I recently heard an interesting suggestion for why our companies and our capitalist economy look the way they do today, and it has to do with measurement. Quite simply, we gravitate to and maximize things that we can measure. In business, this usually means money or profit – income versus spending, which is perhaps the simplest measurable facet of a company. Profit is easy to quantify and an obvious measure of success. There are of course a host of other success targets beyond profit that a business can measure, but the further they stretch into the realm of perceived benefit or impact and away from clear metrics like sales data or manufacturing efficiencies, the harder they are to calculate.
In some ways though, measuring more facets and activities of business will help us better calculate the actual success and impact of a company, and help companies and their leaders to maximize in areas beyond just profit, sales, or similar traditional success measures.
This seems especially relevant as there is a growing cloud of uncertainty around the environmental health of our planet, and its complex ecosystems show signs of instability. Companies that recognize the importance of sustainability in constructing a solid business model of the future are now creating measurements for sustainability so they can track and improve in this important area. Take Puma for example, who have begun to calculate and report “Environmental Profit and Loss,” and are now leading from out front by gathering a coalition of other companies who will join them in measuring, calculating and reporting these “EP&L” figures.
Full of “assumptions and shortcomings” though Puma’s measurements are, the fact that such measurement is being undertaken (at considerable cost, I’m sure) is interesting in relation to Authenticity. Here is a huge company attempting to tell us how much - right down to air and water - of the resources belonging to “the commons” that it uses. Puma even plans to report this measurement all the way down to individual product lines. As Puma CEO Jochen Zeitz points out, the practice is a bit like putting a nutritional label on food - something we take for granted today, but a practice that only became industry standard in the late 1960’s.
If (as we believe), the democratization of information due to the internet and social media is positioning Authenticity as the new operating currency that companies must trade on, where do measurements like Puma’s EP&L fit? In addition to sustainability measures, could we devise measures for the "meaning" that a company’s Purpose delivers to customers and employees?
Would such measures help our companies to better manage for positive outcomes in areas of relationship to the marketplace that would be considered “softer” than cash in/out or other traditional measures?
Or would they simply add to the avalanche of "big data" - just another statistic that creates more work than benefit with marginal positive efficiency that can be manipulated to improve a brand or image? If so it could actually decrease Authenticity and prove the phrase popularized by Mark Twain, “there are lies, there are damn lies, and there are statistics.”