starvation and drought, from civil war and genocide, from climate change and crop failure. Corporate accounting ignores externalities. GDP, as Robert Kennedy famously said '... ignores everything that is really valuable ...'. During my international work I have counted dead bodies more than most accountants, but there was no way to report the TRUE VALUE DESTRUCTION that this represented
It is worth noting that double entry accounting, Cartesian thinking and Newtonian science worked very well when they were first introduced several hundred years ago ... and still have a huge value in modern times. Evidence of double entry accounting goes back a little more than 800 years though it was only first written about (to our modern knowledge) around the time Adam Smith was writing about economics and moral sentiment. Modern physics did not disprove Newton's ideas, but modernized and enhanced the ideas, and that is more or less what I want to do with conventional double entry accounting and True Value Accounting!
So a General Theory of Accountability ... in other words True Value Accounting (TVA) ... is an idea to address ALL the issues which the critics of measurement bring up all the time.
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
Others have articulated the idea of multiple capitals ... and I do not want to argue the merits of my 5 versus how others describe the capitals. I wrote about 7 capitals a couple of years ago and got into all sorts of feedback about why the number 7 was wrong. It is not a real issue. The key characteristic of these capitals is that they encompass EVERYTHING. I have settled on this segmentation because it has the best fit with the way that I think summarized numbers will need to be reported in the most meaningful way.
Second is to describe the Socio-Enviro-Economic system (SEES) and understand how it works. From this it becomes possible to start to design a data architecture that is responsive to the key pieces of the system.
As regards data architecture I am informed by my engineering studies, and particularly engineering thermodynamics, and by conventional double entry accounting that has the idea of state (balance sheet) and flow (profit and loss account) and the coherence of the data between the two.
The data architecture must work for every component of the SEES. The data architecture must differentiate between STATE and FLOW for all of the capitals and all of the following pieces of the system..
ORGANIZATIONS ... should use a system of accounting that includes conventional money double entry accounting AND the initial state, flows/processes and new state that applies for multiple capitals. That is profit, and people/society and planet/environment ... in other words the famous triple bottom line.
...... the financial balance sheet shows financial and physical assets and liabilities
...... stock markets value organizations based on a computation of the net present value of what the market things the future will be!
...... financial accounts and (mostly) stock markets ignore what the organization does in terms of impact on society and the environment ... but TVA brings these into account.
PEOPLE ... an individual's present state, the cost of living and the contribution. These change depending on a person's stage in life, a person's history and the opportunities of the time and the place. The foundational measure is to do with a person's QUALITY OF LIFE.
...... all of which then aggregates into a family
...... and into a community
...... and into a society
...... which is a part of a PLACE
PLACE ... where things happen
...... where people live
...... where organizations operate
...... where land exists and provides ecosystem services or economic services or resources
...... where all sorts of physical capital is located to provide services to people and organizations
PRODUCT ... the things that are consumed to support QUALITY OF LIFE
..... but product leaves a footprint as it flows through the supply chain
..... and again when it is used
..... and again in the post use waste chain.
PROCESS ... how inputs are converted to outputs
..... which eventually creates the PRODUCTS that PEOPLE use
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
It is often said 'Think Global ... Act Local'. With the TVA initiative this means that the PLACE (COMMUNITY) is very critical in the way management information should be obtained and deployed because PLACE is where all the SEES actors/elements come together.
This describes the data architecture fairly comprehensively ... but does not address the actual process of numbering. The concept being developed is for numbering is very similar to the idea of standard costs in conventional management accounting ... but more on that another time.
I like to think this has some potential in the CRCS strategy albeit quite limited.
Critical comment is welcomed
Peter
____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Thu, Jan 5, 2017 at 4:42 PM, Peter Burgess wrote:
Dear Jonathan
My notes were prepared late at night (early morning) ... and the idea that your response happened even later reminds me of being a student again when a 24 hour agenda was the norm.
I have read (and collected) a host of different IDEAS from a huge number of THINKERS so it is relatively easy to find writing that describes different ways of moving forward to get to a better world.
You had the following in your message to me:
///////////////////////////////
I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
/////////////////////////////////
I have been saying almost the same thing since 1975 ... more than 40 years ago long before the Visa Card was invented. I realized that conventional bookkeeping and financial wealth were not a good enough ways to measure progress and performance ... the money metric does not handle the value destruction associated with death from starvation and drought, from civil war and genocide, from climate change and crop failure. Corporate accounting ignores externalities. GDP, as Robert Kennedy famously said '... ignores everything that is really valuable ...'. During my international work I have counted dead bodies more than most accountants, but there was no way to report the TRUE VALUE DESTRUCTION that this represented
It is worth noting that double entry accounting, Cartesian thinking and Newtonian science worked very well when they were first introduced several hundred years ago ... and still have a huge value in modern times. Evidence of double entry accounting goes back a little more than 800 years though it was only first written about (to our modern knowledge) around the time Adam Smith was writing about economics and moral sentiment. Modern physics did not disprove Newton's ideas, but modernized and enhanced the ideas, and that is more or less what I want to do with conventional double entry accounting and True Value Accounting!
So a General Theory of Accountability ... in other words True Value Accounting (TVA) ... is an idea to address ALL the issues which the critics of measurement bring up all the time.
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
Others have articulated the idea of multiple capitals ... and I do not want to argue the merits of my 5 versus how others describe the capitals. I wrote about 7 capitals a couple of years ago and got into all sorts of feedback about why the number 7 was wrong. It is not a real issue. The key characteristic of these capitals is that they encompass EVERYTHING. I have settled on this segmentation because it has the best fit with the way that I think summarized numbers will need to be reported in the most meaningful way.
Second is to describe the Socio-Enviro-Economic system (SEES) and understand how it works. From this it becomes possible to start to design a data architecture that is responsive to the key pieces of the system.
As regards data architecture I am informed by my engineering studies, and particularly engineering thermodynamics, and by conventional double entry accounting that has the idea of state (balance sheet) and flow (profit and loss account) and the coherence of the data between the two.
The data architecture must work for every component of the SEES. The data architecture must differentiate between STATE and FLOW for all of the capitals and all of the following pieces of the system..
ORGANIZATIONS ... should use a system of accounting that includes conventional money double entry accounting AND the initial state, flows/processes and new state that applies for multiple capitals. That is profit, and people/society and planet/environment ... in other words the famous triple bottom line.
...... the financial balance sheet shows financial and physical assets and liabilities
...... stock markets value organizations based on a computation of the net present value of what the market things the future will be!
...... financial accounts and (mostly) stock markets ignore what the organization does in terms of impact on society and the environment ... but TVA brings these into account.
PEOPLE ... an individual's present state, the cost of living and the contribution. These change depending on a person's stage in life, a person's history and the opportunities of the time and the place. The foundational measure is to do with a person's QUALITY OF LIFE.
...... all of which then aggregates into a family
...... and into a community
...... and into a society
...... which is a part of a PLACE
PLACE ... where things happen
...... where people live
...... where organizations operate
...... where land exists and provides ecosystem services or economic services or resources
...... where all sorts of physical capital is located to provide services to people and organizations
PRODUCT ... the things that are consumed to support QUALITY OF LIFE
..... but product leaves a footprint as it flows through the supply chain
..... and again when it is used
..... and again in the post use waste chain.
PROCESS ... how inputs are converted to outputs
..... which eventually creates the PRODUCTS that PEOPLE use
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
It is often said 'Think Global ... Act Local'. With the TVA initiative this means that the PLACE (COMMUNITY) is very critical in the way management information should be obtained and deployed because PLACE is where all the SEES actors/elements come together.
This describes the data architecture fairly comprehensively ... but does not address the actual process of numbering. The concept being developed is for numbering is very similar to the idea of standard costs in conventional management accounting ... but more on that another time.
I like to think this has some potential in the CRCS strategy albeit quite limited.
Critical comment is welcomed
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
On Thu, Jan 5, 2017 at 2:57 AM, Jonathan Cloud wrote:
Hi Peter:
This is a wonderful challenge. I believe I agree with precisely 91.7% of your arguments, and will therefore come back to them.
But as in most conversations, making one argument usually evokes in the listener’s mind the unspoken counter-arguments (which probably accounts for some of the interest in the dialectic method). I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
But having said all that…
My challenge to you is to apply what you’re saying to our specific objectives and situations, because this could provide powerful support for our mission. We need to distinguish talking about metrics, and actually applying them in ways that are useful. Certainly I can agree that
...conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
And
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community.
So the challenge is to reverse this, in practice, in our work with communities and ecosystems and organizations. I suggest that as a part of our work you provide the quantitative validation for our interventions, in order to show how they do good, and how much good they do, in addition to being profitable (since they require this in order to be self-sustaining). Are you up for this? If so, we’ll all be able to see whether much of value will actually happen.
In this context I’m attaching the latest version of the Bound Brook proposal, and happy to have you make suggestions as to what we should be adding to it….
Thanks
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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On Jan 5, 2017, at 1:14 AM, Peter Burgess wrote:
OUCH ... I am sorry I did not see all of this earlier in the day
I very much like the idea that you are thinking about pushing forward in a variety of ways in parallel ... and that is good, indeed very good.
But at the same time I am incredibly disappointed that the matter of metrics is nowhere to be found. As I often mention, in my early career we would often use the phrase 'Show me a company with poor management information ... and I will show you a company with poor performance!
For decades now, every major company on the planet has incredibly sophisticated management information and for all practical purposes they have the efficiency (in making profit) that they run the world! Unfortunately, conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
I have been interested and involved with not for profit work in international development, humanitarian relief, community development, sustainability, climate, etc and the metrics dimension of management was almost entirely missing ... and to the extent metrics were there, they were expensive to use and of dubious value ... usually very late. I was appalled at the numbering methods used by the World Bank, the UN, USAID and the rest and it came as no surprise when in depth performance analysis showed poor performance!
Getting really useful metrics for every dimension of the socio-enviro-economic system within which everything functions is a critical tool ... and my work on True Value Accounting (TVA) is, I believe, heading in the right direction. I am not the only one working towards better metrics ... GRI, SASB, IR, SROI are some of the better known initiatives but TVA has a much more elegant data architecture together with better integration with the conventional money accounting data elements.
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community. Gus made reference to Fund Accounting as used in municipalities, governments, etc. last Friday, but we did not get into much discussion about this ... but it is such a weak system of accounting that it was made illegal for companies to use about 150 years ago ... yet persists throughout the public sector. One reason is that the system is very easy to game ... and that has suited politicians in the past, and in experience to this day ... and of course it only deals with money flows and does nothing for the non-money value flows that are important for a living community. There are reasons why so many cities have been economically and socially gutted during the past 50 years ...yet the numbering of this process has been conspicuous by its absence. I worked on national level government financial management in the 1990s with the aim of moving from cash basis accounting to accrual accounting and more appreciation of the 'assets' and 'liabilities'. This has been an ongoing battle since the 1960s when the UN System of National Accounts was introduced for countries but little was done to update the accounting for public sector entities.
This past year, I have been flirting with some work on this subject in Baltimore and deeply concerned that most of the proposals to improve the situation can only be sustained by massive flows of new money into the area, and no system of numbering that can justify this ... the ideas may do good, but if they won't make money profit, how do they get justified! We absolutely have to get to grips with a numbering system that makes sense so that we can easily make investment for social and environmental return as well as just profit returns!
So while I am happy that CRSC is going to reach out in 2017 ... doing it without a metrics dimension will likely mean that nothing very much of value will actually happen.
With very nest wishes
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Wed, Jan 4, 2017 at 10:37 PM, matthew Polsky wrote:
Perhaps start with the paragraph on communities in my comment on Friedman's article.
Some of the other comments on the article may contain some good examples of community; perhaps note and build around those.
The sociologist Robert Putnam has written about losing community.
P.S. 'Grok' is a new one for me.
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From: vzelin@gmail.com on behalf of Victoria Zelin
Sent: Thursday, January 5, 2017 3:24 AM
To: matthew Polsky
Cc: Jonathan Cloud; Peter Burgess; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
I am pretty sure people don't get the possibility of community that we see. good point. It took me a long time, after leaving Deloitte, to grok 'community.' And I was looking for the distinction of what community meant. Most people aren;t looking and have no idea.
Suggestions?
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
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On Wed, Jan 4, 2017 at 9:44 PM, matthew Polsky wrote:
Jonathan:
Some thoughts:
let's not be blind to possible issues with co-ops (or anything else that is unlikely to run perfectly). I sent you an article yesterday about thefts at a Brooklyn co-op, allegedly by members. Qualities like monitoring, flexibility, adaptability, resiliency will be important
if we're going to (heavily) use hugely significant words like 'community,' 'transformation,' 'thrive,' and increasingly now 'regeneration,' let's give attention to whether our audiences are getting them (I would bet they don't); what we even mean by them; whether our own assumptions in a range of areas are consistent with them, and, if they're not, while it doesn't necessarily mean we change anything right away (as it's probably impossible to go full flight into these things), at least be aware of it.
See my comment today on a Tom Friedman article, particularly the section on 'communities,' as well as the overall need to change how we think about some fundamental things.
http://www.nytimes.com/2017/01/04/opinion/from-hands-to-heads-to-hearts.html?comments#permid=20987110
consistent with re-launching 'the Sustainable Leadership Forum...as a new CRCS Institute for Transformational Leadership,' which includes 'A Possible New Jersey' component, consider mentioning the document I framed and asked you to co-write on 'A Clean Economy for NJ,' possibly to offer to NJ Gubernatorial Candidates. You had conditions for writing it, which we are 1 1/2 steps or so from fully meeting. We just need Marnie to commit to writing it with you, and you and her need to co-decide how to work together. Possibly we'll have her commitment by the time you go to press with what you want to send out
relatedly, if there are other activities either you or Victoria are doing that are reasonably related to all this, why not mention them too? I'm thinking of the significant role Victoria is playing recruiting the new ED for the re-launch of the American Sustainable Business Council--NJ Affiliate. There might be others. Are you still doing some writing from time to time? Keeping a hand in anything from the old days?
Matt
c: Victoria, Gus, Peter
From Hands to Heads to Hearts
www.nytimes.com
Remembering what makes us human is how to show economic value in the age of smarter and smarter machines.
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From: Jonathan Cloud
Sent: Wednesday, January 4, 2017 7:46 PM
To: Victoria Zelin; Peter Burgess; Gus Escher; matthew polsky
Subject: DRAFT: New Directions for 2017
I’d like to publish something like this on CRCSolutions.org if no one has any objections, along with some links to our new initiatives:
Center for Regenerative Community Solutions | and New ...
crcsolutions.org
How would you like the members of your community to work together as part of a thriving and resilient ecosystem, providing for the basic needs of all citizens?
New Directions for 2017
CRCS will be moving in several new directions this year, which we think will be of interest to a wider audience than just those of us interested in financing clean energy. We’ve been focusing more on communities in the past year, and on the values and vision that led to our mission, to assist local communities and neighborhoods to become more resilient in the face of the widening impacts of a changing climate.
We are proposing to work with one or two towns in New Jersey on their revitalization and self-renewal. Culture actually holds the key to greater local resilience, alongside the physical transformation of communities into eco-communities. And organization is what’s needed to transform culture. We are planning to create “civic cooperatives” that will lead these communities into a positive self-generating future. Many communities are today experiencing decline, or struggling to ignite a self-renewal, within the broader context of the need for a world for a world that shifts carbon from the atmosphere back into the soil. The cooperative model has proven itself to be more enduring, more beneficial, and often more valuable to communities than the conventional marketplace business model.
What makes this possible is that we have a number of tools with which we can assist groups in organizing their communities with more sustainable development. To begin with, we have the clean energy financing tools mentioned earlier, one of which — DREAM financing — is in principle able to be utilized today, though it has not yet been tried or tested. This innovation fulfills our goal of bringing financial resources to communities and groups to enable transformational change. Specifically, we think that DREAM can provide the starting-point for a clean energy co-op that could undertake solar, energy conservation, and resiliency projects, and return the profits to the community.
More broadly, we seek to apply regenerative design and permaculture principles to community redevelopment, and act as catalysts for more rapid evolution. Together with other organizations and professionals we are able to bring inspired planning and action, whether it is to the creation of an ecovillage or cohousing community or of cooperative enterprises in food, energy, the arts, and finance.
We invite you to join us in this adventure, in one of several ways. We are thinking of re-animating the Sustainable Leadership Forum (which we had put on hold to work on PACE) as a new CRCS Institute for Transformational Leadership. Download our program information sheet to see what’s available (attached).
