There is only one Structure for Business Organization; the Business
Every Enterprise has an organization structure, which causes the unsolvable re-organization problem
We are all familiar with the organization structure. You likely think that an organization structure is good, since it shows you your department and position, who you report to, where others are, etc. However, this same organization structure is the fatal error of 20th century business organization and management.
For many years, people have recognized the problem of a fixed and rigid organization structure, which is like a straight jacket placed on the business that constrains business flexibility and hampers business change.
We are all familiar with the re-organization problem, when the organization structure goes out of alignment with the changing business and a new structure is contrived to align the organization closer to the actual business. The difficulties in restructuring to a new rigid organization became known as the “change management” problem. Many books on organization theories and solutions to organize the business have been produced to solve the fixed organization structure, re-organization, and change management problems. Management consultants introduced “Change Management” services to help with the problems. But, despite all the “solutions”, the problems remain unsolved today.
There is only one structure to use to organize the business; the business itself
The solution to organize the business is obvious, if anyone stops to think. The organization structure is contrived and implemented over the business. The organization structure does not organize the business. Only one structure can be used to organize the business; the business itself! The solution to organize the business is to organize the business.
If the business is not organized; the business cannot be managed! The business must be organized for 21st Century Management to leave the re-organization problem and all other unsolvable 20th century problems behind.
The business is organized by organizing “the activity of providing goods and services
The enterprise business is defined commonly today as “the activity of providing goods and services”, which defines only two entities:
- Business results produced as economic outputs of value from the business, including all goods and services and internal results needed
- Performance solutions in the specific human and other capital entities utilized in business activity to provide results
Results and performance solutions can be organized like a spreadsheet to show results across the columns and performance solutions down the rows. The cell can record business activity, when specific performance solutions are utilized to produce specific results. This structure is the organized business structure. The structure automatically re-organizes with each new result produced, completed result deactivated, or change to performance solutions deployed to a result. This offers complete business organization flexibility, and eliminates the unsolvable re-organization problem.
Every organization unit produces results; the set of results can also define the organization
Business results are the outputs of value produced by the organization. Every organization unit produces a set of results. Instead of defining the organization unit and then assigning results to produce, we can define the results that must be produced together as a set and label the set with attributes like organization name and responsible manager. All the results that the enterprise must produce can be organized into sets to organize the complete enterprise. Organized results can be inverted to be viewed by organization name, responsible manager, or other attributes. The set of results for any organization name or responsible manager can be viewed as its own business structure, showing the results to be produced and the capital available to be utilized.
Every organization unit has assigned capital utilized to produce results
Every organization unit or responsibility center utilizes capital in the human capital, fixed assets, business processes and information systems, supplies and petty cash, management plans and guidance, etc. to produce results. Much of the capital utilized today is not defined precisely. Much has been developed internally and used to produce results, but was never recorded as enterprise capital of worth. Much usable high-worth capital has been labeled simply as “intangible assets” and left unmanaged.
The business must be organized and managed to know the costs of performance and the value created in results
When this capital is used or consumed, costs are incurred. Therefore, to know the actual costs incurred in business activity or performance, we must define all capital down to the individual capital entity utilized, the performance solution. These performance costs create value in the result produced. The effectiveness of each performance solution contributes to the quality of the result. We must organize the business, and use basic information technology, in order to manage cost-effective performance to produce value-quality results.
The set of results for any organization name or responsible manager can be managed as its own business structure, to manage the result value produced and the performance costs incurred to manage the value-added to each result and all results in the set. Certain results in the set can be viewed as a result value-quality chain and integrated with results under the responsibility of other organization names and managers to form enterprise value-quality chains. This is 21st Century Management.
Use Result-performance Management (R-pM) to organize the business for 21st Century Management
Result-performance Management (R-pM) is the only one way to implement 21st Century Management, and shed the organization structure and other overlaid structures that cause the unsolvable problems you face. The guidance is provided in the R-pM Toolkit, your 21st Century Management Manual, which is offered at a nominal cost to enable research into R-pM and wide use of R-pM. The R-pM Toolkit is available now at result-performance-management.com.
