The following is a comment that was written by Peter Burgess to the thread of a LinkedIn B Team discussion titled 'With 300 people owning 43% of the planets wealth 'POVERTY' has to be the key focus of every business within its sphere of influence followed by WATER' on August 27, 2013

Adam Smith did a lot of research before writing his most famous book in 1776. His conclusions made sense in the economic environment of his time. If he was alive today, I think he would write a very different book.

One thing that has changed is that productivity is way better than about 250 years ago. This means many things, but one big thing is that the global economy has moved from endemic shortage to endemic surplus. This ought to be good, but it is turning out that almost all the improved surplus arising as a result of improved productivity is going to owners of business rather than to those that work in the business. For the past 50 years, labor has become surplus to need and the price of labor has gone down.

In Adam Smith's day, most business was very small. Prices could be negotiated in a market place for real goods and services. Financial services were not a big thing and very rudimentary. Now big corporate organizations have oligopolistic control of prices and financial services pull a lot of profit out of the real economy into the financial sector.

Globalization makes corporate organizations more profitable, but for labor it is a race to the bottom. This is one of the areas where modern technology is a facilitator.

Though there is the potential for global surplus in almost anything people want, a big part of the world's population is extremely poor, hungry, poorly housed, badly educated and in bad health. There is a huge deficit in the infrastructure needed to support a modern productive economy. These issues are not being addressed because the simplistic capitalist market system cannot invest in solving these matters because they cannot deliver profits. No profits, no investment.

The modern Western society is a result of optimizing for organizational profit while ignoring all the externalities and the impact on people, place and planet. Modern management information has a total focus on helping a business optimize for profit, and it is very powerful. There is nothing like it to help decision makers optimize for people and planet, the other elements of the Triple Bottom Line (TBL)

I argue that the purpose of economic activity is to produce the goods and services people need without doing damage to the planet.

All economic activity is implemented by some entity and is located in a place, and data about an economic activity can be collected that shows costs, revenues and profit and the impact on people and planet in the place.

The performance of the organization is the consolidation or roll up of activities in one direction and the progress and performance of a place by consolidation in another direction. Same data for both uses.

Everyone knows the primary motivation of the organization ... it is profit and stock price.

The place is where impact on people and planet can be seen. For people it is quality of life that should be improving. For planet it is about resources being consumed, and the environment being degraded: water quality, air quality (greenhouse gases), land degradation.

Another dimension of socio-economic performance can be derived from product. Most goods and services travel through many places and entities before there is a decision to buy, and then there is use and post use. The end to end value chain of a product has impact on the profit of organizations and in every place, the quality of life of people and the state of the planet.

The modern economy is increasingly being driven by data. Much of the decisions support is about improving profit performance, not about improving the state of people,place and planet. This has to change. More and more analytics are being used to make advertising more effective ... to what end? More stuff, more debt, more waste and pollution, but all this is OK because this advertising is making more profit.

When we change the way the game is scored, we will change the way the game is played.

Peter Burgess TrueValueMetrics

Brilliant analysis, Peter, thank you so much.

Agree with Lewis, excellent overview !

One other point to make on Peters point about Productivity is that as a result global resource extraction has dramatically increased to keep high productivity manufacturing 'fed' with resources for processing and conversion way beyond the 'Needs' of consumers and the net result is the excess ends up in land fill! This is basically robbing future generations of resources which all end up in land fill! >p> This is a crises!