How the Chief Executive Officer Benefits from Managing the Business
The Chief Executive Officers and their management methods are being criticized
The economic crisis is generating criticism of the Chief Executive Officers (CEO) and the 20th century management structures they use. CEOs must heed this criticism and take a new look at current 20th century management structures and the limitations imposed on their own performance by the structures.
The Chief Executive Officer is responsible for the quality and value of results produced by the corporation businesses from suppliers to the customer, value creation in the enterprise strategy, the full costs incurred from the utilization of tangible and intangible capital, the real return from each capital investment and capital development project, the worth of human and other capital employed, the current worth of financial investments to produce income and growth results, and value-added across the businesses to create shareholder value. The CEO must do this in spite of the fact that 20th century management used today, does not provide the means to manage any of these CEO responsibilities.
The only solution for the Chief Executive Officer is to manage the actual corporation business
The actual business that must be managed is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Each business, within the corporation must be managed and the separate businesses must consolidate into one corporation business. In order to manage the business, output results must be defined and managed as one complete data set. Capital investments in specific solutions that can be utilized to produce results must be defined and managed as another data set. The implementation of capital solutions to produce specific results and subsequent utilization in performance must be defined and managed as a third data set. Fortunately for the CEO the actual corporation business can now be managed. Result-performance Management (R-pM) provides the knowledge and guidance to organize the actual business for 21st Century Management. This establishes operational and management results and provides the CEO the full set of solutions needed to manage the current and strategic business.
The CEO must overcome the unsolvable problems of 20th century management
If you are a CEO, you know that you face many problems with current management structures. But it is difficult to see the problems or the solutions, because you have a career built on learning and using 20th century management structures. You are faced with the difficult need to set prior learning and experience aside, and open your mind to new common-sense concepts used to manage the actual business. You must manage your corporate business naturally, the same way you manage your personal business.
There is one fundamental problem with 20th century management that led to the economic crisis. 20th century management used today does not organize and manage the business. An organization structure is laid over the business, instead of organizing the business. This is a fatal error, since an unorganized business cannot be managed. So, your corporation and consultants lay other management structures over the business for strategic or corporate planning, business processes, information systems, accounting, activity costing, performance management, administration, information management, and on an on.
These structures conflict with your actual business and prevent direct business management. You are faced with many unsolvable problems:
- Actual business data is never collected, but enormous amounts of data are collected against overlaid structures that are not directly related to the business
- Since actual business data is not collected, you receive no actual business management information to support your decision making
- All business decisions boil down to output results that must be produced, capital investments needed to gain the capability to produce results, and the capital solutions to utilize in performance to produce results
- You are hampered by a rigid organization when you need to produce new results and provide the proper resources
- You have problems with suppliers and complaints from customers to solve but find a monolithic business process that hides internal symptoms and problems
- You receive mountains of financial statements and management reports that report the wide variety of structures laid over the business, but provide only incidental information on the actual business
- You have a strategy in mind for the future business, but you cannot relate the strategy to the business and manage strategic value creation
- There are difficult-to-control empires that incur high costs and do not show commensurate value, but you cannot document this or find an alternative solution
- You have no way to optimize enterprise operations. Capital utilization means that an asset is assigned somewhere, but you do not know what actual capital you have or what it is producing
- You have expensive costing systems that only show partial known costs and do not charge the costs to the result value produced for actual cost management
- You are responsible for shareholder value but have no way to manage the business to manage shareholder value
- You are pushed to approve capital development and business change projects, but know of past problems, and no one can provide quantified lists of benefits, specific capital solutions planned for development, specific development costs, or the specific result values to be increased or created to return the investment
- You want to develop your human and other capital to increase the worth to the enterprise but have no means to know specific development needs and capital worth. Much of the capital you want to leverage is labeled as “intangible assets”
These are a few examples of the many unsolvable problems faced by every CEO today.