Alternatively, if you are ready to collaborate with us on meaningful work, we invite you to join one of our cooperatives-in-development programs, and get involved in restoring ecosystems and remaking communities. Stay tuned for more information.
And of course we invite you to join our major sponsored programs, Ecovillage New Jersey and the new Ecovillagers Alliance.
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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Peter Burgess Sat, Jan 7, 2017 at 1:08 PM
To: Claudia Freed
Dear Claudia
You don't really need to study this in depth ... but just trying to show you that I have not been completely lazy in the past couple of weeks!
By the way ... big day tomorrow ... I turn 77 and my wife Dawn turns 67 ... time flies when you are having fun
... and I learned that last Thursday Charlie Rose had turned 75! No wonder his programs are deteriorating!
All the best
Peter
---------- Forwarded message ----------
From: Peter Burgess
Date: Sat, Jan 7, 2017 at 1:01 PM
Subject: Re: DRAFT: New Directions for 2017
Claudia Freed Sat, Jan 7, 2017 at 1:12 PM
To: Peter Burgess
Dear Peter!
Happy birthday to you and Dawn. How fun to share a birthday!!! So delighted you are both in good health (I hope!).
I have been terribly busy and was looking to chat with you tomorrow Sunday afternoon. Maybe heat up a cup of hot Toddy (sp?) and get on skype. So much to catch up. Will you be around??
Congratulations!!
Claudia
Claudia Freed
President & CEO at EALgreen.org
O: 630-690-0694
M: 630-670-3321
Claudia@ealgreen.org
See how we're connected...
View my profile on LinkedIn
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From: Peter Burgess [mailto:peterbnyc@gmail.com]
Sent: Saturday, January 07, 2017 12:08 PM
To: Claudia Freed
Subject: Fwd: DRAFT: New Directions for 2017
[Quoted text hidden]
Peter
[Quoted text hidden]
[Quoted text hidden]
[Quoted text hidden]
[Quoted text hidden]
Image removed by sender.
Co-Founder & Lead Author at Global 4C: delton.b.chen@gmail.com +61412995119 Mob. Australia
Project Coordinator at CRCS: deltonchen@crcsolutions.org +1 9083966179 Tel. USA
Research Fellow at Project Drawdown: delton.chen@drawdown.org
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On Fri, Jan 6, 2017 at 10:08 AM, Victoria Zelin wrote:
Wow....
Peter, glad you suggested it. I think we ought to set your inquiry and approach as part of CRCS! And we'd love for you and Delton to talk, because there may be an interesting circle between Global 4C and TVA. I'm copying Delton here, and hope the two of you connect over Skype sometime soon! And let us know how TVA relates to the whole of CRCS, as a distinct project.
Image removed by sender.
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
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Delton Chen Sat, Jan 7, 2017 at 11:58 PM
To: Peter Burgess
Cc: Victoria Zelin , Jonathan Cloud , Gus Escher
Hello Peter,
I suggest that we start a new email thread and arrange a date/time to Skype.
Thurs/Friday 12/13 January 2017 are looking good for me.
Perhaps we should try to identify what ideas and technologies are similar, and to try find overlap between TVA and G4C.
Perhaps we can figure out a way to support each other's projects and efforts.
I look forward to talking.
Cheers
Delton
Delton Chen Ph.D.
Geo-Hydrologist & Climate Policy Researcher
Co-Founder & Lead Author at Global 4C: delton.b.chen@gmail.com +61412995119 Mob. Australia
Project Coordinator at CRCS: deltonchen@crcsolutions.org +1 9083966179 Tel. USA
Research Fellow at Project Drawdown: delton.chen@drawdown.org
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On Sun, Jan 8, 2017 at 2:01 AM, Peter Burgess wrote:
Dear Delton
Thank you for the thoughtful digest of your work around Global 4C ... Complementary Currencies for Climate Change. As an aide-memoire I am responding in red to the various points you have made in your message.
/////////////////////////////
I read through the email thread, and there are some practical and philosophical ideas worth considering, including Peter's TVA which I have investigated a while ago. I'm more than happy to Skype with Peter about TVA at any convenient time.
Happy to Skype at your convenience ... peterbinbushkill
[This is not my old hacked account which in theory has now been completely disabled by Microsoft ... but it took about 14 hours of 'chatting' with their tech support / customer service folk before they actually got round to doing it!]
We are lucky to be living with so many material comforts, but this era is also the most intellectually challenging because we need some answers to some exceptionally deep questions - how to fix civilisation before it literally destroys the planetary ecosystem. Risk No. 1 is probably climate change, and I think this risk will also domino into a nuclear risk.
Agreed ... the technical capabilities of engineers to do amazing things is mind-boggling. I read engineering at Cambridge in the late 1950s and I got to understand how much engineering had progressed in the previous hundred years ... but technical progress has accelerated massively since then ... social progress and governance processes not so much, and basic accounting and economic measurements, not at all!
I am a practical person (an engineer by training) and I don't have the patience to spend too many years on the Global 4C policy unless I think it could work. Currently, I am very excited about the policy and theory, and I currently think it is very worthwhile... but there are no guarantees that Global 4C can reach the ultimate goal because of the many hurdles.
My position with TVA is pretty much the same
At this stage, the theory and philosophy for Global 4C is emerging as something that could be a breakthrough - but to be a genuine breakthrough a new scientific theory is needed, and so enter the 'Holistic Market Hypothesis'. The Hypothesis is unverified and untested, but if it can be verified then this will be a big deal. The Hypothesis states that conventional theories for market economics (for greenhouse gas mitigation) are incomplete, and that a much more complete theory can be elaborated based on three currency types: (i) commodity currency, (ii) fiat currency and (iii) service currency. I call these three currency types 'natural currencies'. Global 4C is based on the new service currency for carbon mitigation...
I think ... but am not sure ... that your use of the word currency is similar to my use of the concept of numbering. When I read economics at university we talked about money in terms of being two things: (1) a store of value and (2) a unit of measure. In my (engineering) view, a unit of measure should not change its size over time nor as a function of market forces. I am working towards a coherent set of measure so that EVERYTHING in the socio-enviro-economic world system can be numbered in a consistent, universal, coherent way. I had not thought to name the various measures in the way you have ... but I had concluded that I needed to have several different numbering systems (your multiple currencies) rather than a single one as we do at the present time (that is money / fiat money)
The big deal is that it may be possible to verify (and validate) that a service currency is necessary to internalise the systemic risk of pollution with currency-rewards, whereas the standard policy approach is to internalise a social cost of pollution with taxes. The social cost is based on an anthropocentric worldview, whereas the systemic risk cost is based on a systems worldview. The two views are complementary.
My work on this part of your idea is somewhat the same ... but with rather different emphasis. I drop back to the fundamental ideas of engineering thermodynamics ... which is surprisingly similar to the basic concept of double entry accounting. Initial state --> flow/process --> Ending state
In corporate accounting the state is the balance sheet, the flow process is the profit and loss account. The weakness of corporate accounting is that it is ONLY about the reporting entity (the company) and ignores externalities.
But in corporate accounting there are also very rigorous principles for group accounts (holding companies) and the methods for consolidating a number of organizations ... SO ...
... my thinking is that we modify conventional accounting so that the profit and loss accounts (or the transaction reporting) includes impact on externalities ... that is people / society and planet / environment ... and then start doing consolidations to determine the impact on ALL the capitals rather than simply the capital that is of interest to owners / investors.
The Global 4C policy is rational in terms of the financial mechanisms and the methodology, but there is a need for the fundamental new science basis to show that it is physically necessary. This is explained in the JFSI paper. But what will not be explained, is the actual proof for the new Hypothesis.
If a proof for the Hypothesis is able to be derived, based on thermodynamic principles (i.e. modern physics), then we will actually define a theory not just for carbon management (i.e. climate mitigation), but also a theory for how all complex adaptive systems emerge from underlying simpler systems that are comprised of three currencies as key components (i.e. the natural currencies). Hence, if correct, it may be possible to describe the three currencies as 'natural currencies' that underscore complex life forms as it derives from DNA.
If the Holistic Market Hypothesis can be assigned a rational topology and be verified/validated, then it should not be surprising to find that all complex adaptive systems (that have emergent properties) are also the product of natural currencies. There is already some good evidence to suggest that this is indeed the case for multi-cellular life (i.e. plants, animals, fungi and protista). This is not reductionism, because the theory should explain the dimensionality of the three currencies; and marry this dimensionality to the underlying quantum system which appears to be the foundation of the Universe (i.e. based on quantum particles and modern physics).
Put another way, if the Hypothesis is correct, then for the economy to have emergent properties for managing the carbon cycle (i.e. self-regulation for climate stability, sustainability and resilience) there will be a need to instigate the Global 4C service currency (i.e. there is no other option).
This approach would bring the economy into a new state that is comparable to the planetary ecosystem which evolved over 100s millions of years to manage the carbon cycle (i.e. with photosynthesis) based on lifeforms that appear to be biologically structured by their own natural currencies.
I won't comment on this part of your message except to say that like yourself I have concluded that there is a need for some radical but very clear and rigorous thinking about how the global socio-enviro-economic system actually works, how it all fits together, and how it needs to be managed in order to have better results. As you said at the beginning we are letting major existential risks get out of hand and the prevailing governance framework does not ... cannot ... work.
My short summary in this email may raise questions from you, and it may certainly sound strange, and it may give you pause for deep reflection, but I have not really tried to explain it fully here.
I also do not want to explain it fully here, because it is not the appropriate place. However, based on this short summary, I hope that it makes some sense that currency systems can provide the kind of accounting that is needed for environmental management because currencies also have economic value and therefore represent energy flows. Without economic value, it is difficult to give data/information any meaning, other than the data itself. This issue of giving value to commodities, information and services, is one of the features that makes currencies special - in my view.
Agreed ... except my caveat that numbering a transaction and storing the value of a transaction as noted earlier are quite different matters ... and I am looking to get a system of numbers that can be used to measure all the elements of a transaction (or process) and be used to measure the state before the process and the state after the process ... which produces a value add which is a whole lot more or less than the profit that emerges when this is done using only the money metrics!
As a separate exercise I see the need to create an infrastructure / ecosystem that enables non money values to be storied for future use. Your idea of the power of currency is very similar to these two ideas rolled into one (like conventional money) but at this point I am aiming to keep the two roles separate.
Bitcoin commentators are talking about 'triple entry accounting' based on debits/credits/validation, and there is also 'momentum accounting' which also uses the term 'triple entry bookkeeping'. But for the environment, the triple values may turn out to be whatever ideas gain the most traction in society, in a Darwinian evolution of ideas.
Commentators said much the same thing when relational database technology was first introduced (in 1978 ???) ... Bitcoin / blockchain are very interesting but to my mind are building on many essentially wrong understandings of what big problems need to be addressed!
I hope that you found this email of some use and inspirational. Please keep this email confidential until I can get some clarity on the theory for natural currencies.
Delton ... thank you ... it has been very worthwhile thinking through what you have written
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Sat, Jan 7, 2017 at 9:52 AM, Delton Chen wrote:
Hello Peter, Gus, V and J,
RE: CONFIDENTIAL - SUMMARY OF THEORY
I read through the email thread, and there are some practical and philosophical ideas worth considering, including Peter's TVA which I have investigated a while ago. I'm more than happy to Skype with Peter about TVA at any convenient time.
We are lucky to be living with so many material comforts, but this era is also the most intellectually challenging because we need some answers to some exceptionally deep questions - how to fix civilisation before it literally destroys the planetary ecosystem. Risk No. 1 is probably climate change, and I think this risk will also domino into a nuclear risk.
I am a practical person (an engineer by training) and I don't have the patience to spend too many years on the Global 4C policy unless I think it could work. Currently, I am very excited about the policy and theory, and I currently think it is very worthwhile... but there are no guarantees that Global 4C can reach the ultimate goal because of the many hurdles.
At this stage, the theory and philosophy for Global 4C is emerging as something that could be a breakthrough - but to be a genuine breakthrough a new scientific theory is needed, and so enter the 'Holistic Market Hypothesis'. The Hypothesis is unverified and untested, but if it can be verified then this will be a big deal. The Hypothesis states that conventional theories for market economics (for greenhouse gas mitigation) are incomplete, and that a much more complete theory can be elaborated based on three currency types: (i) commodity currency, (ii) fiat currency and (iii) service currency. I call these three currency types 'natural currencies'. Global 4C is based on the new service currency for carbon mitigation...
The big deal is that it may be possible to verify (and validate) that a service currency is necessary to internalise the systemic risk of pollution with currency-rewards, whereas the standard policy approach is to internalise a social cost of pollution with taxes. The social cost is based on an anthropocentric worldview, whereas the systemic risk cost is based on a systems worldview. The two views are complementary.
The Global 4C policy is rational in terms of the financial mechanisms and the methodology, but there is a need for the fundamental new science basis to show that it is physically necessary. This is explained in the JFSI paper. But what will not be explained, is the actual proof for the new Hypothesis.
If a proof for the Hypothesis is able to be derived, based on thermodynamic principles (i.e. modern physics), then we will actually define a theory not just for carbon management (i.e. climate mitigation), but also a theory for how all complex adaptive systems emerge from underlying simpler systems that are comprised of three currencies as key components (i.e. the natural currencies). Hence, if correct, it may be possible to describe the three currencies as 'natural currencies' that underscore complex life forms as it derives from DNA.
If the Holistic Market Hypothesis can be assigned a rational topology and be verified/validated, then it should not be surprising to find that all complex adaptive systems (that have emergent properties) are also the product of natural currencies. There is already some good evidence to suggest that this is indeed the case for multi-cellular life (i.e. plants, animals, fungi and protista). This is not reductionism, because the theory should explain the dimensionality of the three currencies; and marry this dimensionality to the underlying quantum system which appears to be the foundation of the Universe (i.e. based on quantum particles and modern physics).
Put another way, if the Hypothesis is correct, then for the economy to have emergent properties for managing the carbon cycle (i.e. self-regulation for climate stability, sustainability and resilience) there will be a need to instigate the Global 4C service currency (i.e. there is no other option).
This approach would bring the economy into a new state that is comparable to the planetary ecosystem which evolved over 100s millions of years to manage the carbon cycle (i.e. with photosynthesis) based on lifeforms that appear to be biologically structured by their own natural currencies.
My short summary in this email may raise questions from you, and it may certainly sound strange, and it may give you pause for deep reflection, but I have not really tried to explain it fully here.
I also do not want to explain it fully here, because it is not the appropriate place. However, based on this short summary, I hope that it makes some sense that currency systems can provide the kind of accounting that is needed for environmental management because currencies also have economic value and therefore represent energy flows. Without economic value, it is difficult to give data/information any meaning, other than the data itself. This issue of giving value to commodities, information and services, is one of the features that makes currencies special - in my view.
Bitcoin commentators are talking about 'triple entry accounting' based on debits/credits/validation, and there is also 'momentum accounting' which also uses the term 'triple entry bookkeeping'. But for the environment, the triple values may turn out to be whatever ideas gain the most traction in society, in a Darwinian evolution of ideas.
I hope that you found this email of some use and inspirational. Please keep this email confidential until I can get some clarity on the theory for natural currencies.
Cheers
Delton
Delton Chen Ph.D.
Geo-Hydrologist & Climate Policy Researcher
Co-Founder & Lead Author at Global 4C: delton.b.chen@gmail.com +61412995119 Mob. Australia
Project Coordinator at CRCS: deltonchen@crcsolutions.org +1 9083966179 Tel. USA
Research Fellow at Project Drawdown: delton.chen@drawdown.org
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On Fri, Jan 6, 2017 at 10:08 AM, Victoria Zelin wrote:
Wow....
Peter, glad you suggested it. I think we ought to set your inquiry and approach as part of CRCS! And we'd love for you and Delton to talk, because there may be an interesting circle between Global 4C and TVA. I'm copying Delton here, and hope the two of you connect over Skype sometime soon! And let us know how TVA relates to the whole of CRCS, as a distinct project.
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
On Thu, Jan 5, 2017 at 4:42 PM, Peter Burgess wrote:
Dear Jonathan
My notes were prepared late at night (early morning) ... and the idea that your response happened even later reminds me of being a student again when a 24 hour agenda was the norm.
I have read (and collected) a host of different IDEAS from a huge number of THINKERS so it is relatively easy to find writing that describes different ways of moving forward to get to a better world.
