LinkedIn Dialog
Peter Burgess Comment

Commment on the issue that money profit accounting is not enoug, and there is need for reform

Burgess COMMENTARY

Peter Burgess

Peter Burgess Founder/CEO at TrueValueMetrics

My position on this question is based entirely on my belief that metrics matter. Every sport, as far as I know has a system of keeping score, and the game is based on winning using that system of scoring.

In our modern society and economy the metrics that are in play are those that relate to money profit, stock prices and GDP growth. It is no wonder that the outcome is what we have ... massive income and wealth inequality, half the population of the planet poor and many hungry and lacking the basics, climate change merely an annoying diversion, and supply chains with totally unacceptable worker conditions, and so on.

CSR is a good idea ... but it gets in the way of achieving the simplistic goals described above.

I argue therefore that we absolutely have to reform metrics so that the core metrics become a comprehensive set that includes the money result (or profit), the people result (quality of life being improved for people) and the various planet results (resource consumption for raw materials and energy ... environmental degradation through solid waste, liquid waste and gaseous waste ... ecosytem stress and losing bio-diversity ... etc).

The results ... profit, people and planet all have to quantified in a single framework that is easy to talk about. Quantification is not easy, but it is not impossible. It can be done using 'standard values' rather like standard costs in cost accounting.

The data should have utility in summary form, but also be structured so that there is an ability to have granular information at any decision point in life ... both the little daily purchases and those that are done just a few times in a lifetime.

Finally .. the system of metrics should function not only from the perspective of the corporate insider, but from other viewpoints as well. The three main views are (1) the organization; (2) the place ... community; and, (3) the product.

Double entry accounting goes back more than 400 years. Modern capitalism goes back to Adam Smith more than 250 years ago. GDP as a metric is more than 70 years old. Seems that some serious reform of the metrics is overdue.

Peter Burgess TrueValueMetrics

We all approach this matter based from experience. And it all depends on the Ethos of the company, like Veronica said there are different drivers. For me the key issue stands on how well You combine them.

It doesn't have to be purely altruistic or utilitary, we are some how summerge in sometimes an sterile discussion, looking for which actions are more pure (almost saint) and which aren't.

I think about this phrase: sustainably profitable, why not? Companies can have great core responsible values, even altruisitic ones, that doesnt mean the financian ones are aside, in fact they can be combine. And the key factor for it as Peter said is to meassure, meassure benefits for the company as well for the society, that way the CSR initiatives can be alligned to the business and viceversa.

When something has value for the company and various stakeholders and is measureable it's more likely to have Internal and external support, to be embrace by sales and marketing not overtake by them, to do good without appearing

Peter,

You've set out clearly one approach that many may find useful; and reminded us that 'what gets measured, gets done'.

Companies/organisations may have preferred practices for measurements (quantitative and qualitative); it's likely also that metrics selected are consistent with professional bodies or industry Best Practice as appropriate.

Veronica Broomes

Couldn't agree more Peter. Beautifully thought out and articulated.