1. 1. MULTI DIMENSION IMPACT ACCOUNTING MDIA CONCENTRATION File: MDIA-p3-14-CONCENTRATION-150721.odp Peter Burgess (c) All rights reserved
2. 2. EXPLANATION This slideset is A WORK-IN-PROGRESS. It will be upgraded periodically. It is part of a series of more than 50 slidesets. Navigation to all of these is available here: FEEDBACK is welcome. Please email to Peter Burgess peterbnyc@gmail.com with a catchy phrase in the subject line so that it gets attention, and please identify the specific slideset(s) involved. This explanation is version v150801. The most current text is available at: MULTI DIMENSION IMPACT ACCOUNTING http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=txt00010199 http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3
3. 3. CONCENTRATION is good for PROFITS MULTI DIMENSION IMPACT ACCOUNTING
4. 4. BUT how good is concentration for SOCIETY (people) and the ENVIRONMENT (planet)? MULTI DIMENSION IMPACT ACCOUNTING
5. 5. Great fortunes have been made by entrepreneurs who have managed to concentrate the industry and monopolize their markets MULTI DIMENSION IMPACT ACCOUNTING
6. 6. Rockefeller who built the Standard Oil monopoly in the late 19th century MULTI DIMENSION IMPACT ACCOUNTING
7. 7. Gates who built the Microsoft operating system monopoly in the late 20th century MULTI DIMENSION IMPACT ACCOUNTING
8. 8. Strong anti-trust legislation was passed early in the 20th century in the USA and Europe but all of this seems to be less effective in the past few decades than it was a century ago MULTI DIMENSION IMPACT ACCOUNTING
9. 9. From the perspective of investors it seems that bigger is better MULTI DIMENSION IMPACT ACCOUNTING
10. 10. From the employee perspective bigger usually means that the employee is simply a smaller cog in a bigger machine MULTI DIMENSION IMPACT ACCOUNTING
11. 11. From the environmental perspective bigger usually means that the damage is bigger, and often also means damage is more remote and away from prying eyes MULTI DIMENSION IMPACT ACCOUNTING
12. 12. Investors are represented in the very big organization by a Board of Directors and the C-level management who understand the relationship between profit and investor satisfaction MULTI DIMENSION IMPACT ACCOUNTING
13. 13. Many very big companies will not tolerate Union representation for their employees MULTI DIMENSION IMPACT ACCOUNTING
14. 14. Very big global supply chains facilitate a 'race to the bottom' for worker remuneration, benefits and even workplace safety MULTI DIMENSION IMPACT ACCOUNTING
15. 15. Accountability has been compromised by concentration it is easier to hide bad practices in a very large organization than in one that is small and relatively simple. MULTI DIMENSION IMPACT ACCOUNTING
16. 16. Accountability has also been compromised by concentration in the assurance industry which is now dominated by very few large firms and worse, these firms also earn substantial fees from various forms of consulting. MULTI DIMENSION IMPACT ACCOUNTING
17. 17. Accountability is compromised further by a system of accounting and its associated rules that only works for investors, but not for the other stakeholders in the modern global socio-enviro-economic environment. MULTI DIMENSION IMPACT ACCOUNTING
18. 18. VERY BIG does enable economies of scale most of the time but not all of the time and this can be good for PROFIT. MULTI DIMENSION IMPACT ACCOUNTING
19. 19. VERY BIG also means less competition which is good for PROFIT but bad for PEOPLE the consumer. MULTI DIMENSION IMPACT ACCOUNTING
20. 20. VERY BIG also means more RISK MULTI DIMENSION IMPACT ACCOUNTING
21. 21. VERY BIG companies usually have the data to optimize for maximum profit but few are organized so that they are able to optimize for minimum risk and especially risks that impact on society and the environment. MULTI DIMENSION IMPACT ACCOUNTING
22. 22. How many companies make 80% of the world's aircraft? MULTI DIMENSION IMPACT ACCOUNTING
23. 23. How many companies distribute 80% of the world's grain? MULTI DIMENSION IMPACT ACCOUNTING
24. 24. How many companies produce 80% of the world's oil and gas? MULTI DIMENSION IMPACT ACCOUNTING
25. 25. How many companies represent 80% of global Internet traffic? MULTI DIMENSION IMPACT ACCOUNTING
26. 26. How many companies dominate in the Internet segment of the economy? MULTI DIMENSION IMPACT ACCOUNTING
27. 27. Concentration is very good for companies (profit) and investors (stock value) but there is no accounting for how bad this same concentration is for society (people) and the environment (planet). MULTI DIMENSION IMPACT ACCOUNTING
28. 28. I like this quote from Adam Smith writing in the 18th century. MULTI DIMENSION IMPACT ACCOUNTING
29. 29. MULTI DIMENSION IMPACT ACCOUNTING Sun Economic Foundations Sun BOP Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun Financial Capital Human Capital Man Built Capital Natural Capital Sun EOP
30. 30. nothing wrong with market based capitalist economics if this is the foundation but very much wrong when performance is ONLY about making maximum profit. MULTI DIMENSION IMPACT ACCOUNTING
31. 31. Big concentration is not bad per se but very bad when it is used simply to make more profit. Being big and efficient with good impact for all components of the socio-enviro-economic system is fine MULTI DIMENSION IMPACT ACCOUNTING
32. 32. and for this to become the norm, it is essential that conventional accounting is enhanced to include impact on society (people) and environment (planet) as effectively as it exists for organizational performance (profit) MULTI DIMENSION IMPACT ACCOUNTING
33. 33. A FINAL OBSERVATION History seems to suggest that bigger is better when an industry is emerging but when an industry has matured, being big may mean lack of agility and first step towards failure. MULTI DIMENSION IMPACT ACCOUNTING
34. 34. The issue of concentration will be addressed in the various SECTOR specific sections of the TVM-MDIA initiative. MULTI DIMENSION IMPACT ACCOUNTING
35. 35. REMINDER This slideset is A WORK-IN-PROGRESS. It will be upgraded periodically. It is part of a series of more than 50 slidesets. Navigation to all of these is available here: FEEDBACK is welcome. Please email to Peter Burgess peterbnyc@gmail.com with a catchy phrase in the subject line so that it gets attention, and please identify the specific slideset(s) involved. This explanation is version v150801. The most current text is available at: MULTI DIMENSION IMPACT ACCOUNTING http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=txt00010199 http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3
36. 36. THANK YOU Some links and contact information: Peter Burgess peterbnyc@gmail.com Peter Burgess LinkedIn profile https://www.linkedin.com/in/peterburgess1 Link to TrueValueMetrics.org website http://www.truevaluemetrics.org/ Link to navigation to other slides in this series: MULTI DIMENSION IMPACT ACCOUNTING http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3