You had the following in your message to me:
///////////////////////////////
I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
/////////////////////////////////
I have been saying almost the same thing since 1975 ... more than 40 years ago long before the Visa Card was invented. I realized that conventional bookkeeping and financial wealth were not a good enough ways to measure progress and performance ... the money metric does not handle the value destruction associated with death from starvation and drought, from civil war and genocide, from climate change and crop failure. Corporate accounting ignores externalities. GDP, as Robert Kennedy famously said '... ignores everything that is really valuable ...'. During my international work I have counted dead bodies more than most accountants, but there was no way to report the TRUE VALUE DESTRUCTION that this represented
It is worth noting that double entry accounting, Cartesian thinking and Newtonian science worked very well when they were first introduced several hundred years ago ... and still have a huge value in modern times. Evidence of double entry accounting goes back a little more than 800 years though it was only first written about (to our modern knowledge) around the time Adam Smith was writing about economics and moral sentiment. Modern physics did not disprove Newton's ideas, but modernized and enhanced the ideas, and that is more or less what I want to do with conventional double entry accounting and True Value Accounting!
So a General Theory of Accountability ... in other words True Value Accounting (TVA) ... is an idea to address ALL the issues which the critics of measurement bring up all the time.
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
Others have articulated the idea of multiple capitals ... and I do not want to argue the merits of my 5 versus how others describe the capitals. I wrote about 7 capitals a couple of years ago and got into all sorts of feedback about why the number 7 was wrong. It is not a real issue. The key characteristic of these capitals is that they encompass EVERYTHING. I have settled on this segmentation because it has the best fit with the way that I think summarized numbers will need to be reported in the most meaningful way.
Second is to describe the Socio-Enviro-Economic system (SEES) and understand how it works. From this it becomes possible to start to design a data architecture that is responsive to the key pieces of the system.
As regards data architecture I am informed by my engineering studies, and particularly engineering thermodynamics, and by conventional double entry accounting that has the idea of state (balance sheet) and flow (profit and loss account) and the coherence of the data between the two.
The data architecture must work for every component of the SEES. The data architecture must differentiate between STATE and FLOW for all of the capitals and all of the following pieces of the system..
ORGANIZATIONS ... should use a system of accounting that includes conventional money double entry accounting AND the initial state, flows/processes and new state that applies for multiple capitals. That is profit, and people/society and planet/environment ... in other words the famous triple bottom line.
...... the financial balance sheet shows financial and physical assets and liabilities
...... stock markets value organizations based on a computation of the net present value of what the market things the future will be!
...... financial accounts and (mostly) stock markets ignore what the organization does in terms of impact on society and the environment ... but TVA brings these into account.
PEOPLE ... an individual's present state, the cost of living and the contribution. These change depending on a person's stage in life, a person's history and the opportunities of the time and the place. The foundational measure is to do with a person's QUALITY OF LIFE.
...... all of which then aggregates into a family
...... and into a community
...... and into a society
...... which is a part of a PLACE
PLACE ... where things happen
...... where people live
...... where organizations operate
...... where land exists and provides ecosystem services or economic services or resources
...... where all sorts of physical capital is located to provide services to people and organizations
PRODUCT ... the things that are consumed to support QUALITY OF LIFE
..... but product leaves a footprint as it flows through the supply chain
..... and again when it is used
..... and again in the post use waste chain.
PROCESS ... how inputs are converted to outputs
..... which eventually creates the PRODUCTS that PEOPLE use
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
It is often said 'Think Global ... Act Local'. With the TVA initiative this means that the PLACE (COMMUNITY) is very critical in the way management information should be obtained and deployed because PLACE is where all the SEES actors/elements come together.
This describes the data architecture fairly comprehensively ... but does not address the actual process of numbering. The concept being developed is for numbering is very similar to the idea of standard costs in conventional management accounting ... but more on that another time.
I like to think this has some potential in the CRCS strategy albeit quite limited.
Critical comment is welcomed
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Thu, Jan 5, 2017 at 2:57 AM, Jonathan Cloud wrote:
Hi Peter:
This is a wonderful challenge. I believe I agree with precisely 91.7% of your arguments, and will therefore come back to them.
But as in most conversations, making one argument usually evokes in the listener’s mind the unspoken counter-arguments (which probably accounts for some of the interest in the dialectic method). I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
But having said all that…
My challenge to you is to apply what you’re saying to our specific objectives and situations, because this could provide powerful support for our mission. We need to distinguish talking about metrics, and actually applying them in ways that are useful. Certainly I can agree that
...conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
And
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community.
So the challenge is to reverse this, in practice, in our work with communities and ecosystems and organizations. I suggest that as a part of our work you provide the quantitative validation for our interventions, in order to show how they do good, and how much good they do, in addition to being profitable (since they require this in order to be self-sustaining). Are you up for this? If so, we’ll all be able to see whether much of value will actually happen.
In this context I’m attaching the latest version of the Bound Brook proposal, and happy to have you make suggestions as to what we should be adding to it….
Thanks
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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On Jan 5, 2017, at 1:14 AM, Peter Burgess wrote:
OUCH ... I am sorry I did not see all of this earlier in the day
I very much like the idea that you are thinking about pushing forward in a variety of ways in parallel ... and that is good, indeed very good.
But at the same time I am incredibly disappointed that the matter of metrics is nowhere to be found. As I often mention, in my early career we would often use the phrase 'Show me a company with poor management information ... and I will show you a company with poor performance!
For decades now, every major company on the planet has incredibly sophisticated management information and for all practical purposes they have the efficiency (in making profit) that they run the world! Unfortunately, conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
I have been interested and involved with not for profit work in international development, humanitarian relief, community development, sustainability, climate, etc and the metrics dimension of management was almost entirely missing ... and to the extent metrics were there, they were expensive to use and of dubious value ... usually very late. I was appalled at the numbering methods used by the World Bank, the UN, USAID and the rest and it came as no surprise when in depth performance analysis showed poor performance!
Getting really useful metrics for every dimension of the socio-enviro-economic system within which everything functions is a critical tool ... and my work on True Value Accounting (TVA) is, I believe, heading in the right direction. I am not the only one working towards better metrics ... GRI, SASB, IR, SROI are some of the better known initiatives but TVA has a much more elegant data architecture together with better integration with the conventional money accounting data elements.
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community. Gus made reference to Fund Accounting as used in municipalities, governments, etc. last Friday, but we did not get into much discussion about this ... but it is such a weak system of accounting that it was made illegal for companies to use about 150 years ago ... yet persists throughout the public sector. One reason is that the system is very easy to game ... and that has suited politicians in the past, and in experience to this day ... and of course it only deals with money flows and does nothing for the non-money value flows that are important for a living community. There are reasons why so many cities have been economically and socially gutted during the past 50 years ...yet the numbering of this process has been conspicuous by its absence. I worked on national level government financial management in the 1990s with the aim of moving from cash basis accounting to accrual accounting and more appreciation of the 'assets' and 'liabilities'. This has been an ongoing battle since the 1960s when the UN System of National Accounts was introduced for countries but little was done to update the accounting for public sector entities.
This past year, I have been flirting with some work on this subject in Baltimore and deeply concerned that most of the proposals to improve the situation can only be sustained by massive flows of new money into the area, and no system of numbering that can justify this ... the ideas may do good, but if they won't make money profit, how do they get justified! We absolutely have to get to grips with a numbering system that makes sense so that we can easily make investment for social and environmental return as well as just profit returns!
So while I am happy that CRSC is going to reach out in 2017 ... doing it without a metrics dimension will likely mean that nothing very much of value will actually happen.
With very nest wishes
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
On Wed, Jan 4, 2017 at 10:37 PM, matthew Polsky wrote:
Perhaps start with the paragraph on communities in my comment on Friedman's article.
Some of the other comments on the article may contain some good examples of community; perhaps note and build around those.
The sociologist Robert Putnam has written about losing community.
P.S. 'Grok' is a new one for me.
From: vzelin@gmail.com on behalf of Victoria Zelin
Sent: Thursday, January 5, 2017 3:24 AM
To: matthew Polsky
Cc: Jonathan Cloud; Peter Burgess; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
I am pretty sure people don't get the possibility of community that we see. good point. It took me a long time, after leaving Deloitte, to grok 'community.' And I was looking for the distinction of what community meant. Most people aren;t looking and have no idea.
Suggestions?
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
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On Wed, Jan 4, 2017 at 9:44 PM, matthew Polsky wrote:
Jonathan:
Some thoughts:
let's not be blind to possible issues with co-ops (or anything else that is unlikely to run perfectly). I sent you an article yesterday about thefts at a Brooklyn co-op, allegedly by members. Qualities like monitoring, flexibility, adaptability, resiliency will be important
if we're going to (heavily) use hugely significant words like 'community,' 'transformation,' 'thrive,' and increasingly now 'regeneration,' let's give attention to whether our audiences are getting them (I would bet they don't); what we even mean by them; whether our own assumptions in a range of areas are consistent with them, and, if they're not, while it doesn't necessarily mean we change anything right away (as it's probably impossible to go full flight into these things), at least be aware of it.
See my comment today on a Tom Friedman article, particularly the section on 'communities,' as well as the overall need to change how we think about some fundamental things.
http://www.nytimes.com/2017/01/04/opinion/from-hands-to-heads-to-hearts.html?comments#permid=20987110
consistent with re-launching 'the Sustainable Leadership Forum...as a new CRCS Institute for Transformational Leadership,' which includes 'A Possible New Jersey' component, consider mentioning the document I framed and asked you to co-write on 'A Clean Economy for NJ,' possibly to offer to NJ Gubernatorial Candidates. You had conditions for writing it, which we are 1 1/2 steps or so from fully meeting. We just need Marnie to commit to writing it with you, and you and her need to co-decide how to work together. Possibly we'll have her commitment by the time you go to press with what you want to send out
relatedly, if there are other activities either you or Victoria are doing that are reasonably related to all this, why not mention them too? I'm thinking of the significant role Victoria is playing recruiting the new ED for the re-launch of the American Sustainable Business Council--NJ Affiliate. There might be others. Are you still doing some writing from time to time? Keeping a hand in anything from the old days?
Matt
c: Victoria, Gus, Peter
From Hands to Heads to Hearts
www.nytimes.com
Remembering what makes us human is how to show economic value in the age of smarter and smarter machines.
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From: Jonathan Cloud
Sent: Wednesday, January 4, 2017 7:46 PM
To: Victoria Zelin; Peter Burgess; Gus Escher; matthew polsky
Subject: DRAFT: New Directions for 2017
I’d like to publish something like this on CRCSolutions.org if no one has any objections, along with some links to our new initiatives:
Center for Regenerative Community Solutions | and New ...
crcsolutions.org
How would you like the members of your community to work together as part of a thriving and resilient ecosystem, providing for the basic needs of all citizens?
New Directions for 2017
CRCS will be moving in several new directions this year, which we think will be of interest to a wider audience than just those of us interested in financing clean energy. We’ve been focusing more on communities in the past year, and on the values and vision that led to our mission, to assist local communities and neighborhoods to become more resilient in the face of the widening impacts of a changing climate.
We are proposing to work with one or two towns in New Jersey on their revitalization and self-renewal. Culture actually holds the key to greater local resilience, alongside the physical transformation of communities into eco-communities. And organization is what’s needed to transform culture. We are planning to create “civic cooperatives” that will lead these communities into a positive self-generating future. Many communities are today experiencing decline, or struggling to ignite a self-renewal, within the broader context of the need for a world for a world that shifts carbon from the atmosphere back into the soil. The cooperative model has proven itself to be more enduring, more beneficial, and often more valuable to communities than the conventional marketplace business model.
What makes this possible is that we have a number of tools with which we can assist groups in organizing their communities with more sustainable development. To begin with, we have the clean energy financing tools mentioned earlier, one of which — DREAM financing — is in principle able to be utilized today, though it has not yet been tried or tested. This innovation fulfills our goal of bringing financial resources to communities and groups to enable transformational change. Specifically, we think that DREAM can provide the starting-point for a clean energy co-op that could undertake solar, energy conservation, and resiliency projects, and return the profits to the community.
More broadly, we seek to apply regenerative design and permaculture principles to community redevelopment, and act as catalysts for more rapid evolution. Together with other organizations and professionals we are able to bring inspired planning and action, whether it is to the creation of an ecovillage or cohousing community or of cooperative enterprises in food, energy, the arts, and finance.
We invite you to join us in this adventure, in one of several ways. We are thinking of re-animating the Sustainable Leadership Forum (which we had put on hold to work on PACE) as a new CRCS Institute for Transformational Leadership. Download our program information sheet to see what’s available (attached).
Alternatively, if you are ready to collaborate with us on meaningful work, we invite you to join one of our cooperatives-in-development programs, and get involved in restoring ecosystems and remaking communities. Stay tuned for more information.
And of course we invite you to join our major sponsored programs, Ecovillage New Jersey and the new Ecovillagers Alliance.
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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matthew Polsky Sun, Jan 8, 2017 at 12:32 PM
To: Peter Burgess
Cc: Jonathan Cloud , Victoria Zelin , Gus Escher
Peter:
Just a couple of responses this time.
See below.
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From: Peter Burgess
Sent: Saturday, January 7, 2017 5:03 PM
To: matthew Polsky
Cc: Jonathan Cloud; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
Dear Matt
Thanks for your feedback ... I won't pick up on all the remarks you made, but just these few because I think that my thinking already aligns quite well with your own, though for these it may not be apparent without this follow up.
1 .................
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
Glad you mention the one immediately above as it is so critical, and so often missed.
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
TPB NOTE IN RESPONSE:
With respect to capitals ... I see the important characteristic is that ALL the capitals are considered ALL the time ... and that these capitals reflect everything in the complete socio-enviro-economic system. In my experience this rarely happens in the analysis of performance for reasons that are primarily self-serving ... financial people look at one set of numbers (the money wealth set) , the environmental people look at their set of issues, the social folk look at their issues, and so on. As I see it, from a system perspective all of these things are connected and a change in one is going to result in changes in the others.
Porter and Kramer who became visible with their promotion of Shared Value and the people who advocate for ESG diminish the value of their thinking because in the end they see a good outcome as a company being more profitable and share prices going up more than without the shared value approach or the ESG approach. This is a dangerous way of thinking because there are a huge number of important GOOD things that need to get done that cannot create corporate / investor profit but CAN help make the world a better place.
2 .....................
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
Don't forget the critters involved in the above-natural capital; it's not just people.
TPB NOTE IN RESPONSE:
As you probably know I was the CFO of a shrimp fishing company fairly early in my career. As a result I did quite a lot of work on a variety of fishery ecosystems including work for FAO, IFAD, KISR and others. Our corporate goal was to have shrimp next year so that we could be profitable next year ... and this was somewhat congruent with the need to maintain a complete and healthy ecosystem including coastal mangrove. A more difficult issue was whether our corporate profit objectives were compatible with the interests of local people who wanted to catch juvenile shrimp in the estuaries before they migrated into the ocean to grow bigger and be available for our corporate fishery.
3 .......................
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
Remember those non-linearities such as the Jevons Paradox; that is, efficiency gains backfiring. Also, unintended consequences or impacts on both the system under study and other systems.
TPB NOTE IN RESPONSE:
The big advantage of measuring PROGRESS by looking at the improvement in STATE means that issues like the Jevons Paradox and unintended consequences are INSIDE the evaluation envelope. When the FLOWS are analyzed for use in determining progress, it is very easy and very common for all sorts of important things to be left out. The whole of the international community's Monitoring and Evaluation methodology is based on this latter approach, and it is easy to game the data in order to report a good result from a project. Understanding FLOWS is important for understanding how to improve the performance, but is not a part of measuring the resultant progress.
-------------------------------
In another message Jonathan made reference to being 93.7% in agreement with what I had written ... something of a compliment, I thought ... but it set me thinking about the fundamental idea of numbering in the context of TVA. I am pretty sure Jonathan was 'yanking my chain' with the use of this percent to indicate a pretty high level of agreement / acceptance of what I had written.
There are many situations where the binary approach is good enough: Yes/No On/Off Better/Worse More/Less, etc
While true--and this risks bringing us to other subjects, sometimes a too-certain, conventionally-wedded view of what is 'binary' misses possibilities for productive hybrids. I've seen this in a growing number of areas, and written on some of it: gender, rationality versus emotions, simple versus complexity, data versus stories, economics versus psychological views of how we tick, local versus global problem-solving, ignorance versus knowledge, etc. At this point, I often approach supposed dualities with questions about how real they really are.
