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What Do We Value?

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Who defines what you value? Of course, we would love to think that we alone define our own sense of value. But, it shouldn't surprise you to know that - on a global basis - our definition of what's important is incredibly influenced by statisticians and economists using the equivalent of an abacus to define human progress in the 21st century.

A country's Gross Domestic Progress (GDP) has been the world's holy grail for nearly four decades (which was preceded by similar measure, Gross National Product). This universal measuring tool, as a means of determining which countries are "developed" and which are not, is a gross tally of a nation's production and consumption. By definition, it assumes every monetary transaction adds to the developed nature or social well-being of a country. In practice, this rewarding of production and consumption masks many of development's costs whether those costs be the workaholism and materialism associated with these toils or the prisons that are constructed to incarcerate those who don't play by the rules. Just consider that pollution - or environmental degradation - shows a double benefit to GDP, scoring points when we pollute and, once again, when we attempt to clean-up our messes. This "gross" (love the pun, don't you?) definition of a country's value is an artifact from an earlier era that assumes that economic development would naturally lead to human development.

There's too much evidence today showing that this GDP = Quality of Life perspective is just plain wrong both in the developed and the less-developed world. U.S. per capita income since World War II has tripled and our homes are twice the size, but there's no reputable survey that shows that Americans are statistically any happier today than they were during Eisenhower's era. In fact, there's more and more evidence that past a certain modest level of economic survival, humans tend to judge their happiness more on a relative basis ("keeping up with the Jones") than on some objective, personal criteria. Capitalism and GDP are the perfect recipes for this zero-sum game of conspicuous consumption. And, in the developing world, we are able to see within a decade's time the societal costs associated with a GDP-driven strategy, whether they are growing income inequities or the loss of generations of cultural traditions.

Why is this important? Well, the indicators we use for societal success determine our policies and even embody our values. While there's no doubt that GDP provides an objective, easily-measurable means of defining the relative success of various countries that's like saying that we could judge a boy's character by how tall he is. In 1972, Bhutan's new King Jigme Singye Wangchuck had a moment of clarity that would have inspired MasterCard (even this credit card giant realizes the importance of the intangibles of life: "there are some things money can't buy...for everything else, there's MasterCard"). This King of a tiny country wedged between China and India suggested the blasphemous: why don't we value the intangible of happiness in our calculations of whether a country is getting it right. Twenty-seven years before the country would have its first TV installed in a home, King Wangchuck proclaimed that Bhutan would follow a Gross National Happiness Index (GNH) instead of GDP.

Since that time, a diverse collection of countries, from Australia and the Netherlands to Sri Lanka and Haiti, have jumped on the happiness bandwagon. France's Nicolas Sarkozy has teamed up with Nobel laureate Joseph Stiglitz to create a Quality of Life Commission to study which indicators have the greatest effect on well-being. There are now HDI's (the U.N's Human Development Index), HPI's (Happy Planet Index), and GPI's (Genuine Progress Indicators) that factor in such subjective criteria as the crime rate in a country, the percentage of couples getting divorced, a country's carbon impact on the world, and the access to education. Just like the triple bottom line is gaining momentum in the business world (an alternative means of defining a company's success based upon people and the planet, not just profits), the governing powers that be are recognizing that these times require a new method of thinking about how we define progress.

If this seems a little abstract, let me share a personal example of how using new, more intangible measuring tools helped save my company during the last economic downturn. When my San Francisco Bay Area hotel company was getting rocked to its core by the combination of the dot-com crash, 9/11, and a variety of other factors beyond our control, I realized that the traditional methods we'd used that defined our success - like year-over-year revenue or profit growth - were no longer relevant as a relative measure of our success since, frankly, everyone was showing huge drops in revenue and net income. Instead, we started giving greater attention to our employee satisfaction surveys and competitive market share as a means of guiding our business strategy. Lo and behold, we came to find that the intangibles of having supremely-engaged employees or evangelical customers created the kind of deep loyalty that allowed us to transcend the bad times. It wasn't that profits and net income weren't important, but they were actually the lagging indicators or our success. Changing our approach from measuring these byproducts to, instead, measuring the inputs (happy employees and customers) helped my company triple in size during a very difficult time. So, I've seen from personal experience that what you measure matters. And, sometimes, you have to adapt your measuring tools to the intangibles in life that truly define success.

So, tonight I travel to Bhutan and tomorrow I have dinner with some of the royal family (including, hopefully, the new King, who at 29, has an incredible likeness to Elvis) and a collection of the members of their relatively new democratic government. I will be meeting with members of the Gross National Happiness Commission to understand the nine key areas that they measure and to question whether a subjective means of measurement has risks of devolving into a sort of "Brave New World" paternalism (don't worry, we know what will make you happy).

Abraham Maslow once said, "If the only tool you have is a hammer, everything starts to look like a nail." This has been the case for world leaders who've myopically been focused on GDP as the only tool in their toolbox. There's a growing misalignment between the kind of human needs Maslow and others have espoused and the professed world economic goals as defined by production and consumption. Robert Kennedy probably summed it up best four years before the Bhutanese King uttered the concept of the Gross Happiness Index, "Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product...counts...cigarette advertising, and ambulances to clear our highways of carnage....Yet the Gross National Product does not allow for the quality of our marriages, the intelligence of our public debate, or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile."

Our American forefathers wrote about our unalienable right toward the "pursuit of happiness" long ago. I am now pursuing the ephemeral concept of happiness in Bhutan and I'll report back to you in a few days as my next posting will overview what I've learned from this trip.

Chip Conley is founder and CEO of Joie de Vivre Hospitality, America's second largest boutique hotel company, and the author of many books including Peak: How Great Companies Get Their Mojo From Maslow.