Manage the Business with one set of Complete and Accurate Information
The fundamental cause of the economic crisis is failure to manage the business
One major problem causing the economic crisis was the lack of accurate management information on the actual business of investment institutions, banks, corporations, and other enterprises. Financial institutions cannot manage “asset value” in the worth of capital, companies do not know full costs or customer value provided, and corporations can not consolidate actual business information from the various units in the corporation.The fundamental problem is the lack of one complete and accurate set of information on the actual business, due failure to manage and measure the business.
20th century management reports against structures laid over the business
The generally-accepted definition of enterprise business is “the activity of providing goods and services”. In order to organize and manage the business, we must organize and manage the activity of providing in the utilization of capital in the performance required to provide. We must also organize and manage goods and services as output results provided to customers.
20th century management used today does not provide a structure to do this. Instead of organizing the business, an organization structure is laid over the business to define organization units, functions, and positions. Since the business is not organized, management structures must be laid over the business. A business strategy defines visions, objectives, maps, owners, and other entities. The chart of accounts defines centers, objects, and codes. Business processes, activity costing, performance management and the many other structures laid over the business produce information complexity and hide the actual business.
Overlaid structures capture vast amounts of data and report mountains of information, but not on the actual business
None of these structures captures actual business data or reports actual business information. Each structure laid over the business defines its own set of entities to report. Often the same entity has different names and definitions. The reported data conflicts with each other. Much of the data reported is incomplete, such as costs that do not include costs of unknown capital or intangible assets. Data is reported against the definition of the structure, rather than the business. As the business changes the fixed reported information becomes more inaccurate. Periodic business change and reorganization is required to align fixed structures closer to the changing business. A large computer infrastructure and many information systems are required to capture and store data on the structures, rather than one integrated system to manage the business. The proliferation of data captured by the various structures leads to information complexity. Additional information systems are required just to manage the vast amounts of data collected and provide management with data reconciliation, information integration, drill down, ad-hoc reporting, and other features to address the problems built into 20th century management.
The only way to capture business data is to organize and manage the business
A more-precise definition of the business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Actual business data cannot be captured unless the components that comprise the business are precisely identified, defined, measured, and managed. There are three components of the business 1) the capital investments made in the business as specific capital solutions utilized, 2) the output results from the business in specific results accomplished or produced, and 3) the performance of the business in the utilization of a specific capital solution to incur to cost to produce a specific result of value. Actual business data is captured by measuring and managing the attributes of capital solutions, results, and performance.
If capital solutions are not identified and managed as a set, the investments in the business cannot be managed to capture data on investment returns, capital worth (asset value), investment amortization, solution capacity, and the many other attributes of capital solutions. Today many capital solutions are lumped together as a fixed asset, have been developed but never defined as a solution, or are labeled as “intangible assets”. Many solutions required for good business management have never been identified or developed. If economic output results are not identified or managed as a set, the value created across the business, the value-added after performance costs, the quality required, the volumes of business, and other attributes of results cannot be captured. A few results such as product, order, and revenue are managed as separate data entities. but results results produced across the business are not managed as a data set with common attributes. If the performance of the business is not defined in the utilization of a specific capital solution to produce a specific result, the costs of performance, performance effectiveness, and the value-added produced by specific performance cannot be captured.
Actual business management information is produced by business data entities that describe the complete business
Business management captures actual business data on the components of the business plus data entities that describe the operations and development of the business. Business data is maintained in the business information base. Management solutions produced from business data and as solutions to support business management are maintained in the business information base.
All business data comes from capturing information on six essential entities, plus related subsidiary records:
- Result captures the value, quality, volume, risk, value added, symptoms, goals, and other data on outputs planned or produced across the business. Results have various names today like material, product, order, revenue, report, project, etc
- Capital solution captures the capacity, investment amount, qualifications, reliability, return on investment, worth, cause, and potential of capital acquired, developed, utilized, and supported by the business. Capital solutions have various names today like system, employee, asset, supplies, knowledge, etc
- Performance domain captures the costs, effectiveness, capacity utilization, uncertainty, contribution to value added, problems, expectations, and other data on specific capital solutions implemented and utilized to produce a specific result
- Enterprise captures data on related enterprise businesses within the company or corporation, suppliers, business partners, customers, and others who interact with the business
- Business descriptor captures data related to the attributes of the business such as region, market, product group, customer segment, and other data of interest to the business
- Time period captures data on history, plans, estimates, actual, and changes in operations and development to the strategic horizon.