Here is some of my stuff on it:
. “Why Complexity Matters When Measuring Sustainability: Part IV,” with Claire Sommer, GreenBiz.com, June 18, 2013. http://www.greenbiz.com/blog/2013/06/18/why-complexity-matters-measuring-sustainability
. “The Local-Global Connection: Forging Inter-scale Sustainability Action,” EarthPeople Media, September 17, 2013.
http://earthpeopleco.com/images/KnowledgeBank/TheLocal-GlobalConnection.pdf
. “The Uncountable and Sustainable Business Metrics: Can There Be a Productive Relationship?: Part VIII,” with Claire Sommer, Sustainable Brands, November 15, 2013.
http://www.sustainablebrands.com/news_and_views/new_metrics/matt-polsky/uncountable-sustainable-business-metrics-can-there-be-product
. “What if ‘Opposites’ Aren’t Really Opposite?: Part XIX,” With Jill Lipoti, Sustainable Brands, February 15, 2016.http://www.sustainablebrands.com/news_and_views/new_metrics/matt_polsky/are_opposites_really_opposite_what_if_they%E2%80%99re_not_part_19.
Questionaires then move on to a number of buttons ... select one of Very satisfied ... Reasonably satisfied ... Somewhat unsatisfied ... Very unsatisfied
and a whole variety of other questions that relate to a set of buttons
And then there are numbers that relate to a system of measurement with very specific units of measure
....Distance / length is measured in meters (m)
....Time is measured in seconds (s)
....Mass is measured in grams (gm)
....Energy is measured in calories (cals)
....Temperature is measured in degrees
and then there is money as a measure
Distance, time, mass, energy, temperature all have units of measure that never change
Anticipating my getting back to you later about Newtonian physics versus Einsteinian/Modern Physics, the latter shows that, in contrast to what was thought, the speed of light and time are not constants.
Money, on the other hand, is a unit that changes in size all the time ... what sort of a measure is that?
There are a whole range of derivatives of thse units, like:
.... Area is m x m
.... Speed is m/s
.... etc
And then there are derivatives to help understanding ... like the calculation of a percentage ... which is how this chain of thought started.
I use comparison all the time to get some easy understanding of what numbers are telling me ... and percent change is helpful some of the time, but it is important to understand the context. Journalists use percent change frequently without putting it into context and can easily distort the story ... so simple absolute numbers are also important to help get the story in context. Corporate reporting of financial information is very highly regulated so that misinformation becomes more difficult ... and spite of this from time to time there are serious scandals ... but actually quite infrequent relative to the number of financial reports that are produced correctly!
So how to number some of the important things that need to be in the accounting and presently go un-numbered.
Human capital
.... Human Quality of Life
Natural capital
.... Land
.... Bio-system service (biodiversity, etc)
.... Physical system services (air, water, climate, minerals)
People Built Capital / Systems
.... Financial capital [we already have money for this ... but impact on human capital and natural capital not numbered]
.... Physical capital [we often think that the buy sell transaction in money is a useful measure ... but really not]
.... Intangible capital [same]
The way the numbering has to work is that everything ends up being numbered relative to impact on human capital / quality of life AND the elements of natural capital
-----------------------------------------
With regard to the work being done by Delton Chen ... it has some of the characteristics of the work that I am trying to do. Both of us are starting with an engineering background which helps with complex system thinking and is an easier starting point than, for example, economics and finance.
I think both of us recognize the importance of money and the money related ecosystem that has enabled trade and economic transactions for hundreds of years.
I have been a huge critic of the modern financial ecosystem because it has developed over the past 50 years to enable a segment of the financial services industry to function in a way that does nothing for the economy but merely concentrates wealth into a few hands ... this wealth comes from somewhere, and is essentially wealth that used to be in the hands of ordinary people outside the financial sector before the operation of this segment of the financial sector.
One of the services that conventional banking provides is the ability to preserve (money) wealth and store it for future use. We need something similar for the preservation of GOOD wealth ... that is GOOD that is not transacted for money but GOOD that makes life better and the world a better place. Various initiatives to do this are emerging ... but I don't think any of the ones I have see can work well unless a reliable system for numbering GOOD is developed.
I looked hard at Delton's work two or three years back ... I need to bring myself up to date. It could be very relevant.
There is also the emergence of blockchain technology that is getting a lot of hype ... and could be a useful part of a universal value accounting framework sometime in the future. One of the issues that the blockchain does not address is the fundamental problem of GIGO ... garbage in garbage out. Blockchain ensures that what comes out of the chain is the same as what went in ... and that is a useful step, but it does nothing to ensure that what goes in is right. If stupid measures go into a blockchain system, stupid measures will come out.
----------------------------------------
Thank you all
Happy weekend!
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
TrueValueMetrics ... Impact Accounting for the 21st Century
www.truevaluemetrics.org
The TrueValueMetrics is an initiative to upgrade accountancy and management metrics for the 21st century. The idea of Multi Dimension Impact Accounting (MDIA) uses ...
LinkedIn: www.linkedin.com/in/peterburgess1/
Peter Burgess | LinkedIn
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View Peter Burgess’ professional profile on LinkedIn. LinkedIn is the world's largest business network, helping professionals like Peter Burgess discover inside connections to recommended job candidates, industry experts, and business partners.
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Peter Burgess
www.slideshare.net
I graduated from Cambridge University (Sidney Sussex College) with double majors in engineering and economics in 1961. Subsequently I qualified as a Chartered Accountant in London with Cooper Brothers & Co that over the years morphed into PriceWaterhouseCoopers. During my career, more than anything else I have learned of the immense power of data to enable change. My experience in the corporate world has been that management information systems are enabling change that results in high performance to the benefit of the company. Meanwhile, my experience with civil society and the public sector consulting with the World Bank, the United Nations and others is that the management information o...
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
On Fri, Jan 6, 2017 at 11:00 AM, matthew Polsky wrote:
Peter:
It looks from other correspondence, that you, Jonathan, and Victoria has reached some accommodation regarding the application of your ideas in the Bound Brook project.
See below for my responses to some of your comments.
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From: Peter Burgess
Sent: Thursday, January 5, 2017 9:42 PM
To: Jonathan Cloud
Cc: matthew polsky; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
Dear Jonathan
My notes were prepared late at night (early morning) ... and the idea that your response happened even later reminds me of being a student again when a 24 hour agenda was the norm.
Would be nice to think my students thought about the ideas I presented in class 24 hours a day, but I won't delude myself that much.
I have read (and collected) a host of different IDEAS from a huge number of THINKERS so it is relatively easy to find writing that describes different ways of moving forward to get to a better world.
So true!
You had the following in your message to me:
///////////////////////////////
I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
/////////////////////////////////
I have been saying almost the same thing since 1975 ... more than 40 years ago long before the Visa Card was invented. I realized that conventional bookkeeping and financial wealth were not a good enough ways to measure progress and performance ... the money metric does not handle the value destruction associated with death from starvation and drought, from civil war and genocide, from climate change and crop failure. Corporate accounting ignores externalities. GDP, as Robert Kennedy famously said '... ignores everything that is really valuable ...'. During my international work I have counted dead bodies more than most accountants, but there was no way to report the TRUE VALUE DESTRUCTION that this represented
It is worth noting that double entry accounting, Cartesian thinking and Newtonian science worked very well when they were first introduced several hundred years ago ... and still have a huge value in modern times. Evidence of double entry accounting goes back a little more than 800 years though it was only first written about (to our modern knowledge) around the time Adam Smith was writing about economics and moral sentiment. Modern physics did not disprove Newton's ideas, but modernized and enhanced the ideas,
I'm intrigued by your last statement, and have flagged 3 articles to read later to help me understand it better, because I've often heard (without a lot of depth) the opposite in sustainability circles. My preliminary guess is that it is either a judgment call, a gray area (as I see these in my sleep), or maybe a definitional thing.
and that is more or less what I want to do with conventional double entry accounting and True Value Accounting!
So a General Theory of Accountability ... in other words True Value Accounting (TVA) ... is an idea to address ALL the issues which the critics of measurement bring up all the time.
To the degree you are able to show this, the better. I'm skeptical you can totally merge the basically separate paradigms here (remember in a recent email between us I mentioned aspects of sustainability like non-linearities, and Jonathan implicitly mentioned the emergent property of systems), but then you don't have to. But it would be intriguing if you explicitly tried and see how far you can get.
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
Glad you mention the one immediately above as it is so critical, and so often missed.
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
Others have articulated the idea of multiple capitals ... and I do not want to argue the merits of my 5 versus how others describe the capitals. I wrote about 7 capitals a couple of years ago and got into all sorts of feedback about why the number 7 was wrong. It is not a real issue. The key characteristic of these capitals is that they encompass EVERYTHING. I have settled on this segmentation because it has the best fit with the way that I think summarized numbers will need to be reported in the most meaningful way.
Second is to describe the Socio-Enviro-Economic system (SEES) and understand how it works. From this it becomes possible to start to design a data architecture that is responsive to the key pieces of the system.
As regards data architecture I am informed by my engineering studies, and particularly engineering thermodynamics, and by conventional double entry accounting that has the idea of state (balance sheet) and flow (profit and loss account) and the coherence of the data between the two.
It will probably be helpful to all of us once you begin to show how this would look.
The data architecture must work for every component of the SEES. The data architecture must differentiate between STATE and FLOW for all of the capitals and all of the following pieces of the system..
ORGANIZATIONS ... should use a system of accounting that includes conventional money double entry accounting AND the initial state, flows/processes and new state that applies for multiple capitals. That is profit, and people/society and planet/environment ... in other words the famous triple bottom line.
...... the financial balance sheet shows financial and physical assets and liabilities
...... stock markets value organizations based on a computation of the net present value of what the market things the future will be!
...... financial accounts and (mostly) stock markets ignore what the organization does in terms of impact on society and the environment ... but TVA brings these into account.
PEOPLE ... an individual's present state, the cost of living and the contribution. These change depending on a person's stage in life, a person's history and the opportunities of the time and the place. The foundational measure is to do with a person's QUALITY OF LIFE.
...... all of which then aggregates into a family
...... and into a community
...... and into a society
...... which is a part of a PLACE
PLACE ... where things happen
...... where people live
...... where organizations operate
...... where land exists and provides ecosystem services or economic services or resources
...... where all sorts of physical capital is located to provide services to people and organizations
I see this all the time and most people would agree with you.
I accept it for certain practical and not illegitimate purposes, but at heart remain, to coin a phrase, a 'planeterist.' That's the scale at which I most relate; that is my 'place.' And consistent with the emergent property of systems, there are things happening at the planetary level, both physically, biologically, socially, etc., that I don't see how you capture in the conventional meaning of 'place.'
One field I've taught, sustainability science, is schitzophrenic (sp) on this. It also strongly calls for a 'Place-based orientation,' but also discusses global processes. It needs to reconcile these apparent contradictions.
PRODUCT ... the things that are consumed to support QUALITY OF LIFE
..... but product leaves a footprint as it flows through the supply chain
..... and again when it is used
..... and again in the post use waste chain.
PROCESS ... how inputs are converted to outputs
..... which eventually creates the PRODUCTS that PEOPLE use
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
Don't forget the critters involved in the above-natural capital; it's not just people.
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
Remember those non-linearities such as the Jevons Paradox; that is, efficiency gains backfiring. Also, unintended consequences or impacts on both the system under study and other systems.
It is often said 'Think Global ... Act Local'. With the TVA initiative this means that the PLACE (COMMUNITY) is very critical in the way management information should be obtained and deployed because PLACE is where all the SEES actors/elements come together.
I wrote an article critical of this long-established truism, including a source that argued there is a place for just the opposite: 'Think Local: Act Global.'
Actually, like in a lot of things, you need both. But too many conventional wisdoms steer people away from their apparent opposites, or the creation of hybrids, that might have their own potentials if looked at.
This describes the data architecture fairly comprehensively ... but does not address the actual process of numbering. The concept being developed is for numbering is very similar to the idea of standard costs in conventional management accounting ... but more on that another time.
Again, It will be helpful to all of us once you begin to do this.
I like to think this has some potential in the CRCS strategy albeit quite limited.
Critical comment is welcomed
Provided above.
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
TrueValueMetrics ... Impact Accounting for the 21st Century
www.truevaluemetrics.org
The TrueValueMetrics is an initiative to upgrade accountancy and management metrics for the 21st century. The idea of Multi Dimension Impact Accounting (MDIA) uses ...
LinkedIn: www.linkedin.com/in/peterburgess1/
Peter Burgess | LinkedIn
www.linkedin.com
View Peter Burgess’ professional profile on LinkedIn. LinkedIn is the world's largest business network, helping professionals like Peter Burgess discover inside connections to recommended job candidates, industry experts, and business partners.
Slideshare: http://www.slideshare.net/PeterBurgess2/
Peter Burgess
www.slideshare.net
I graduated from Cambridge University (Sidney Sussex College) with double majors in engineering and economics in 1961. Subsequently I qualified as a Chartered Accountant in London with Cooper Brothers & Co that over the years morphed into PriceWaterhouseCoopers. During my career, more than anything else I have learned of the immense power of data to enable change. My experience in the corporate world has been that management information systems are enabling change that results in high performance to the benefit of the company. Meanwhile, my experience with civil society and the public sector consulting with the World Bank, the United Nations and others is that the management information o...
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Thu, Jan 5, 2017 at 2:57 AM, Jonathan Cloud wrote:
Hi Peter:
This is a wonderful challenge. I believe I agree with precisely 91.7% of your arguments, and will therefore come back to them.
But as in most conversations, making one argument usually evokes in the listener’s mind the unspoken counter-arguments (which probably accounts for some of the interest in the dialectic method). I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
But having said all that…
My challenge to you is to apply what you’re saying to our specific objectives and situations, because this could provide powerful support for our mission. We need to distinguish talking about metrics, and actually applying them in ways that are useful. Certainly I can agree that
...conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
And
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community.
So the challenge is to reverse this, in practice, in our work with communities and ecosystems and organizations. I suggest that as a part of our work you provide the quantitative validation for our interventions, in order to show how they do good, and how much good they do, in addition to being profitable (since they require this in order to be self-sustaining). Are you up for this? If so, we’ll all be able to see whether much of value will actually happen.
In this context I’m attaching the latest version of the Bound Brook proposal, and happy to have you make suggestions as to what we should be adding to it….
Thanks
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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On Jan 5, 2017, at 1:14 AM, Peter Burgess wrote:
OUCH ... I am sorry I did not see all of this earlier in the day
I very much like the idea that you are thinking about pushing forward in a variety of ways in parallel ... and that is good, indeed very good.
But at the same time I am incredibly disappointed that the matter of metrics is nowhere to be found. As I often mention, in my early career we would often use the phrase 'Show me a company with poor management information ... and I will show you a company with poor performance!
For decades now, every major company on the planet has incredibly sophisticated management information and for all practical purposes they have the efficiency (in making profit) that they run the world! Unfortunately, conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
I have been interested and involved with not for profit work in international development, humanitarian relief, community development, sustainability, climate, etc and the metrics dimension of management was almost entirely missing ... and to the extent metrics were there, they were expensive to use and of dubious value ... usually very late. I was appalled at the numbering methods used by the World Bank, the UN, USAID and the rest and it came as no surprise when in depth performance analysis showed poor performance!
Getting really useful metrics for every dimension of the socio-enviro-economic system within which everything functions is a critical tool ... and my work on True Value Accounting (TVA) is, I believe, heading in the right direction. I am not the only one working towards better metrics ... GRI, SASB, IR, SROI are some of the better known initiatives but TVA has a much more elegant data architecture together with better integration with the conventional money accounting data elements.
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community. Gus made reference to Fund Accounting as used in municipalities, governments, etc. last Friday, but we did not get into much discussion about this ... but it is such a weak system of accounting that it was made illegal for companies to use about 150 years ago ... yet persists throughout the public sector. One reason is that the system is very easy to game ... and that has suited politicians in the past, and in experience to this day ... and of course it only deals with money flows and does nothing for the non-money value flows that are important for a living community. There are reasons why so many cities have been economically and socially gutted during the past 50 years ...yet the numbering of this process has been conspicuous by its absence. I worked on national level government financial management in the 1990s with the aim of moving from cash basis accounting to accrual accounting and more appreciation of the 'assets' and 'liabilities'. This has been an ongoing battle since the 1960s when the UN System of National Accounts was introduced for countries but little was done to update the accounting for public sector entities.
This past year, I have been flirting with some work on this subject in Baltimore and deeply concerned that most of the proposals to improve the situation can only be sustained by massive flows of new money into the area, and no system of numbering that can justify this ... the ideas may do good, but if they won't make money profit, how do they get justified! We absolutely have to get to grips with a numbering system that makes sense so that we can easily make investment for social and environmental return as well as just profit returns!
