Priorities, metrics and values.
In decisions and in life!
The World Economic Forum is over and it appropriately included a degree of soul-searching and even an admittance that mistakes had been made. This has been a good lead-in to my deliberations as I compose the 4th habit in the series (the 7 habits of highly effective decision makers) which discusses making ethical considerations a priority in decision making. (This may be THE most important of the 7 habits).
In my research on the topic, I have “discovered” a really special man Professor Clayton Christensen from Harvard Business School who poses some fantastic questions. I would like to share two elements of his work with you.
First a video of a talk he gave when receiving the McKinsey Award for the best HBR article. He talks about some of the flaws we make in measurement of profitability. Among other problems created, he demonstrates how they force us into a short-term bias and into one that reduces our likelihood of creating jobs. I think more and more that companies goals must start encompassing wider targets than profitability – and alongside CSR. For instance, is it not time that we started reporting on job creation and increased number of employees (as a positive)?
Have a look at the video (it is less than 5 minutes), and then come back for the article …
The second element of his work I would like to share is his article (that won the HBR award). It may challenge your thinking – or at the very least have you re-assess the priorities in your life. The questions he asks his Harvard class are:
- First, how can I be sure that I’ll be happy in my career?
- Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness?
- Third, how can I be sure I’ll stay out of jail?
He then discusses the concept of a strategy for your life and resource allocation within that frame. Personally, I found the article refreshing and inspiring – and perhaps what many of us need as we move through some of the character-forming challenges that the world is providing us at the moment.
(Note you may have to register for HBR too read this – registration is free and Genesis gain no benefit from this in any way).
How will you measure your life
We normally end our articles with an offer of assistance with the issues that the topic raises when they are within our capabilities at Genesis. We certainly cannot claim to be experts in assisting people to re-align their values and measurement systems. However, we would be able to coach an individual or group through the process, probably using some of the tools we have available.
Because we believe it is important to give back to the world, we would be happy to offer such a facilitation for FREE to anyone (or any group) who would seriously like to undertake this. We could do this remotely or face to face and would only charge for any out of pocket costs we incurred in the process. Write to me confidentially at sgifford@genesis-esp.com to start an initial discussion.
(Note: we obviously have a constraint on time and so the offer is only available to the first 5 people/companies who contact us).
This was really interesting! I enjoyed reading Christensen’s article, and was pleased to see discussion about short-term bias occurring at that level. Like Barry, I’ve been thinking along those lines for a while. I wrote a research report in 2009 for my MBA on the future of management consulting, and started to explore “multiple-stakeholder orientation” as an example of an idea which could create opportunities for consultants. In this report I wrote:
“It is more likely … that the single priority of maximising shareholder value will be retained, but that shareholder value will be redefined by a multi-generational perspective leading to the incorporation of environmental and social objectives. As the true environmental and social cost of business activities is increasingly recognised, the financial benefit of minimising harm will become more apparent. The odds of success seem much greater if the motivation for corporate social responsibility is to gain competitive advantage which improves the bottom line, rather than to achieve compliance with an externally mandated requirement. ”
Although this wasn’t the focus of my research, I’ve been interested in this topic ever since and have been taking note of discussions about sustainability and generational thinking. It seems to me that the current disconnect between business, environmental and social objectives largely disappears if we take a long-term view of costs, and account for the true cost of current business practices.
Fascinating Simon.
Instinctively I have been advocating for a long time that the financial and accounting paradigm is the cause of much of the world’s economic and social well-being woes. Not only do many decisions made based on conventional (and often short term biased) financial (accounting-based) measures damage sustainable economic growth, development and social upliftment, they often positively encourage courses of action that destroy sustainable economic well-being and upliftment.
Practices such as the balanced scorecard, that amongst other emphasises aspects such as “responsible citizenship,” is but one of the many trains of thought aimed at countering the biased impact of accounting-based financial measures.
Political and social systems such as communism and socialism are also evidence of movements aimed at finding solutions for long term sustainable economic upliftment and well-being; although we know today that, while pure in theory, their application had the opposite impact, counterintuitive to beliefs at the time.
Similarly, public conscience pressure groups such as the “green people” and other environmentalists are in effect trying to counter the negative impact of short-term financial accounting based measures.
A key concern is that, by and large, financial measures form the basis of most reward and incentive schemes, thereby often positively encouraging behaviour and decision-making that is “making the world economically poorer”. In addition, so much human and intellectual effort is spent (wasted?) on engineering creative costly solutions simply to “improve the financial ratios”, with no regard to true economic upliftment and well-being.
The solution? There is no silver bullet, but at least the awareness is growing that traditional bases of financial performance measurement does not encourage decisions and behaviour aimed at ensuring the long term survival of earth and mankind.
Perhaps the ultimate question should no longer be “What will shareholders say?”, but rather “What will our children and their children one day say of the legacies of their forefathers?”
Hi Simon,
Once again thank you for taking the time to post these two pieces of information that in many ways force us to think or re-think what is important in life and the fact that if measure success is a continuum, and it will look much different than if we place our gauge at only discrete locations.
Prof. Christensen makes extremely important points as far as what are our priorities, Of course I am biased in many ways to his way of thinking because he is a fellow BYU grad and therefore our philosophy of life is the same. But on ceteris paribus if people measure success from the point of view not of accumulated material goods, but rather a combination of personal satisfaction, family life, knowledge and understanding plus the financial rewards for your effort.
Then success has an added dimension and will help us to have happier lives.
The old idea that he who collects more toys at the end of the game (life) wins, will have no value. Because what are you going to do with the toys if you have no time to play with them? You will never hear a dying man when his family surrounds him to say “I wish I had spent more time at the office”
Cheers
Rogelio