Reimagining "Value" For A Post-Crisis Economy
Published March 14, 2009 @ 03:54PM PT
[Guest blogger Steve Wright is the Director of Innovation at the Salesforce.com Foundation where he works to help the social sector improve its impact by developing better tools for operations, collaboration, and management. Before that, he spent 13 years in education, including a stint in the Peace Corps in Micronesia. We're thrilled to welcome Steve and his important and insightful thoughts on reimagining value for a post-crisis economy.]
(via giumaiolini)
(Social) Value: Love
"Money can't buy me love" is both cheesy and true
The reason why money can't buy love is because, ultimately, love is the value that money represents. Money is a proxy for value and value is that which holds us together and makes us relevant, love. This feels cheesy or even embarrassing because we have broken our social contract with value. Specifically, we have inappropriately imbued money with a value of its own, disassociating money from its role as an intermediary, as a temporary representation of value in a chain of transactions. Money has become the object as opposed to the expedient. It is my thesis that value creation must be the frame within which wealth creation fits; that our humanity can no longer be subjugated to our economy due to a false primacy of our intermediary for value, cash. I believe that our economy should serve our humanity.
Proxies for Value
In order to have an explicit currency we need to believe
A dollar is not a standard in the same way a foot or a meter is. (Or at least it hasn't been since we left the gold standard.) While there is broad agreement that one dollar represents an approximate or relative amount of value, that amount is far more mutable than is the distance that correlates to one meter. If I buy a house, the appropriate total value would be derived from the sum of the values that comprise the house; the materials, the land, the labor, etc. The seller can then take the currency she earned from the sale and exchange it for goods or services that she needs, and so on down the chain. This works because we have agreed on a currency to act as a proxy for value between disassociated transactions.
In order to have an explicit currency we need a social contract. We all have to agree and, more to the point, we all have to believe. From this perspective, currency is simply a device to make barter more efficient, more expedient. I don't have to have something you need to get from you something I want. Currency enables barter between two people that could not otherwise trade value. This is beautiful as long as the value chain remains intact, as long as each hand that owned the dollar earned that dollar by exchanging it for something valuable.
By now everyone knows the sad tale of Bernard Madoff's duped investors. They looked at their statements and thought they were rich. But then, one day, they discovered to their horror that their supposed wealth was a figment of someone else's imagination.
Unfortunately, that's a pretty good metaphor for what happened to America as a whole in the first decade of the 21st century.
- Paul Krugman, Decade at Bernies
I am greatly appreciative of Krugman's populist frame here. It lies in sharp contrast to the most common frame for our current economic crises where the problem is banks not having enough money. When banks had enough money (enough of what is now more clearly understood to be my/our money) they took it to the race track and placed bets on things like currency fluctuations, mortgage backed securities and collateralized debt obligations. The value that stood behind my dollar was exchanged for an imaginary or (best case scenario) potential value that could only be realized if a bank's horse won. And what was done to mitigate the risk of these investments? Additional bets were placed as hedges which further distanced the currency from any real value. The proxy didn't actually represent anything. At best it was an IOU and at worst what was thought to be an asset became a debt.
Bernard Madoff intentionally defrauded his clients but the calculus of what he did is no different than what our global financial institutions have done to all of us. Their sole concern was how money could make more money, completely divorced from creating anything real. To be sure, the new money could then been used to build, hire, educate, serve, etc, but, as is my thesis, that is the tail wagging the dog.
One of the outcomes of the collapse of this global ponzi scheme of an economy is that barter, value exchange without the intermediary of currency, is on the rise. Barter is not possible without at least the perception of something valuable, something real, changing hands. In contrast, our current system offers no guarantee that anything valuable is involved in any transaction. Recently, Malaysia bought fertilizer from Korea and Russia with palm oil. They were able to calculate relative value of the real goods but were unable to find a currency to act as a proxy for that value so barter was the only way to get the deal done. Again, the role of currency is to be an expedient for disassociated transactions. Had Korea needed cement and not palm oil, they couldn't have participated in this transaction with Malaysia.
Value Discovery
The Resonance of Social Enterprise
If it is true that humanity-as-society has been redefined to humanity-as-economy and if it is true that this is a bad thing then, to fix it, we need to learn to embrace interaction with the same rigor as transaction.
I am positing that our current system for facilitating trade by assigning transitory value to an intermediary object is broken. What we have seen recently is that this system is too susceptible to corruption, collusion and greed. Too much is lost in the translation of value from one transaction to the next or, more to the point, having lost the connection to the value that it represents, currency becomes desirable as valuable in and of itself. Thus, it becomes easier to gamble on exotic instruments and inflate currency because that currency's value is derived without consideration for anything real.