So while I am happy that CRSC is going to reach out in 2017 ... doing it without a metrics dimension will likely mean that nothing very much of value will actually happen.
With very nest wishes
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Wed, Jan 4, 2017 at 10:37 PM, matthew Polsky wrote:
Perhaps start with the paragraph on communities in my comment on Friedman's article.
Some of the other comments on the article may contain some good examples of community; perhaps note and build around those.
The sociologist Robert Putnam has written about losing community.
P.S. 'Grok' is a new one for me.
From: vzelin@gmail.com on behalf of Victoria Zelin
Sent: Thursday, January 5, 2017 3:24 AM
To: matthew Polsky
Cc: Jonathan Cloud; Peter Burgess; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
I am pretty sure people don't get the possibility of community that we see. good point. It took me a long time, after leaving Deloitte, to grok 'community.' And I was looking for the distinction of what community meant. Most people aren;t looking and have no idea.
Suggestions?
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
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On Wed, Jan 4, 2017 at 9:44 PM, matthew Polsky wrote:
Jonathan:
Some thoughts:
let's not be blind to possible issues with co-ops (or anything else that is unlikely to run perfectly). I sent you an article yesterday about thefts at a Brooklyn co-op, allegedly by members. Qualities like monitoring, flexibility, adaptability, resiliency will be important
if we're going to (heavily) use hugely significant words like 'community,' 'transformation,' 'thrive,' and increasingly now 'regeneration,' let's give attention to whether our audiences are getting them (I would bet they don't); what we even mean by them; whether our own assumptions in a range of areas are consistent with them, and, if they're not, while it doesn't necessarily mean we change anything right away (as it's probably impossible to go full flight into these things), at least be aware of it.
See my comment today on a Tom Friedman article, particularly the section on 'communities,' as well as the overall need to change how we think about some fundamental things.
http://www.nytimes.com/2017/01/04/opinion/from-hands-to-heads-to-hearts.html?comments#permid=20987110
consistent with re-launching 'the Sustainable Leadership Forum...as a new CRCS Institute for Transformational Leadership,' which includes 'A Possible New Jersey' component, consider mentioning the document I framed and asked you to co-write on 'A Clean Economy for NJ,' possibly to offer to NJ Gubernatorial Candidates. You had conditions for writing it, which we are 1 1/2 steps or so from fully meeting. We just need Marnie to commit to writing it with you, and you and her need to co-decide how to work together. Possibly we'll have her commitment by the time you go to press with what you want to send out
relatedly, if there are other activities either you or Victoria are doing that are reasonably related to all this, why not mention them too? I'm thinking of the significant role Victoria is playing recruiting the new ED for the re-launch of the American Sustainable Business Council--NJ Affiliate. There might be others. Are you still doing some writing from time to time? Keeping a hand in anything from the old days?
Matt
c: Victoria, Gus, Peter
From Hands to Heads to Hearts
www.nytimes.com
Remembering what makes us human is how to show economic value in the age of smarter and smarter machines.
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From: Jonathan Cloud
Sent: Wednesday, January 4, 2017 7:46 PM
To: Victoria Zelin; Peter Burgess; Gus Escher; matthew polsky
Subject: DRAFT: New Directions for 2017
I’d like to publish something like this on CRCSolutions.org if no one has any objections, along with some links to our new initiatives:
Center for Regenerative Community Solutions | and New ...
crcsolutions.org
How would you like the members of your community to work together as part of a thriving and resilient ecosystem, providing for the basic needs of all citizens?
New Directions for 2017
CRCS will be moving in several new directions this year, which we think will be of interest to a wider audience than just those of us interested in financing clean energy. We’ve been focusing more on communities in the past year, and on the values and vision that led to our mission, to assist local communities and neighborhoods to become more resilient in the face of the widening impacts of a changing climate.
We are proposing to work with one or two towns in New Jersey on their revitalization and self-renewal. Culture actually holds the key to greater local resilience, alongside the physical transformation of communities into eco-communities. And organization is what’s needed to transform culture. We are planning to create “civic cooperatives” that will lead these communities into a positive self-generating future. Many communities are today experiencing decline, or struggling to ignite a self-renewal, within the broader context of the need for a world for a world that shifts carbon from the atmosphere back into the soil. The cooperative model has proven itself to be more enduring, more beneficial, and often more valuable to communities than the conventional marketplace business model.
What makes this possible is that we have a number of tools with which we can assist groups in organizing their communities with more sustainable development. To begin with, we have the clean energy financing tools mentioned earlier, one of which — DREAM financing — is in principle able to be utilized today, though it has not yet been tried or tested. This innovation fulfills our goal of bringing financial resources to communities and groups to enable transformational change. Specifically, we think that DREAM can provide the starting-point for a clean energy co-op that could undertake solar, energy conservation, and resiliency projects, and return the profits to the community.
More broadly, we seek to apply regenerative design and permaculture principles to community redevelopment, and act as catalysts for more rapid evolution. Together with other organizations and professionals we are able to bring inspired planning and action, whether it is to the creation of an ecovillage or cohousing community or of cooperative enterprises in food, energy, the arts, and finance.
We invite you to join us in this adventure, in one of several ways. We are thinking of re-animating the Sustainable Leadership Forum (which we had put on hold to work on PACE) as a new CRCS Institute for Transformational Leadership. Download our program information sheet to see what’s available (attached).
Alternatively, if you are ready to collaborate with us on meaningful work, we invite you to join one of our cooperatives-in-development programs, and get involved in restoring ecosystems and remaking communities. Stay tuned for more information.
And of course we invite you to join our major sponsored programs, Ecovillage New Jersey and the new Ecovillagers Alliance.
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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Peter Burgess Sun, Jan 8, 2017 at 5:07 PM
To: matthew Polsky
Cc: Jonathan Cloud , Victoria Zelin , Gus Escher
Matt
Thanks for your short message ... and thanks for the homework you have assigned me via your links! Thanks for all of this and the intellectual stimulation that is possible as a result.
I think my approach and your approach reflect a substantially different understanding of the PURPOSE of metrics. I want to use metrics to manage ... that is to help make better decisions, and for that there needs to be reasonably correct numbering. I have often said that the best management information is quick/timely, reasonably accurate, low cost, and relevant. Up to now, I have not seen much of this in most of the intellectual work being done to analyze and improve metrics.
My view of Newton's thinking reflects my acceptance of methods that are good enough, not perfect. For most practical purposes in everyday life and business operations a Newtonian level of understanding is quite good enough. People who are pushing the frontier of science need to use cutting edge thinking and metrics, but most of the modern economy can be managed using relatively simple Newtonian type thinking. For everything that has happened in my life, it has been good enough to think of time and the speed of light as constants ... and I really want to get away from the variability of the size of money even when it stays motionless!
It bothers me that many people prefer to have no numbers, than numbers that approximate to something sensible. When there are no numbers, the default tends to be to consider the value of whatever it is a zero ... which is almost always very wrong!
Al the best
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
On Sun, Jan 8, 2017 at 12:32 PM, matthew Polsky wrote:
Peter:
Just a couple of responses this time.
See below.
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From: Peter Burgess
Sent: Saturday, January 7, 2017 5:03 PM
To: matthew Polsky
Cc: Jonathan Cloud; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
Dear Matt
Thanks for your feedback ... I won't pick up on all the remarks you made, but just these few because I think that my thinking already aligns quite well with your own, though for these it may not be apparent without this follow up.
1 .................
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
Glad you mention the one immediately above as it is so critical, and so often missed.
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
TPB NOTE IN RESPONSE:
With respect to capitals ... I see the important characteristic is that ALL the capitals are considered ALL the time ... and that these capitals reflect everything in the complete socio-enviro-economic system. In my experience this rarely happens in the analysis of performance for reasons that are primarily self-serving ... financial people look at one set of numbers (the money wealth set) , the environmental people look at their set of issues, the social folk look at their issues, and so on. As I see it, from a system perspective all of these things are connected and a change in one is going to result in changes in the others.
Porter and Kramer who became visible with their promotion of Shared Value and the people who advocate for ESG diminish the value of their thinking because in the end they see a good outcome as a company being more profitable and share prices going up more than without the shared value approach or the ESG approach. This is a dangerous way of thinking because there are a huge number of important GOOD things that need to get done that cannot create corporate / investor profit but CAN help make the world a better place.
2 .....................
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
Don't forget the critters involved in the above-natural capital; it's not just people.
TPB NOTE IN RESPONSE:
As you probably know I was the CFO of a shrimp fishing company fairly early in my career. As a result I did quite a lot of work on a variety of fishery ecosystems including work for FAO, IFAD, KISR and others. Our corporate goal was to have shrimp next year so that we could be profitable next year ... and this was somewhat congruent with the need to maintain a complete and healthy ecosystem including coastal mangrove. A more difficult issue was whether our corporate profit objectives were compatible with the interests of local people who wanted to catch juvenile shrimp in the estuaries before they migrated into the ocean to grow bigger and be available for our corporate fishery.
3 .......................
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
Remember those non-linearities such as the Jevons Paradox; that is, efficiency gains backfiring. Also, unintended consequences or impacts on both the system under study and other systems.
TPB NOTE IN RESPONSE:
The big advantage of measuring PROGRESS by looking at the improvement in STATE means that issues like the Jevons Paradox and unintended consequences are INSIDE the evaluation envelope. When the FLOWS are analyzed for use in determining progress, it is very easy and very common for all sorts of important things to be left out. The whole of the international community's Monitoring and Evaluation methodology is based on this latter approach, and it is easy to game the data in order to report a good result from a project. Understanding FLOWS is important for understanding how to improve the performance, but is not a part of measuring the resultant progress.
-------------------------------
In another message Jonathan made reference to being 93.7% in agreement with what I had written ... something of a compliment, I thought ... but it set me thinking about the fundamental idea of numbering in the context of TVA. I am pretty sure Jonathan was 'yanking my chain' with the use of this percent to indicate a pretty high level of agreement / acceptance of what I had written.
There are many situations where the binary approach is good enough: Yes/No On/Off Better/Worse More/Less, etc
While true--and this risks bringing us to other subjects, sometimes a too-certain, conventionally-wedded view of what is 'binary' misses possibilities for productive hybrids. I've seen this in a growing number of areas, and written on some of it: gender, rationality versus emotions, simple versus complexity, data versus stories, economics versus psychological views of how we tick, local versus global problem-solving, ignorance versus knowledge, etc. At this point, I often approach supposed dualities with questions about how real they really are.
Here is some of my stuff on it:
. “Why Complexity Matters When Measuring Sustainability: Part IV,” with Claire Sommer, GreenBiz.com, June 18, 2013. http://www.greenbiz.com/blog/2013/06/18/why-complexity-matters-measuring-sustainability
. “The Local-Global Connection: Forging Inter-scale Sustainability Action,” EarthPeople Media, September 17, 2013.
http://earthpeopleco.com/images/KnowledgeBank/TheLocal-GlobalConnection.pdf
. “The Uncountable and Sustainable Business Metrics: Can There Be a Productive Relationship?: Part VIII,” with Claire Sommer, Sustainable Brands, November 15, 2013.
http://www.sustainablebrands.com/news_and_views/new_metrics/matt-polsky/uncountable-sustainable-business-metrics-can-there-be-product
. “What if ‘Opposites’ Aren’t Really Opposite?: Part XIX,” With Jill Lipoti, Sustainable Brands, February 15, 2016.http://www.sustainablebrands.com/news_and_views/new_metrics/matt_polsky/are_opposites_really_opposite_what_if_they%E2%80%99re_not_part_19.
Questionaires then move on to a number of buttons ... select one of Very satisfied ... Reasonably satisfied ... Somewhat unsatisfied ... Very unsatisfied
and a whole variety of other questions that relate to a set of buttons
And then there are numbers that relate to a system of measurement with very specific units of measure
....Distance / length is measured in meters (m)
....Time is measured in seconds (s)
....Mass is measured in grams (gm)
....Energy is measured in calories (cals)
....Temperature is measured in degrees
and then there is money as a measure
Distance, time, mass, energy, temperature all have units of measure that never change
Anticipating my getting back to you later about Newtonian physics versus Einsteinian/Modern Physics, the latter shows that, in contrast to what was thought, the speed of light and time are not constants.
Money, on the other hand, is a unit that changes in size all the time ... what sort of a measure is that?
There are a whole range of derivatives of thse units, like:
.... Area is m x m
.... Speed is m/s
.... etc
And then there are derivatives to help understanding ... like the calculation of a percentage ... which is how this chain of thought started.
I use comparison all the time to get some easy understanding of what numbers are telling me ... and percent change is helpful some of the time, but it is important to understand the context. Journalists use percent change frequently without putting it into context and can easily distort the story ... so simple absolute numbers are also important to help get the story in context. Corporate reporting of financial information is very highly regulated so that misinformation becomes more difficult ... and spite of this from time to time there are serious scandals ... but actually quite infrequent relative to the number of financial reports that are produced correctly!
So how to number some of the important things that need to be in the accounting and presently go un-numbered.
Human capital
.... Human Quality of Life
Natural capital
.... Land
.... Bio-system service (biodiversity, etc)
.... Physical system services (air, water, climate, minerals)
People Built Capital / Systems
.... Financial capital [we already have money for this ... but impact on human capital and natural capital not numbered]
.... Physical capital [we often think that the buy sell transaction in money is a useful measure ... but really not]
.... Intangible capital [same]
The way the numbering has to work is that everything ends up being numbered relative to impact on human capital / quality of life AND the elements of natural capital
-----------------------------------------
With regard to the work being done by Delton Chen ... it has some of the characteristics of the work that I am trying to do. Both of us are starting with an engineering background which helps with complex system thinking and is an easier starting point than, for example, economics and finance.
I think both of us recognize the importance of money and the money related ecosystem that has enabled trade and economic transactions for hundreds of years.
I have been a huge critic of the modern financial ecosystem because it has developed over the past 50 years to enable a segment of the financial services industry to function in a way that does nothing for the economy but merely concentrates wealth into a few hands ... this wealth comes from somewhere, and is essentially wealth that used to be in the hands of ordinary people outside the financial sector before the operation of this segment of the financial sector.
One of the services that conventional banking provides is the ability to preserve (money) wealth and store it for future use. We need something similar for the preservation of GOOD wealth ... that is GOOD that is not transacted for money but GOOD that makes life better and the world a better place. Various initiatives to do this are emerging ... but I don't think any of the ones I have see can work well unless a reliable system for numbering GOOD is developed.
I looked hard at Delton's work two or three years back ... I need to bring myself up to date. It could be very relevant.
There is also the emergence of blockchain technology that is getting a lot of hype ... and could be a useful part of a universal value accounting framework sometime in the future. One of the issues that the blockchain does not address is the fundamental problem of GIGO ... garbage in garbage out. Blockchain ensures that what comes out of the chain is the same as what went in ... and that is a useful step, but it does nothing to ensure that what goes in is right. If stupid measures go into a blockchain system, stupid measures will come out.
----------------------------------------
Thank you all
Happy weekend!
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
TrueValueMetrics ... Impact Accounting for the 21st Century
www.truevaluemetrics.org
The TrueValueMetrics is an initiative to upgrade accountancy and management metrics for the 21st century. The idea of Multi Dimension Impact Accounting (MDIA) uses ...
LinkedIn: www.linkedin.com/in/peterburgess1/
Peter Burgess | LinkedIn
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Slideshare: http://www.slideshare.net/PeterBurgess2/
Peter Burgess
www.slideshare.net
I graduated from Cambridge University (Sidney Sussex College) with double majors in engineering and economics in 1961. Subsequently I qualified as a Chartered Accountant in London with Cooper Brothers & Co that over the years morphed into PriceWaterhouseCoopers. During my career, more than anything else I have learned of the immense power of data to enable change. My experience in the corporate world has been that management information systems are enabling change that results in high performance to the benefit of the company. Meanwhile, my experience with civil society and the public sector consulting with the World Bank, the United Nations and others is that the management information o...
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Fri, Jan 6, 2017 at 11:00 AM, matthew Polsky wrote:
Peter:
It looks from other correspondence, that you, Jonathan, and Victoria has reached some accommodation regarding the application of your ideas in the Bound Brook project.
See below for my responses to some of your comments.
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From: Peter Burgess
Sent: Thursday, January 5, 2017 9:42 PM
To: Jonathan Cloud
Cc: matthew polsky; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
Dear Jonathan
My notes were prepared late at night (early morning) ... and the idea that your response happened even later reminds me of being a student again when a 24 hour agenda was the norm.