The business information base references all business information from one or more of these six entities. Data captured on these essential entities is stored and reported from a simple information system that can be maintained by a flexible general ledger, information reporting system, or relational database management system. Existing information systems now processing results like products and orders and capital solutions like personnel and property continue to process subsidiary to the business information system.
Actual management information is produced by business data, human knowledge, facility records, and management intelligence solutions
Business management employs management information solutions to manage the business. Business management information solutions are produced as information capital within each category of capital to provide the specific capabilities needed to produce different solutions. There are four categories of information capital:
- Business data: Manage the data on the six data entities and subsidiary files, manage the referencing to other information, and manage security and access to the business information base
- Human knowledge: Manage and develop solutions needed to develop human capabilities and assist utilization of specific capital solutions and production of specific results
- Facility records: Capture business transactions on capital solutions utilized to produce results against goals and expectations and provide management solutions on the status of the business
- Management intelligence: Analyze business data and facility records to extract management information and research the external business environment for opportunities and competitive information.
Each type of information capital is referenced by a business data entity and maintained in the managed business information base. All business information including emails, internet postings and downloads, correspondence, file transfers, and off-line documents must be referenced by the appropriate data entities.
Business management reports one set of complete and accurate management information
Business management captures complete and accurate data on the business including unknown costs of unmanaged and intangible capital, value and quality of specific results that are not managed today, value added across result chains by the performance producing the results, the worth of capital utilized by the business, and other business data that cannot be captured with 20th century management.
The business is managed by managing the results produced by the current business and the progress to strategic results to be produced by the strategic business. Capital development to develop new capital solutions to produce future results is managed with its own project business structure. Management decisions focus on new and improved results needed and new and improved capital solutions needed to produce future results. Management information is used to manage the performance utilized to produce results, exceptions in producing results planned, progress to producing strategic results, customer and partner relationships, and other specific information needed to manage the business. Corporate governance manages the transition time period by period to the approved strategic business structure.
Business management eliminates information complexity, missing information, inaccurate information, and management time waste
Business management eliminates all 20th century management problems that plague all businesses today. Business management incorporates the results and performance of overlaid structures like business processes and information systems within the business. All other structures laid over the business are removed and associated data collection and reporting are discontinued.
Business management eliminates information complexity by reporting one unified set of management information. All actual business data is captured to report complete information and one set of consistent definitions is used to report accurate and non-conflicting information. Business management is executed within the framework of the actual business. Management can concentrate on the future business strategy and the results and performance needed and the progress of the existing business in operation to the strategy. Management knows that any exceptions will be anticipated and reported for preventive action.
Result-performance Management (R-pM) provides the knowledge for actual business management
Result-performance Management (R-pM) is the only source of knowledge and expertise on how to manage the actual business. Forward-looking enterprises are now using R-pM guidance to organize and manage their business to gain breakthrough advantages over competitors burdened by unsolvable 20th century management problems. Business management is explained and documented in the Business Management Toolkit. The Toolkit provides procedures for actual business management and maintains emerging 21st century management conventions, definitions, and standards. Management consultants who base 21st century business management services on R-pM knowledge are licensed to help enterprises learn, organize, and manage the actual business. R-pM and business management are supported 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 the failure to plan, account for, and manage the actual business, that caused the economic crisis, the way to eliminate the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building a structure 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 solution to eliminate the problems
- Business management; the only Solution to the Economic Crisis explains how to plan and manage the business to capture 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, stimulate the economy, restore confidence, organize businesses to flourish in the recovery, 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 address and personal password. Your email address is protected and used only for download problems, product updates, and occasional R-pM Member news and white papers.
