- Jerry Schuitema
Living in a slimes dam.
Surrounded by parasites and desperately in need of governance purification.
With its mythical lay lines, Swellendam has attracted a number of creative eccentrics. One is the gnome like reclusive figure of Jan du Toit, affectionately known by town folk as Jan Pot after his artistic ceramic creations and paintings.
On those rare occasions when he allows you into his historic abode in the third oldest town in South Africa, you will have to tread with care, mindful of the fact that he once fell through his bedroom floor into his wine cellar, and severely regretting that he kept that part of the house under excessive lock and key. So mostly he entertains in an ancient outbuilding where he unleashes his creative genius. When he decides to engage you, he shows another side to his creativity – a poetic skill with Afrikaans idiom in crafting highly entertaining anecdotes. Like the time an irate ma-plotter on the East Rand, came stomping towards him on “possakkebene.” That defies translation as a noun, and even the combination of “post-bag legs”, does not do it justice.
He defends his growing reclusiveness as an escape from the “sluimsloot” out there, which is arguably not so metaphorical for many and which, for the purpose of this article, I’m translating as a “slimes-dam”. Ignoring mischief with my metaphor by those who know that not even parasites can survive in toxic mine tailings, let’s live with the image it creates as the setting for some low cost horror movie and perfect breeding ground for all kinds of flesh-eating, blood-sucking parasites, leaches and other organisms from microscopic to man-size creatures with vampire teeth.
I’m sure that in the past few weeks, many (along with quite a few Americans, I suspect) felt as if we are living in that mess – awakened anew to our plight by handfuls of chlorine granules flung by public protector reports, court cases, tears, shebeens, and a number of other skirmishes as purifiers fought contaminators and good battled against evil. With apologies to Dickens – it’s been the most disturbing of times. It’s been the most comforting of times. It gives cause to lament. It gives cause to celebrate. And now, years of skirmishes around corruption, governance and accountability have exploded into war.
While the aim is to restore the water to a pristine state of sound values; the purifying agent and parasite killer is good governance. Amid all of the cups of it flung into the sludge recently, one was the release of King IV, which represents a significant shift from its earlier emphasis on shareholder interests to a more inclusive stakeholder approach. As one spokesperson put it: “... the creation of value for others creates value for oneself.”
Now, if I had said that in a Moneyweb article (as I have countless times), some readers would have argued: “the creation of value for yourself, creates value for others.” That has been a traditional assumption around capitalism for many decades, citing Adam Smith’s “invisible hand”, which, especially since the Milton Friedman era, has been presented as a grabbing claw driven by self-gain, from which crumbs “trickle down” in sufficient quantities to fill the outstretched hands of the masses.
So there’s the switch. Is it a grabbing claw of self-gain? Or is it the open hand of value creation for all, starting with service to the community in providing it with products and services it needs? I am reminded of Mick Davis, mining entrepreneur and former CEO of Xtrata, when he endorsed my book “Value through Values” more than 10 years ago and which inspired the title to this website “Creating Value for all”.
“It is we who choose (business's) character and determine its predilection to add to the common good. It is this value in a business endeavour that will secure its legacy in Society and contribute mightily to a sustainable and coherent proposition for value creation for shareholders, employees, communities - for society as a whole. This makes the case for this in a simple but powerful way.”
That theory has been converted into a transferable methodology based on wealth creation by and for all. It is puzzling beyond belief that all governance and sustainability processes, including King, persist in favouring the schizophrenic Triple Bottom line as the paragon of accounting for sustainability and governance; over and above the long standing, stakeholder inclusive contribution account, or even the cash value-added statement. A full comparative analysis is beyond the length of this article, but will be dealt with in future.
All of what 3BL professes to promote (but in a divisive, near irreconcilable way) is captured in one simple measurement of value added (see here). Expanded into the full account, and then into supplementary inputs, which can include all of the required 3BL metrics, you have created one simple, understandable by all, protocol that seamlessly merges with all of the final statutory accounts. And it does not need high cost outside expertise to drive it. Perhaps that’s the only explanation for its survival. The true value of 3BL lies in its capturing of data on a broader scale. But for it to fully inform and help drive strategy, as opposed to a set of ticked boxes in an integrated report, it has to be filtered through a contribution account, which in turn tangibly affects strategy, wealth creation for all, and the standard final accounts.
For many the difference in the posture of the invisible hand is mere semantics and academic. “What about profit?” they adolescently bleat. For King, inclusive capitalism obviously includes the attainment of healthy profits. But he does not take the final plunge: that of redefining purpose. That is seen as too big a paradigm shift. Without it, for the most part, it is simply saying: “chase your profits” but stick to the rules of sound values, ethics, and fair play -- which I will happily prescribe for you up until King 5009. (Or (V)IX in Latin; Google says.)
That approach is somewhat counter-intuitive to the basic tenet of King IV. If you adopt that postulate, the leap into redefining purpose from profit maximisation to value creation for all, is really only a small one. Because profit is part of wealth distribution, and a fundamental pillar of optimal wealth distribution is that it has to meet the legitimate expectations of all of the primary contributory stakeholders (including capital, labour and state), and encourage continued, sustainable contribution.
King prescriptions coerce an adoption of behaviour to fit into that mould. I have no doubt that in time (albeit after mine), organisations will naturally take that leap. Many already have. For while attention always follows intention, attention can also mould intention. It is a question of sincerity. If we adopt that sincerity: naturally and instinctively, on a broader scale in all of transactional life, we will need far fewer King prescriptions.
We will certainly save vast amounts of water purifiers and parasite killers.
#MervynKing #KingIV #TripleBottomLine #3BL #StateofCaptureReport