Social Business - the why question & 4th bottom line

Comment by chris macrae on October 31, 2008 at 7:41am

while he is morally right, one of the things I have spent over 10 years studying is why the multiple bottom line approach accidentally doesn’t work, most infamously triple bottom line (Triple Bottom John Elkington is accidentally in the centre of a multimillion dollar consulting empire that certainly doesn’t compound whole truth sustainability the way that Bangladesh microeconomics models and hi-trust auditing verifiably does)

what we need to transform is the one line thinking of reward every performance for how much is extracted last quarter; this terrifying mathematical error is actually required by law in the USA as what business is to value itself by

if you add in other reports on other lines they never get as much systemic-action and budget attention as the one that is being rewarded every cycle; moreover they don’t challenge the risks of imploding that multiply from the global extraction every quarter

the solution therefore is to require a second audit that has every much as cyclical attention as chasing how much money did we historically extract; wherever this system future measure of what sustainability is being compounded up or down conflicts in it s health indicators with the money measure, those governing system must review what is happening with complete transparency

here is a simple way of illustrating why it matters to understand what system goodwill is multiplying into the future not just what organization has taken out in the last quarter

the global accountant Anderson lived in their additive and one audit world; their goodwill -relationships with global business stakeholders was worth billions of dollars - but before Enron they had several experiences where the fines they got from being over-creative with clients books were far less than the client paid them so the mathematical assumption they made was if we accelerate up our goodwill with what global business leaders demand even if this brings our true and fair value with society down to nothing our future will be billions +0= billions

fortunately for humanity goodwill's audit is multiplicative; it is actually more vital over time than even the additive audit thence when you have billions of global business value but absolute zero value to society your worth becomes billions*0=0

This pair of equations additive versus multiplicative is probably the most vital one you will ever need if you are to impact change so that business does well financially by multiplying goodwill. For example even the most hard nosed management team would make different decisions if they understood such compound risk is multiplicative not additive. Moreover when management teams did not care about compound's risk future bubbling we a transparent world would change where the line between crook and ignorance was drawn. Today as we watch many trillions of dollars being taken out of taxpayers pockets for failures at the top of big banks and insurance companies, this main line is not yet drawn correctly. Those who profited from consigning societies to probably 10 years of no development cannot be criminally prosecuted because they can claim to have been ignorant not corrupt. And I agree with them. Until goodwill’s multiplication audit is widely known of, all their professional advisers will themselves be claiming that they were not corrupt, they may have been slightly foolish not to see what was bubbling but they were doing their hardest as the law in Delaware state (which governs the majority of America’s global corporations) demands to extract money. For those who know system pattern rules this is a classic catch 22 of Einstein’s - those paid to be most expert in the old conventional system will be last in the world in being capable of leading facilitation of its transformation

Comment by Jeff Mowatt on February 7, 2009 at 1:24am

Ramla Akhtar's people-centered model might be interesting in this context.

http://www.triplebottomline.com.pk/response.asp?id=1&sub_id=7

Comment by Jeff Mowatt on March 16, 2010 at 11:41pm

Here's a presentation given by my colleague Terry last year for the Economics for Ecology conference in Sumy

He's describing capitalism and the relationship with human disposal which is something I take up later in a blog on the ethical dimension of reforming capitalism.

Jeff

Comment by Inger-Mette Stenseth on March 17, 2010 at 12:40am

Thank you Jeff! I will look at this!

im

Comment by Jeff Mowatt on June 29, 2010 at 11:10pm

Thinking further on this I realised that what he's talking about is somewhat aligned with the influence on P-CED which came from Carl R Rogers and his work person-centered counselling where “Each individual has worth, dignity and the capacity for self-direction if given an empathic, non-judgmental, supportive environment.”

Even more recently the quadruple bottom line struck me with People, Planet, Profit and Principles.

The principles being the core argument for changing capitalism:

http://www.p-ced.com/1/about/background/

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