Speakers & AuthoritiesStrategy

Don’t Just Show Me the Money. Michael Porter on Measuring Social Progress.

By April 15, 2014February 23rd, 2016No Comments

Robert F. Kennedy once said a country’s gross domestic product (GDP) measures “everything except that which makes life worthwhile.” Even Simon Kuznets, chief architect of the macro-economic metric, warned against equating its growth with well being. Yet, 80 years since its introduction, GDP remains the sole measure of national progress in almost every country – to the detriment of the world, according to Michael Porter.

Harvard Business School Professor and renowned authority on strategy and competitiveness, Porter has long focused on economic development and metrics. But the ‘Arab Spring’ of 2011, mass protests in Brazil and the Occupy movement demonstrate the shortcomings of economic growth as a proxy for social progress. It’s time, he says, to begin measuring social progress directly in order to fully assess – and address – a country’s ability to improve quality of life for their people. A society that has rising GDP but fails to address basic human needs, erodes the environment, and limits opportunity for its citizens is not succeeding.

“We in the United States grow up celebrating ourselves as the world’s most powerful nation, the world’s richest nation, the world’s freest and most blessed nation,” wrote New York Times columnist Nicholas Kristof. But the country isn’t number one – or even close. The new Social Progress Index, designed by leading scholars under Porter’s leadership and issued by the nonprofit Social Progress Imperative, ranks the U.S. a sobering 16 of 132 countries. New Zealand is first, followed by Switzerland, Iceland and the Netherlands – each somewhat poorer than the U.S. per capita, but significantly better at meeting the needs of their people. Canada comes in seventh, the best among the G-7 nations.

Porter, who created the concept of shared value to help businesses stimulate economic value by addressing social issues, is hoping the Social Progress Index will bring social and environmental considerations to the top of policy and corporate agendas. The Index is his brainchild, an ambitious, sophisticated effort to provide societies with a robust empirical basis for seeing how their national conditions stack up against their desires and against their peers. Based on 54 non-economic indicators – a vast amount of data reflecting suicide, property rights, school attendance, attitudes toward immigrants and minorities, opportunity for women, religious freedom, nutrition, Internet and cell phone access, and much more – it “allows us, for the first time, to examine the relationship between economic and social progress,” says Porter.

It’s often said that what you measure is what you get. If that holds true, Porter’s mission to spur more effective social entrepreneurship and philanthropy, better government development programs, and more responsible business strategies, should result in true social progress.