DIALOG - TPB - JK
About the development of True Value Acccounting / Multi Dimension Impact Accounting
Food for thought ... intellectual nourishment!
Peter Burgess / John Kiehl
Feb 8 (3 days ago)
Food for thought ... intellectual nourishment!
to John, bcc: alan
I read this this morning ...
and then saw this comment
Agreeing wholeheartedly with Arthur above. Here’s another angle to understand it:
Read about the Law of Requisite Variety — https://en.wikipedia.org/wiki/Variety_(cybernetics)#The_Law_of_Requisite_Variety
“If a system is to be stable the number of states of its control mechanism must be greater than or equal to the number of states in the system being controlled”
In the following excerpt, flip out the word “control” for “governance”.
From Jurgen Appelo’s book on Agile leadership (“Management 3.0”)….
“People are the only elements in a software project with the ability to initiate interaction and to convert information into innovation…..
….Simply put, [the law of requisite variety] states that a system can be controlled by another system only when the other system is just as complex or more complex than the first one….
..People are the most complex elements of any software project. This makes them best qualified to directly control their own projects because people (not processes) are the only parts with sufficient complexity to deal with the variety of states that they are confronted with. And any complex system, if it is to produce useful results, needs some level of control.
Neither documented processes, nor code generators, nor project management tools, nor the most exquisite upfront designs can ever hope to have the amount of complexity that any ordinary software project possesses. Processes, tools, and designs cannot outperform their masters. Without people, they are useless.
The Law of Requisite Variety makes it quite clear that if some level of control is needed in a project, you had better select people as the control mechanisms. They are the only ones complex enough to actually pull it off”
— from “Management 3.0” pp. 64–65 (Chapter 4) by Jurgen Apello
While I have never articulated my own thinking in this way, it is very much what I have done throughout my career when trying to manage various entities in the best possible way, and now as I try to build out a set of True Value Management Metrics. You may have noticed that I don't get very excited about very much unless whatever it is 'fits' into a bigger and very much more complex framework in a meaningful way.
I am always mindful of your push-back about complex systems.
Some of the other writing of Arthur Brock is interesting ...
All the best
Peter Burgess ... Founder and CEO
TrueValueMetrics ... Meaningful Metrics for a Smart Society
True Value Accounting ... Multi Dimension Impact Accounting
Twitter: @truevaluemetric @peterbnyc
Telephone: 570 202 1739
Feb 8 (3 days ago)
Sadly, I don’t have the mental horsepower — nor motivation — to take apart Arthur Brock’s exegesis, but I will point out a few things that strike me as iconic of the over-simplification that Albert Einstein warns us about when he warns us about describing something simply “… but no simpler”.
Complex systems are NOT complex … period. End of sentence.
This is what Wolfram has so successfully (and repeatedly) demonstrated. What we call complex systems are in fact ALL systems that rise above a very, very low threshold of 'complexity', a threshold below which absolutely NOTHING happens. So Arthur’s claim that he has a better way of regulating a complex system fall on my deaf, New Kind of Science ears.
“you can’t govern something that doesn’t exist”
This thought leads me to a different line of inquiry. Specifically, the man-made world of ideas is just as real as the Mother Nature made world of protons, hydrogen, and gravity. Just because cryptocurrencies 'don’t exist' in a proton/Black Hole sort of way doesn’t mean they don’t exist. (I know you agree with me) The thoughts of man are in fact the most powerful forces in the Universe. We can shape and regulate these thoughts with other thoughts, as well as chemistry, physics, and software.
Any system that can’t regulate itself dies.
I’m not sure any system can self-regulate itself. Regulation arises from a system being embedded in a larger system. Is a swinging pendulum self-regulating its periodicity. Or, is the pendulum embedded in the earth’s gravitational field regulating the pendulum? Is our solar system an example of a self-regulating system? They tell me our Sun is half-way thru its life cycle and will burn out in 5 billion years. Will the death of the solar system be an example of a system that was not able to self-regulate? Of course not. In fact the thing to notice is that the life span of any meaningful creature or civilization in the solar system is minute compared to the time frames that guarantee the system is stable. Arthur’s rescuing of cryptocurrency would be better served by finding a way to embed cryptocurrencies in a larger, more expansive system, rather than perfecting some sort of internal regulator. Actually, I think I would suggest he looks for both — an internal feedback regulator, and an external boundary value regulator.
