Replace Capital Development with 21st Century Result and Capital Development
All capital development should develop capital, plus business results for return on investment
Every business enterprise must produce output results that lead to goods and service results to create value. An expanding enterprise must produce new results of increasing value. The enterprise needs additional capital in order to produce new results as part of the business. The capital must be acquired or developed, implemented as specific capital solutions, and then utilized to produce improved or new results of increased value. The value added to new business results must justify the capital expenditure to acquire or develop needed solutions and provide the return on investment.
All capital development is really result and capital development to develop capital as solutions to be utilized to create additional value in output results produced by the business. The additional value of output results provides the return on the capital development investment. If the capital solutions utilized and the results produced by business performance are not managed, result and capital development cannot be managed properly and the return on investment cannot be measured. Even physical capital development, like a new building, produces capital solutions to produce results, be it the enterprise office facility solution or a facility solution to produce lease or rental income results.
20th century enterprise management does not organize or manage results or capital as sets
20th century management used today does not manage the enterprise business, defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The business has three components: 1. capital invested and made available as capital solutions, 2. output results required, and 3. performance in the utilization of a specific solution to incur costs and produce value in a specific result.
20th century management does not define specific results produced and capital solutions utilized to be managed as sets. Added result value cannot be managed to provide benefits and specific capital solutions developed cannot be managed to know costs. Capital development is a difficult exercise separate from the business context to develop performance or tangible assets to produce some estimated return on investment. Much capital development and solution implementations fail to create the added result value needed for the return on investment.
Manage result and capital development as part of the business for measured and managed return
The answer for all future result-capital development is 21st century business management, using the knowledge and procedures of Result-performance Management (R-pM). We must manage capital solutions utilized and the business results produced to plan and manage the value added to results. 21st century result and capital development manages new capital solution development to produce new or improved results.
Each result and capital development project is managed as part of the business with its own project business structure. Solution development and operating costs are managed for solutions implemented to produce results. Costs are charged against the volume of results produced. The volume of results produced also has a value. The result value less the performance costs from the capital solutions utilized to produce results gives the result value-added. The additional value-added to results is measured to determine the actual return on capital solution investments. 21st century business management is the essential approach for any new result and capital development.
Result and capital development arises from the business requirements to improve results or produce new results
Result and capital development is initiated by result symptoms in missing or deficient results. This leads to requirements for new and improved results. Capital solutions are reviewed to define the problems preventing required results. Capital solution specifications are prepared to meet analyzed and refined result requirements. Solutions are defined by professionals for each category of business, human, facility, and management capital. The capital development project is planned to develop the specific capital solutions needed to produce new results. Removing result symptoms provides the value and benefits of the investment. Acquiring or developing capital solutions incurs the cost of the investment.
Therefore, to plan result and capital development the enterprise must know the specific new and improved results to be produced. The value that is created or increased over a time period must be itemized and totaled to show the value that can be created for the investment return. The specific capital solutions needed to produce the results must be defined to itemize the costs of development and future operation or performance costs of the solutions. Capital solutions include the business and system process, human capabilities and knowledge, equipment and infrastructure facilities, management strategies and tactics, and information solutions needed to produce a high value-quality result. Capital solutions are designed to produce specific results, result by result, along a result chain.
The new result value created can be totaled over the projected payback period. This should exceed the cost of operations to provide a value-added that can be compared to the result value-added with no development. The added value-added to existing and new results over the payback period must provide the return to justify the investment. The new value-added expected after development is backed up by new result goals accepted by result managers to substantiate the development.
Result and capital development projects have their own business structure
Each result and capital development project is its own business with a set of results to produce and a set of capital solutions to utilize in executing the project. The project business structure supports investment management results in the enterprise business structure.
Every capital solution to be developed with related results is organized as a result in the project business structure. Capital, external assistance, and expenditures assigned to the project are organized as project capital solutions. Result and capital development project management manages the utilization of project solutions to produce project results. Capital solution costs are captured against specific project results. This provides the means to capture acquisition, development, and implementation costs; to establish each developed result and capital solution as a business data entity; to document each solution and new business result completely; and to create the knowledge solutions to utilize new solutions to produce new business results properly.
Human capital assigned to the project normally is organized in result teams to develop new results and in performance teams to develop new solutions. Team members include those who will utilize and support the new solutions in operation.
New capital solutions developed as project results are implemented as new solutions to produce the new or improved business results. The solution acquisition and development cost are then amortized against the business results produced over the investment payback period.
Implemented project solutions are utilized to produce planned result value
Users have been involved in the whole operation-development continuum and have accepted result goals to utilize new solutions to produce result value-added. Users are supported by professionals for each category of capital utilized to solve implementation problems. New solution development to improve or enable results is part of the business routine. Result value and performance costs are captured in the general ledger system to know added result value-added over expected value-added with no investment, to manage the specific return on investment for each solution.
Result-performance Management (R-pM) provides the method to organize the business and utilize human and other capital, where needed to produce results
The source of knowledge for corporations to organize and manage their business is Result-performance Management (R-pM). R-pM shows how to organize results to be produced and then how to deploy and implement capital solutions where needed to produce results. Once the business is organized the business can be managed directly, without the need to lay enterprise organization and management structures over the 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 business management guide “How to Manage Projects in the 21st Century” describes result and capital development and proper development project management.
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