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|Date: 2022-07-07 Page is: DBtxt001.php bk0006020|
The Basic Concepts of True Value Metrics
Community Is the Focus of TVM
Communities are where people live
All communities are different
Community is where people live and work. It has been said that “all politics is local”, but it is even more true that “all life is local”. There are many advantages associated with community focus planning, with the ability to have programs that are of a manageable size, and the ability to see the impact, and adjust to handle constraints that would otherwise disrupt progress. In a community the decision making is done by people … and cause and effect are meaningful … not merely remote statistical abstractions.
Relief and development analysis is complex … but is simpler at the community level than at a national level. With a community focus approach it is possible for analysis to be simplified to focus on material activities that are most impacting performance of the community. Community analysis is location specific and community centric, rather than the more usual sector centric analysis with implementing organizations.
The advantage of the community centric approach is that activities may be optimized to suit the place which results in much more effective socio-economic progress. Where resources are limited this is an important consideration. Location specific community centric planning and resource allocation is important because each community is different, and accordingly the activities in each place should be different. National level plans provide a guiding overview, it is but it is planning and analysis at the community level that makes it possible to do things that optimize progress. Every community is different. Planning at the community level is more relevant than planning at any other level. If the goal is for people to have a better quality of life, then the community is where people live and work.
What is the “state”? What is the “progress”
The performance of a community is often pretty clear at the community level … but performance at the community level is not well documented and in a form that facilitates decision making, oversight and accountability.
The money and material resources of a community are a mix of private property, public property and the resources of the commons. The complete resources of the community are also those that have social value, though not a direct trading or monetary value. These are all part of the “state” of the community and include (1) the value of the human resource; (2) the value of organization and governance; and, (3) the value of future opportunity and potential.
State … balance sheet of the community
The state of the community is recorded using data about the community. The data are organized along typical accounting lines with items sorted according to balance sheet assets and liability classifications. The data reflect not only money accounting asset classifications but also TVM value classifications for all the value elements for the balance sheet.
The TVM construct for state of the community is similar to a balance sheet of a corporate organization but expanded beyond the normal assets and liabilities to embrace the value intangibles, especially the value associated with quality of life in the community. The state of the community is about quality of life and the assets and liabilities of the community.
Progress … balance sheet change over time
There is progress when the state of the community is improving from year to year. The state of the community is an aggregation of value … and while value is subjective and not easy to quantify it is very important and the fundamental basis for determining quality of life. The TVM construct for progress is based on the core idea from double entry accounting that changes in the balance sheet may be used to understand the progress of an entity over a period of time. The change in the balance sheet … the change in the net value plus is a measure of progress. A community shows progress when the balance sheet improves.
Performance … what cost? … what impact?
The progress and performance of a community are functions of the potential of the community and the efficiency and effectiveness of the socio-economic activities in the community, including those originating within the community and those that come from outside. Too many activities in the prevailing socio-economic systems benefit some at the expense of others … usually the poor and powerless.
Some ancient practices are very efficient
It is thought provoking to consider how any human being can live and prosper in the middle of a dessert … but pastoral societies do this by being highly efficient in their use of very limited resources. Relative to the potential of the available resources they do amazingly well.
In contrast a modern advanced economy … the prevailing throwaway consumption based economy … is highly inefficient in its use of available resources. Cleaner effluent from a profligate resource using production process is a step in the right direction … but only a very small step!
Quality of life determined at the community level
Quality of life is determined at the community level … whether it is a rich community with abundant resources or one that is poor and struggling. Good decision making has a huge role in making the best possible use of resources, and community performance metrics should be suited to decision making at the community level.
A good start is the efficient and effective use of resources. The underlying assumption of market economics is that the market delivers efficient allocation of scarce resources … but this is rarely so because few markets have economic efficiency but are being gamed so that winners win and losers lose rather than delivering an optimum equilibrium. TVM at the community level provides data so that the market works more efficiently with value taken into consideration as much as profit. TVM analysis aims to be useful ... to improve decision making and socio-economic performance.
Facilitating progress at community level
TVM is a system that works with data … and has community, a place, as the core of data collection and analysis. All the data are linked to place and associated with time. Every fact that is going to be important in decision making about the community is needed. Broadly this breaks down in the following sections:
Where are decisions made … where are the data?