So, what does effective value transmission look like? A scale-free network is an interesting way of thinking about human networks, specifically how we interact and transfer value.
"...the most notable characteristic in a scale-free network is the relative commonness of vertices with a degree that greatly exceeds the average. The highest-degree nodes are often called "hubs", and are thought to serve specific purposes in their networks, although this depends greatly on the domain."
- Wikipedia
In the image, imagine the circles (nodes) as individuals or organizations and the connections between as interactions, or transmissions of value. This is an idealized way to think about human networks and value discovery. The popular nodes (hubs) are centers of activity or attractiveness and they represent the discovery of value. Hubs become more or less attractive as value moves through the network. What if we could discover and move to root value in a natural state or, dare I say, in a free market? What if a free market, instead of focusing its defining freedom on selling, could increase our freedom to discover a more complex and nuanced value, a value that is sourced from constituent parts like raw materials, resources, skills, knowledge, relationships, productivity, reliability, efficacy, desire, love, etc.
Our current system with its overly abstracted and evidently exploitable assignation of value constrains the network to have fewer and inflated hubs and any nuance or complexity in the definition of value is lost in the translation through currency. Value creation should be a market design principle. Wealth creation is a market participant motivation. An effective market should ensure value creation while facilitating wealth creation, not the other way around. Additionally, an effective market would leverage our social (human) network defining "valuable" more accurately by harvesting connections to what we value. Again, the reason to have an economy is to serve humanity.
So, with this idealized lens on human networks where value acts like a sort of gravity to which we are attracted, we can concentrate our economic efforts on creating value instead of creating demand. We can prioritize health over consumption. We can leverage truth instead of marketing. In this sort of system, the modifier "social" (social enterprise, social impact, social network, social economy) connotes relevance.
If we follow the argument that the dynamics behind a system being "social" may actually increase the efficacy of that system then it is reasonable to consider that a social enterprise is more efficacious than it's sibling, the enterprise. It does not seem like a radical statement that an enterprise that creates Value -- not just cash but universally recognized and communally realized value -- should be considered particularly successful. The modifier "social" is not a burden that limits or restrains an enterprise's ability to create revenue, it is instead a paradigm that increases an enterprise's ability to create Value.
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Comments (39)
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Steve,
First, thanks for writing this thought provoking and insightful piece. I agree with most everything that you're saying, but I'm interested in bringing it back to the context of social entrepreneurship and something a bit more tangible.
If you're reimagining value, it seems to me there's a connection with the "blended value" movement, which returns environmental and social value back to the equation. My question is one of scale. What's the scale that's needed to reimagine value? Is it firms like Good Capital getting more and more press for their high (all types of) value investments? Is it big corporations blurring the lines between CSR and what "business" is supposed to mean? Is it a broader cultural shift on the part of consumers?
I know (or have a feeling) that the answer is "all three," but I'm interested in your perspective about where the greatest potential for change is, and where the best leading indicators are now that can be leveraged to build momentum?
Posted by Nathaniel Whittemore on 03/15/2009 @ 10:48AM PT
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I have been looking for this kind of info and because I couldn't find it I started blogging about it on valuecrisis.com. This essay touches at th every heart of the current crisis and also seems to begin to offer a solution. But I have some questions.
Is your idea of a solution one where new values are assigned? Like social value? You say that the reason to have an economy is to serve humanity. Who will measure that? Isn't it to serve humans? Can't you opt out of an economy? I bought a pack of cigarrettes yesterday and I certainly did not do it for humanity. I was glad to exchange $5.50 for the pack even though I knew much of that was going to tax because I don't smoke them very often. And he was glad to sell them to me. Do we need other justification? Will this transaction be measured for it's social value? Won't that take all the fun out of it? I value fun. Aren't values intensely personal things?
But if I read this to be what I would like it to mean, you would be talking about social networks being a better transmitter of current individual value systems, and for better inter-valuation of them. Social markets such as Ebay, Craigslist, your towns farmers market are excellent transmitters of current valuations. Web 2.0 technologies have loosened the grips on the data silos of many products valuations, but there is so much more. So much more could be done to educate the consumer on the value of their products and on the value of those products producers.
One of the great things about a crisis is it clarifies your true values. Let's hope we can use this crisis instead of the government just injective everyone the the novacain of free money. We have a better chance of codifying and expressing our true values now than we have ever had before. Let's take it.
