Reorganization is one of the top 10 problems of 20^th century enterprise management

The enterprise organization structure is the fatal error of 20^th century enterprise management

Why do we have to reorganize every few years? Why not organize just once and reorganize gradually as the business changes?

There are many 20^th century business organization theories and methods. Hundreds of books have been written on how to organize the enterprise, organization development, and organization change. There are many so-called business organization methods and structures, but these structures organize the enterprise and are laid over the business. The structures do not organize the actual business, causing the unsolvable reorganization problem. If the business is not organized the business cannot be managed. Additional management structures must be laid over the business to manage the enterprise. This is why the enterprise organization structure is the fatal error of 20^th century enterprise management.

Organizes the business for one business organization structure used for all business management

The business enterprise is defined commonly as “the activity of providing goods and services“. In order to organize the business, we must organize “the activity of providing goods and services”.

Business management eliminates the reorganization problem by organizing goods and services and other economic output from the business as results, and by organizing business activity as capital solutions utilized in business performance. The business is organized by deploying specific capital solutions to be utilized in performance to produce specific results. The business changes whenever management decides to produce a new result, close a finished result, or utilize a different capital solution to produce a result. The enterprise must organize the economic output results produced and and each investment in a capital solutions that define the actual business. Then, the enterprise business organization changes naturally with every change to the business.

The Reorganization Problem

20^th century corporate organizations organize people into contrived structures that are laid over the business

Again, the organization structure is the fatal error of 20^th century management. Once an organization structure is laid over the business, the business can never be managed. All 20^th century enterprises organize contrived entities like divisions, departments, sections, positions, processes, functions, etc. The objective is to organize people, rather than the business. The business must continually change in order to survive and grow, but we force the business to adjust to a contrived rigid organization structure, making business change a major problem.

The business changes, but the organization structure remains rigid, causing reorganization and change management problems

As the business changes, the rigid organization structure goes further out of alignment with the business, which builds up pressure for organizational change or reorganizations. Reorganizations are often a disruptive upheaval involving management consultants and charge management services. The new organization is dictated by people, power, and politics rather than organizing the business. One of several bad organization structure alternatives is implemented and the cycle is repeated. Instead of organizing the business naturally, people are forced to accept and adjust to a new arbitrary structure, introducing unnecessary change management problems.

The reorganization never solves the basic business organization problem. It simply sets up another cycle of conflict between a new rigid enterprise organization structure and the continuing changes to results produced and capital solutions utilized as part of the business. Eventually the enterprise must be reorganized again to align the enterprise organization structure closer to the actual business.

The Reorganization Solution

The only way to eliminate the reorganization problem is to organize the enterprise as a business through the three entities that actually define the business “the activity of providing goods and services”:

• Results: The economic outputs produced by the business to provide goods and services results
• Capital solutions: The capital investments required to provide goods and services
• Performance domains: The capital solution implemented to produce as specific result in order to manage business activity

The business organization structure is a business organization capital solution that maintains the current results to be produced, performance solutions available to the business, specific solutions utilized to produce a specific result, and the relationships between results. The strategic business organization structure shows the strategic results and the capital solutions to be developed and utilized at the strategic horizon.

The business organization structure is not a management prerogative

The enterprise business organization is not an arbitrary structure that management can dictate, since the organization is business capital and the organization structure is a professionally-managed business organization solution. Management directs the strategic results and capital development needed, and directs new current results needed and the responsibility and solutions to produce the result. The strategic and current business organizations are then updated and put in place.

The business organization organizes enterprise results and result relationships

The business organization organizes the results to be produced by the business in three levels:

• Key-results: The highest level of result that must be produced for a successful business. Normally there are about 20 to 30 key-results in a business
• Set-results: Mid-range results that organize the business within each key result. Set results define results under common responsibility, results that form value-quality chains, etc
• End-results: The lowest level of results that are produced directly from performance

Result relationships are defined to relate results in the business organization structure, to define results that accumulate or allocate result metrics to other results, to sequence results that comprise a result chain, and to show results that depend on or impact other results.

Once the results to be produced are organized, the capital to be utilized to produce the results is deployed to the results in performance domains to complete the business organization. All capital solutions, such as responsible organization unit or result manager, are entered in performance domains for each result to be produced by the solution. Reporting relationships are defined through relationships between higher-level and lower-level results. A sub-set of the business structure can be inverted to show the results and deployed capital solutions under the responsibility of a particular organization unit or manager.

Contrived structures are no longer laid over the business to obscure the view of the actual business. There is no more reorganization, since the business organization solution changes with each result or capital solution change.

Human capital is deployed to produce results, where they have the qualified capabilities

Human personnel and capability solutions are one category of capital and are deployed, where they are qualified and needed to produce specific results. Human personnel solutions deploy qualified internal or external individuals to utilize their time to produce specific results. Human capability solutions are deployed to provide a specific capability required to produce difficult high-value results. Human capital is not neglected in a center, but is managed continually to develop and improve capabilities to produce higher-value results and increase human capital worth.

The business organization is maintained using information technology

The reaction may be that the enterprise business is too complex to be organized. The “business” is complex today, because it is not organized. The business capital unit utilizes information technology solutions, to organize all results, capital solutions, deployments, redeployments, etc., enabling systematic 21^st century business management. Results and capital solutions are organized at the level needed by management to manage the enterprise business properly.

Business management is the solution to the reorganization problem

The challenge is to actually learn and define the enterprise business in results and investments in capital solutions to organize the business to employ 21^st century business management. Once the enterprise actually understands its business, organizing and reorganizing naturally is easy. The guidance needed is provided in the download “How to Organize the Enterprise Business“.

Result-performance Management (R-pM) provides the knowledge and procedures for actual business management and reporting

Result-performance Management (R-pM) is the only source of knowledge and expertise on how to manage the actual 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 20^th 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 21^st century management conventions, definitions, and standards. Management consultants who base 21^st century business management services on R-pM knowledge are licensed to help enterprises learn, organize, and manage the actual business. Business management knowledge and the Business Management Toolkit are available and supported today at result-performance-management.com.

The solution to the economic recession is explained in free downloads

Three free white papers explain the dead-end 20^th 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 20^th 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.

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This entry was posted on Tuesday, November 10th, 2009 at 01:43 and is filed under:
Forums: Organization and Management, Strategy and Performance Management, Top Ten 20th Century Problems
Topics: Change Management, Conventional Management Methods, Organization Methods, Business Transformation, Corporate Governance
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