The Tale Of What We Measure: Bhutan, Gdp And The Riddle Of True Progress

Last week I was lucky enough to attend Ignite Waterloo, a lively and well-organized evening conference event which I would describe as TED on speed. Presenters each get five minutes only! Thirteen presenters dazzled us with their stories that evening.  Incidentally I absolutely recommend the Ignite experience - similar events are held all over!

One of the presenters, author and business strategist Sandy Richardson talked about GDP (Gross Domestic Product) and true progress.  She proposed to us that despite its longstanding status as the benchmark for economic success (therefore prosperity, productivity, growth and happiness for a country), GDP is not in fact the best way to measure true progress.

GDP as a Measure of Progress?

Why not?  It does not distinguish between transactions that increase well-being and those that decrease well-being.   Put another way, if the economy is doing well but the people are doing badly, are we really getting anywhere?

Why did we start using GDP in the first place then?  Right after World War II, then US-president Herbert Hoover held it up as the most effective way to measure recovery from the war.  Growing the economy was the best way to distribute wealth and increase well-being at that time.  But since we are no longer in post-World-war recovery mode, different metrics now apply.

The Hidden Art of Measurement

Deeper social, economic and historical analysis aside, I like the way her talk called attention to the art of measurement.  Deciding which metrics are important is actually quite a profound exercise, since it drives everyone's behaviours, goals and mindsets toward improving those metrics.   This is equally true inside a company as it is within an entire national economy.

What gets measured gets managed, according to the late great management thinker Peter Drucker.  So it is essential to pick out the metrics that represent short-term goals in alignment with long-term strategy.

Operating on Yesterday's Agenda

An example could be to acquire some new investors in order to acquire the cash required to invest in upgrades - to improve energy efficiency, or drive new product research - that will permit the business to fulfill its overall mandate better.  Dollars of  investment acquired makes sense as a short-term metric but only in service of the long-term goal.  If it was the only thing you measured you would, theoretically, go on searching for investment forever but never moving on to the other activities which will enable achievement of long-term goals, value and mission - i.e. true progress.

When companies (or countries!) forget to update their metrics and continue behaving as though yesterday's priorities are still the most important thing, you get sideways or even backwards progress.  You lose sight of mission and long-term goals.  It's critical to update the metrics you are measuring and working towards to today's reality.

The importance of balance 

Ms. Richardson also went on to talk about the danger of only measuring one thing, since no metric can adequately describe your entire operation.  I agree. I recently designed a management operating system for a client (that chart full of lovely green post-it notes you see in the attached pic!) which allows them to review the 48 top metrics that will drive excellence across their organization.  Balance in measurement is extremely important.

The small country of Bhutan has made international headlines for its adoption of 'Gross Domestic Happiness' as a key metric for measuring progress.  It will be interesting to see how that experiment works out.  There are alternative metrics coming out  all of the time:  Happy Planet Index, the OECD's Better Life Initiative, and though displacing GDP, even partially, will be a challenge, it is a very exciting and promising time to be alive as these ideas surface to balance out the economic factors.

What is your definition of true progress?

Do you have metrics for success in your life and work?  Do they make sense with what you believe is truly important for yourself, your business, your family and your country?  When was the last time you checked for alignment between what you are working on day-to-day and what you really want to accomplish in the long-term?

Take a cue from Bhutan and try updating your progress metrics to something that represents true success to you.