Measuring the right things means a chance of achieving the right goals

The pundits claim ‘If it isn’t being measured, it isn’t being managed’ (generally attributed to Peter Drucker) and how we have become masters of measuring. We measure everything from sales, return on equity, unemployment, sheep in the national flock, the cost of a basket of goods and the growth rates of each of these, seasonally adjusted of course.

Endless streams of data report on how we are progressing. ‘Progressing towards what?’ the astute (or innocent) observer may query. And that is at the core of our current sustainability problem.

The Australian government has set strong goals for economic growth in terms of GDP per capita and GDP growth and is set to achieve them with a healthy surplus besides. But what are we measuring? What is the ultimate goal?
A goal of improved economic performance is surely a statement wishing a better quality of life. However it is becoming increasingly evident that the answer to the question posed by Myers (2002) “Does the good life truly rest with piling up more and more goodies?” might just be no.

Why should you listen to the deliberations of some faceless blogger? Consider some of the facts being published by institutions such as Redefining Progress, the United Nations, The Australia Institute and many more.

The Genuine Progress Indicator (GPI) is being touted by these organizations as an alternative to the ubiquitous GDP. GPI is calculated from the same consumption data as GDP with a couple of differences.
GPI rewards economic ‘goods’:
– Volunteer work
– Rearing children
– Natural habitats retained

And penalises economics ‘bads’
– Resource depletion
– Pollution
– Cleaning up pollution
– Costs of crime and crime prevention

GPI avoids the perverse situation described by Redefining Progress where it was suggested that the devastating fires in southern California would produce a much needed boost to regional GDP through the rebuilding of homes. The Exxon oil spill in Alaska is well known as being a boost for the local GDP because consumption is all good good good for GDP, regardless of its source. This is why most western countries can be shown to have falling GPI (or real quality of life) in spite of ever increasing GDP.

But there are pockets of resistance in places such as the Netherlands (Myers 2002) and Santa Monica (Venetoulis, et al 2004) where use of GPI has displayed the true cost of our lifestyles and those areas are turning the tide and building a culture and the supporting infrastructure for sustainability.

As with monitoring of any system, industry or business there must be an alignment of the performance indicators to the strategy or purpose. If not, the system will be refined to greater alignment with its performance indicators to the detriment of the original goal. A company which only measures success by sales without considering profit will have difficulty with the payroll at the end of the month.

While we tolerate GDP to be quoted to us proof of economic growth we are accepting that degradation of our lifestyles is good news for our economy. I encourage you all to go forth from this blog, form my opinion (it is right – trust me) and demand better reporting from our economists, governments and the press.

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Posted in economic development
One comment on “Measuring the right things means a chance of achieving the right goals
  1. Alexey says:

    Wiiliam, your contribution is vlaid but is missing the Corporate world. I would add that in order for the world to consider the GPI as a serious indicator, Corporations and Organisations need to look closely at the four components of the EEE ratio. EEE = MMK services gained/NK services sacrificed
    Out of interest you may want to check this website:

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