How to Build Value-quality Chains

There are many business management articles and a lot of talk about value, be it value creation, value propositions, value management, or value chains. With 20^th century management all we can do is write articles and talk. We cannot build actual 21^st century value-quality chains as explained in the new download “How to Build Value-quality Chains“, available now at Result-performance-Management.com.

20^th century management cannot build or manage value or quality chains

20^th century management mixes performance and the output results together as “performance” and manages “performance quality”. 20^th century business process and information systems are directed at a final result and do not specifically define or manage the results leading to the final result. So, there is no way to manage value or to build value or quality chains.

The link in the value-quality chain is the economic output result

Value-quality chains form naturally by organizing the business for 21^st Century Management using Result-performance Management (R-pM). The business consists of two entities.

Results: The economic outputs from business production that form the links in the chain
Performance solutions: The capital utilized in business production to produce a result at each link

Any area of the business can be organized by defining the results produced and the performance solutions utilized.

Each result in the value chain has a value, costs, and a value-added

Results form a natural chain of results that starts with input results from suppliers. The enterprise willingness to pay confers value on these results. Input results are transformed along a chain of internal results. The internal customer willingness to pay confers value on these results. The chain leads to a final result that goes to the external customer. The customer willingness to pay confers value on the result.

The value of all input results and internal results cannot exceed the value of the final result. Performance solutions utilized for each result have a cost. The total cost of performance at each link cannot exceed the value of the result. If it does the result must be discontinued, costs must be reduced, or the value must be increased and the value of another result decreased. Each result must have a positive value-added to add value to the chain.

The quality of each result in the chain is determined by the effectiveness of performance solutions utilized

Results form quality chains as well. Quality is an attribute of the result, not performance. A low-quality result is produced by an ineffective performance solution. Managing performance enables identification of the ineffective solution. A low-quality result may be produced by a low-quality input result. In this case, the results are followed back the chain to identify the result with ineffective performance. This enables quality to be directly and precisely managed as produced by the business.

Business processes and information systems can be redefined and managed as value quality chains

Each business process and information system produces many results.These results are identified and organized as a chain. Each result is managed separately. The business process and information system processing are integrated as business process solutions producing the result. Other solutions utilized to produce the result are identified such as human capability, facilities and supplies, management plans and policies, and information. These solutions must be managed also to produce high value-quality results.

Once the results produced and the performance solutions utilized are defined any enterprise can use R-pM to manage the value-quality chain.