The success of community development depends a lot on where decisions are made and what data are available. People are a key to community success … but how are they organized to be effective in helping the community to progress.
The community governance structures may be the best locus for decision making and data, but maybe not. Maybe the locus should be an activist group or other civic organization. The community as the reporting entity is not the community government but the community … the community government is an organization within the community.
It is possible for data to be effective without having any formal locus … data are about the community as a whole and may be located “in the cloud” if there is no other place where they may reside.
What are needs of people?
People have needs … basic needs. People have wants that go well beyond needs. A “middle class” quality of life is about needs being satisfied without any worries and some level of want being realized to suit oneself and deliver on a reasonable “quality of life”. Modern metrics for progress are poor indicators of quality of life, but more metrics that correlate with more and more economic activity and profit.
In all of history, society has been constrained because there were more basic needs than the practical capacity to supply these basic needs … but this is no longer the case. Modern science and technology could now enable global capacity that would be more than sufficient to satisfy all basic needs … but the governance structure and metrics for allocation of resources to make this happen are missing. TVM therefore starts any community analysis with needs.
In a sustainable economic setting, the needs of people are satisfied using the money they earn to purchase everything they need and want. The economic infrastructure makes the products and services they need easily accessible. A combination of productivity and market forces (in theory) makes the products and services affordable.
On other words in a sustainable economic setting, people meet their needs and their wants through their own economic activities … and society improves over time because productivity improves, surpluses result and society has reserves for unanticipated problems.
What do people need? There is not one easy simple formula … every community has different needs, depending on its history and the resources at its disposal.
Needs very different
After the earthquake in Haiti in January 2010, the communities directly affected by the earthquake had need for rescue, emergency services and all the basics for survival … vastly different from communities in other parts of Haiti not structurally damaged by the earthquake, but having to cope with a massive influx of displaced survivors.
The essentials for survival in a disaster affected community are water, food, shelter, sanitation, health care, and security. In most disaster situations people “self organize” into working communities or groups to help each other and to make the best of what is available.
What do people want? A community is likely to have very different priorities from those that an outsider may see as the key priorities … especially when the potential of the community is not clear and the vision of community leaders is limited. Change usually starts with small steps … and accelerates over time … success building on success. People replicate success … but want to see success in practice not merely as a project hypothesis.
Unmet needs in a poor socio-economic setting
Unmet needs are a result of resource shortage, capability shortage and organizational deficit. The scale of unmet needs and the possibilities for progress are constrained not only by the availability of resources … but also they are constrained by issues like lack of know-how, poor organization and the way in which available resources are deployed.
The resources of the planet are finite … but they are substantial. TVM takes all resources into consideration … including human resources, natural resources, technical resources and financial resources. TVM wants to know what resources are in the community and what resources can be mobilized to satisfy the needs of the people in the community.
In some poor settings, the reason for poverty is because of external exploitation and forced deprivation. The poor and powerless are unable to change anything for the better while the rich and powerful stay in control. Over the past five decades or more there have been international initiatives to reduce poverty. These initiatives have had some impact, but nothing like the impact that should have been achieved given the resources available for the work. More community data will serve to make abuse more visible.
Poor communities may not have the local resources to do what needs to be done. People may know what would improve the community but do not have the materials to do the work nor the money to buy the materials.
In some cases unmet needs exist because knowledge … human capacity is a constraining factor. Resources may be available, but they cannot be used to satisfy needs because the know how is not available. Lack of knowledge capacity needs to be addressed and made part of the process for community progress. Focus is needed on how resources have to be organized in order to provide the capacity that will deliver goods and services to satisfy all the basic needs … and more.
In the community setting, unmet needs require incremental resources, but it should be done using a systems approach that looks for continuous incremental sustainable improvement. People with needs should be at the center of initiatives to satisfy needs … the minimum of external resources should be injected into the process.
A big part of the key to sustainable progress is that the economic productivity of people has to be improved AND opportunities to use incremental education, knowledge and skills have to be created.
More education without more jobs is a wasted opportunity
What role for natural resource wealth?