Posted by _ XgenX _ on 03/15/2009 @ 12:45PM PT
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Buying cigarettes is an interesting one. There is demand, some portion of which is driven by addiction. There is clearly a lot of deception and fabrication of demand. According to the WHO 100 million were killed worldwide by tobacco and that could be 1 billion in the 21st. According to wikipedia, the US is behind China (5x), India and Brazil in production of tobacco so monitorring the complete supply chain for value (or it's negation, cost) is difficult (is there fair trade tobacco?). So, there are many discrete moments in the lifecycle from seed to shelf where value (or cost) is obscured. So, the pack that you buy, even with the tax which I see as an attempt to extract payment for social cost, is a great example of the inefficiencies of our system. We actually have no clue what the actual cost/value of a pack of cigerrettes is. We do not have an effective (transparent) market that could efficiently and effectively value a pack of cigarettes. It's not so much about informing consumers as it is about effectively valueing products. If we can do that then the physcis of the market can do their thing.
Posted by Steve Wright on 03/15/2009 @ 05:02PM PT
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I just valued it yesterday. It took five seconds. Both parties agreed.
Are you talking about centrally controlling values? Are you talking about some sort of calculus that will allow some central planning commission to calculate the value for 200,000,000 people each day? Let's see, how many times a day do I decide what I value in a monetary transaction where I exchange something that took my time to earn for something that is worth my time. How would the government tell me what I _should_ buy today? You can try to control the price, but you can't control the value. The money does not contain the value of the thing to me. Would they just send me a twitter of my daily purchases?
Moreover, are you saying that cigarettes should cost me more because they are bad for me? Why stop at cigarrettes? Why not calculate the total societal cost of peanut butter over a 20 year period. But you pick cigarrettes because they are moraly wrong. Will fatty foods be next? What about lying to our children about the threat of asbestos or the benifits of ethanol or the purity of electricity. What are the societal costs of that? Maybe your words should be taxed for their total cost? Should your words be taxed or "valued"?
I was just using cigarettes as bait to eek out which you valued more, government or economy.
Posted by _ XgenX _ on 03/15/2009 @ 09:29PM PT
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Mark, I am trying to envision a system where true cost and value is exposed. I am making horrible and unsubstantiated assumptions about the cigarette supply chain and communal cost. In our current system we are subject to a pardigm where we legislate a tax to cigarettes after the fact to ammeliorate a recrceived communal cost. This is, as you say, a volitile example but entertaining to play with. :)
So, I am not saying cigarettes should cost more because they are bad for you, I am saying that the price of a pack of cigarettes should reflect its value/cost to all stakeholders. We should let the physics of the market decide. Our current market does this very poorly.
Posted by Steve Wright on 03/16/2009 @ 12:32PM PT
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I agree that we don't know the costs that went into producing the products we consume. It would be nice to have a better idea of this. We might think, for instance, that vegetables that we buy at the local farmers market have consumed less fuel to be delivered to market. But we might be wrong. And we don't know what type of fuel is consumed. We don't know the density of product per gallon of fuel consumed. It would be nice. But it is much simpler to look at the price and the quality of the product. We still have to factor in convenience to us to purchase it. We have to do these kind of calculations every day because conditions, well sometimes they change.
I think it us much simpler for the consumer to make his calculations based on the price and the quality of the product. Remember that we still need to sort our purchases in order of importance at the time. We already have a lot on our hands. And this doesn't change if we are purchasing for our home or if we are purchasing for a business. We spend a lot of time just calculating whether the purchases we are making are worth the money we are spending.
It is then left up to the supply change to make sure that they are charging enough money. That is much the same calculation as the consumer is making. But many companies do not know if the products they are selling are fully covered by the price they are charging for them. They may end up with a net loss. Much more can be done in this area with new technologies and codification of cost components. Much is happening in this area but there is so much more work left to be done. One area being worked on is XBRL, a business reporting XML tagging standard. XML tagging can also help in other areas such as price comparison and many other cross-evaluations by the wide adoption of Microformats.
In any case the solution seems to be more of a world wide web of intervaluations than some uber-definition of value. Values have meaning only in comparison to other values.
Posted by _ XgenX _ on 03/16/2009 @ 09:25PM PT
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Well said.
