The Business Complexity Problem and Solution
Business Complexity is one of the top ten problems of 20th century management!
Business complexity is the opposite of business simplicity. The simplest way to organize and manage the business is to organize and manage the business.
Business complexity includes complexity in 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) organizes and manages one business structure
Result-performance Management (R-pM) organizes 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 management information is not captured or reported since the business itself is not organized.
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.
R-pM replaces 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.
- Unmanaged 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.
We have mentioned the accepted definition of the business as ” the activity of providing goods and services“. The enterprise must employ Result-performance Management (R-pM) to organize and manage specifically the only two entities that comprise the business:
- Result: The goods and services and other economic outputs actually produced directly from the business
- Performance Solutions: The capital defined as specific solutions to be utilized in business activity to produce specific results
R-pM organizes one business structure to replace structures laid over the business.
R-pM organizes essential results and the minimum performance needed for a high value-quality result in the business structure
R-pM eliminates business complexity 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 manage enterprise capital used in business activity effectively, and investment management results to manage change, improvement, and development. All other results are closed.
Performance solutions are defined and the minimum performance needed to produce a value-quality result is deployed to produce results. Unneeded or unusable performance solutions are out-placed or liquidated.
R-pM prevents 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 records management, and the enterprise business and management scope is defined by results, performance solutions, time periods, suppliers and solution providers, and customers. All other complications and complexities are cleared away for transparent management.
R-pM simplifies business management information by reporting results produced and performance solutions utilized
R-pM provides two integrating entities for business information: results and performance solutions. All information on the business refers to specific results and specific performance solutions. All business decisions involve results to produce and performance solutions to utilize. R-pM captures basic business data in result value and quality, capital worth, performance costs and effectiveness, result value-added, result 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 performance solution attributes. The actual business is managed through consistently-defined entities for results, capital as performance solutions, performance transactions, enterprises interacting with the business, and time periods with result goals and performance expectations.
R-pM manages information as specific business data, human knowledge, facility records, or management intelligence solutions. The information can be integrated into a simplified enterprise information base and delivered to result users to utilize specific solutions and produce specific results.
R-pM enables business collaboration and integration through one simple structure across all businesses
Every business using R-pM 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.
21st Century Management eliminates 20th century problems
Result-performance Management (R-pM) eliminates the top ten problems and other costly 20th century problems. Slash costs, simplify business management, and boost competitive advantage through R-pM, the conventional method for 21st Century Management.
Download your 21st Century Management Manual today
Your 21st Century Management Manual, The R-pM Toolkit, is available today and is under continual development to expand and refine 21st Century Management. Get your R-pM Toolkit, and future updates, at result-performance-management.com.
November 4th, 2006 at 16:54
[…] Business Complexity: New results and performance are added, but are not managed, for improvement or removal when not needed […]