Business Organization that eliminates Reorganization and Economic Crisis Problems
The enterprise organization structure is the fatal error that prevents business management
I have participated in many organization studies in my years as a management consultant. My approach to organization studies was to organize the business first, and then assign the people to manage and operate the business.
If the business is not organized the business cannot be managed. The business must be managed to prevent the problems that underlie the current economic crisis such as “unknown asset values”, unwieldy and unmanageable corporations, unknown business information for government regulatory and economic management, the focus on performance and not the results produced, the consequential lack of management information on result value and the cost of producing results, and governance through regulation because the business cannot be governed.
Conventional business organization prevents business organization and management
But, I always find that others concentrate on organizing the people first in a contrived enterprise organization structure and then laying the structure over the business, making the business adjust to the way people were organized. This prevents the enterprise from organizing and managing the business and invariably introduces many more unsolvable problems.
- Contrived entities like departments, sections, functions, positions, etc., were defined, that did not relate to the business and restricted business flexibility
- Since the business was not organized, the business could not be managed
- Other structures used for planning, direction, accounting, performance, reporting, etc. were overlaid or changed to fit the organization, rather than using the business for management
- Managers and staff could justify their existence in the enterprise by filling an organization position, with no reference to the value they created through their performance
- Capital was assigned to the organization to reside rather than to the business to be utilized
- The organization was measured for time consumed, money spent, etc. rather than measuring the business. The organization may have been re-engineered into a process in order to measure the process rather than the business
- By definition, since the organization was different than the business, the enterprise was laying structures over the business and preventing integrated business planning and management
- The organization structure is fixed in place, while the business continually changes, creating pressure for organization change and upheavals in re-organization and change management problems. Re-organization begins another cycle of unsolvable problems
- The list of unsolvable problems is infinite, and the problems can never solved by improving structures laid over the business
So, let’s go back to organizing the business first. If the business is organized, the organization changes with business change, eliminating reorganization and change management problems. The first thing you have to do is to understand the reality of how your business operates and define how it should operate. To do this, you must understand what the business is. The definition of the business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”.
Therefore, to organize your business, you need to understand and define three things. First, the economic outputs your enterprise must produce across the scope of the business to be successful. These are called results, and are defined so that they can be counted and measured. Second, the tangible and intangible capital you have invested in and utilize to produce these results, which are defined as capital solutions, so that they can be deployed, implemented, and measured. Third, the performance domain, where each capital solution is implemented to produce a specific result. These three components organize the business into a business structure that can be used for all business planning, direction, control, reporting, and governance.
Organize business results first, and then deploy capital solutions to be utilized in performance to produce results
The most important thing to define in order to organize the business is not functions, units, positions, or organizational relationships. The most important thing to define is the results to be produced for the success of the business. Of course, it is easier to pick functions and positions out of the air, than to understand the fundamentals of the business in results to be produced. But, it is results of value and quality that are essential for business success.
Once you have defined results to be produced by the business, you must identify the human and other capital available as specific capital solutions that can be utilized to produce results. Some solutions basic to a unit may be organized and managed as a capital module. Once you have defined the capital solutions available to the business, you can organize the business. The business is organized by deploying and implementing a capital solution to a performance domain to produce a specific result. A performance domain is defined by the result identifier and the capital solution identifier. When results have been defined for measurement and production; capital solutions have been defined for measurement, development and implementation; and the specific capital solutions to be utilized to produce a result are implemented in a domain for measured performance, you have organized the business into a business structure. You can now capture actual business data on capital worth, investment balances, and returns; result volumes produced, value created, quality delivered, and risks to be managed; and performance costs, effectiveness, uncertainty, and value-added to results. This provides management information that has never been available to manage the actual business for breakthrough competitive advantage.
Certain capital solutions can be defined as responsible for producing the result
The business organization unit is a implemented as a business organization solution, called a result unit, which can house the capital module used for all results, for which the unit is implemented. A result unit solution may include defined positions. A result manager in position and individuals in other positions are implemented as a human capital personnel solutions to produce the results required by the position. The business structure can be inverted to show the results under a particular result unit solution or result manager solution.
Results are organized into end-results produced directly by utilizing capital solutions in performance. Set-results are produced by producing end-results in the chain or set that comprise the set-result. Key-results are produced by a number of set results within the key-result. Capital solutions are organized by the human capabilities needed to develop and support them. Once your results and capital solutions are organized, you can deploy your people to produce results and support capital solutions. You then have a natural organization that will change every time your results or capital solutions change, and you will never need to reorganize.
If you are part of a corporation, the corporation organizes by organizing each division, subsidiary, or venture within the corporation as a business and then logically consolidating results, capital solutions, and performance of all businesses within the corporation into one corporate business. Corporations also consolidate businesses by region, industry, product group, or other business descriptor.
When the business is organized the business can be managed as one business structure. Once the business is managed, you can eliminate the organization and management structures laid over your business and all the unsolvable problems that hamper your business and caused the failures and losses of financial institutions and other corporations in the economic crisis.
Result-performance Management (R-pM) provides the method to organize the business and utilize human and other capital, where needed to produce results
The source of knowledge for corporations to organize and manage their business is Result-performance Management (R-pM). R-pM shows how to organize results to be produced and then how to deploy and implement capital solutions where needed to produce results. Once the business is organized the business can be managed directly, without the need to lay enterprise organization and management structures over the business.
Forward-looking enterprises are now using R-pM guidance to organize and manage their business to gain breakthrough advantages over competitors burdened by unsolvable 20th century management problems. Business management is explained and documented in the Business Management Toolkit. The Toolkit provides procedures for actual business management and maintains emerging 21st century management conventions, definitions, and standards. Management consultants who base 21st century business management services on R-pM knowledge are licensed to help enterprises learn, organize, and manage the actual business. R-pM and business management are supported at result-performance-management.com.
The Solution to the Economic Crisis is explained in free downloads
Three free white papers explain the dead-end 20th century management problems, such as the failure to plan, account for, and manage the actual business, that caused the economic crisis, the way to eliminate the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building a structure for financial and economic management, and organizing local businesses to flourish in the eventual recovery.
- How to Eliminate Problems that caused the Economic Crisis explains the major unsolvable 20th century management problems and the solution to eliminate the problems
- Business management; the only Solution to the Economic Crisis explains how to plan and manage the business to capture business data and provide management the information needed for actual business, corporation, industry, and economic management
- A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management, stimulate the economy, restore confidence, organize businesses to flourish in the recovery, and manage economic cycles to prevent future crisis
These three white paper downloads are available to R-pM Community Members at Result-performance Management.com. There is no cost or obligation to join the R-pM Community. Join by entering your email address and personal password. Your email address is protected and used only for download problems, product updates, and occasional R-pM Member news and white papers.
