Tuesday, March 9, 2010

Important ideas ... no traction

Dear Colleagues

I have been at many events in the last two years where very experienced people have talked about their subjects ... and it is clear that there are many wonderful ideas that should be used to improve the quality of life in our local and national society, and indeed in the global society.

But what is equally clear is that many of these ideas will never by used because while the value proposition is clear, there is no clarity about the profit potential. Allocation of resources is ALL about profit and making money ... if making a lot of money is not the agenda for an idea or a technology, then "who cares?!".

This has been driving decision making for a long time ... but the profit focus gained a lot of extra traction with the Reagan Presidency in the USA and with Margaret Thatcher as Prime Minister in the UK. This was a good thing ... up to a point ... but it quickly got out of hand. By the end of the 1980s I was observing that the biggest cost in the US economy was the cost of profit. In order to have a salable product and get funding, the margin for profit had to be bigger than the costs ... which worked for some dot-com type companies, but for people trying to do work involving major engineering and construction, was not a good thing at all.

Good ideas ... important ideas and no traction is not a new problem, but it has great importance now that it has become clear to everyone except bankers and financial quants that the global economy has taken a huge hit. It is no longer an acceptable idea that there will be no traction for good ideas because the money profit is rather week even though the social value adding is great.

But to get traction there has to be a change in the way the metrics are done. Value and quality of life have to be scored. Just as companies are scored by the profit they earn ... communities should be scored by the value progress they make ... and there should be metrics for both community progress and the performance of the activities that produced the progress.

Value is subjective ... and value is difficult to quantify ... but value is important. Ignoring it does not make it less important. There are ways to quantify value and do it with a reasonable level of acceptance ... using standard value rather like cost accountants might use standard costs.

But if the value of good ideas becomes clear ... and there are metrics everywhere that look at value adding as much as profit ... there is hope.

What gets measured gets done!

If you change the way the game is scored, you change the way the game is played.

Community Analytics (CA) is a new way to keep score ... a new way to measure important things!

Peter Burgess

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