When we use the word cancer, most people think of it in its biological form. However, how it works, and the outcome it produces, are similar to a broader, life-threatening form of cancer, which I call “life cancer.” This form of cancer poses a greater threat to life and represents the cancer of our time.
Business Measurement Standard
Both forms are silent, insidious destroyers of the fabric of life. With physical cancer, we are fully aware of the problem and direct considerable resource towards its understanding and cure. With regard life cancer, we have not fully identified and acknowledged the problem, and, therefore, are doing nothing to address it.
While physical cancer is sometimes terminal, thankfully, we can no longer classify it as a threat to the existence of life, due to the great advances made in medical science. With life cancer, the threat to life, not just human life, is inestimably higher. Furthermore, it not only threatens life but also to change the nature of life unfavourably, across a broad spectrum. To compound the problem even further, we have limited time before we reach the tipping point – before we “Cross the Rubicon” of life. Where life as we know it will change irreparably. The problem I refer to affects every aspect and facet of life. It adversely affects society, the environment, economy and business. In fact, it is the root cause of our most serious social, environmental, economic and business problems. It affects you and your family directly and indirectly, although you are probably oblivious to its negative effects.
Charlie Munger: Invert And Use “Disconfirming Evidence”
This hidden, insidious problem stems from using an inadequate and inappropriate business measurement standard. It may seem strange and over dramatic to think of it as the cancer of life, but the way we measure business has a profound effect on life. Business is at the centre of life, affecting society, environment, and economy. Our measurement standard has a direct and major impact on all these constituents. It can change, enhance or destroy life. As our measurement standard focuses on a single objective, namely the pursuit of profit and enriching stakeholders, that’s the results we’ve been producing for decades – at the expense of everything else. We destroy the environment such as The Great Barrier Reef, the rainforests, and are responsible for global warming, plus the extinction of species on a grand scale. We also distribute wealth unfairly and create economic systems, which serve the few at the expense of the many, all in pursuit of profit and shareholder enrichment. Underlying and supporting all this is our inadequate and inappropriate measurement standard. The evidence to support these claims that our business measurement standard is the root cause of our most serious social, environmental, economic and business problems is overwhelming. These claims all make perfect sense – every imbalanced system causes unpleasant and unwanted side effects. Our measurement standard is horribly imbalanced, producing serious unintended consequences.
It is the cancer of our time, eating away and destroying the fabric of life as we know it. Left unchecked it will destroy us as assuredly as any untreated cancer kills.
Some may say that we have acknowledged the inadequacies of our measurement standard and are attempting to integrate it with other measures to provide a more balanced and less harmful approach. The reality is, this is not the solution. The reasons I say this will become apparent as I explain the problem further.
What we need is a new paradigm. Using our existing systems and understanding is like using a 16th-century physician’s knowledge to treat a modern cancer sufferer. It’s simply inadequate and inappropriate. Our five-hundred-year-old accounting model may have served us well during the industrial revolution, but now it’s well past its useful shelf-life. We need to rethink the solution because the evidence before us strongly suggests that taking disparate measures and integrating them cannot solve the problem. This is because we must base our solution on a clear understanding of the situation as we know it.
What we know is that business comprises different parts (or constituents.) These parts are integrated and interrelated in a cause-and-effect model. The success of business is dependent on all constituents benefiting from their mutual association. Therefore, to ensure business achieves its objective of serving all constituents, we must understand this integrated causal model. We also know that value creation is the common denominator of business, that all constituents expect their association to be rewarded through the growth in value of what they contributed to the association. Consequently, the causal model must be based on the principles of value creation. So, while we need an integrated solution, we cannot achieve this by cobbling together disparate measures, which are not based on any understanding of the value creation causal model, which drives business success.
The process of change starts by recognising the need for change. We then need to acknowledge the urgency for change, and thirdly, we need to agree on the broad framework upon which to base this change.
Unless we change, and urgently, this cancer will continue its unabated destruction of the fabric of life as we know it. Life will change (unfavourably for most) and will drive many species to extinction because good people like you did nothing about it, despite being aware of the problem. You can do something about it by adding your voice to the groundswell demanding the problem be effectively addressed. By signing up as a member of www.newmeasurementstandard.org you are adding your voice to the call for change. You are doing something positive.
If you need any convincing that our measurement standard is at the heart of our most serious social, environmental, economic and business problems, then ask for the proof, but don’t brush it aside. At “We Need a New Business Measurement Standard” (www.newmeasurementstandard.org) we can provide all the proof and evidence you need. Remember, this affects you and your family’s long-term well-being so you need to take action now. You have a duty to act because the rate at which we are destroying and consuming is UNSUSTAINABLE. Bear in mind that this rate will increase rapidly soon due to population increase and the shift of major 3rd world economies to 1st world economies. A bad situation is going to get worse.
If you also think that supportive reporting, such as Corporate Social Responsibility (CSR) is helping, then think again. We’ve been using CSR reporting for nearly three decades, and its made no marked difference. There are many reasons why its made little or no difference, and why it never will. So, by cobbling a failed system onto a bad measurement standard is enough of a clue as to its likelihood in addressing the cancer we face.
We need measures.
However, we definitely don’t need bad measures – they lead to bad outcomes. Our social, environmental, economic and business problems are a direct result of these bad measures. We need more balanced measures.
Measures which ensure all constituents (or stakeholders) benefit through their association. These measures need to be based on an understanding of the value creation causal model – the driver of business success.
Let’s not forget that businesses still need to be profitable to survive and prosper over the long-term and that this is essential for a prosperous life for all, provided this is not achieved at the expense of other stakeholders. Profit and capitalism are not the enemies – a bad measurement standard is.
However, having said all this, let’s be realistic. Our current measurement standard serves the needs of a few. These are rich, powerful and influential people, who pay lip service to change while ensuring nothing changes. We have known of the problems caused by our inadequate and inappropriate measurement standard for decades. We have known for decades that business operates as a causal model. We have also known that we need to create value for all constituents to optimise long-term growth and success. So, despite knowing we have a problem and having identified key components for a solution, and with the massive resources of business behind us, why have we done NOTHING? Vested interests. If the current system serves you well, why change it? Why concern yourself with the well-being of other stakeholders when you can amasses profits for yourself? ”Let the cancer keep eating away as long as I’m okay, why worry?” This is the attitude adopted by most of the rich, powerful and influential.
It is for this reason, we need to build public support to highlight the problems and dislodge vested interests from blocking change. That’s why we need you to sign up and support the call for change at www.newmeasurementstandard.org.
By using current measurement standards, businesses around the world will do whatever they have to, to make a profit as that’s their sole measure of success and their objective – everything else is off the radar and doesn’t matter. They will abuse the environment, their staff, the community and keep in place systems protecting their interests. Profit before everything else destroys. It even destroys those who believe in it. This cancer must end, and it starts with you and your support.
Article by Adrian Dore