The Logic of Business Change
Business change is change to the business
Business change is change to the business. A previous post on the Logic of Business said the generally accepted definition of business is “the activity of providing goods and services”. The article logically defined the business as “the utilization of capital in performance to produce value in results”. Business change is therefore change to “the utilization of capital in performance to produce value in results”. If the business is organized, normal business change changes the business as the routine. Business change is change to implement the new performance solutions needed to produce valuable new results.
20th century business change is not change to the business, but change to the organization and management structures laid over the business. 20th century methods do not plan and manage the individual costs and benefits of change. Costs may be captured against major capital items or the change project. Benefits are invariably stated expectations of performance improvements or estimated increases in sales or revenue results.
21st Century Management manages the business as one integrated business structure. Business change implements a new and improved business structure. Business change manages the value created in specific new results for benefit and the costs incurred in specific performance solution investments.
Business change projects change overlaid structures to align with the actual business
The business changes continually with each new result produced, result completed, and performance solution redeployed. 20th century business change does not change the actual business, but periodically aligns overlaid organization and management structures, such as processes, systems, and accounts, closer to the business. The overlaid structures prevent the actual business from being organized and managed.
The costs and benefits of change do not build up from the business, but estimate the impact of change on the business
Since the actual business performance and results produced are hidden under overlaid structures, the costs and benefits of change cannot be managed. The impact of change on business performance, such as productivity and costs, and results, such as production and profits, must be estimated. The invested capital is lumped together producing unknown costs and intangible assets. The results produced are not defined as a set preventing value and benefit measurement.
21st Century Management organizes and manages the business to change naturally
Change to the business cannot be managed, if the business is not managed. 21st Century Management organizes and manages performance and results so the business organization changes naturally, eliminating reorganizations and use of overlaid management structures. Normal business change is a matter of defining a new result to produce and deploying the performance solutions to produce the result, redeploying performance solutions to other results to deactivate a completed or discontinued result, or change to a performance solution utilized to produce a specific result.
With 21st Century Management, business change projects produce managed business change
Actual business change projects implement new or improved performance solutions to produce new or improved results. New or improved performance solutions and results are managed in the planned business structure to manage change to the business. The change project has its own business structure.
Business change happens when the enterprise needs to add or create planned value in specific results, so invests in capital to be developed as specific performance solutions. Capital development projects have a business structure to utilize assigned capital to develop new solutions as project results. Project results capture development costs and are implemented as documented performance solutions. New solutions are utilized to incur costs and create value in the results produced over the payback period. The result value-added provides the return on each solution investment.
21st Century Management plans and manages the cost and benefits of change
Specific performance solution investments must be managed in development and operations to manage the real costs of change. Results that contain the value to be created must be planned to manage the benefits of change. 21st Century Management organizes and manages the business as one integrated business structure to plan and manage the costs and benefits of change to the business structure.
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