Posted by Steve Wright on 03/17/2009 @ 09:25AM PT
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Nathaniel,
Yes, I think it is all three. 1) Organizations like Good Capital (http://www.goodcap.net), the Institute for OneWorld Health (http://www.oneworldhealth.org), Grameen Shakti (http://www.gshakti.org), and others are not good examples of philanthropy nor are they good examples of 3rd or social sector organizations. These are good examples of businesses. What we need is for them to be successful. They need press but not about how nice they are. They need press about how good they are. 2) CSR is tired. Just the act of calling it out as a specific thing means that it is adjunct to what a business is. It's an option. Corporations should not have the option to be socially responsible. While I believe their is a role for legislation (yes, even regulation) it is not about requiring corporations to do specifically socially responsible stuff, it is about making room for more than just revenue in the definition of success. I look to new corporate definitions like what is being developed by b-corporation.net, Corporation 20/20 (http://www.corporation2020.org/), and low-profit Limited Liability (http://en.wikipedia.org/wiki/L3C) to help us redefine success. 3) As for a cultural shift, it is my understanding the our "culture" already has an understanding of what we value, we just need to see it manifested. So, yes all this is part of the "blended value" movement but the term is problematic because it makes room for a type of value that is not blended. What makes value blended is the addition of social impact. To me that is more value, not alternate value. Of course, this leads to the need for creating new ways to measure this more holistic value and that is the stuff of another post. I believe that what is critical is for our businesses and our governments and our citizens to collaborate effectively in robust collaborative efforts to solve problems. This is not something that we should in addition to business as usual. We would fail in that case. Solving problems must become business as usual.
Posted by Steve Wright on 03/15/2009 @ 01:23PM PT
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the this comment reminds on of the book by N.K.DAVID " it is time we truly know why Jesus wept ( at the grave of lazarus)" . i think people ingnore the most important things most at times to consider other lesser values
Posted by obasi u. on 04/17/2009 @ 05:29AM PT
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Great thread, guys, and original thread, Steve. trying to synthesize and add, I think new ways of measuring are in a sense just including what has always been allowed to be called externalities. Good business is good business, I think. If you work to enhance the ecosystem, what my father, a country weekly newspaper editor in Appalachian Mississippi called building a community in which your business can survive. I think our metrics are collective, but they also need to explicitly include the voices and views of the marginalized, women and children explicitly. my friend sabina Alikre is working on that at http://ophi.org.uk/ and USAID and the World Bank is starting to use them. I'm bringing her work into the world of fair trade through some partners.
when we start counting things in a new way, we need to make sure we look around and that all the stakeholders are at the table when we create the new currency/value exchange. it has to work for the marginalized and those without power or wealth for it to work for all of us.
Posted by Kevin Jones on 03/15/2009 @ 02:23PM PT
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It seems that defining a company's/organization's stakeholders is as critical an endeavor as measuring impact. As you and Tim (below) are pointing out, getting the measurement right is likely very communal.
Posted by Steve Wright on 03/15/2009 @ 07:16PM PT
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Russian companies have moved into major barter mode, as they did after the Russian economic collapse of the 90's. That is a good place to look at these intersections around direct vs intermediated value within the conventional big business system context.
There is a tension between the scalable network and globalized light speed transactions with strangers, conforming assets, etc...i think we are seeing a tipping point opportunity to push some of the flatter and scalable design elements though. The local economy folks are all about this but it tends to fall too far outside of the current fat middle of the world to be resonate beyond a certain slice of us. I woudl say rather that local economies is one great realization of intimacy as it pertains to transferring value. Anonymity has been an increasing requirement of our system.
On "social" i like this frame. I tend to want to reject social these days as a modifier the same as Steve rejects CSR. We want enterprise to mean all these elements. Stakeholder theory. Sustainability. Etc. Everything must be integrative of full value. No more externalized costs onto society without accounting. No more arbitrage on human dignity. Catchy phrase to say, down with child labor etc.
But Social Enterprise/eur is a good placeholder for the (r)evolution.
On blended value, at least teh way I have always understood Jed Emerson (http://www.blendedvalue.org) to use it...it doesn't leave room for non blended value extremes actually. It is about the fundamental truth that all value is a blend of financial, social, environmental (and some other) value. We can't look at things in a vacuum. It is a false binary code that we bought into awhile back. Every transaction, investment, choice...it driven by and eventually driving to full spectrum of value outcomes around 'people' and 'planet.' When we choose a job salary counts...and so does proximity to our aging parents. When we invest in a PCV plant upstream, following the money, we reap the health outcomes whether we took that into consideration or not at teh investment decision pt. And on a on.
Posted by Tim Freundlich on 03/15/2009 @ 03:03PM PT
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Tim, thanks for the link (http://www.blendedvalue.org) and the clarification on blended value.
Posted by Steve Wright on 03/15/2009 @ 03:43PM PT
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sorry i can't edit that last post on this platform. In particular beyond the carious typos...PVC plastics versus PCV was the example hyperbole i was trying to use.
Posted by Tim Freundlich on 03/15/2009 @ 03:09PM PT
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various typos :)
Posted by Tim Freundlich on 03/15/2009 @ 03:09PM PT
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Excellent post, thank you. Intitially, you come out with a radical/ fundamental analysis. The problem is the that we worship wealth creation over value creation; I agree. However, you end your quite impressive analysis with a general pitch for social enterprise. I would argue that you are taking a knife to a gunfight.