Just my thoughts,
Feb 10 (1 day ago)
I don't like it when you start talking about mental horsepower ... it reminds me of my inability to master mathematics in a useful way ... and the need for me to revert back to arithmetic!
I found myself looking at the work of Arthur Brock because ... using broad strokes only ... he seemed to be thinking along rather similar lines to myself with respect to money and the workings of the economic system. The piece on cryptocurrencies was just one of a several similar ... which support my contention that most of the proposed solutions to the failing socio-enviro-economic system cannot work simply because they are not system solutions, but something too limited in scope ... moving deckchairs on the Titanic.
The concepts of blockchain won't change anything of significance as long as they are simply used to make banking and financial services as they now exist more efficient ... and this is the most likely outcome.
Olinga Ta'eed (Seratio) is thinking outside this box with the idea of a Social Earnings Ratio which is very good except that I cannot see exactly how this is going to be 'trusted' in a meaningful way. He also talks about the SER as being a currency or coin, which is definitely needed but I cannot ground these ideas in a tangible way.
True Value Accounting (TVA) ... Multi Dimension Impact Accounting ... is not only about a PEOPLE measure (like the SER) ... but also about the impact on NATURE in all its complexity.
I am now talking about several different UNITS OF ACCOUNT rather than metrics / measurements / values / numbering / etc. This is a small change in naming, but a big change in terms of bringing conventional accounting and TVA/MDIA closer together.
In conventional accounting there is already a lot of acceptable rules and principles associated with MULTI-CURRENCY ACCOUNTING and how the presentations change depending on the ways EXCHANGE RATES change.
So in the TVA data architecture there will be multiple UNITS OF ACCOUNT:
...... there is MONEY
............ one for each CURRENCY
...... there are units of account for PEOPLE
............ one for LIFE ITSELF
............ one for QUALITY OF LIFE (perhaps with further sub-divisions)
...... there will be several units of account for NATURE
............ one for LAND
............ one for WATER
............ one for AIR
............ one for Carbon/GHG/Climate
............ one for BIO-DIVERSITY
............ one for ECOSYSTEM SERVICES
In the TVA data architecture there are multiple PERSPECTIVES. These might also be thought of as different REPORTING ENTITIES.
In conventional financial analysis of the ORGANIZATION there is a lot of thinking about COST and PRICE in order to generate PROFIT.
A first step is to think in terns of COST, PRICE and VALUE. VALUE and PRICE are the determinants of the buy or not-to-buy decision. However, in prevailing decision making the IMPACT on PEOPLE and PLANET is ignored, with PRICE only representing the FINANCIAL dimension of the IMPACT. There needs to be a complete accounting for ALL the UNITS OF ACCOUNT for everything that is flowing through the system.
Another thing to think about is the relationship between an OPERATING STATEMENT or PROFIT and LOSS ACCOUNT, and a BALANCE SHEET. These reports describe both the FLOW or ACTIVITY and the STATE in a very succinct way. In conventional accounting this is only about the MONEY UNIT OF MEASURE. In TVA this is expanded to reflect ALL the UNITS OF MEASURE.
Every REPORTING ENTITY has a HISTORY that is reflected in the BEGINNING STATE or BALANCE SHEET of the ENTITY and its ACTIVITIES are reflected in the OPERATING STATEMENT for the ENTITY. The ACTIVITIES of the ENTITY result in an ENDING BALANCE SHEET.
PROFIT is the MONEY measure of PROGRESS for the ENTITY and is the CHANGE in the MONEY BALANCE SHEET from the beginning to the end of the period.