Now it is possible to manage corporate businesses directly
The corporate business can be organized for 21st Century Management to replace high-cost overlaid structures and eliminate unsolvable 20th century management problems. The CEO can manage the current business directly, the strategic future business, and the changes and development required. Direct business data is collected on five entities to provide management information that describes the complete business.
- Results: All economic outputs procured or produced by the business organized into management sets, value-quality chains, and subsidiary information like material item, product, or order
- Capital Solutions: Capital solutions organized by the support required and related to subsidiary information like employee, asset, supplies, or cash
- Performance (Result-Solution) Domain: A capital solution implemented to be utilized in performance to incur the costs to produce a specific result of value
- Business Descriptor: The attributes to the business to relate information by product group, customer segment, region, market, codes, or other descriptors
- Enterprises: The business enterprise, superior or subordinate enterprises or projects, suppliers, customers, business partners, and others that interact
- Time periods: The historic or future periods to the strategic horizon that record goals and expectations and report on operations and development
These six entities are all that is required to manage the business. Other entities that are not related to the business are used no longer.
The CEO gains capabilities by managing the business
The CEO benefits and gains significant new capabilities by directly organizing and managing the business:
- Business results, capital solutions, and performance are interrelated in one business structure, so results can be added and closed easily and capital solutions needed in performance can be redeployed, to continually reorganize the business
- All management organization, planning, direction, control, reporting, and governance is integrated to utilize the current and strategic business structures
- Complex business processes are replaced with basic result value-quality chains that can be integrated with supplier, customer, and partner chains and show cost, value, and quality at each result link
- Professional facility records management captures complete financial and non-financial data on actual costs, value, and other metrics and provide accurate management information solutions
- A strategic business structure projects future result value and plans new results and capital solutions needed, to manage value creation from the current to strategic structure for good governance
- All results produced are justified by the value of customer willingness to pay for the result that must exceed the cost of producing the result
- Result and performance managers optimize the capacity utilization, cost, and effectiveness of solutions utilized to produce a volume of high value-quality results
- Full result-performance costing shows the cost of performance against result value to manage result value-added along result value-quality chains
- Value is managed for results throughout the business related to the revenue and profit results and can manage accumulated or expected shareholder value results
- All capital development and business change is managed to develop the results and specific performance solutions needed to produce result value-added benefits
- Administration is replaced by professional capital management to manage solution operation, development, and improvement; provide and maintain qualified solutions to produce results, and to increase the return on investment and worth of solutions by producing high value-quality results
- Each corporate business is managed by a consistent and standardized business structure that consolidates up into one complete and consistent corporation business structure
- Symptoms appearing in corporation results are traced to the subsidiary business results to identify the performance problem and the capital solution cause and need for an improved solution
These are but a few examples of how business management simplifies the CEO environment and provides the solutions needed to produce specific management results. This is not new work added to what the CEO does today, but replaces the ineffective efforts of trying to manage with 20th century management.
You may be successful with 20th century management, and see no need to improve
Many corporations have grown and become successful using 20th century management. This is of credit to their management. But now, many successful corporations are suffering a downturn due to the crisis caused by 20th century management. In the past, the enterprise competed with other enterprises that were burdened with the same costs and problems. The future playing field will no longer be level. The corporation will have to compete with other corporations that that have organized the business for 21st Century Management.
Result-performance Management provides the knowledge to manage the business
Result-performance Management (R-pM) provides the knowledge to organize the business for new 21st century management conventions and standards. Visit result-performance-management.com to learn the significant advantage of organizing and managing the corporate business and the business in every part of the corporation. Join the R-pM community to download documents that explain corporate business management. The Business Management Toolkit, is available today and is under continual development to expand and refine business management and to document new 21st century management conventions and standards. Download your Business Management Toolkit, and provide your email address for future updates, 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 investment analysis, that caused the economic crisis, the way business management eliminates the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building an architecture 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 21st century solution
- The Only Solution to the Economic Crisis; Manage the Business explains how to manage the business to capture actual 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 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 and password. Your email address is protected and used only for download problems and occasional R-pM Member news and white papers.