Perhaps what we need is not a proliferation of "social" enterprises, but an entire rethinking of how our economy is embedded in our society, culture, and democracy. The pursuit of individual profit over communal welfare is a function of how we have embraced the power of the self-regulating market. Unless the way we change markets fit into and support every facet of our national scheme, then social enterprises will always be operating within a structure where the word social just means marketing to liberals, and thus more profit.
Perhaps the modifier social should not lead to you to social enterprise, but socialism? Just a thought, thanks for the post!
Posted by Dave Ellis on 03/15/2009 @ 08:13PM PT
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Dave, Thank you for you comments. Relative to a knife to a gun fight, maybe you're at the moment, but I am hopeful that this is a moment in time and the idea of blended value (as mentioned before) and new corporate structures (as mentioned earlier) will make it possible for the "modern" corporation to evolve in to something that creates a more holistic value, universally recognized and cummunally realized. A core component of this idea is that if we are to succeed in the broadedest sense, as humanity, we have to learn to solve problems (poverty, hunger, disease, envornmental degradation...). This is the fight to which we must bring our heaviest artillery.
Posted by Steve Wright on 03/16/2009 @ 07:52AM PT
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Wow! There's a lot going on here:
- merits and demerits of currency to effectively translate value
- systems level thinking in attributing the true value/cost of a good or service
- role of the market in valuing a good or service
- social enterprise and the pursuit of blended value in the whole mix
When I look at this, I see value or values as the common denominator, and this can be a dicey topic. I don't know that currency specifically is the fundamental issue behind the crisis. It has its role to play, but eliminating currency does not eliminate the larger value discussion. In the fertilizer-palm oil barter scenario, you might still have societal costs lurking where no money is exchanged. Environmental issues with petroleum-based fertilizer or inhumane labor conditions for palm oil harvestors could be a couple of examples. In this case, a currency might actually be quite useful in assigning social costs to value created in these products. I wouldn't want them paying for their social costs with more of their products, creating more social cost!!!
It is interesting that a lot of the social costs (or negative externalities in economic lingo) are manifest in a longer timeframe than the wealth creation that produces them. If there is an underlying dynamic to the crises as a whole, I would say that it was an unsustainable sense of entitlement in the short term. Our economy has largely been driven on the premise that you can have more, now. Don't worry about the cost down the road. It's interesting how broadly this can be applied: the young professionals living beyond their means, the mortgage broker doing what it takes to book a loan, the young person dropping school to deal drugs, Madoff, Enron, etc. It is incredibly telling that fudiciary responsibility as understood by many is maximizing next quarter's returns. You cannot get less sustainable than that!
One of the appeals of "the market" is that it takes the burden off of any central source to create values. It's a nice crutch to be able to say, "I'm okay, and you're okay, and the market as a whole will determine value(s)." It's attractive to leave it up to the wisdom of the crowd, but I'd say some of humanity's worst moments have been ushered in by crowds. The crowd often look to leaders to set the tone, and then join in.
I see the social enterprise movement as an alternative source of leadership. Although I lament the personal tragedy that has come with the current crisis, I think we needed some pain to push us past our complacency. There is a real opportunity for the social enterprise field to demonstrate that value is more important, more fulfilling and more sustainable than wealth. I am finding this resonates more and more with people since the crisis started. I think we need to be thoughtful about seizing the moment!
Posted by Steve Hardgrave on 03/16/2009 @ 09:54AM PT
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Steve, I really like the addition of a longer time horizon to understand value/cost. I was an educator in my former life. It always seemed like a longer time horizon was need to see change than our political system was willing to give. And the market, crowd, leadership points are very well put.
Posted by Steve Wright on 03/16/2009 @ 12:51PM PT
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Hi Steve,
Thanks for joining the conversation and couldn't agree more. I think that for this alternative leadership to really take route, four things are needed:
1. Examples, examples, examples: When I tell people about Better World Books, it clicks. The sky opens up and people understand why the hell this is so exciting and viable. We need more stories told about organizations where this is built into their DNA, and/or we need to get better at telling them.
2. We need to be able to tell a plausible story about scale. To extend the example above, BWB is great, but its a company, not an industry, and certainly not a whole economy. There needs to be a clear and simple vision that takes the Aha! I see when i tell people about BWB and the like and expands it to the macro.
3. Entry points, entry points, entry points. We need to figure out how to expand the entry points through which graduating folks, mid-career shifters, and the encore careers come through the door. It can't be a mystery quest filled with hurdles and danger.
4. Exit points. We need folks with experience with this framework in positions of power at related institutions, like banks and government.