Would be nice to think my students thought about the ideas I presented in class 24 hours a day, but I won't delude myself that much.
I have read (and collected) a host of different IDEAS from a huge number of THINKERS so it is relatively easy to find writing that describes different ways of moving forward to get to a better world.
So true!
You had the following in your message to me:
///////////////////////////////
I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
/////////////////////////////////
I have been saying almost the same thing since 1975 ... more than 40 years ago long before the Visa Card was invented. I realized that conventional bookkeeping and financial wealth were not a good enough ways to measure progress and performance ... the money metric does not handle the value destruction associated with death from starvation and drought, from civil war and genocide, from climate change and crop failure. Corporate accounting ignores externalities. GDP, as Robert Kennedy famously said '... ignores everything that is really valuable ...'. During my international work I have counted dead bodies more than most accountants, but there was no way to report the TRUE VALUE DESTRUCTION that this represented
It is worth noting that double entry accounting, Cartesian thinking and Newtonian science worked very well when they were first introduced several hundred years ago ... and still have a huge value in modern times. Evidence of double entry accounting goes back a little more than 800 years though it was only first written about (to our modern knowledge) around the time Adam Smith was writing about economics and moral sentiment. Modern physics did not disprove Newton's ideas, but modernized and enhanced the ideas,
I'm intrigued by your last statement, and have flagged 3 articles to read later to help me understand it better, because I've often heard (without a lot of depth) the opposite in sustainability circles. My preliminary guess is that it is either a judgment call, a gray area (as I see these in my sleep), or maybe a definitional thing.
and that is more or less what I want to do with conventional double entry accounting and True Value Accounting!
So a General Theory of Accountability ... in other words True Value Accounting (TVA) ... is an idea to address ALL the issues which the critics of measurement bring up all the time.
To the degree you are able to show this, the better. I'm skeptical you can totally merge the basically separate paradigms here (remember in a recent email between us I mentioned aspects of sustainability like non-linearities, and Jonathan implicitly mentioned the emergent property of systems), but then you don't have to. But it would be intriguing if you explicitly tried and see how far you can get.
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
Glad you mention the one immediately above as it is so critical, and so often missed.
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
Others have articulated the idea of multiple capitals ... and I do not want to argue the merits of my 5 versus how others describe the capitals. I wrote about 7 capitals a couple of years ago and got into all sorts of feedback about why the number 7 was wrong. It is not a real issue. The key characteristic of these capitals is that they encompass EVERYTHING. I have settled on this segmentation because it has the best fit with the way that I think summarized numbers will need to be reported in the most meaningful way.
Second is to describe the Socio-Enviro-Economic system (SEES) and understand how it works. From this it becomes possible to start to design a data architecture that is responsive to the key pieces of the system.
As regards data architecture I am informed by my engineering studies, and particularly engineering thermodynamics, and by conventional double entry accounting that has the idea of state (balance sheet) and flow (profit and loss account) and the coherence of the data between the two.
It will probably be helpful to all of us once you begin to show how this would look.
The data architecture must work for every component of the SEES. The data architecture must differentiate between STATE and FLOW for all of the capitals and all of the following pieces of the system..
ORGANIZATIONS ... should use a system of accounting that includes conventional money double entry accounting AND the initial state, flows/processes and new state that applies for multiple capitals. That is profit, and people/society and planet/environment ... in other words the famous triple bottom line.
...... the financial balance sheet shows financial and physical assets and liabilities
...... stock markets value organizations based on a computation of the net present value of what the market things the future will be!
...... financial accounts and (mostly) stock markets ignore what the organization does in terms of impact on society and the environment ... but TVA brings these into account.
PEOPLE ... an individual's present state, the cost of living and the contribution. These change depending on a person's stage in life, a person's history and the opportunities of the time and the place. The foundational measure is to do with a person's QUALITY OF LIFE.
...... all of which then aggregates into a family
...... and into a community
...... and into a society
...... which is a part of a PLACE
PLACE ... where things happen
...... where people live
...... where organizations operate
...... where land exists and provides ecosystem services or economic services or resources
...... where all sorts of physical capital is located to provide services to people and organizations
I see this all the time and most people would agree with you.
I accept it for certain practical and not illegitimate purposes, but at heart remain, to coin a phrase, a 'planeterist.' That's the scale at which I most relate; that is my 'place.' And consistent with the emergent property of systems, there are things happening at the planetary level, both physically, biologically, socially, etc., that I don't see how you capture in the conventional meaning of 'place.'
One field I've taught, sustainability science, is schitzophrenic (sp) on this. It also strongly calls for a 'Place-based orientation,' but also discusses global processes. It needs to reconcile these apparent contradictions.
PRODUCT ... the things that are consumed to support QUALITY OF LIFE
..... but product leaves a footprint as it flows through the supply chain
..... and again when it is used
..... and again in the post use waste chain.
PROCESS ... how inputs are converted to outputs
..... which eventually creates the PRODUCTS that PEOPLE use
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
Don't forget the critters involved in the above-natural capital; it's not just people.
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
Remember those non-linearities such as the Jevons Paradox; that is, efficiency gains backfiring. Also, unintended consequences or impacts on both the system under study and other systems.
It is often said 'Think Global ... Act Local'. With the TVA initiative this means that the PLACE (COMMUNITY) is very critical in the way management information should be obtained and deployed because PLACE is where all the SEES actors/elements come together.
I wrote an article critical of this long-established truism, including a source that argued there is a place for just the opposite: 'Think Local: Act Global.'
Actually, like in a lot of things, you need both. But too many conventional wisdoms steer people away from their apparent opposites, or the creation of hybrids, that might have their own potentials if looked at.
This describes the data architecture fairly comprehensively ... but does not address the actual process of numbering. The concept being developed is for numbering is very similar to the idea of standard costs in conventional management accounting ... but more on that another time.
Again, It will be helpful to all of us once you begin to do this.
I like to think this has some potential in the CRCS strategy albeit quite limited.
Critical comment is welcomed
Provided above.
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
TrueValueMetrics ... Impact Accounting for the 21st Century
www.truevaluemetrics.org
The TrueValueMetrics is an initiative to upgrade accountancy and management metrics for the 21st century. The idea of Multi Dimension Impact Accounting (MDIA) uses ...
LinkedIn: www.linkedin.com/in/peterburgess1/
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www.slideshare.net
I graduated from Cambridge University (Sidney Sussex College) with double majors in engineering and economics in 1961. Subsequently I qualified as a Chartered Accountant in London with Cooper Brothers & Co that over the years morphed into PriceWaterhouseCoopers. During my career, more than anything else I have learned of the immense power of data to enable change. My experience in the corporate world has been that management information systems are enabling change that results in high performance to the benefit of the company. Meanwhile, my experience with civil society and the public sector consulting with the World Bank, the United Nations and others is that the management information o...
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Thu, Jan 5, 2017 at 2:57 AM, Jonathan Cloud wrote:
Hi Peter:
This is a wonderful challenge. I believe I agree with precisely 91.7% of your arguments, and will therefore come back to them.
But as in most conversations, making one argument usually evokes in the listener’s mind the unspoken counter-arguments (which probably accounts for some of the interest in the dialectic method). I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
But having said all that…
My challenge to you is to apply what you’re saying to our specific objectives and situations, because this could provide powerful support for our mission. We need to distinguish talking about metrics, and actually applying them in ways that are useful. Certainly I can agree that
...conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
And
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community.
So the challenge is to reverse this, in practice, in our work with communities and ecosystems and organizations. I suggest that as a part of our work you provide the quantitative validation for our interventions, in order to show how they do good, and how much good they do, in addition to being profitable (since they require this in order to be self-sustaining). Are you up for this? If so, we’ll all be able to see whether much of value will actually happen.
In this context I’m attaching the latest version of the Bound Brook proposal, and happy to have you make suggestions as to what we should be adding to it….
Thanks
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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On Jan 5, 2017, at 1:14 AM, Peter Burgess wrote:
OUCH ... I am sorry I did not see all of this earlier in the day
I very much like the idea that you are thinking about pushing forward in a variety of ways in parallel ... and that is good, indeed very good.
But at the same time I am incredibly disappointed that the matter of metrics is nowhere to be found. As I often mention, in my early career we would often use the phrase 'Show me a company with poor management information ... and I will show you a company with poor performance!
For decades now, every major company on the planet has incredibly sophisticated management information and for all practical purposes they have the efficiency (in making profit) that they run the world! Unfortunately, conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
I have been interested and involved with not for profit work in international development, humanitarian relief, community development, sustainability, climate, etc and the metrics dimension of management was almost entirely missing ... and to the extent metrics were there, they were expensive to use and of dubious value ... usually very late. I was appalled at the numbering methods used by the World Bank, the UN, USAID and the rest and it came as no surprise when in depth performance analysis showed poor performance!
Getting really useful metrics for every dimension of the socio-enviro-economic system within which everything functions is a critical tool ... and my work on True Value Accounting (TVA) is, I believe, heading in the right direction. I am not the only one working towards better metrics ... GRI, SASB, IR, SROI are some of the better known initiatives but TVA has a much more elegant data architecture together with better integration with the conventional money accounting data elements.
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community. Gus made reference to Fund Accounting as used in municipalities, governments, etc. last Friday, but we did not get into much discussion about this ... but it is such a weak system of accounting that it was made illegal for companies to use about 150 years ago ... yet persists throughout the public sector. One reason is that the system is very easy to game ... and that has suited politicians in the past, and in experience to this day ... and of course it only deals with money flows and does nothing for the non-money value flows that are important for a living community. There are reasons why so many cities have been economically and socially gutted during the past 50 years ...yet the numbering of this process has been conspicuous by its absence. I worked on national level government financial management in the 1990s with the aim of moving from cash basis accounting to accrual accounting and more appreciation of the 'assets' and 'liabilities'. This has been an ongoing battle since the 1960s when the UN System of National Accounts was introduced for countries but little was done to update the accounting for public sector entities.
This past year, I have been flirting with some work on this subject in Baltimore and deeply concerned that most of the proposals to improve the situation can only be sustained by massive flows of new money into the area, and no system of numbering that can justify this ... the ideas may do good, but if they won't make money profit, how do they get justified! We absolutely have to get to grips with a numbering system that makes sense so that we can easily make investment for social and environmental return as well as just profit returns!
So while I am happy that CRSC is going to reach out in 2017 ... doing it without a metrics dimension will likely mean that nothing very much of value will actually happen.
With very nest wishes
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
On Wed, Jan 4, 2017 at 10:37 PM, matthew Polsky wrote:
Perhaps start with the paragraph on communities in my comment on Friedman's article.
Some of the other comments on the article may contain some good examples of community; perhaps note and build around those.
The sociologist Robert Putnam has written about losing community.
P.S. 'Grok' is a new one for me.
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From: vzelin@gmail.com on behalf of Victoria Zelin
Sent: Thursday, January 5, 2017 3:24 AM
To: matthew Polsky
Cc: Jonathan Cloud; Peter Burgess; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
I am pretty sure people don't get the possibility of community that we see. good point. It took me a long time, after leaving Deloitte, to grok 'community.' And I was looking for the distinction of what community meant. Most people aren;t looking and have no idea.
Suggestions?
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
On Wed, Jan 4, 2017 at 9:44 PM, matthew Polsky wrote:
Jonathan:
Some thoughts:
let's not be blind to possible issues with co-ops (or anything else that is unlikely to run perfectly). I sent you an article yesterday about thefts at a Brooklyn co-op, allegedly by members. Qualities like monitoring, flexibility, adaptability, resiliency will be important
if we're going to (heavily) use hugely significant words like 'community,' 'transformation,' 'thrive,' and increasingly now 'regeneration,' let's give attention to whether our audiences are getting them (I would bet they don't); what we even mean by them; whether our own assumptions in a range of areas are consistent with them, and, if they're not, while it doesn't necessarily mean we change anything right away (as it's probably impossible to go full flight into these things), at least be aware of it.
See my comment today on a Tom Friedman article, particularly the section on 'communities,' as well as the overall need to change how we think about some fundamental things.
http://www.nytimes.com/2017/01/04/opinion/from-hands-to-heads-to-hearts.html?comments#permid=20987110
consistent with re-launching 'the Sustainable Leadership Forum...as a new CRCS Institute for Transformational Leadership,' which includes 'A Possible New Jersey' component, consider mentioning the document I framed and asked you to co-write on 'A Clean Economy for NJ,' possibly to offer to NJ Gubernatorial Candidates. You had conditions for writing it, which we are 1 1/2 steps or so from fully meeting. We just need Marnie to commit to writing it with you, and you and her need to co-decide how to work together. Possibly we'll have her commitment by the time you go to press with what you want to send out
relatedly, if there are other activities either you or Victoria are doing that are reasonably related to all this, why not mention them too? I'm thinking of the significant role Victoria is playing recruiting the new ED for the re-launch of the American Sustainable Business Council--NJ Affiliate. There might be others. Are you still doing some writing from time to time? Keeping a hand in anything from the old days?
Matt
c: Victoria, Gus, Peter
From Hands to Heads to Hearts
www.nytimes.com
Remembering what makes us human is how to show economic value in the age of smarter and smarter machines.
From: Jonathan Cloud
Sent: Wednesday, January 4, 2017 7:46 PM
To: Victoria Zelin; Peter Burgess; Gus Escher; matthew polsky
Subject: DRAFT: New Directions for 2017
I’d like to publish something like this on CRCSolutions.org if no one has any objections, along with some links to our new initiatives:
Center for Regenerative Community Solutions | and New ...
crcsolutions.org
How would you like the members of your community to work together as part of a thriving and resilient ecosystem, providing for the basic needs of all citizens?
New Directions for 2017
CRCS will be moving in several new directions this year, which we think will be of interest to a wider audience than just those of us interested in financing clean energy. We’ve been focusing more on communities in the past year, and on the values and vision that led to our mission, to assist local communities and neighborhoods to become more resilient in the face of the widening impacts of a changing climate.
We are proposing to work with one or two towns in New Jersey on their revitalization and self-renewal. Culture actually holds the key to greater local resilience, alongside the physical transformation of communities into eco-communities. And organization is what’s needed to transform culture. We are planning to create “civic cooperatives” that will lead these communities into a positive self-generating future. Many communities are today experiencing decline, or struggling to ignite a self-renewal, within the broader context of the need for a world for a world that shifts carbon from the atmosphere back into the soil. The cooperative model has proven itself to be more enduring, more beneficial, and often more valuable to communities than the conventional marketplace business model.
What makes this possible is that we have a number of tools with which we can assist groups in organizing their communities with more sustainable development. To begin with, we have the clean energy financing tools mentioned earlier, one of which — DREAM financing — is in principle able to be utilized today, though it has not yet been tried or tested. This innovation fulfills our goal of bringing financial resources to communities and groups to enable transformational change. Specifically, we think that DREAM can provide the starting-point for a clean energy co-op that could undertake solar, energy conservation, and resiliency projects, and return the profits to the community.
More broadly, we seek to apply regenerative design and permaculture principles to community redevelopment, and act as catalysts for more rapid evolution. Together with other organizations and professionals we are able to bring inspired planning and action, whether it is to the creation of an ecovillage or cohousing community or of cooperative enterprises in food, energy, the arts, and finance.
We invite you to join us in this adventure, in one of several ways. We are thinking of re-animating the Sustainable Leadership Forum (which we had put on hold to work on PACE) as a new CRCS Institute for Transformational Leadership. Download our program information sheet to see what’s available (attached).
Alternatively, if you are ready to collaborate with us on meaningful work, we invite you to join one of our cooperatives-in-development programs, and get involved in restoring ecosystems and remaking communities. Stay tuned for more information.
And of course we invite you to join our major sponsored programs, Ecovillage New Jersey and the new Ecovillagers Alliance.
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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matthew Polsky Mon, Jan 9, 2017 at 2:42 AM
To: Peter Burgess
Cc: Jonathan Cloud , Victoria Zelin , Gus Escher
See below.
From: Peter Burgess
Sent: Sunday, January 8, 2017 10:07 PM
To: matthew Polsky
Cc: Jonathan Cloud; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
Matt
Thanks for your short message ... and thanks for the homework you have assigned me via your links! Thanks for all of this and the intellectual stimulation that is possible as a result.
I think my approach and your approach reflect a substantially different understanding of the PURPOSE of metrics. I want to use metrics to manage ... that is to help make better decisions, and for that there needs to be reasonably correct numbering. I have often said that the best management information is quick/timely, reasonably accurate, low cost, and relevant. Up to now, I have not seen much of this in most of the intellectual work being done to analyze and improve metrics.
