Changing Our Business Measurement Standard.

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I appreciate you are a busy executive, focused on the demands of your job, with little time to dedicate to broader issues, despite you appreciating their importance. Therefore, you want articles which are relevant, brief and to the point. That’s the format of my articles – they lack verbiage, not substance. I write about the need for a new business measurement standard and what a workable solution will look like.

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Why is this important, and why will it affect every business and everybody in business? Simple - Change is inevitable, and Change will be fundamental.

1. Change Inevitable.

Our current business measurement standard is inadequate and inappropriate and the root cause of our most serious environmental, social, economic and business problems. Without fundamental change, we will not avert a catastrophic disaster.

Right now, we use financial measures as a business measure, even although financial measures account for less than 20% of business value. So, it’s obvious, financial measures as a business measure are inadequate and inappropriate. Finance is not business. Yet, despite this, we continue to use financial measures as a business measure because it is our only comparable measure. However, this creates a major problem because as our sole comparable measure, it encourages business to compromise other stakeholder measures to ensure they produce strong financials. This means we allow our exclusive, inadequate and inappropriate business measures to distort outcomes and make business behave in a profiteering manner. This, collectively, results in our business measures being the underlying root cause of our most serious social, environmental, economic and business problems. What we have is a one-sided, imbalanced approach to business, which ultimately hurts all, even those it purports to serve. Put as simply as possible - our current measures are bad for business. Adopting a myopic, one-sided perspective of business, not paying adequate attention to the interests of other stakeholders, is the reason business longevity is in decline.

2. Change will be fundamental.

While profit creation remains central to the survival of business, the profit objective will no longer be served through a myopic focus on shareholder interests alone, but rather a balanced business measurement standard approach to serving the needs of all stakeholders and shareholders. What we measure and how we measure will change fundamentally. Our attitude and approach to business will change fundamentally. Change will permeate the entire fabric of business - nobody will be left untouched.

As with all fundamental change - there will be winners and losers. Losers will be found among the slow adopters and winners those who follow the course of change, and who quickly and easily adapt to it. My articles will provide you with a clear insight into the urgent need for change and the course this change will follow. For example, you may already be aware of additional reporting appended to financial accounts in an attempt to provide greater awareness and “balance” of corporate performance. However, are you aware that none of these “solutions” come remotely close to meeting our business needs for a new measurement standard? They are a distraction and waste of time. Many have been with us for decades (e.g. CSR reporting) but have had a poor impact - because they don’t meet our business needs.

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Adrian Dore

Bristol, United Kingdom

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