In TVA the PROGRESS is determined by the CHANGE in the BALANCE SHEETS for ALL the UNITS OF MEASURE for the ENTITY from the beginning to the end of the period.
TO BE CONTINUED ... over my brain energy limit for the day / morning
All the best
Alan Longley / John Kiehl / Olinga Ta'eed
John Kiehl / Alan Longley ... February 1, 2017
Happy New Year ... and thanks for this dialog. It makes a pleasant change from the 'news' in the media!
From Peter Burgess 10:30 PM (12 hours ago)
I missed this message last week ... I remember some of this discussion ... and got quite involved with trying to understand the work of Chris Cook at the time. Chris Cook got me thinking about the idea that we have a 'property ownership culture' when in fact we really need an culture around access to the use of a thing or a service. This predates ideas like the sharing economy ... Uber / AirBNB / etc.
My thinking about how this system fits together is emerging, though I still find it difficult to describe succinctly ... but I keep trying:
I am getting clearer about how all the pieces fit together yet. I think in terms of 3 segments of the system working together
(3) PEOPLE BUILT SYSTEMS AND STRUCTURES (PBS)
Everything will fit into these three segments
PEOPLE are the primary PURPOSE for every activity in the economy and in life
NATURE is the underlying foundation and support for everything
PBS is everything that humankind has done to make activities easier and more productive.
The key metrics for PEOPLE is QUALITY OF LIFE and the value of LIFE ITSELF. A wide range of issues feed into QUALITY OF LIFE. There is COST OF LIVING and all sorts of PRODUCTS (goods and services) that support QUALITY OF LIFE.
There are a number of separate key metrics for NATURE including LAND, WATER, AIR, CLIMATE SYSTEM, BIO-DIVERSITY, ECO-SYSTEM SERVICES. There is a vast amount of work at the scientific level on this ... but it is difficult to assimilate into a better metric for management.
The key segmentation for PBS involves three sub-segments:
(1) FINANCIAL CAPITAL
(2) PHYSICAL CAPITAL
(3) INTANGIBLE CAPITAL.
Each of these can be expressed in terms of MONEY CURRENCY and a range of other VALUE or IMPACT CURRENCIES associated with PEOPLE and NATURE
PERSON: The VALUE of a PERSON should not be expressed in MONEY CURRENCY terms, but in a measure that is defined independently. The components of VALUE for a PERSON include the value of LIFE ITSELF and the STATE of a PERSON in terms of QUALITY OF LIFE, COST OF LIVING and CONTRIBUTION to making the world a better place.
ORGANIZATION: The profit progress and performance of a for profit corporate ORGANIZATION can be described quite well using conventional accounting and in terms MONEY and using information set out in a BALANCE SHEET / STATE and a PROFIT AND LOSS ACCOUNT / FLOW-ACTIVITY. The impact / value add / value destruction progress and performance of an ORGANIZATION should also be expressed in a similar way using all of the metrics associated with PEOPLE and NATURE.
PLACE: A very similar approach can be used for a PLACE. A PLACE aggregates in much the same way that an ORGANIZATION consolidates. The progress and performance of a PLACE needs to be expressed in terms of aggregation of many elements of the STATE and the aggregation of the many elements of the ACTIVITIES
PRODUCTS: Yet again, PRODUCTS can use a similar set of metrics. PRODUCTS are important because they flow through ORGANIZATIONS and PROCESSES and PLACES and eventually are used by PEOPLE in support of their QUALITY OF LIFE.
PROCESSES: PROCESSES are used to produce PRODUCTS. There may be many PROCESSES in an ORGANIZATION. There may be many PROCESSES used in a SUPPLY CHAIN to produce a PRODUCT. There may be many different PROCESS located in a PLACE.
The money accounting for an ORGANIZATION includes money numbers for FINANCIAL CAPITAL, PHYSICAL CAPITAL and INTANGIBLE CAPITAL. Better metrics require numbers to reflect an accounting for the STATE of PEOPLE and the STATE of NATURE and the IMPACT on PEOPLE and the IMPACT on NATURE.
