We must go back to managing the business again
When business started, the actual business was managed
The common definition of a business enterprise is “the activity of providing goods and services”. In other words, the business is “the utilization of capital in performance to produce value in results”. We all manage our actual personal business to utilize our capital in performance to produce value in results naturally, using common sense.
Several hundred years ago, all business was in individual or small enterprises that managed actual business activity in the utilization of capital available in humans with capabilities and knowledge of the business, business practices followed, management methods and intelligence on customers, and facilities in business locations, equipment, tools, money, and supplies available. They used this capital to produce output results in goods they had to buy, goods produced or improved and relocated, final results in goods and services they had to sell, and money received from sales.
They managed their business naturally by managing utilization of capital in performance to produce value in results. Common sense told them that costs were in the consumption of capital in business activity or performance, and that value created was in results leading to the final goods and services results sold. They realized that customer willingness to pay placed value on the total of raw material results and results in their chain. They realized that profit results came from result value-added that exceeded performance costs. They realized that they had to invest in capital as specific performance solutions to be able to produce results, and that result value had to increase to repay the investment. They realized that performance in capabilities and tools had to be effective to produce a high-quality result. They realized that capacity in time, capabilities, and facilities limited the volume of results produced. They realized that performance uncertainty in producing results as needed posed risk that final results would not be produced as planned. To reduce risk, they managed the performance utilized to produce each result one by one in the chain of results needed to produce final results for their customers.
When businesses grew, enterprises were organized and managed rather than the business
In recent centuries, as businesses grew, the complete sets of capital employed and results produced became difficult to manage. There were no information systems to help manage the actual business. So, enterprises in companies, associations, and institutions were formed. New structures were contrived to manage the business enterprise, rather than the enterprise business.
Enterprise organization structures were contrived, and many organization theories emerged. The organization structure was laid over the business, so that capital utilized and results produced did not need to be specifically defined. Actions executed and results accomplished have been confused as “performance” since the 15th century.
Since the business was not organized, the business could not be managed. Additional structures were contrived for enterprise planning, direction, control, and reporting:
- Strategy, corporate plan, investment, and budget structures for enterprise planning
- Work flow, function, project, process, and system structures for enterprise direction
- Financial and statistical accounting, activity and project costing, and quality structures for enterprise control
- Financial statements, performance management, strategic enterprise management, and other structures for enterprise reporting
These contrived structures had to be learned, because they did not employ common sense to manage the business. The structures concentrate on managing the defined “performance”. These structures continued to evolve over the past 100 years to comprise today’s 20th century management.
We now have information technology to manage the business, but continue to manage the enterprise
Information technology now gives us the processing capability to manage the actual business by organizing business capital in the specific performance solutions utilized in the business and organizing the business results produced that lead to final results in goods and services. We can organize, plan, direct, control, and report the actual business using one business structure and plain common sense.
But instead, we employ information technology to computerize the many enterprise organization and management structures laid over the business. Each structure defines the enterprise differently and we have different systems for different structures. This leads to information and business complexity. The overlaid structures are rigid, while the business must change continually. The structures hamper business change and conflict with the actual business creating the multitude of unsolvable 20th century management problems discussed here at the Business Change Forum.
Unsolvable problems must be eliminated by organizing the business for 21st Century Management
We now have the means to organize and manage the actual business, naturally, as our early ancestors did. Result-performance Management (R-pM) organizes the capital utilized as performance solutions and the output results produced into one business structure. The one business structure is used for all business organization, planning, directing, control, and reporting. R-pM provides the concepts, conventions, definitions, and standards for 21st Century Management. R-pM eliminates reorganization, change management, misalignment, business and information complexity, inaccurate business information, and the time waste and costs of 20th century management structures.
Organize your business for 21st Century Management. The R-PM Toolkit, available today at result-performance-management.com, provides the information and guidance you need.
