[This article was first posted at SustainableBrands.com Dec 17, 2017.]
We’ve come a long way since the first New Metrics conference seven years ago.
Back then, much of our focus was stuff — resource efficiency and the physical “metabolism” of our organizations; now, we focus more and more on value. Back then, we were very concerned with reporting; now, we’re increasingly concerned with how reporting contributes to strategic insight. Back then, we focused on the metrics of the tangible — the stocks and flows or both physical resources and traditional financial reports; now, we recognize the large and still rising value of the intangibles — from climate risks to human happiness. Back then, we were working to think about natural capital alongside financial capital; now, we’re working to bring five capitals into the management equation. Back then, we were focused on the numbers themselves; now, we’re beginning to understand the critical importance of context and the power of science-based goals. Back then, our conversation was on the fringes of the business world; now, it’s moved much closer to the heart of the mainstream.
But even the old is new again, as “traditional” metabolic metrics provide a foundation for value leakage discovery, which builds internal and external engagement, which fuels business and service model innovation. This has been a powerful center point of recent Natural Logic engagements — unlocking, in the words of one client, “massive” unseen business value that was literally invisible in standard management and financial reports. In other words, the new metrics disclosed value to which the old metrics were literally blind (see “10 Things You Need To Know About Your Value Stream”).
That’s not the only way we’re blind. Permit me to share a conversation that was eye-opening for me. About 15 years ago, I spoke with the CSO of a very large global manufacturing company, which had just released its first CSR report. The CSO was proud of this accomplishment, and was a little taken aback when I asked, “How will you use this report to help your people make better decisions, and manage the company better?”
“Well,” she responded, “we print several thousand copies” (uh-oh), “and distribute them to all our managers. They keep them on their desks (this is not going to end well, I thought), and when they get a relevant question, they can look up the answer in the CSR report.”
“Yikes,” I thought. “That’s not management at all, and certainly not better decision-making” (as I contemplated shorting their stock). And it certainly misses the opportunities that appropriate metrics, appropriately deployed, can open.
So, let me ask you the same question: How do you use your sustainability metrics and reports — as a rearview mirror displaying past performance, or as a radar system illuminating the path ahead? As a box you need to check, or as a tool to help your people and partners be smarter?
JM Juran (who, along with W Edwards Demming, was one of the founders of Total Quality Management) approached this question with great lucidity nearly 70 years ago, when he observed that “To be in a state of self-control, a person should be provided with knowledge about what he [sic]… is supposed to do, what he is actually doing, and what choices he has to improve results wherever necessary. … If any of these three conditions [is] not met, a person cannot be held responsible.”
I’ve polled audiences on these questions at nearly every opportunity over the past two decades, and I’m dismayed at the responses. Typically, barely five percent of people say that their company has all three. How can you manage an organization effectively and hold your people accountable in an organization that fails to provide these fundamental conditions (it polled at 30 percent at New Metrics ‘17 — great progress but still woefully inadequate)?
New metrics — properly contexted, deployed and used — can provide an opening to this dilemma. They can help organizations use sustainability reporting not merely as historical records but as tools of discovery, to help people be, think and act smarter — to cut waste, operate more efficiently, see pattern and disclose value, share insights and unlock opportunity.
And they can serve as a modern-day council fire. Think about it: For as long as we’ve been human, we’ve commonly gathered together in a circle at the end of the day, often around a fire, and shared the stories of the day, the imagined or hoped-for stories of the next day, and the other stories that would arise as we’d watch the dancing flames. I’ve observed the same pattern, as teams gather around the cool fire of a computer screen, gaze into charts displaying trends, ratios and context, and discover stories — and value, and hidden opportunity — in the patterns of the data, and share those stories as a way to open new futures.
My mentor, Fernando Flores (former Chilean minister and senator, businessman, writer, provocateur), has observed that we humans are strange monkeys — ones that have conversations, declare concerns, invent futures. And ones that freak out, duck responsibility and slip into resignation. But something else is possible, if we can enter into a different sort of conversation together.
So, the challenges of New Metrics go beyond the metrics themselves. Here are several:
For the sake of what? Why does this matter? In order to:
There’s one more challenge — one that can’t be measured: Courage. Literally (or at least etymologically), “strength of heart” (I and other capable sustainability coaches and advisors can help you with many things; this is one you’ll have to bring forward on your own!).
Finally, let me leave you with this guidance from William Bruce Cameron, who challenges us to remember, when thinking about metrics, that “not everything that can be counted counts, and not everything that counts can be counted.”
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