Natural resource wealth is a problem … more than anything else mineral rights are being exploited under the “rule of law” so that ruling elites and corporate interests are able to enrich themselves while ignoring any claims that community people might reasonably have.
The world's big energy and mining companies have become larger economic entities than most national economies and they wield a huge amount of economic power. In theory they behave according to the rules of law and international ethical norms … but few people have any idea what really goes on behind closed doors.
It would seem reasonable that natural resource wealth could be used to improve the quality of life for poor communities that are resource rich … but it is not happening on any significant scale. There is more talk than 20 years ago … but not much change yet, and there probably will be little change unless there are more relevant metrics like TVM about community performance and the associated organizations, activities and value chains.
Huge abuse of power When you apply value chain analysis and “follow the money” it becomes fairly apparent that there is a big disconnect between what is said and what is done! How come heads of state in resource rich countries become so rich while people remain so poor? There is huge corporate benefit accruing at the same time that chronic poverty remains.
What are the possibilities
Each community has potential … but all are different because the place and the people are different. Performance depends on what is possible in the place … what resources there are and what constraints there are. The future progress of the community will depend on what is done … what activities so that the state of the community improves over time. Planning provides a guideline about how this progress towards the optimum possibilities may be achieved.
The potential of the community is a function of the resources of the community including especially the people of the community. Though the resources of the community are a limiting factor, they can be organized in an optimal way to achieve more … and have a higher productivity and more surplus production. The potential of the community changes when the value of the resources change … as the value of the human resource changes when education is improved, skills are improved and health is improved
Cause and effect not correlation is important
Measuring progress and measuring performance is expensive and has no value unless the information is used to improve performance. A little information that improves decision making is very valuable … it does not need to be an academically rigorous study … just some useful facts that decision makers can easily process. Management information aims to be meaningful and valuable … trying to get at cause and effect in a practical way.
A good part of academic study tends to being rigorous in methodology … academically useful, maybe but not of much practical use. For financial reasons more than anything else, a large part of the data about socio-economic performance comes from the academic community that has cornered most of the available money. This has been good for the academics and college researchers, but very bad for society as a whole. Academic studies that identify correlation that has little or no practical application are a wasting resources and probably worse … teaching a way to research that cannot very much help progress where it is most needed.
Cause and effect … performance
It is virtually impossible to identify useful linkages of cause and effect at the level of national aggregation … a common level of study by the academic community … but it is quite possible at the community level. The cause of progress in a specific community may be understood by analysis of the activities in this community. Activities that are surplus producing with net value adding help the community to progress. Though all the facts will rarely by available, enough data may exist so that in combination with an understanding of the linkages in the community, there can be improvement in the way things are done.
The progress of a community is affected by (1) the starting point … the available resources of the community; (2) the potential of the community; (3) the vision of the community leaders; (4) how the community organizes; and (5) the priorities and what activities it chooses to do.
When good decisions are being made in the community, the results are rapidly apparent … same with bad decisions.
Value chain analysis
Value chain analysis is important for community decision making and to understand the potential of the community relative to its performance. The fact of terrible poverty in places that are major oil producers suggests that the value chain in place is wrong … albeit legal. Rule of law is usually thought of as a way to make progress possible … but the application of rule of law in many situations involving big investments and big profits suggests that rule of law enables rip-off in ways that need to be exposed. Every community needs to be doing value chain analysis in connection with all its external socio-economic activities including things like governance constraints and security matters.
Community plans, oversight and accountability
Data make it possible to have plans that aim to make a community progress … but the aim of the plan is not to have a plan, but to facilitate progress. The data that makes it possible to plan also makes it possible to measure progress
Oversight is the link between implementation and plan … when done in a constructive way oversight helps to keep progress on track. The purpose of oversight is more to identify problems and deliver help than to find fault and pinpoint blame. Oversight is successful when there is high performance progress … not when it catches people out!
Accountability also should start from a positive place. The primary goal of accounting is not to find fault with performance, but merely to have data about performance. Most of the time the data show rather normal transactions and performance … but sometimes the data show excellence that should be celebrated and sometimes the data show inappropriate behavior that should not be tolerated. People should know about progress and performance and celebrate jobs well done. People respond more to favorable encouragement than to negative fault finding and blame. Positive reinforcement is possible when there are data to provide accountability.
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