image missing Date: 2021-10-17 Page is: DBtxt003.php L0900-TVM-OVERVIEW-02

The business world has become very productive and profitable over a period of well over a century enabled in large part by management accounting that has conventional financial accountancy at its core. This period has seen an enormous improvement in quality of life for many people around the world, a rate of progress never seen in history before and worth celebrating.

A closer look suggests that progress has been far less valuable than simple averages would suggest.

People are living far longer in the 21st century than they were doing in the 19th century. Better nutrition, better living and working conditions and better medicine have all contributed to people living on average about 30 years longer. While the global average has improved, some places have improved far less than others. Many of the places where there has been great progress in the past are no longer progressing as fast, or not at all.

Engineering and technology generally have been responsible for making productivity improvement possible.

There have been a series of major innovations with respect to energy. Water and wind power was displaced by fossil fuel produced steam power that was applied to enable transportation and the production of electricity. Energy has been foundational for almost everything within the industrial revolution.

There has also been massive progress in the science of materials. Many of the high performance elements of the modern economy have become possible because of improvement in materials. The modern jet engine is one such example.

Another area major technological progress has been the emergence of digital systems. The computational power that exists in 2020 is millions of times more powerful than what was possible just 50 years ago, and its power continues to grow. The computational power represents a huge potential for better performance, but whether this will be managed for good of otherwise is an open question.

TVM (TrueValueMetrics) aims to be a gamechanger by enabling social capital and natural capital to be managed as effectively as economic capital. The idea of a triple bottom line (TBL) that reflected not only profit but also people and planet was articulated in the 1990s by John Elkington but has not been widely adopted. Profit performance, GDP growth and stock prices remained the dominant performance metrics. It is said that you manage what you measure and only financial or economic metrics have been in play. TVM numbers the TBL in terms of performance and all the capitals ... social capital, natural capital and economic capital ... in terms of progress. Essentially this means that all the important externalities are brought into account.

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