Conventional money is a unit of account that is both a store of value (capital) and a value exchange (flow). The plan here is to have several units of account that can be used to number state and flow for all the capitals.
A PERSON, an ORGANIZATION, a PLACE. a PRODUCT and a PROCESS can all be described using these units of account a consistent architecture for the accounting and for the reporting of all the entities.
This is pretty dense ... but I think it is fairly complete
All the best
Alan Longley / John Kiehl / Olinga Ta'eed
FAVORS / Favors: the Main Idea ... dialog with Alan Longley
Favors: the Main Idea
Favors would be a mobile app that weaves a better, fairer, stronger social fabric. It would look and function like a marketplace / ecosystem app, a platform to help users exchange the type of
free services we already refer to as “favors”. Imagine two roommates. Gina just invited a date over for dinner and now she needs John to clean the apartment. John and Gina agree on Favors that “urgent apartment cleaning” is worth 50 points. Once the favor is marked complete, John has proof that Gina owes him 50 points in favors. Favors would act as a ledger so that Gina’s future efforts at reciprocity could be logged and reconciled with her debt. In other words, Gina could quite literally (and precisely) repay the favor.
Favors would also function as a social network. Instead of exchanging thoughts, jokes, or links on this network users would exchange real meaningful favors. Part of the company strategy would be guarding the meaningfulness of what happens on the network. To keep things kosher, users could block someone who asks for deplorable favors, and a “report abuse” function would be honored. To keep things engaging, well, a ton of things could be done; see “Beyond the MVP” section for some initial ideas.
Minimum Viable Product
Upon beta release, the iPhone app would have no revenue stream. It would provide the following services for free to you:
Accounts -- helps you set and reset username, password, avatar
Network -- lists who you can exchange favors with, and offers ways to:
o search for a user by name
o request to connect with a user
o disconnect from a user
Report Abuse -- you can block other users for requesting deplorable favors
Register -- tools for you to track the states of a transaction
o User A describes the favor, sets a price, sends request to connection(s)
o User B agrees to do the favor at listed price, marks when favor is complete
o User A confirms that the favor is complete
Notifications -- you can view and respond to:
o connection requests
o favor requests
o new transaction statuses
Ledger -- dynamic list of your creditors and debtors, complete transaction history
What Problems would be Solved by the MVP?
When you need a favor, it’s hard to remember who owes you one.
When you do someone a favor, you might not get credit for it. They might deny that you did the favor. Or you both might forget.
Overly-nice people tend to return small favors with big ones.
Overly-selfish people tend to pay back big favors with small ones, or don’t return favors at all.
Money is Boring
Returning a favor invokes positive emotions and mystical ideas like karma and vasana.
Paying for a favor with money kills the magic.
Beyond the MVP
Favors could work as a platform for engaging local, smaller-scale groups. Since the app attempts to “weave a better, fairer, stronger social fabric”, call them Quilts. Corporations might weave a Quilt for employee engagement. Schools might weave a Quilt for classroom engagement. If this service was monetized as a subscription, we could provide Quilts with analytics on social capital: metrics on how reciprocity, trust, and cooperation are exhibited by their group. These analytics would be drawn from actual behaviors, rather than from responses to some cheesy “Great Places to Work” survey. For those Quilts that rank highest in social capital, these analytics would be a badge of honor; we could publish “Top 100 Quilts” on our website; another great way to market the app.
In future iterations of the app, we could incorporate the ability to forgive debts. Kredit Scores would be a verifiable index of the user’s generosity. Someone with a very high Kredit Score would have forgiven a lot of debts (or perhaps a few very big debts) within Favors. Because the app would be built on the blockchain, there would be no feasible way to game this system; a high Kredit Score would provide a true sign that someone is a generous benefactor. If John is feeling generous, he can use Favors to forgive Gina’s debt. In addition to cancelling the 50 point debt, Favors would publicly give John +50 kredit points as a sign of his generosity.
