Manage the Business with one set of Complete and Accurate Information
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 both the activity or performance involved in providing and also the goods and services provided to our customers.
20th century management 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, owners, requirements, and other entities. The chart of accounts defines centers, objects, and codes. The business process defines process objectives, stations, performance activities, performance quality, and other entities. Information systems have their own built in file structures and entities. Cost accounting gathers known costs against activities, centers, selected final products, or other entity. Performance management systems require reporting on other sets of entities concerning the process, training, customer actions, etc. The many structures laid over the business produce business 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 business. A large computer infrastructure and many information systems are required to capture and store data on the structures. 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.
R-pM organizes the actual business to report actual business management information
Result-performance Management (R-pM) organizes the business activity in performance by organizing the capital utilized as specific performance solutions that incur the costs of operating the business. R-pM organizes the economic business outputs that lead to the goods and services provided to customers as results that contain the value created by the business. R-pM captures business data on the cost-effectiveness of utilizing human and other capital as performance solution to produce specific value-quality results.
All business management information comes from capturing information on five essential entities:
- Performance solution captures the costs, effectiveness, capacity, uncertainty, improvements, and other data on capital planned or utilized
- Result captures the value, quality, volume, risk, improvement value added, and other data on outputs planned or produced across the business
- Capital captures the actions and worth of capital acquired, developed, utilized, and supported by the business
- Enterprise captures data on related enterprises within the business, suppliers, business partners, customers, etc
- Time period captures data on history, plans, estimates, actual, and changes in operations and development to the strategic horizon.
Data captured on these essential entities is stored and reported from a simple Result-performance Management System that can be maintained by a flexible general ledger or information reporting system.
R-pM reports one set of complete and accurate management information
R-pM 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.
With R-pM, 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 performance 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 performance needed to produce future results. R-pM reports management information 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.
R-pM eliminates information complexity, missing information, inaccurate information, and management time waste
R-pM eliminates all 20th century management problems that plague all businesses today. R-pM 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.
R-pM eliminates information complexity by reporting one unified set of management information. R-pM captures all actual business data to report complete information. R-pM use one set of consistent definitions to report accurate and non-conflicting information. R-pM saves management time by enabling business management 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.
But this is only possible with R-pM to organize the business for 21st Century Management. The guidance you need is provided in The R-PM Toolkit, available now at result-performance-management.com.
