Unsolvable Business Problems due to the Flawed Definition of Performance
What does performance really mean?
Performance is one of the most widely used words in describing how the business is organized and managed. Performance is used in business performance management, human performance management, key performance indicators, performance management systems, and methods like control panels and scorecards, and performance evaluations. Therefore, it is very important to have a precise and usable definition of performance.
How do you define performance? What is the definition put forward for your performance management methods or solutions? What does your dictionary say? Does the definition make sense? Are your key performance indicators actually performance indicators? Do your performance management methods actually manage performance? What is performance in our enterprise, and how should we define performance?
Both the activity of performance and the result of the performance are defined as performance
If you look up the definition business enterprise, you will likely find a definition, “the activity of providing goods and services”. If you look up the definition of performance or performance management, you likely will see that “performance” defines not only the activity as performance, but also defines the goods and services and other output results produced by the activity as performance. Does it make sense to define business activity in the utilization of capital, such as human performance, to be the same as goods and services and other output results, such as sales performance?
Defining the performance activities and performance results to be the same thing, makes it difficult to manage performance activities and performance results as different things! The definition of “performance” is one of the main barriers to managing the actual business in the “activity of providing goods and services”.
The flawed definition of performance is still being used in new business methods, education, and books
All new books and writings, methods, learning, and business school teachings on performance employ the flawed definition of performance. How can all those designing methods and writing about performance and management, even today, mindlessly copy this definition, without asking themselves: what if we were to manage performance activity and results from performance separately to manage the specific performance activity producing a specific result, instead of mixing them together as “performance”?
The definition of performance causes many unsolvable management problems
The definition of “performance” and today’s business performance management methods cause many unsolvable business problems and prevent effective business management. In order to manage the business we must manage performance in business activity separate from performance in goods and services provided.
We have unsolvable business problems in unknown performance costs and output result value, knowing the value added to results over the cost of performance, trying to manage performance quality instead of managing performance effectiveness to produce result quality, inability to manage performance uncertainty to reduce result risk, managing performance of a business process rather than the performance producing each result in a result chain, mixing result metrics that count and measure results with performance indicators that manage a level of performance, inability to relate result goals in economic outputs from the business with the performance expectations for human and other capital producing the results, and so on. These problems are caused directly by defining results as performance. The corresponding failure to organize and manage the business causes the multitude of other unsolvable problems discussed in the Business Change Forum.
We will continue our years of unsolvable management problems as long as we mindlessly copy the flawed definition of performance. However, we will make a breakthrough to eliminate management problems, when we properly define performance activity to be performance and performance results to be results.
Result-performance Management defines business activity as performance and business outputs as results
The breakthrough definition of performance is in Result-performance Management (R-pM). R-pm separates results from performance to organize business activity as performance and goods and services as results. R-pM organizes and manages the enterprise business for the first time. R-pM properly defines results separate from performance and performance solutions, result management separate from performance management, and result metrics separate from performance indicators, and result goals separate from performance expectations.
R-pM employs the 21st Century Management definitions of results and performance, as used for enterprise business operations, as follows:
- Capital: The assets and capabilities of the business of worth supported as performance solutions that incur costs in utilization
- Performance: The utilization of human and other capital by the business as performance solutions to meet expectations and produce business results
- Performance solution: An item of capital organized in the business structure that can be deployed and utilized to incur a cost to produce a specific result
- Performance expectation: The expected level of execution of human and other business capital in capacity, costs, effectiveness, and uncertainty in producing business results
- Performance indicator: Measure of the level of capacity, cost, effectiveness, uncertainty, worth, and other attributes of specific performance solutions continuing over time
- Performance management: Responsibility to provide and support qualified solutions that meet expectations in utilization to produce results
- Result: Economic output from business performance of positive or negative value that can be counted and measured
- Result goal: The planned count, volume, value-added, quality, or other measure of economic business output in results within a time period
- Result metric: Measure of the volume, value, quality, and risk, and other attributes of results produced within a time period
- Result management: Responsibility to utilize performance solutions to produce results and reach result goals
These definitions are used by R-pM to organize business results produced and business capital utilized as performance solutions for 21st Century Management.
The proper definition, organization, and management of results and performance is documented in The R-pM Toolkit
Result-performance Management separates results from performance to organize, measure, and manage business outputs produced by performance as results and business capital executed or utilized in performance as performance solutions. Visit Result-performance-Management.com to learn more about organizing your business with R-pM for 21st Century Management, and download The R-pM Toolkit, your 21st Century Management Manual.
