Peter Burgess Dialog
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Burgess COMMENTARY

Peter Burgess

Peter, rather than putting energy toward a lack of optimism in response to this 9 Characteristics article (and considering that you appear to be are a metrics specialist) why don't you share 9 helpful ideas/examples/practices for measuring the right things re: the 'better metrics, things of huge value that we take for granted and do not measure' that you suggested would help make more progress?…specific examples would be most helpful and would be more consistent with your argument for more than just talk :-) Unlike Reply privately Flag as inappropriate 3 days ago Francine M., Peter Burgess like this

@Raphael ... thanks for your gentle zing!

Think of any economic activity you know ... a factory, a gas station, a school, a diner, anything ...

1 ... What do the financial accounts for this economic activity look like, specifically what are the main items in the profit and loss account.

2 ... What is the payroll expense? The payroll expense has to be funded by the owners and it becomes a money cost for the business that reduces the profits for the owner. At the same time this same money is a value to the individual employee, to the employee's family and the community where they live. The value derived from the payroll expense is a multiple of the payroll expense, probably a much as a multiple of 4.

3 ... What are the main materials that go into production? Each and every product that goes in as an input to an economic activity has both a money cost and a trucost. Both money cost and trucost reflect the history of the supply chain, and materials have to be 'exploded' into the constituent elements.

4 ... What are the main products/services that come out of the economic activity? These have both the money cost and the trucost together with a profile containing all the constituent elements.

5 ... What is the energy that goes into production? Each type of energy has a money cost and a trucost. Each type of energy is exploded as for the main materials.

6 .... The trucost element for resource depletion is a function of each input of material and energy. Resource depletion is very different for virgin aluminum compared to aluminum produced from recycled soda cans. The resource depletion is near zero for solar produced electricity compared to the use of fossil fuels.

7 ... The trucost element for environmental degradation is a function of each input of material and energy. Each different material or energy type is associated with an amount of environmental degradation.

8 ... The trucost impact on the built environment depends on the type of economic activity ... and in turn the built environment has an impact on the performance of the economic activity.

9 ... The trucost impact on the enabling environment depends on the amount of taxes paid. Government cannot function when there are too small tax and other revenues.

10 ... The trucost impact on the enabling environment is also improved with 'do-good' expenditures which reduce profits.

11 ... The trucost impact on knowledge is a function of the R&D expenses of the company.

The framework that is emerging can be used to improve the performance reporting and analysis for an organization, an individual, a product, an individual person, a place.

The framework will facilitate comparing the trade off between less use of energy and an individual's quality of life.

All of this is complicated ... but the essential framework is relatively simple. The reason I am relatively quiet about the detail is that I don't want to spend too much time explaining errors that existed yesterday, but don't exist in the updated version that I have moved to since I published the erroneous version. Conversely, I am getting to the stage where getting input from others will be very helpful ... and I am now doing this with a number of face-to-face colleagues.

I should also observe that this is an attempt to build something like an accounting system, rather than being something that is more closely like some branch of economics.

I realize this is may seem to be somewhat superficial ... but that is the nature of brief answers to complex question.

Peter Burgess ... TrueValueMetrics
Multi Dimension Impact Accounting

Delete 2 days ago Raphael Louis Vitón likes this

Peter - you make a good point, and Michael Porter made a similar one in the Harvard Business Review - that the balance sheet needs to be redesigned to capture value creation in a more holistic way. Instead of, for instance, only capturing the risk/cost side of certain stakeholder relationships. Unlike Reply privately Flag as inappropriate 1 hour ago

Peter, I like where you are heading with this. It's the nuts and bolts bit of Conscious Business for me. You could be heading for conscious accounting perhaps? I think we need to be a little careful about for example the cost of the 'do-good' bit though, If the company is aligned around purpose, or even the 4 CC pillars, there are several more organic impacts that perhaps don't fit into your existing model and that is the company is likely to be much more successful, profitable, etc. as the Firms of Endearment, How Report, etc studies demonstrate. So while there is a perceived cost to this, the likelihood is that the company will benefit in greater staff retention and thus churn and re-training costs, higher levels of customer satisfaction and service, greater long term resilience, much higher levels of engagement, etc. etc. Not sure how you integrate something organic successfully into something mecahnistic but I'm sure you'll think of a way... 8)

Unlike Reply privately Flag as inappropriate 1 hour ago