What is Business Organization and Management?
Business Change Forum receives many queries on business organization and management
Many queries ask, “What is business organization and management?” or “definition of or define business organization and management” There is much confusion in the business community today on the exact definition and meaning of “business organization and management”.
Business organization and management starts with the business. What is the business that is to be organized and managed? When we look up the definition of enterprise business, the closest definition is “the activity of providing goods and services”. A previous post on the Logic of Business discussed this topic and logically defined the business as “the utilization of capital in performance to produce value in results”.
This shows that business organization and management is the organization and management of “the activity of providing goods and services” or “the utilization of capital in performance to produce value in results”.
The 20th century management has never organized or managed the business
Managers, other personnel, and business students are confused about “business organization and management”, because they have no learning or experience with actual “business organization and management”. 20th century management has never organized or managed the business in business activity to produce goods and services, or to utilize capital in performance to produce value in results.
20th century management evolved before information technology was available to manage the details of the actual business. So, instead of organizing and managing the business, 20th century management manages the enterprise by laying organization and management structures over the business. The organization structure is the fatal error of 20th century management. Once an organization structure is laid over the business, the business can never be managed.
We must manage the enterprise, through contrived management structures laid over the business for corporate strategy, financial accounting, asset management, human resource management, business process management, performance management, supply chain management, production and logistics management, customer relationship management, cost accounting, project management, management information, and so on.
The overlaid structures restrict business flexibility. Business change conflicts with rigid structures, causing unsolvable problems with reorganization, investment planning, capital development, project management, governance, change management, costing, business records, collaboration, value management, alignment, etc.
21st Century Management is real business organization and management
Business organization and management is organizing and managing “the utilization of capital in performance to produce value in results”. 21st Century Management organizes a simple, easy-to-manage business structure defined by only two entities:
- Results: Specific economic outputs that must be produced by business performance
- Performance Solutions: Specific capital that must be utilized in performance to produce specific results
Results are the inputs to and the outputs from performance. A result is a specific accomplishment, like customer order recorded, that can be counted and measured. Capital is utilized through performance solutions to produce results. A performance solution is an item of capital, like a human salesmanship capability solution, utilized to produce the result. The business organization is updated with each result or performance solution change. Generic financial or statistical management systems can be used to organize and manage the business.
Once the business is organized, 21st Century Management manages the business structure to integrate planning, reporting, operations, development, optimizing, and governance. 21st Century Management manages the business data that describes the business in:
- Result value: To evaluate results from what the enterprise pays for input results, what internal customers agree, to what the external customer pays for final results
- Performance costs: Development and operation costs captured for all tangible and intangible capital that is utilized to produce results
- Result value-added: To redeploy solutions and deactivate low-value results, to reduce performance costs, or to increase result value and lower the value of another result, as needed, to manage positive value-added
- Capital worth: Positive or negative capital worth captured or assessed for all revenue, performance, or investment capital to record the worth of all capital, and to manage real enterprise worth
This valuable business data can only be approximated in the many 20th century accounting and other structures that fail to identify all enterprise capital of worth, the performance solutions that incur costs, and results that create value.
21st Century Management manages performance capacity used for result volume, performance costs against result value, performance effectiveness for result quality, and performance expectations to reach result goals to optimize the business.
Result-performance Management (R-pM) is the only method for 21st Century Management
Result-performance Management (R-pM) is the conventional method to organize the business for 21st Century Management. R-pM eliminates costly 20th century business organization and management problems. Slash costs, simplify business management, and boost competitive advantage by organizing and managing the business with R-pM.
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.
