Abolish unsolvable “Business Change Management” Problems
Business change is not change to the business, but to structures laid over the business
We all have heard of business change problems and the need for change management to solve these problems. We assume that business change changes the actual business, and that business change management manages change to the business. We think of projects like reorganizations, systems implementation, business process re-engineering, etc as changes to the business. We think that the business never changes until there is a periodic business change project.
One problem with 20th century management is that no one knows what the business is that is supposedly being organized, managed, and changed, because there has never been a precise identification and definition of the “business”. The fact is that 20th century “business change” is not change to the business. The actual business is in a continual state of change that we are not aware of because the business has never been defined and organized. The most common 20th century definition of the enterprise business is the “activity of providing goods and services”. The business changes with each change in business activity, which is the utilization of capital as performance solutions, and each change to goods and services, which are economic output results. 20th century management has never precisely defined and organized the “activity of providing goods and services”, so actual business change has never been managed as business change.
The organization structure does not organize the business. If the business was organized, the organization would change with each business change and there would never be reorganizations. The organization structure organizes the enterprise. The organization structure is laid over the business. As the business changes the rigid organization structure goes out of “alignment” with the business, increasing pressure for reorganization to bring the organization into alignment with the business.
The business process is not defined as the business activity or performance that produces a specific result, but is an artificially contrived structure that is laid over the business. Most information systems are packaged as a standard fixed system that is laid over the business in every enterprise that implements the system. Other structures for accounting, administration, performance management, cost accounting, etc are also contrived and laid over the business. Business change is not change to the business, but change to structures laid over the business.
Business change is an unsolvable problem caused by conflicts between the business and structures laid over the business
When structures are laid over the business there is pressure to make the business agree with the structure. The known capital utilized in business performance activity and economic output results like goods and services are fixed as part rigid structures that are only changed every five to ten years when there is need for “business change”. The fact is that the business changes with each performance solution change, each time a new employee is hired, a new policy is implemented, or old equipment is retired. The business changes with each result change, whenever a new output result, such as a study report, product, marketing campaign, added service, etc are produced by the business or old results are completed or discontinued.
Attempting to align the business with rigid structures restricts business flexibility and hampers change needed to be competitive and responsive. Whenever the business does change there is conflict between the actual business and the overlaid structures. If a ‘new product” result is to be produced there must be change to the organization, the business process, the information systems, the chart of accounts, the performance scorecards, and all the other structures laid over the business, which is rarely done properly. The overlaid structures cause unsolvable problems in areas like reorganization, alignment, business complexity, business flexibility, capital management and utilization, result value chain management, and on and on.
The structures laid over the business prevent the business from being managed. Business data is collected related to the overlaid structures rather than the actual business and management information is reported against overlaid structures rather than the actual business. This creates unsolvable 20th century management problems in information complexity, unknown costs and value, unknown capital worth, unmanaged investment returns, intangible assets, data reconciliation and information integration, information inaccuracies and discrepancies, corporate governance, and on and on.
Result-performance Management (R-pM) organizes the business as one structure for all business management
Result performance management organizes the actual business for 21st Century Management to eliminate unsolvable 20th century management problems. R-pM defines and organizes the business as “the utilization of capital as performance solutions to produce value in results”. R-pM organizes business activity in the capital utilized by the business as specific performance solutions in one performance structure. R-pM organizes goods and services and other business results in one result structure. R-pM organizes the business as one integrated business structure by deploying performance solutions from the performance structure to be utilized to produce results in the result structure.
Human personnel capital is deployed to manage or produce specific results. Information system and business processes are utilized to produce results in a chain of results. Knowledge capital is created to use a specific performance solution, such as a computer program, or to produce a specific result, such as a sold product. The business changes with each change to capital utilized by the business as performance solutions and with each change to an economic output result produced by the business.
The business structure is professionally maintained as a business organization performance solution and is updated with every change to the business in a performance solution utilized or a result produced. The business structure is used for all business organization, planning, directing, reporting, and control.
Result-performance Management eliminates overlaid structures and unsolvable problems
The one integrated business structure replaces structures laid over the business. Each business result is the responsibility of an organization unit and becomes part of the organization unit result set. The business organization unit is defined by the results it is responsible to produce and the performance solutions deployed to produce the results. Business processes and information systems are defined as specific process solutions utilized to produce specific results. The business structure provides a “chart of accounts” to capture value created in each result and complete costs incurred by each solution utilized as well as information of result quality, performance effectiveness and other financial and non-financial result metrics and performance indicators, in addition to 20th century cash and accruals.
Each part of a current structure that is required by the business is incorporated into the business as specific performance solutions or result chains. Existing personnel, equipment, processes and systems, business data, knowledge, strategies and policies, etc are redefined as specific performance solutions. Overlaid structures for supply chain and customer relationship management are redefined as result value-quality chains. All unnecessary structures like organization, data reconciliation and information integration, artificial management information reporting, etc are removed along with the wasted effort in updating and maintaining the structures. Eliminating the overlaid structures eliminates the 20th century management problems associated with the structures.
R-pM abolishes the unsolvable business change problems
Once the business is organized as one integrated business structure, 20th century business change problems are left behind. Each business change either is a change to an output result produced by the business, or is a change to a performance solution utilized to produce a result. Every business change is implemented by updating the business structure and making the change. There are no other structures to update and to go out of alignment. All business reporting is on actual and strategic results and the performance solutions utilized.
Business change projects are only needed to acquire or develop new capital as performance solutions to produce new or improved results. Each capital development project has its own business structure to produce new results and performance solutions as project results and to utilize capital assigned as performance solutions to produce the results. Business change is understood and managed within the context of the actual understood and managed business.
This is all described in The R-PM Toolkit, your 21st Century Management Manual, now available at result-performance-management.com.