In future iterations of the app, we could incorporate the ability to view favors that are requested by local strangers (users who live near you, but are not connected to you on the app). This would enable Favors to be a humanitarian tool. Church groups, boy and girl scouts, and other orgs might use Favors as a way to reach out to their local communities. If one of these orgs formed a Favors Tribe, then their members could do favors in its name. Any favors done in the name of a Tribe would be automatically forgiven, and the Kredit points would go to the Tribe.
Imagine a worldwide race where all Favor Tribes compete to earn the most Kredit points within a specified month; we could publish leaderboards on our website; this would be a great way to market the app.
Value Proposition and Revenue Model
Favors could flourish either as a standalone marketplace (similar to Uber and Airbnb), or as a plug-in to intranets like Igloo and Zoho. On the one hand, if the app worked as a standalone marketplace, the primary revenue stream would be from data marketplaces; our buyers would receive behavioral profiles generated by user activities within the Favors marketplace. On the other hand, if the app worked better as an intranet plug-in then we would use a typical SaaS (subscription-based) revenue model; accounts would be referred to as Quilts; users would receive social capital reports.
If Favors succeeded as a plug-in on platforms like Igloo or Zoho, those platforms would likely acquire the app. Alternatively, if it flourished as a standalone marketplace, Favors would become an attractive addition to the suite of social-service products offered by groups like Uber, Airbnb, and Facebook.
Total Addressable Market
February 2, 2017 ... 11:44 AM (1 hour ago)
I have been reviewing some of your old messages (and not so old). When I reread this particular material it clicked that something like the FAVORS app would serve well to build something akin to a 'market' that would determine the value of a lot of intangible things that do not have conventional intrinsic money pricing.
At a meeting on Tuesday I tried to describe a payment mechanism that would help a not for profit serving very low income beneficiaries. The problem to be addressed is that people who benefit from a variety of social welfare programs lose ALL their benefits if they work hard and then go over a wage cap ... a terrible disincentive for people to build up some better earning potential, savings and then continue working to climb out of poverty.
I suggested that people should be able to work at Harlem Grown as long and as valuably as they can ... and the value of all the work should be recognized. They should only be paid a wage that is lower than the cap being imposed by all the rules / regulations of the social benefits. They should be credited with the difference to a savings account denominated in GOOD (something like the FAVORS points)
One of the similarities between FAVORS and my accounting for GOOD in this instance is that the money equivalent value of the transaction is determined already. The missing piece of the ecosystem is a 'ledger' to record the transaction and keep track of it.
One can envision a system where the balance in the GOOD account can be used as a backing for a loan in MONEY which can then be spent in the normal way.
Unfortunately there are potential legal implications surrounding this which might nullify the idea making the avoidance of the social welfare cap null and void. This is a legal matter beyond what I know.
Alternative Currencies ... Smart Contracts ... Complex Markets ... Unit of Account
I cannot really understand how the Olinga currency initiative makes a difference absent associated transactions that produce meaningful value add. If the idea that the Olinga currency serves as a replacement for money currency that we are using at this time ... the dollar, pound, Yen Euro etc. I can see it serving as a replacement simply because the blockchain is more efficient, but the legal hurdles to deploying this would likely be huge. In the end don't the established banks still win?
I think it is the Unit of Account that is the key to my better understanding of how everything has to work, including a Multi Dimension Impact Accounting / True Value Accounting. Some of this is a little bit like the IMF and its basket of currencies and its special drawing rights ... or the old EU currency the ECU (European Currency Unit) that was also a basket of currencies all with separate exchange rates relative to the ECU.
I think the basket of units of account that we need are (about 10):
... PEOPLE (life, cost of living, quality of life)
... NATURE (land, water, air, climate-carbon-equivalent, bio-diversity, ecosystem services)
... PBS - FINANCIAL (money)
... PBS - PHYSICAL (basket of units of account)
... PBS - INTANGIBLE (basket of units of account)
This is not particularly well articulated ... which is not surprising given the complexities that really and truly do exist
Open file 12682
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