Date: 2024-05-13 Page is: DBtxt003.php L0913-TVM-MMW-000035
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TrueValueMetrics ... Peter Burgess Manuscript
Making Management Work for Relief and Development |
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Chapter 35
Organizational View, Part 1 |
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Introduction
The main vehicle for economic activity Almost all socio-economic activity is carried out using some form of organization. The corporate form is the standard for “for profit” activities. A not for profit corporate form is common for “non-profit” activities. But all organizations that use resource should be looking for best possible performance. For a number of years a socialist economic model was used with “government” being the key economic operator. This did not work well, arguably because an imperfect market system is substantially better than even the best system administered by even the most benevolent bureaucrats. Improving organization performance Every organization can improve performance. In the corporate for profit sector the driver of performance improvement is the corporate profit, and not much else. The corporate community has been very creative in building “value” for its stakeholders, some of which is truly value creation and some of which is merely transfer of wealth from one group in global society to another. Getting the corporate wealth creating engine working in a way that reflects a more equitable sharing of wealth is critical to a stable world. In the not for profit or social value organizations, the driver of performance improvement is social value adding. But mostly the metric that is used is merely the size of the organization in terms of the income and the disbursements and the number of the staff. Size has very little to do with performance, though it is a measure. Up to now, no metrics to measure an organization's performance relative to the goal of relief and development progress have been used. As soon as an organization's contribution to a community's performance is measured, it will be possible to get a much better idea of an organization's true performance. At some level this is already being done with respect to “projects”, but this is a poor measure to be using ... the metric has to be at the community level. Performance is very much a function of the relief and development sector “value chain”. If people and community are the “reason” for socio-economic development assistance, then activities that do not have any connection with people and communities cannot have any “value” ascribed to them. Thus, under this metric of relief and development performance, a lot of academic activity that is incurring costs and getting funded will not have associated international relief and development value. This means they will be categorized as value destroying organizations. Organizations in the “north” Most organizations that have emerged in the countries of the “north” have evolved in response to a market oriented capitalist system that has a substantial amount of law and regulation to facilitate its success and control its excesses. In terms of wealth creation the organizations and the organizational framework works well ... but it does have its flaws. Organizations in the “south” The organizations and the organizational framework that drives socioeconomic progress in the “south” has really not worked. There has been some success, but overall the results as a whole are poor. A wide range of different organizations are needed in order for international socio-economic development to be successful. Up to now there has not been much attention paid to this, and there are gaps. Some of the organizations that are needed at the community level do exist, but few people know about them, and they are not organized in ways that can attract substantial incremental fund flows for development. In most communities, the local organizations are often informal, and unlikely to be “registered” in any formal way, and unlikely to have presentable accounts. It would be advantageous to have some organization in the community that has links to the “north” either directly or through some appropriate intermediary organizations. Government and government entities are major organizations in the relief and development sector. In the “north” government has a donor relationship in the relief and development sector, and in the “south” the government and the government entities are recipients of aid or beneficiaries. While these organizations are responsible for a huge aggregate fund flow, it is not easy to find out where the money originates, what it is used for, and what results are being achieved. Organizations that are in “north” and “south” The organizations that are in the “north” and “south” fall into several groups: (1) government organizations ... bilateral aid agencies and embassies; (2) multilateral organizations like the UN, the World Bank, etc.; (3) international NGOs; (4) large multinational corporations like Shell, BP, Exxon Mobil, Newmont Mining, Cargill, Vodaphone, etc.; and (5) small closely held international companies. Almost all of these organizations are “north” organizations reaching into the “south”. Rarely are the “south” organizations reaching into the “north”. I worked in Kuwait in the early 1980s. One of the things that impressed me about Kuwait was the operation of The Kuwait Fund ... an organization that was investing Kuwait's oil wealth around the world. Already, in the early 1980s, the fund was providing earnings for Kuwait of the same order of magnitude as oil revenues. This was done by reaching from the “south” into the “north” and being a full participant in the institutional wealth creation normal in the “north”. The Emirates are now doing similar global investing, using a similar model ... and reaching beyond passive investing to direct investment in international operating companies. Some new organizations are needed There are many places in the relief and development sector where needed organizations are missing. Some of the organizations need to emerge in the “north”, some organizations need to emerge in the “south”, and some new organizations are needed to join the “north” and the “south” in an efficient way. One set of organizations needed will help to bring more efficient activities into communities, and help to build value in these communities. Another set of organizations will help to make management information about the relief and development sector more universally available, and help to bring enough information into play so that it is possible to have end to end trust. Virtual organizations, networks, etc. The idea of network and connections has been around for a long time, but the idea of virtual organizations is relatively new. Modern technology has now made it possible to have a very active and powerful organization that does not have a lot of physical presence in any one place. |
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