Over the past century GAAP style business accounting has been at the center of the system of scorekeeping used to measure socio-economic progress. If it is not corporate profit, it is the stockmarket prices, and if not that then GDP growth. None of these metrics include anything about the quality of life, about the impact of business performance on the society in which the business lives.
This has been very convenient. Business has been able to report profit while destroying the society where people live ... the stockmarket goes up, and a part of society prospers.
The value destruction that has been going on in many societies over the past 50 years is obscene, but the system of metrics does not include these big issues. Most government units around the world do not even do GAAP style accrual accounting, they simply have cash based accounting. They do not have "balance sheets" and the powerful controls inherent in double entry bookkeeping do not apply to government entities. Many not for profits operate with similar cash based accounting.
If there was some semblance of balance sheet accounting in the public sector it would become apparent how dysfunctional this sector of the economy has become. The same might be said of the not for profit sector.
There needs to be a complete rethink about how the metrics of society are put together. The idea that the GDP, a measure of the "strength" of the US economy is based largely on how much consumers spend is total nonsense. The idea that the cost of healthcare in the US economy is 17% of the total does not mean strength, but silliness in the system of metrics. In my mind the product ... GDP is Gross Domestic Product ... is how much good health is delivered, and the cost is something very different. A strong health performance would be one where the people's health is good and the costs are low.
All of these issues need to be addressed ... and Community Analytics (CA) has been developed as a complete system of metrics for socio-economic progress and performance. In addition to money accounting, CA uses the idea of value. Instead of making the organization for focal point of accounting and reporting, it is the community. Instead of measure how much has been spent or consumed, CA looks at what impact this has had on the quality of life ... or the value of the community.
CA has been designed to have some good aspects of old-fashioned accounting, but also to function in the fast moving modern era. Data acquisition is designed for mobile phone text messages, and automatically organized in a way that reduced data overload and increased the value of the data for decision making, and the accountability of decision makers.
When CA deploys, there will be many that do not like it ... but the job of a good accountant is to provide the data that are needed for good decision making. This is exactly what CA has been designed to do.
The CA methodology has been developed over a very long time ... but other perspectives are of interest. Please contact the CA team if you have ideas for how CA can be improved.
Thursday, February 11, 2010
Monday, August 3, 2009
How society keeps score!
The sad reality is that society does not keep score ... it just loses the game ... because everyone else is keeping score, and the score-keeping and the games people play totally leave out impact on society!
The process of socio-economic progress has been played using a game that measures profit for the players ... but leaves out the impact of the game on the broader society. The fact that half the world live in abject poverty afflicted with hunger and disease is obscene ... but this outcome of the game of global profit building is not taken into account.
Decision making is focused almost exclusively on more and more and more profit ... the metrics for this are well developed. Community Analytics (CA) is an emerging alternative metric that asks what value adding has been achieved by all the socio-economic activity, as well as how much profit has been achieved. In too many instances, great profit performance is offset by value destruction resulting from the profitable corporations activities. This is not a desirable outcome ... but happens because the value dimension in not part of the financial accounts and the reporting of profit ... and the capital markets respond accordingly.
With CA, this can change! How fast depends on the CA team ... and we are optimistic.
More on this soon
Peter Burgess
Tr-Ac-Net Inc.
Transparency and Accountability Network
Community Analytics (CA)
The process of socio-economic progress has been played using a game that measures profit for the players ... but leaves out the impact of the game on the broader society. The fact that half the world live in abject poverty afflicted with hunger and disease is obscene ... but this outcome of the game of global profit building is not taken into account.
Decision making is focused almost exclusively on more and more and more profit ... the metrics for this are well developed. Community Analytics (CA) is an emerging alternative metric that asks what value adding has been achieved by all the socio-economic activity, as well as how much profit has been achieved. In too many instances, great profit performance is offset by value destruction resulting from the profitable corporations activities. This is not a desirable outcome ... but happens because the value dimension in not part of the financial accounts and the reporting of profit ... and the capital markets respond accordingly.
With CA, this can change! How fast depends on the CA team ... and we are optimistic.
Peter Burgess
Tr-Ac-Net Inc.
Transparency and Accountability Network
Community Analytics (CA)
Tuesday, March 31, 2009
What vision needs to be ...
Vision is not very helpful when it is totally impractical ... nor is it of great interest or value when it is pedestrian and reflects no stretch.
The Obama administration has vision ... and President Obama is doing an excellent job of balancing his vision for the United States and the World between what is worth something, and what is possible.
While there is idealism ... there is little ideology.
How does Tr-Ac-Net fit in?
Tr-Ac-Net has been a critic of an economic system that was reporting profit on top of value destruction for several decades, and a system of law and accounting that was making this easier and easier to do. It was not sustainable ... it was a Ponzi like scheme that would implode in due time ... and of course it did.