I would say I have that same purpose to a point. I would add that the management (and leadership, another subtlety) has to be make better decisions towards the aim of sustainability, which should never be lost sight of. That includes its nuances, many of which have come up in our discussions (e.g. Jonathan just sent an email out about critical tipping points, which I've only heard mentioned once at many metrics forums.) Metrics are a tool towards that end, which I've also rarely heard mentioned at metrics forums. Metrics should aid the company in 'learning' its way towards sustainability, which is not necessarily a quick, efficient process. So I would add learning to your criteria list, which also means that the overall culture around the metrics has to be open to that.
My view of Newton's thinking reflects my acceptance of methods that are good enough, not perfect. For most practical purposes in everyday life and business operations a Newtonian level of understanding is quite good enough. People who are pushing the frontier of science need to use cutting edge thinking and metrics, but most of the modern economy can be managed using relatively simple Newtonian type thinking. For everything that has happened in my life, it has been good enough to think of time and the speed of light as constants ... and I really want to get away from the variability of the size of money even when it stays motionless!
I'm sure you're right as far as practicality in most imaginable circumstances. But I think we should strive to be accurate in invoking terms from other fields. That's particularly important for interdisciplinary thinking if we're going to be credible to people coming into sustainability from other fields, who may know more than us about some fields that we invoke. We don't want to get it wrong, even if mathematically it may not make a lot of difference.
As a student of Herman Daly, a sustainability giant, I once corrected a statement he made that the intensity of the sun is a constant. It isn't as it varies very slightly from year to year. Once I said it, another student described it better than I could. Daly accepted it, saying 'we do want to be accurate,' even though it made no difference to his larger point. I think it was a teaching moment for any students paying attention.
And as we're beginning to get into 'transformation,' which is no longer just manage a little better, who knows if conventional 'practicality' is going to be good enough.
It bothers me that many people prefer to have no numbers, than numbers that approximate to something sensible. When there are no numbers, the default tends to be to consider the value of whatever it is a zero ... which is almost always very wrong!
Al the best
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
TrueValueMetrics ... Impact Accounting for the 21st Century
www.truevaluemetrics.org
The TrueValueMetrics is an initiative to upgrade accountancy and management metrics for the 21st century. The idea of Multi Dimension Impact Accounting (MDIA) uses ...
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Peter Burgess
www.slideshare.net
I graduated from Cambridge University (Sidney Sussex College) with double majors in engineering and economics in 1961. Subsequently I qualified as a Chartered Accountant in London with Cooper Brothers & Co that over the years morphed into PriceWaterhouseCoopers. During my career, more than anything else I have learned of the immense power of data to enable change. My experience in the corporate world has been that management information systems are enabling change that results in high performance to the benefit of the company. Meanwhile, my experience with civil society and the public sector consulting with the World Bank, the United Nations and others is that the management information o...
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Sun, Jan 8, 2017 at 12:32 PM, matthew Polsky wrote:
Peter:
Just a couple of responses this time.
See below.
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From: Peter Burgess
Sent: Saturday, January 7, 2017 5:03 PM
To: matthew Polsky
Cc: Jonathan Cloud; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
Dear Matt
Thanks for your feedback ... I won't pick up on all the remarks you made, but just these few because I think that my thinking already aligns quite well with your own, though for these it may not be apparent without this follow up.
1 .................
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
Glad you mention the one immediately above as it is so critical, and so often missed.
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
TPB NOTE IN RESPONSE:
With respect to capitals ... I see the important characteristic is that ALL the capitals are considered ALL the time ... and that these capitals reflect everything in the complete socio-enviro-economic system. In my experience this rarely happens in the analysis of performance for reasons that are primarily self-serving ... financial people look at one set of numbers (the money wealth set) , the environmental people look at their set of issues, the social folk look at their issues, and so on. As I see it, from a system perspective all of these things are connected and a change in one is going to result in changes in the others.
Porter and Kramer who became visible with their promotion of Shared Value and the people who advocate for ESG diminish the value of their thinking because in the end they see a good outcome as a company being more profitable and share prices going up more than without the shared value approach or the ESG approach. This is a dangerous way of thinking because there are a huge number of important GOOD things that need to get done that cannot create corporate / investor profit but CAN help make the world a better place.
2 .....................
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
Don't forget the critters involved in the above-natural capital; it's not just people.
TPB NOTE IN RESPONSE:
As you probably know I was the CFO of a shrimp fishing company fairly early in my career. As a result I did quite a lot of work on a variety of fishery ecosystems including work for FAO, IFAD, KISR and others. Our corporate goal was to have shrimp next year so that we could be profitable next year ... and this was somewhat congruent with the need to maintain a complete and healthy ecosystem including coastal mangrove. A more difficult issue was whether our corporate profit objectives were compatible with the interests of local people who wanted to catch juvenile shrimp in the estuaries before they migrated into the ocean to grow bigger and be available for our corporate fishery.
3 .......................
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
Remember those non-linearities such as the Jevons Paradox; that is, efficiency gains backfiring. Also, unintended consequences or impacts on both the system under study and other systems.
TPB NOTE IN RESPONSE:
The big advantage of measuring PROGRESS by looking at the improvement in STATE means that issues like the Jevons Paradox and unintended consequences are INSIDE the evaluation envelope. When the FLOWS are analyzed for use in determining progress, it is very easy and very common for all sorts of important things to be left out. The whole of the international community's Monitoring and Evaluation methodology is based on this latter approach, and it is easy to game the data in order to report a good result from a project. Understanding FLOWS is important for understanding how to improve the performance, but is not a part of measuring the resultant progress.
-------------------------------
In another message Jonathan made reference to being 93.7% in agreement with what I had written ... something of a compliment, I thought ... but it set me thinking about the fundamental idea of numbering in the context of TVA. I am pretty sure Jonathan was 'yanking my chain' with the use of this percent to indicate a pretty high level of agreement / acceptance of what I had written.
There are many situations where the binary approach is good enough: Yes/No On/Off Better/Worse More/Less, etc
While true--and this risks bringing us to other subjects, sometimes a too-certain, conventionally-wedded view of what is 'binary' misses possibilities for productive hybrids. I've seen this in a growing number of areas, and written on some of it: gender, rationality versus emotions, simple versus complexity, data versus stories, economics versus psychological views of how we tick, local versus global problem-solving, ignorance versus knowledge, etc. At this point, I often approach supposed dualities with questions about how real they really are.
Here is some of my stuff on it:
. “Why Complexity Matters When Measuring Sustainability: Part IV,” with Claire Sommer, GreenBiz.com, June 18, 2013.
http://www.greenbiz.com/blog/2013/06/18/why-complexity-matters-measuring-sustainability
. “The Local-Global Connection: Forging Inter-scale Sustainability Action,” EarthPeople Media, September 17, 2013.
http://earthpeopleco.com/images/KnowledgeBank/TheLocal-GlobalConnection.pdf
. “The Uncountable and Sustainable Business Metrics: Can There Be a Productive Relationship?: Part VIII,” with Claire Sommer, Sustainable Brands, November 15, 2013.
http://www.sustainablebrands.com/news_and_views/new_metrics/
matt-polsky/uncountable-sustainable-business-metrics-can-there-be-product
. “What if ‘Opposites’ Aren’t Really Opposite?: Part XIX,” With Jill Lipoti, Sustainable Brands, February 15, 2016.
http://www.sustainablebrands.com/news_and_views/new_metrics/
matt_polsky/are_opposites_really_opposite_what_if_they%E2%80%99re_not_part_19.
Questionaires then move on to a number of buttons ... select one of Very satisfied ... Reasonably satisfied ... Somewhat unsatisfied ... Very unsatisfied
and a whole variety of other questions that relate to a set of buttons
And then there are numbers that relate to a system of measurement with very specific units of measure
....Distance / length is measured in meters (m)
....Time is measured in seconds (s)
....Mass is measured in grams (gm)
....Energy is measured in calories (cals)
....Temperature is measured in degrees
and then there is money as a measure
Distance, time, mass, energy, temperature all have units of measure that never change
Anticipating my getting back to you later about Newtonian physics versus Einsteinian/Modern Physics, the latter shows that, in contrast to what was thought, the speed of light and time are not constants.
Money, on the other hand, is a unit that changes in size all the time ... what sort of a measure is that?
There are a whole range of derivatives of thse units, like:
.... Area is m x m
.... Speed is m/s
.... etc
And then there are derivatives to help understanding ... like the calculation of a percentage ... which is how this chain of thought started.
I use comparison all the time to get some easy understanding of what numbers are telling me ... and percent change is helpful some of the time, but it is important to understand the context. Journalists use percent change frequently without putting it into context and can easily distort the story ... so simple absolute numbers are also important to help get the story in context. Corporate reporting of financial information is very highly regulated so that misinformation becomes more difficult ... and spite of this from time to time there are serious scandals ... but actually quite infrequent relative to the number of financial reports that are produced correctly!
So how to number some of the important things that need to be in the accounting and presently go un-numbered.
Human capital
.... Human Quality of Life
Natural capital
.... Land
.... Bio-system service (biodiversity, etc)
.... Physical system services (air, water, climate, minerals)
People Built Capital / Systems
.... Financial capital [we already have money for this ... but impact on human capital and natural capital not numbered]
.... Physical capital [we often think that the buy sell transaction in money is a useful measure ... but really not]
.... Intangible capital [same]
The way the numbering has to work is that everything ends up being numbered relative to impact on human capital / quality of life AND the elements of natural capital
-----------------------------------------
With regard to the work being done by Delton Chen ... it has some of the characteristics of the work that I am trying to do. Both of us are starting with an engineering background which helps with complex system thinking and is an easier starting point than, for example, economics and finance.
I think both of us recognize the importance of money and the money related ecosystem that has enabled trade and economic transactions for hundreds of years.
I have been a huge critic of the modern financial ecosystem because it has developed over the past 50 years to enable a segment of the financial services industry to function in a way that does nothing for the economy but merely concentrates wealth into a few hands ... this wealth comes from somewhere, and is essentially wealth that used to be in the hands of ordinary people outside the financial sector before the operation of this segment of the financial sector.
One of the services that conventional banking provides is the ability to preserve (money) wealth and store it for future use. We need something similar for the preservation of GOOD wealth ... that is GOOD that is not transacted for money but GOOD that makes life better and the world a better place. Various initiatives to do this are emerging ... but I don't think any of the ones I have see can work well unless a reliable system for numbering GOOD is developed.
I looked hard at Delton's work two or three years back ... I need to bring myself up to date. It could be very relevant.
There is also the emergence of blockchain technology that is getting a lot of hype ... and could be a useful part of a universal value accounting framework sometime in the future. One of the issues that the blockchain does not address is the fundamental problem of GIGO ... garbage in garbage out. Blockchain ensures that what comes out of the chain is the same as what went in ... and that is a useful step, but it does nothing to ensure that what goes in is right. If stupid measures go into a blockchain system, stupid measures will come out.
----------------------------------------
Thank you all
Happy weekend!
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
TrueValueMetrics ... Impact Accounting for the 21st Century
www.truevaluemetrics.org
The TrueValueMetrics is an initiative to upgrade accountancy and management metrics for the 21st century. The idea of Multi Dimension Impact Accounting (MDIA) uses ...
LinkedIn: www.linkedin.com/in/peterburgess1/
Peter Burgess | LinkedIn
www.linkedin.com
View Peter Burgess’ professional profile on LinkedIn. LinkedIn is the world's largest business network, helping professionals like Peter Burgess discover inside connections to recommended job candidates, industry experts, and business partners.
Slideshare: http://www.slideshare.net/PeterBurgess2/
Peter Burgess
www.slideshare.net
I graduated from Cambridge University (Sidney Sussex College) with double majors in engineering and economics in 1961. Subsequently I qualified as a Chartered Accountant in London with Cooper Brothers & Co that over the years morphed into PriceWaterhouseCoopers. During my career, more than anything else I have learned of the immense power of data to enable change. My experience in the corporate world has been that management information systems are enabling change that results in high performance to the benefit of the company. Meanwhile, my experience with civil society and the public sector consulting with the World Bank, the United Nations and others is that the management information o...
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Fri, Jan 6, 2017 at 11:00 AM, matthew Polsky wrote:
Peter:
It looks from other correspondence, that you, Jonathan, and Victoria has reached some accommodation regarding the application of your ideas in the Bound Brook project.
See below for my responses to some of your comments.
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From: Peter Burgess
Sent: Thursday, January 5, 2017 9:42 PM
To: Jonathan Cloud
Cc: matthew polsky; Victoria Zelin; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
Dear Jonathan
My notes were prepared late at night (early morning) ... and the idea that your response happened even later reminds me of being a student again when a 24 hour agenda was the norm.
Would be nice to think my students thought about the ideas I presented in class 24 hours a day, but I won't delude myself that much.
I have read (and collected) a host of different IDEAS from a huge number of THINKERS so it is relatively easy to find writing that describes different ways of moving forward to get to a better world.
So true!
You had the following in your message to me:
///////////////////////////////
I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
/////////////////////////////////
I have been saying almost the same thing since 1975 ... more than 40 years ago long before the Visa Card was invented. I realized that conventional bookkeeping and financial wealth were not a good enough ways to measure progress and performance ... the money metric does not handle the value destruction associated with death from starvation and drought, from civil war and genocide, from climate change and crop failure. Corporate accounting ignores externalities. GDP, as Robert Kennedy famously said '... ignores everything that is really valuable ...'. During my international work I have counted dead bodies more than most accountants, but there was no way to report the TRUE VALUE DESTRUCTION that this represented
It is worth noting that double entry accounting, Cartesian thinking and Newtonian science worked very well when they were first introduced several hundred years ago ... and still have a huge value in modern times. Evidence of double entry accounting goes back a little more than 800 years though it was only first written about (to our modern knowledge) around the time Adam Smith was writing about economics and moral sentiment. Modern physics did not disprove Newton's ideas, but modernized and enhanced the ideas,
I'm intrigued by your last statement, and have flagged 3 articles to read later to help me understand it better, because I've often heard (without a lot of depth) the opposite in sustainability circles. My preliminary guess is that it is either a judgment call, a gray area (as I see these in my sleep), or maybe a definitional thing.
and that is more or less what I want to do with conventional double entry accounting and True Value Accounting!
So a General Theory of Accountability ... in other words True Value Accounting (TVA) ... is an idea to address ALL the issues which the critics of measurement bring up all the time.
To the degree you are able to show this, the better. I'm skeptical you can totally merge the basically separate paradigms here (remember in a recent email between us I mentioned aspects of sustainability like non-linearities, and Jonathan implicitly mentioned the emergent property of systems), but then you don't have to. But it would be intriguing if you explicitly tried and see how far you can get.
First of all ... there are multiple capitals.
... People / Human Capital
... Natural Capital
Glad you mention the one immediately above as it is so critical, and so often missed.
... People Built Capital
........ Financial Capital
........ Physical Capital
........ Intangible Capital
Others have articulated the idea of multiple capitals ... and I do not want to argue the merits of my 5 versus how others describe the capitals. I wrote about 7 capitals a couple of years ago and got into all sorts of feedback about why the number 7 was wrong. It is not a real issue. The key characteristic of these capitals is that they encompass EVERYTHING. I have settled on this segmentation because it has the best fit with the way that I think summarized numbers will need to be reported in the most meaningful way.
Second is to describe the Socio-Enviro-Economic system (SEES) and understand how it works. From this it becomes possible to start to design a data architecture that is responsive to the key pieces of the system.
As regards data architecture I am informed by my engineering studies, and particularly engineering thermodynamics, and by conventional double entry accounting that has the idea of state (balance sheet) and flow (profit and loss account) and the coherence of the data between the two.
It will probably be helpful to all of us once you begin to show how this would look.
The data architecture must work for every component of the SEES. The data architecture must differentiate between STATE and FLOW for all of the capitals and all of the following pieces of the system..
ORGANIZATIONS ... should use a system of accounting that includes conventional money double entry accounting AND the initial state, flows/processes and new state that applies for multiple capitals. That is profit, and people/society and planet/environment ... in other words the famous triple bottom line.
...... the financial balance sheet shows financial and physical assets and liabilities
...... stock markets value organizations based on a computation of the net present value of what the market things the future will be!
...... financial accounts and (mostly) stock markets ignore what the organization does in terms of impact on society and the environment ... but TVA brings these into account.
PEOPLE ... an individual's present state, the cost of living and the contribution. These change depending on a person's stage in life, a person's history and the opportunities of the time and the place. The foundational measure is to do with a person's QUALITY OF LIFE.
