Organize the Business and Remove Structures Laid Over the Business to Eliminate Business Complexity
Business Complexity is one of the top ten problems of 20th century enterprise management!
Business complexity is the opposite of business simplicity. The business is simplified by organizing and managing the business.
Business complexity is caused by structures laid over the business and different information in each structure
Instead of organizing and managing the actual business, today’s enterprises lay organization, planning, directing, control, and reporting structures over the business. These rigid structures conflict with each other and the actual changing business creating the business complexity problem. Each structure defines the enterprise differently using inconsistently-defined entities and various information systems, producing the information complexity problem. Different structures used by different enterprises prevent business collaboration and integration.
Result-performance Management (R-pM) provides the knowledge to organize and manage one business structure
Result-performance Management (R-pM) provides the concepts and procedures for 21st century business management to organize one business structure for all planning, directing, control, and reporting. Existing capital is organized as part of the business and overlaid structures are left behind. The business structure produces one set of complete, accurate, and consistently-defined business management information, including actual business information on result value, capital worth, performance costs, and result investment returns that are unknown today.
The Business Complexity Problem
Business complexity is created by definition by organization and management structures laid over the business
Every enterprise suffers business complexity due to 20th century enterprise organization and management structures that are laid over the business. 20th century management lays a rigid enterprise organization structure over the business and then overlays monolithic business processes with a variety of contrived entities. The enterprise overlays more structures for planning, administration, performance management, accounting, quality control, reporting, etc. Business complexity arises since each structure creates separate planning, management, and maintenance needs. The actual business is forced to adjust to overlaid structures that hamper business change and go out of alignment with the business.
Overlaid structures use different entities to define the enterprise creating information complexity
Each overlaid structure uses its own set of information entities like units, positions, centers, processes, objects, checkpoints, activities, functions, responsibility, projects, work flows, etc. to define the enterprise. This information must be managed and cross-referenced, complicating business management and creating an enormous business information complexity and the information integration problem. The structures are processed by different information systems and additional systems may be required to reconcile and integrate data for management reporting. Management information is reported against overlaid structures producing inaccurate, incomplete, and overlapping information. Actual business data is not captured and business management information cannot be reported since the business itself is not organized or managed.
The problem of business complexity from excess results and unmanaged capital is explained in “Business Complexity from Excess Results and Poorly Utilized Capital” at result-performance-management.com.
The Business Complexity Solution
Overlaid structures complicate the enterprise and prevent business management. The only way to simplify the enterprise is to directly organize and manage the business to replace structures laid over the business with one business structure.
Replace overlaid structures with one integrated business organization and management structure
“Business complexity” is a misnomer that refers to enterprise complexity arising from many enterprise structures. Enterprise complexity can only be reduced by clearing away the overlays and focusing on the actual business. When looking at the actual business, real “business complexity” arises from two sources.
- Excess results that do not meet an objective or that have a performance cost greater than their value.
- Intangible assets, mismanaged solutions, and ineffectively-utilized capital
Business complexity is reduced by simplifying the business. To simplify the business, the enterprise needs to organize and manage the actual business.
The definition of the business is “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. The enterprise must organize and manage the only three entities that comprise the business:
- Result: The goods and services and other economic outputs actually produced directly from the business
- Capital Solutions: The capital invested in the business defined as specific solutions of known worth and investment return
- Performance Domains: Specific capital solutions implemented in the business to be utilized to produce specific results
Business management organizes one business structure to replace structures laid over the business.
Organize essential results and the minimum capital needed for a high value-quality result in the business structure
Business complexity is eliminated as a problem by structuring revenue results for only the high-value business goods and service results needed to generate revenues or to reach other objectives, capital management results to develop and support enterprise capital as solutions, and investment management results to manage change, improvement, and development. All other results are closed.
Capital solutions are defined and the minimum capital needed to produce a value-quality result is implemented in performance domains. A performance domain is defined by the result to be produced and the capital solution to be utilized. Business transactions are generated by performance domain, result total, and capital solution total each time a volume of full or partial results is produced.
Prevent business complexity by maintaining the business structure to produce needed results from effective performance
Thereafter, business simplicity is maintained by continually managing results to optimize the highest value results and by continual performance management to improve and upgrade solutions, to redeploy solutions from deactivated or reduced volume results, and to out-place or liquidate solutions that cannot be redeployed.
When the business is organized and managed properly business processes become result value-quality chains, performance management becomes result-performance management, accounting becomes professional facility records management, and the enterprise business and management scope is defined by results, capital solutions, time periods, enterprises that interact with the business, and business descriptors. All other complications and complexities are cleared away for transparent management.
Simplify business management information by reporting results produced and capital solutions utilized
Two integrating entities are established for business information: results and capital solutions. All information on the business refers to specific results and specific capital solutions. All business decisions involve results to produce and capital solutions to utilize. Basic business data is captured in result volumes produced, result value and quality, capital worth, performance costs and effectiveness, result value-added, capital investment returns, etc.
As overlaid structures are cleared away other entities that define the enterprise like department, activity, object, function, etc. are defined or replaced by specific result or capital solution attributes. The actual business is managed through consistently-defined entities for results, capital solutions, business transactions, enterprises interacting with the business, time periods, and business descriptors to define product groups, customer segments, markets, etc. The current to strategic business is managed with result goals and performance expectations planned for each time period.
Information capital is managed as specific business data, human knowledge, facility records, or management intelligence solutions. The information can be integrated into a simplified enterprise business information base and delivered to result users to utilize specific solutions and produce specific results.
Enable business collaboration and integration through one simple structure across all businesses
Every managed business organizes the business consistently to define the output results produced and to utilize standardized capital to incur complete and comparable costs. This enables business collaboration and integration to produce the highest value-quality result at the lowest cost in the most appropriate business. Common solutions can be utilized by any managed business. One complete set of consistent and comparable business management information is reported for every managed business.
Result-performance Management (R-pM) provides the knowledge for actual business management
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 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. The Business Management Toolkit guide “How to Build Result Value-quality Chains” describes value chains in detail. 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. Business management knowledge and the Business Management Toolkit are available and supported today 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.
November 4th, 2006 at 16:54
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