Tr-Ac-Net failed, like almost everyone else, to make an impression on leadership, so that the implosion took place, and our efforts were ineffectual. We failed ... but we have learned something. What is very apparent is that there is the need for an upgrades system of socio-economic and financial metrics ... and this is, of course, what we have been working on for some considerable time.
This performance metrics system is now called Community Analytics (CA). The concepts are based on accountancy, but not limited to the money accounting that has proved so inadequate. These metrics suit both the social business, the for profit business and the not for profit charity.
The idea of CA is simple ... but some of the practice is more complex. CA is moving towards deployment, and in due course should give the world a better system of metrics.
Peter Burgess
The Obama administration has vision ... and President Obama is doing an excellent job of balancing his vision for the United States and the World between what is worth something, and what is possible.
While there is idealism ... there is little ideology.
How does Tr-Ac-Net fit in?
Tr-Ac-Net has been a critic of an economic system that was reporting profit on top of value destruction for several decades, and a system of law and accounting that was making this easier and easier to do. It was not sustainable ... it was a Ponzi like scheme that would implode in due time ... and of course it did.
Tr-Ac-Net failed, like almost everyone else, to make an impression on leadership, so that the implosion took place, and our efforts were ineffectual. We failed ... but we have learned something. What is very apparent is that there is the need for an upgrades system of socio-economic and financial metrics ... and this is, of course, what we have been working on for some considerable time.
This performance metrics system is now called Community Analytics (CA). The concepts are based on accountancy, but not limited to the money accounting that has proved so inadequate. These metrics suit both the social business, the for profit business and the not for profit charity.
The idea of CA is simple ... but some of the practice is more complex. CA is moving towards deployment, and in due course should give the world a better system of metrics.
Peter Burgess
Friday, April 4, 2008
Multi-Sector Process
Dear Colleagues
One of the many lessons learned is that socio-economic progress is constrained when efforts are unduly concentrated in any specific sector, ignoring the others. Oftentimes, issues that constrain are associated with some other sector, and success depends on everything working together and not just one bit of the puzzle.
Process that includes all the sectors has much more chance of success than an initiative that has a single sector focus. The process is best when it is inclusive, rather than exclusive.
Sincerely
Peter Burgess
One of the many lessons learned is that socio-economic progress is constrained when efforts are unduly concentrated in any specific sector, ignoring the others. Oftentimes, issues that constrain are associated with some other sector, and success depends on everything working together and not just one bit of the puzzle.
Process that includes all the sectors has much more chance of success than an initiative that has a single sector focus. The process is best when it is inclusive, rather than exclusive.
Sincerely
Peter Burgess
The Vision Thing
Dear Colleagues
Tr-Ac-Net wants to be more about what it is doing than what it might possibly do in the future ... but having said that, the reality is that Tr-Ac-Net has more vision and more hopeful optimism about positive change on a global basis than most organizations.
Tr-Ac-Net can have a hopeful optimistic vision because there is science and technology that has enormous potential ... and there are several billion people that can make almost anything possible.
Though society has allowed itself to be constrained by systems and procedures, and in this constrained system, widespread poverty has been a norm ... Tr-Ac-Net does not believe that such poverty needs to be.
The Tr-Ac-Net vision is that people ... all people ... should have opportunity to progress, and that community is an organizational form that can be helpful in making opportunity possible.
While there is value in having money and being able to pay the bills ... this is not the only value in society. People have far more dimensions than just the one that embraces material goods and money. Society has multiple facets ... the more the better ... and social value is complex.
The idea of "pursuit of happiness" is a wonderful idea ... especially when it is an idea for everyone, with nobody left out.
Please stay tuned to the Tr-Ac-Net blogs as we do our modest part in trying to help improve the global society.
Sincerely
Peter Burgess
Tr-Ac-Net wants to be more about what it is doing than what it might possibly do in the future ... but having said that, the reality is that Tr-Ac-Net has more vision and more hopeful optimism about positive change on a global basis than most organizations.
Tr-Ac-Net can have a hopeful optimistic vision because there is science and technology that has enormous potential ... and there are several billion people that can make almost anything possible.
Though society has allowed itself to be constrained by systems and procedures, and in this constrained system, widespread poverty has been a norm ... Tr-Ac-Net does not believe that such poverty needs to be.
The Tr-Ac-Net vision is that people ... all people ... should have opportunity to progress, and that community is an organizational form that can be helpful in making opportunity possible.
While there is value in having money and being able to pay the bills ... this is not the only value in society. People have far more dimensions than just the one that embraces material goods and money. Society has multiple facets ... the more the better ... and social value is complex.
The idea of "pursuit of happiness" is a wonderful idea ... especially when it is an idea for everyone, with nobody left out.
Please stay tuned to the Tr-Ac-Net blogs as we do our modest part in trying to help improve the global society.
Sincerely
Peter Burgess
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