The Adaptive Quadruple Bottom Line
Scorecard
Henk Hadders
University of Groningen
Accountability Through Measurement
2nd National CSIN Conference
Toronto, March 2-3, 2010.
Intro
1. Organizational Sustainability
2. A new Strategic Performance Scorecard:
-
The Adaptive Quadruple Bottom Line Scorecard (AQBLSC)
3. A new Sustainability Measurement and Reporting Tool:
- Capitals-based approach
- Context-based sustainability & Context-based metrics
- Quotients-based sustainability approach
A Reference Model
Knowledge
Integration
Surviving
Knowledge Claims
Knowledge Claim
Evaluation
Create new Knowledge
Claims needed for
Problem solution
Duties and obligations
to stakeholders regarding
impact on vital capitals Social Contract
(Norm)
Stakeholders
Actual impact
Knowledge
on
Adaptation
Knowledge
Production
Organizational
Operations
Actual
Problem Impact on
Detection and
Knowledge gaps
Interaction
Vital Forms
of Capital
Natural ,Human,
Social, Constructed
Appropriations
Affective, Evaluative
Response and behavior
Well-Being
Internal and External
stakeholders
Create
flow of goods
and services
needed and used for
Reactive Learning
“downloading”
Mental models
Thinking
Reenacting
habits
Doing
All learning integrates thinking and doing. In reactive learning, thinking is
governed by established mental models and doing is governed by
established habits of action
Adopted from Senge, P. et al : Presence (2004)
Deeper Levels of (Creative) Learning
Thinking
Increasing awareness
of the whole
Action that increasingly
serves the whole
Doing
Deeper levels of learning create increasing awareness of the larger whole – both
as it is and as it is evolving– and actions that increasingly become part of creating
alternative futures.
Adopted from Senge, P. et al : Presence (2004)
The Adaptive Maturity Model
Thinking
Increasing awareness
of the whole
Financial Metrics
Balanced Scorecard
Adaptive Scorecard
AQBLSC
Adopted from Joe Firestone (2006)
Action that increasingly
serves the whole
Doing
A different way of viewing organizational
performance scorecards
• A life cycle approach enables managers to…
– Design more complex scorecards to account for more
variables, and
– Assess more types of organizational performance
•
•
•
•
•
•
•
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Financial
Environmental
Social
Economic
Learning
Knowledge
Organizational Intelligence
Organizational Adaptation
What is the Adaptive Quadruple Bottom Line
Scorecard ?
• The AQBLSC is a tool for measuring business performance that
not only considers standard metrics, such as financial,
customer, business process, and employee development – it
also evaluates a firm’s
1. Organizational Learning and Intelligence
1. Routine learning processes
2. Deeper creative learning processes
2. Social Responsibility
3. Sustainability
4. Adaptive Capacity
Major Benefits of the Adaptive Quadruple
Bottom Line Scorecard
The AQBLSC……
• Balances between internal and external impacts of the organization
• Incorporates a management evaluation perspective that provides a
basis for evaluating the quality of management processes used
• Provides a conceptual foundation that can enable more sophisticated
formal modeling of measures, and simulation of strategy dynamics
• Offers greater applicability to account for the many ways in which
organizational complexity impacts performance
• Builds a foundation for formulating more sophisticated business
strategies
• Adopts a broad-view systems approach that offers a high probability of
achieving organizational sustainability and adaptability
The AQBLSC
Business Processing (BP)
and Management (BM)
Operational Performance
Measures
Doing (BP)
Outcome
Financial Bottom Line
Environmental
Bottom Line
Social
Bottom Line
Economic
Bottom Line
Internal
Stakeholders
External
Stakeholders
Internal
Stakeholders
External
Stakeholders
Internal
Stakeholders
External
Stakeholders
Impact
Managing (BM)
Outcome
Impact
Knowledge Processing (KP)
and Management (KM)
Intelligence Performance
Measures
Doing (KP)
Outcome Impact
Managing (KM)
Outcome
Impact
Business Processing (BP)
and Management (BM)
Knowledge Processing (KP)
and Management (KM)
Operational Performance
Measures
Doing (BP)
Outcome
Impact
Managing (BM)
Outcome
Impact
Intelligence Performance
Measures
Doing (KP)
Outcome Impact
Financial Bottom Line
Environmental
Bottom Line
TBL
Social
Bottom Line
Economic
Bottom Line
Internal
Stakeholders
External
Stakeholders
Internal
Stakeholders
External
Stakeholders
Internal
Stakeholders
External
Stakeholders
Advocating for non-financial impact
measurement, using
• Capitals-Based Theory
• Context-Based Metrics (CBMs)
• Ecological and Social Footprints with
Sustainability Quotient Method
Managing (KM)
Outcome
Impact
Non-Financial Capitals and Well-Being
Natural
Capital
Anthro
Capital
Available
Flows of
Beneficial
Goods and
Services
Appropriations
by Individuals
and Collectives
This is the capitals-based theory of
Sustainability to which we subscribe!
Resulting
Levels of
Individual
and
Collective
Well-Being
The 4 Bottom Lines and their Capitals
Area of Impact
ANTHRO Capital
Monetary
Capital
Bottom Line
Financial Bottom Line
Environmental
Bottom Line
Social
Bottom Line
Economic
Bottom Line
Internal
Stakeholders
External
Stakeholders
Internal
Stakeholders
External
Stakeholders
Internal
Stakeholders
External
Stakeholders
Natural
Capital
Human
Capital
Social
Capital
Constructed
Capital
Adding Organizations to the Mix
management
interventions
and impacts on
organizational
activity
organizational
contributions
to supplies of
vital capital
(pos.& neg.)
Positive &
Organizational
activity
neg. impacts
indicators
and metrics
indicators
and metrics
quality and
size of stocks
of capital
Stocks of
Vital Capital
indicators
and metrics
quality and
volume of
flows from
capital
Positive &
neg. impacts
indicators
and metrics
basic needs
being met ?
(yes/no)
Human
Well-being
indicators
and metrics
…..and mapping indicators and metrics to this causal theory of human well-being
Adopted from McElroy (2009)
Definition of CBMs:
 Measures of sustainability performance that express
impacts on social and/or environmental resources in
the world, relative to what such impacts ought to be
in order to ensure human well-being
– Grounded in the context of actual social and/or
environmental conditions in the world
– Literal measures (absolute, not relative) of
sustainability performance
An Example: Water Use (w/o context)
Fortune 500 Company’s Annual Water Use
Mark W. McElroy, 2008
An Example: Water Use (with context)
Fortune 500 Company’s Annual Water Use
Mark W. McElroy, 2008
CBMs Take Form of Quotients
Sustainability
Performance
Scoring
Conventions
Mark W. McElroy, 2008
A
=
N
Actual impacts on
vital resources
Normative impacts on
vital resources
For environmental areas, scores of < 1.0 = Sustainable
For social areas, scores of > 1.0 = Sustainable
I thank my US Friends
• Joe Firestone PhD, CEO of Knowledge Management
Consortium International: [email protected]
– the Adaptive Scorecard
• Steve Cavaleri PhD, Professor Connecticut State University:
[email protected]
– System Dynamics and Modeling
• Mark W. McElroy PhD, CEO of the Center for Sustainable
Innovation & Director of Research at Deloitte’s Center for
Sustainable Performance in Waltham, Mass, :
[email protected]
– the Social Footprint and the Quotient approach to sustainability
and Thank You!
For more information, contact us at
Henk Hadders
University of Groningen
[email protected]