...... all of which then aggregates into a family
...... and into a community
...... and into a society
...... which is a part of a PLACE
PLACE ... where things happen
...... where people live
...... where organizations operate
...... where land exists and provides ecosystem services or economic services or resources
...... where all sorts of physical capital is located to provide services to people and organizations
I see this all the time and most people would agree with you.
I accept it for certain practical and not illegitimate purposes, but at heart remain, to coin a phrase, a 'planeterist.' That's the scale at which I most relate; that is my 'place.' And consistent with the emergent property of systems, there are things happening at the planetary level, both physically, biologically, socially, etc., that I don't see how you capture in the conventional meaning of 'place.'
One field I've taught, sustainability science, is schitzophrenic (sp) on this. It also strongly calls for a 'Place-based orientation,' but also discusses global processes. It needs to reconcile these apparent contradictions.
PRODUCT ... the things that are consumed to support QUALITY OF LIFE
..... but product leaves a footprint as it flows through the supply chain
..... and again when it is used
..... and again in the post use waste chain.
PROCESS ... how inputs are converted to outputs
..... which eventually creates the PRODUCTS that PEOPLE use
STATE, PROGRESS AND PERFORMANCE
..... At any point in time there is a STATE. The state of the world is the sum total of the state of everything.
.......... at the same time everything (including place, organization, product) has a STATE described numerically in much the same way the Balance Sheet describes the STATE of an organization
..... PROGRESS is the improvement of STATE over time.
.......... the modern economy has had progress as measured by the increase in FINANCIAL CAPITAL (WEALTH), but the PROGRESS as measured by the CHANGE in STATE of al the component capitals of SEES is not as good
.................. GDP does not address this at all ... but the Genuine Progress Indicator (GPI) is much better
..... PERFORMANCE is the amount of CAPITAL consumed in order to achieve PROGRESS for PEOPLE.
Don't forget the critters involved in the above-natural capital; it's not just people.
.......... massive improvements in PERFORMANCE can be achieved in almost every major PROCESS being used by organizations (big and small) to make PRODUCTS
Remember those non-linearities such as the Jevons Paradox; that is, efficiency gains backfiring. Also, unintended consequences or impacts on both the system under study and other systems.
It is often said 'Think Global ... Act Local'. With the TVA initiative this means that the PLACE (COMMUNITY) is very critical in the way management information should be obtained and deployed because PLACE is where all the SEES actors/elements come together.
I wrote an article critical of this long-established truism, including a source that argued there is a place for just the opposite: 'Think Local: Act Global.'
Actually, like in a lot of things, you need both. But too many conventional wisdoms steer people away from their apparent opposites, or the creation of hybrids, that might have their own potentials if looked at.
This describes the data architecture fairly comprehensively ... but does not address the actual process of numbering. The concept being developed is for numbering is very similar to the idea of standard costs in conventional management accounting ... but more on that another time.
Again, It will be helpful to all of us once you begin to do this.
I like to think this has some potential in the CRCS strategy albeit quite limited.
Critical comment is welcomed
Provided above.
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
TrueValueMetrics ... Impact Accounting for the 21st Century
www.truevaluemetrics.org
The TrueValueMetrics is an initiative to upgrade accountancy and management metrics for the 21st century. The idea of Multi Dimension Impact Accounting (MDIA) uses ...
LinkedIn: www.linkedin.com/in/peterburgess1/
Peter Burgess | LinkedIn www.linkedin.com
View Peter Burgess’ professional profile on LinkedIn. LinkedIn is the world's largest business network, helping professionals like Peter Burgess discover inside connections to recommended job candidates, industry experts, and business partners.
Slideshare: http://www.slideshare.net/PeterBurgess2/
Peter Burgess
www.slideshare.net
I graduated from Cambridge University (Sidney Sussex College) with double majors in engineering and economics in 1961. Subsequently I qualified as a Chartered Accountant in London with Cooper Brothers & Co that over the years morphed into PriceWaterhouseCoopers. During my career, more than anything else I have learned of the immense power of data to enable change. My experience in the corporate world has been that management information systems are enabling change that results in high performance to the benefit of the company. Meanwhile, my experience with civil society and the public sector consulting with the World Bank, the United Nations and others is that the management information o...
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
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On Thu, Jan 5, 2017 at 2:57 AM, Jonathan Cloud wrote:
Hi Peter:
This is a wonderful challenge. I believe I agree with precisely 91.7% of your arguments, and will therefore come back to them.
But as in most conversations, making one argument usually evokes in the listener’s mind the unspoken counter-arguments (which probably accounts for some of the interest in the dialectic method). I’ve just finished Dee Hock’s Birth of the Chaordic Age, a book I heartily recommend to everyone, and — to counterbalance your arguments — here’s some of what he says about measurement:
For all the wonder of modern science and its obsession with measurement and particularity, we don’t believe Life will never surrender its secrets to a yardstick… Body, mind, and spirit are inseparably one and they are one with all else in the universe.
… Is it any wonder that a society that worships the primacy of measurement, prediction, and control should result in destruction of the environment, maldistribution of wealth and power, mass destruction of species, the Holocaust, the hydrogen bomb, and countless other horrors? How could it be otherwise, when for centuries we have conditioned ourselves with ever more powerful notions of engineered solutions, domination, compelled behavior, and separable self-interest? … It is that to which we have persuaded ourselves for centuries, in thousands of subtle ways, day after day, month after month, year after year. It did not need to be so, ever. It need not be so now. It cannot be so forever.
Whether biological or social, whether organism or organization, all things are living processes, not constructed mechanisms, and none can be made to behave as though they were machines, in spite of all our illusions to the contrary. None, at bottom, are controllable, and science, mathematics, and measurement can never bring them to compelled behavior. We may damage them severely. We may destroy them utterly. But we cannot change or compel their essential nature or behavior. Life will never surrender its secrets to a yardstick.
He is particularly scathing about accounting, in deliciously insightful passages that are too long to quote, and then cites H. Thomas Johnson, a CPA and economic historian, to the effect that
Double entry bookkeeping and the systems of income and wealth management that evolved from it since the sixteenth century are eminently Cartesian and Newtonian. They are predicated on ideas such as the whole being equal to the sum of the parts… [but] in a 'systemic' view of the world, nothing is merely the sum of its parts… The language of financial accounting merely asserts answers, it does not invite inquiry. In particular it leaves unchallenged the worldview that underlies [the way] organizations operate. Thus, management accounting has served as a barrier ro genuine organizational learning… Never again should management accounting be seen as a toll to drive people with measures. Its purpose must be to promote inquiry into the relationships, patterns, and processes that give rise to accounting measures.
In short, according to Hock (who created the $1.8 trillion Visa) going down the path of more measurement is precisely the wrong direction for humanity, life, and the planet.
But having said all that…
My challenge to you is to apply what you’re saying to our specific objectives and situations, because this could provide powerful support for our mission. We need to distinguish talking about metrics, and actually applying them in ways that are useful. Certainly I can agree that
...conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
And
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community.
So the challenge is to reverse this, in practice, in our work with communities and ecosystems and organizations. I suggest that as a part of our work you provide the quantitative validation for our interventions, in order to show how they do good, and how much good they do, in addition to being profitable (since they require this in order to be self-sustaining). Are you up for this? If so, we’ll all be able to see whether much of value will actually happen.
In this context I’m attaching the latest version of the Bound Brook proposal, and happy to have you make suggestions as to what we should be adding to it….
Thanks
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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On Jan 5, 2017, at 1:14 AM, Peter Burgess wrote:
OUCH ... I am sorry I did not see all of this earlier in the day
I very much like the idea that you are thinking about pushing forward in a variety of ways in parallel ... and that is good, indeed very good.
But at the same time I am incredibly disappointed that the matter of metrics is nowhere to be found. As I often mention, in my early career we would often use the phrase 'Show me a company with poor management information ... and I will show you a company with poor performance!
For decades now, every major company on the planet has incredibly sophisticated management information and for all practical purposes they have the efficiency (in making profit) that they run the world! Unfortunately, conventional money profit accounting works well for owners and investors, but it ignores impact on people/society and planet/environment ... and until these are brought into account in a systematic way existential risks lack climate change, social unrest and migration will not be addressed.
I have been interested and involved with not for profit work in international development, humanitarian relief, community development, sustainability, climate, etc and the metrics dimension of management was almost entirely missing ... and to the extent metrics were there, they were expensive to use and of dubious value ... usually very late. I was appalled at the numbering methods used by the World Bank, the UN, USAID and the rest and it came as no surprise when in depth performance analysis showed poor performance!
Getting really useful metrics for every dimension of the socio-enviro-economic system within which everything functions is a critical tool ... and my work on True Value Accounting (TVA) is, I believe, heading in the right direction. I am not the only one working towards better metrics ... GRI, SASB, IR, SROI are some of the better known initiatives but TVA has a much more elegant data architecture together with better integration with the conventional money accounting data elements.
The management of place ... community, neighborhood, city, county, state, country has been badly served by the metrics community. Gus made reference to Fund Accounting as used in municipalities, governments, etc. last Friday, but we did not get into much discussion about this ... but it is such a weak system of accounting that it was made illegal for companies to use about 150 years ago ... yet persists throughout the public sector. One reason is that the system is very easy to game ... and that has suited politicians in the past, and in experience to this day ... and of course it only deals with money flows and does nothing for the non-money value flows that are important for a living community. There are reasons why so many cities have been economically and socially gutted during the past 50 years ...yet the numbering of this process has been conspicuous by its absence. I worked on national level government financial management in the 1990s with the aim of moving from cash basis accounting to accrual accounting and more appreciation of the 'assets' and 'liabilities'. This has been an ongoing battle since the 1960s when the UN System of National Accounts was introduced for countries but little was done to update the accounting for public sector entities.
This past year, I have been flirting with some work on this subject in Baltimore and deeply concerned that most of the proposals to improve the situation can only be sustained by massive flows of new money into the area, and no system of numbering that can justify this ... the ideas may do good, but if they won't make money profit, how do they get justified! We absolutely have to get to grips with a numbering system that makes sense so that we can easily make investment for social and environmental return as well as just profit returns!
So while I am happy that CRSC is going to reach out in 2017 ... doing it without a metrics dimension will likely mean that nothing very much of value will actually happen.
With very nest wishes
Peter
_____________________________
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
http://www.truevaluemetrics.org
LinkedIn: www.linkedin.com/in/peterburgess1/
Slideshare: http://www.slideshare.net/PeterBurgess2/
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Email: peterbnyc@gmail.com
Skype: peterbinbushkill
On Wed, Jan 4, 2017 at 10:37 PM, matthew Polsky wrote:
Perhaps start with the paragraph on communities in my comment on Friedman's article.
Some of the other comments on the article may contain some good examples of community; perhaps note and build around those.
The sociologist Robert Putnam has written about losing community.
P.S. 'Grok' is a new one for me.
From: vzelin@gmail.com on behalf of Victoria Zelin
Sent: Thursday, January 5, 2017 3:24 AM
To: matthew Polsky
Cc: Jonathan Cloud; Peter Burgess; Gus Escher
Subject: Re: DRAFT: New Directions for 2017
I am pretty sure people don't get the possibility of community that we see. good point. It took me a long time, after leaving Deloitte, to grok 'community.' And I was looking for the distinction of what community meant. Most people aren;t looking and have no idea.
Suggestions?
Best,
Victoria
Victoria Zelin
Co-founder
Center for Regenerative Community Solutions, a 501c3 non-profit
(908) 507-3150 cell
VZelin@CRCSolutions.org
http://CRCSolutions.org
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On Wed, Jan 4, 2017 at 9:44 PM, matthew Polsky wrote:
Jonathan:
Some thoughts:
let's not be blind to possible issues with co-ops (or anything else that is unlikely to run perfectly). I sent you an article yesterday about thefts at a Brooklyn co-op, allegedly by members. Qualities like monitoring, flexibility, adaptability, resiliency will be important
if we're going to (heavily) use hugely significant words like 'community,' 'transformation,' 'thrive,' and increasingly now 'regeneration,' let's give attention to whether our audiences are getting them (I would bet they don't); what we even mean by them; whether our own assumptions in a range of areas are consistent with them, and, if they're not, while it doesn't necessarily mean we change anything right away (as it's probably impossible to go full flight into these things), at least be aware of it.
See my comment today on a Tom Friedman article, particularly the section on 'communities,' as well as the overall need to change how we think about some fundamental things.
http://www.nytimes.com/2017/01/04/opinion/from-hands-to-heads-to-hearts.html?comments#permid=20987110
consistent with re-launching 'the Sustainable Leadership Forum...as a new CRCS Institute for Transformational Leadership,' which includes 'A Possible New Jersey' component, consider mentioning the document I framed and asked you to co-write on 'A Clean Economy for NJ,' possibly to offer to NJ Gubernatorial Candidates. You had conditions for writing it, which we are 1 1/2 steps or so from fully meeting. We just need Marnie to commit to writing it with you, and you and her need to co-decide how to work together. Possibly we'll have her commitment by the time you go to press with what you want to send out
relatedly, if there are other activities either you or Victoria are doing that are reasonably related to all this, why not mention them too? I'm thinking of the significant role Victoria is playing recruiting the new ED for the re-launch of the American Sustainable Business Council--NJ Affiliate. There might be others. Are you still doing some writing from time to time? Keeping a hand in anything from the old days?
Matt
c: Victoria, Gus, Peter
From Hands to Heads to Hearts
www.nytimes.com
Remembering what makes us human is how to show economic value in the age of smarter and smarter machines.
From: Jonathan Cloud
Sent: Wednesday, January 4, 2017 7:46 PM
To: Victoria Zelin; Peter Burgess; Gus Escher; matthew polsky
Subject: DRAFT: New Directions for 2017
I’d like to publish something like this on CRCSolutions.org if no one has any objections, along with some links to our new initiatives:
Center for Regenerative Community Solutions | and New ...
crcsolutions.org
How would you like the members of your community to work together as part of a thriving and resilient ecosystem, providing for the basic needs of all citizens?
New Directions for 2017
CRCS will be moving in several new directions this year, which we think will be of interest to a wider audience than just those of us interested in financing clean energy. We’ve been focusing more on communities in the past year, and on the values and vision that led to our mission, to assist local communities and neighborhoods to become more resilient in the face of the widening impacts of a changing climate.
We are proposing to work with one or two towns in New Jersey on their revitalization and self-renewal. Culture actually holds the key to greater local resilience, alongside the physical transformation of communities into eco-communities. And organization is what’s needed to transform culture. We are planning to create “civic cooperatives” that will lead these communities into a positive self-generating future. Many communities are today experiencing decline, or struggling to ignite a self-renewal, within the broader context of the need for a world for a world that shifts carbon from the atmosphere back into the soil. The cooperative model has proven itself to be more enduring, more beneficial, and often more valuable to communities than the conventional marketplace business model.
What makes this possible is that we have a number of tools with which we can assist groups in organizing their communities with more sustainable development. To begin with, we have the clean energy financing tools mentioned earlier, one of which — DREAM financing — is in principle able to be utilized today, though it has not yet been tried or tested. This innovation fulfills our goal of bringing financial resources to communities and groups to enable transformational change. Specifically, we think that DREAM can provide the starting-point for a clean energy co-op that could undertake solar, energy conservation, and resiliency projects, and return the profits to the community.
More broadly, we seek to apply regenerative design and permaculture principles to community redevelopment, and act as catalysts for more rapid evolution. Together with other organizations and professionals we are able to bring inspired planning and action, whether it is to the creation of an ecovillage or cohousing community or of cooperative enterprises in food, energy, the arts, and finance.
We invite you to join us in this adventure, in one of several ways. We are thinking of re-animating the Sustainable Leadership Forum (which we had put on hold to work on PACE) as a new CRCS Institute for Transformational Leadership. Download our program information sheet to see what’s available (attached).
Alternatively, if you are ready to collaborate with us on meaningful work, we invite you to join one of our cooperatives-in-development programs, and get involved in restoring ecosystems and remaking communities. Stay tuned for more information.
And of course we invite you to join our major sponsored programs, Ecovillage New Jersey and the new Ecovillagers Alliance.
My best regards,
Jonathan Cloud
Executive Director
Center for Regenerative Community Solutions, a 501c3 NJ Nonprofit Corporation
New Jersey PACE
8 Revere Drive, Basking Ridge, NJ 07920
Office 908-396-6179 ~ Cell 908-581-8418 ~ Fax 908-842-0422
www.NewJerseyPACE.org ~ www.CRCSolutions.org
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