Would love to hear more about things happening on these fronts.
Posted by Nathaniel Whittemore on 03/17/2009 @ 10:24PM PT
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Quite comment Nathaniel ... i think http://www.the-hub.net is a great way to take the company and bridge to a more macro context. it is super concrete and intuitively accessible. it is about a global network coming alive and it is plumbing for people and community within this context. some folks are working on bringing it to the US, starting with san francisco next fall
Posted by Tim Freundlich on 03/17/2009 @ 10:32PM PT
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I agree Tim, and actually, I think that your vision of the Hub, which includes partnerships with artistic institutions and a fluid approach to events is exactly the type of thing I'm talking about when I mention "entry points."
Posted by Nathaniel Whittemore on 03/22/2009 @ 01:00PM PT
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I think that among all this talk about how to control values there should be better dicussion about what values are.
To me values are items in a list for me. The items in my list grow and shrink. I know that at any time I can only attain and hold a finit number of items, but that number may change. They are the things I keep near to me; the things I fill my life with. Some of them may be people. My list may be unique at any given time.
We are partaking in this discussion because we value a free and open discussion about value assignment or because we are looking in this list for something to solve some problem. Whatever reason we have to seek this here has by our own decisions brought us here. When we stop receiving value from this list we may leave it.
We have made one value decission to spend our limited resource of time here instead of doing the dishes or whatever. That is one value judgement in one day. Imagine the millions of myriad decisions a person makes. Some of them may be purchases.
The only problem and the only result of you casting your net around to catch these values is not that you will catch them, but that you will destroy the delecate web of algea and kelp and plankton of decisions in the huge decisionator network eco-system of the economy.
Certainly better education of each individual decision maker would be helpfull, but you ignore the value of prices in sending signals. Money is only one way we express our values. Our decission maker network benifits from faster signals. As money gets manipulated it disrupts the spead and validity of those price signals and our desicionator network suffers.
We will need to replace that fast firing price system with a faster network to tell people what to strive for and how to spend each and every day, if we want to improve the knowledge of decisionators in the network. What is faster than free floating price purchases? We are all members of the value inter-network and we all benifit from better faster comunications just as we do from high speed web and comments lists with free and open discussions.
Posted by _ XgenX _ on 03/22/2009 @ 07:13PM PT
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I'm scrambling to get a presentation together for my board tonight and I came across this wonderful piece and all of your comments. Special thanks to Kevin Jones' comment about internalizing the externalities and for Dave Ellis' last comment since it resonates with the ultimate goals of groups I partner with. I run a sustainable development membership organization in Central Appalachia (the Ohio section) called Rural Action. When I reflect on what we're doing - building pathways for participatory development in forestry, ag, watershed restoration, youth leadership, and energy - we are trying to overcome an economic system that has degraded the people and land of this region for over 100 years. If we had our druthers, full cost accounting would be the norm. I like working at the local level because it's so much easier to see what people in a local economy value. Individual donors invest in us, consumers (individual and institutional) buy our produce, landowners seek information about their timber and understory opportunities, etc.
I also know that folks buy smokies and everyone hauls to Parkersburg on the weekend to value the shopping malls and what they can offer. So it's slow going, but the hope that by holding out the alternative narrative (it's all connected, there's no downstream, people and place matter, resilience counts, etc.) and concrete projects, we will eventually create a system that grows quality, not just quantity, and we'll walk away from the growth-is-great paradigm. So that's where social enterprise comes in. If I can jump on opportunity to connect local resources to traditional markets, grow new markets and demand for local products, strengthen local value chains, then I'm helping people rally around a new kind of economy. I give it 100 years in my limited planning horizon.
Final comment - while it got a bit obtuse, I like the network metaphor for imagining nodes of value - value centers. We operate in networks a great deal and at the local level at least I can see how it applies. More concrete examples would help the case. And the first paragraph is just great - I'm passing this along to staff and colleagues.
Posted by Michelle Decker on 03/16/2009 @ 09:59AM PT
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Michelle, many thanks for the comments. And, yes the network metaphor needs some work. I will take your suggestion and look for concrete examples. Thanks.
Posted by Steve Wright on 03/16/2009 @ 12:54PM PT
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Great conversation. I would love to add my reflection and someone else's. As it applies to this blog, I view an entrepreneur as someone who generates real, substantial value for an organization. The entrepreneur does not just raise investment (then you're just a broker), no, they turn cash into real value. Entrepreneurs are connectors, creators, and doers.
Social Entrepreneurs are just mindful entrepreneurs who account for value at all levels.
This conversation has entered the global consciousness. All of us who constantly refresh The Huffington Post are aware of the Cramer vs. Stewart debate. I would like to pull one quotation from John Stewart which I believe captures the heart of this thread:
JS: But isn’t that part of the problem? Selling this idea that you don’t have to do anything... When are we going to realize in this country that our wealth is work. That we’re workers and by selling this idea that of “Hey man, I’ll teach you how to be rich.” How is that any different than an infomercial?
http://justfixit.wordpress.com/2009/03/14/jon-stewart-versus-jim-cramer-cnbc-smackdown/
Dollars $$$ as a proxy for value are undeniably abstractions of abstractions and have been further abstracted by the statistical arbitrage we've seen in the financial world. We need to realize that value, and $$$s for that reason, is only generated through meaningful work.
Posted by Charles Harding on 03/16/2009 @ 11:54AM PT
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Great conversation. I would love to add my reflection and someone else's. As it applies to this blog, I view an entrepreneur as someone who generates real, substantial value for an organization. The entrepreneur does not just raise investment (then you're just a broker), no, they turn cash into real value. Entrepreneurs are connectors, creators, and doers.
Social Entrepreneurs are just mindful entrepreneurs who account for value at all levels.
This conversation has entered the global consciousness. All of us who constantly refresh The Huffington Post are aware of the Cramer vs. Stewart debate. I would like to pull one quotation from John Stewart which I believe captures the heart of this thread:
JS: But isn’t that part of the problem? Selling this idea that you don’t have to do anything... When are we going to realize in this country that our wealth is work. That we’re workers and by selling this idea that of “Hey man, I’ll teach you how to be rich.” How is that any different than an infomercial?
http://justfixit.wordpress.com/2009/03/14/jon-stewart-versus-jim-cramer-cnbc-smackdown/
Dollars $$$ as a proxy for value are undeniably abstractions of abstractions and have been further abstracted by the statistical arbitrage we've seen in the financial world. We need to realize that value, and $$$s for that reason, is only generated through meaningful work.
Posted by Charles Harding on 03/16/2009 @ 11:54AM PT
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Obama on AIG from the Huffpost
http://www.huffingtonpost.com/2009/03/16/obama-aig-remarks-full-te_n_175312.html
"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.
"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said.
+++++++++++++++
Said Obama: "All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules."
"This isn't just a matter of dollars and cents," he added. "It's about our fundamental values."
Posted by Steve Wright on 03/17/2009 @ 09:27AM PT
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But what about the other 99.9% of the money they received? Is this part so offensive because it went to actual individuals? Should they forgo their bonuses so that more money could be sent to Deutche Bank or the other benificiearies of our baliout money?
Certainly the bailout of AIG was a fiasco of Titanic proportions. Too big to fail? How many other corporations are we on the hook for then because they are too big to fail? Now they will punish the captains of the ship as it heads toward the iceberg.
Posted by _ XgenX _ on 03/22/2009 @ 02:48PM PT
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Steve and everybody,
Steve thanks for your brave post on centered on how to bring love into the business equation. What a great discussion you've triggered!
I want to toss in there that the culture around business that more fully integrates our humanity will by definition look really different than what is conventionally thought of as excellence in business today, at least in the west.
As an example that's on my mind because I'm heading there again in a few days, I was really struck by the fact that at the first Indian School of Business semifinals of the Global Social Venture Competition a couple years ago, at which teams of MBA students/entrepreneurs/investors pitched business plans to experienced professional investors/business people, every single team gave a musical or dance performance at the kickoff dinner event. This was an acknowledgement of the incredibly diverse cultures the international teams hailed from, it meant that providing space for artistic expression was appropriate at a high-caliber business educational event, and it was simply fun.
This is not something one would see in an American business environment, even a "blended value" one, since doing something like that would generally be seen as too frivolous or exposing or corny-- it would be judged "unprofessional." I had to wonder how long they would keep this up once they had absorbed norms set by the presumably more "advanced" social entrepreneurship culture emanating from the competition's hub in the San Francisco Bay Area. In fact the advanced culture is one that has not gone so far down the dehumanization path (as we have by and large in the west) that people no longer give the time to cultivate let alone share and celebrate each others' myriad talents.
Of course I totally I believe that Coase's theorem, which says in a nutshell that externalities will be internalized if you can measure them and figure out who's the responsible party, will mean that the actual prices of things reflect more of their full cost and value as we improve our information systems for making environmental and social value visible.
I also believe we need separate ways to see that value, because dollars will always be an imperfect way of integrating that value into the way we allocate our money and our time.
But there will never be a currency, or a metric, that dictates that we should integrate things like homegrown musical performances or other moments of simple enjoyment by the business people who come together to do business with each other. This will require instead that we have the confidence and awareness to stay in touch, or get back in touch, with ourselves enough and give ourselves permission to be fully expressed in the way we design our work.
Sara
Posted by Sara Olsen on 03/17/2009 @ 11:46PM PT
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Sara, Thanks for joining in and safe travels.
It is my hope that this ability to both bring one's whole self in to thier work as well as respect the context of our colleagues is something that we can evolve (re-evolve?) in to. I could not agree more with the sentiment. If we are not whole in our endeavor to solve the world's most intractible problems that we will fail. This tends in to the goovy-sphere and gets a bit fuzzy, but it seems to take the same sort of strength that it takes to be present.
There is some fantastic work by Monica Sharma
http://www.kosmosjournal.org/kjo/articles/articlessub2/personal-planetary.shtml
that for the first time helped me to understand the role of self in global change.http://www.conches.org/2008/01/impact-measurem.html
Posted by Steve Wright on 03/18/2009 @ 09:58PM PT
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I just found a great post at the Doors of Perception blog that lists a lot of examples. Essentially, the post looks at the sustainability problem exploring how to expose cost with design. design of product but also of info-scape or some such thing.
http://www.doorsofperception.com/archives/2009/03/metrics_and_aes.php
Posted by Steve Wright on 03/18/2009 @ 09:51PM PT
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Wow, that really is a great post! I am definitely going to point people to that. Excellent starting point for an overview of what has been standardized and what hasn't been, and maybe is not possible to, standardize.
Posted by Sara Olsen on 03/24/2009 @ 12:24AM PT
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Wow, love and business! An intriguing new angle indeed.
After my own post about metrics and aesthetics, someone told me about this excellent piece on Adbusters about "visionaries redesigning our economic model".
http://www.adbusters.org/magazine/55/economists_leading_change.html
Reading that piece reminds me how right Steve is to say (above) that "getting the measurement right is likely very communal". When new metrics are devised by smart people, or even "visionaries", sitting in a darkened room, the danger is that they (the metrics) get added to a stack of other new metrics - but otherwise ignored.
A great example of communally-devised system is the Lewes Pound: http://www.thelewespound.org/Formally, it's another complementary currency. In practice, it's a tool developed by a vibrant, place-based, grassroots movement. That's why it's getting used.
Posted by john thackara on 03/19/2009 @ 12:33AM PT
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John,
Great link. The idea of a local (community) currency is, well, brilliant. In this case, their is actually something uniquely valuable about the currency in and of itself, in that it stands for an individual's choice to buy locally. It doesn't scale but then its definition is the antithesis of scale.
It is often said that when something is purchased the consumer is voting with their pocketbook. Economic choices are currently a very polluted metrics system but maybe it needn't be?
Posted by Steve Wright on 03/20/2009 @ 01:07PM PT
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As someone in Nebraska, a relatively conservative state, I have a slightly different perspective on creating societal value. I think there are still many people in the United States, many of whom are in my home state, that still don't see government as a major player in helping to create a system that realizes value for us as a society.
Government is still the best way to create change in the world, but we still don't live in a country where the population is necessarily educated enough to tackle many of the social and environmental problems we face. If we cannot overcome this initial hurdle, I am less hopeful that we can tackle many of the challenges in creating value in organizations.
Its important to get our message out there...about the importance of social and environmental justice. That when we see value in things in the world, we should go out and achieve that value. That government can provide the basic research and impetus for a universe of new methods to improve our lives and achieve social value.
Posted by Luke Waltman on 03/20/2009 @ 11:06AM PT
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Luke,
I am in complete agreement that governement has a strong role to play but what I am suggesting is that we need an entirely new frame. Today, truth/love/value is devined by sifting through bias. The right and left each have their own marketing strategy to express their versions of the relative truth. (I am working hard to word this in neutral tones...). Personally, I do not think there is an objective truth, at least not in any practical sense. The trick is to create a system where we actually intend to get close, where the goal is to facilitate the discovery of truth/love/value. This is in opposition to our current system where the goal is to facilitate the creation of wealth. Education and activism can then be more effectively and transparently executed.
Posted by Steve Wright on 03/20/2009 @ 12:59PM PT
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I agree, education is fundamental. Without it we won't be able to overcome the obstacles to our own wisdom we've managed to put in place over the past several millennia.... and returning us to that wiser state may eventually be a job nature does for us.
Posted by Sara Olsen on 03/24/2009 @ 12:26AM PT
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Awosome....just awosome....really so usefull information for all of us.....thanks to share this post with us....
Vanraj
rishi.square1@gmail.com
www.squareoneseo.com
Posted by Vanraj Langa on 04/07/2009 @ 10:46PM PT
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