What are business results?
The business is defined as “the utilization of capital of worth in performance to incur costs and produce value in results”. Every business in the world invests in capital, the capital is utilized in performance, and utilization of capital in performance produces output results. The three components of the business are capital, performance, and results.
The objective of every business is to produce results
Results are the outputs of value that must be produced across the business for success. Revenue management results include products, services, customer contacts, sales orders, revenues, and profits. Revenue support results include advertisement run, market surveyed, customer followed up, etc. Capital management results include payroll paid, human training executed, asset maintained, marketing tactic devised, information created, etc. Investment management results include new product developed, information system implemented, new equipment procured and installed, etc. Every output that must be produced by the business is a result. Results must have a value that exceeds the cost of performance to produce the result for a successful business. Every person in the business works to produce results.
Results are outputs from the business that can be counted and measured
The definition of business results is “the set of economic outputs of positive or negative value that can be counted and measured and are produced over time against goals”. Today people do not think of results as a set of managed outputs. Results are defined and managed as separate entities, such as a product, invoice, completed work order, etc. But, results are not isolated outputs that are managed as a separate entity. Results are part of a set of outputs produced by the business that have common attributes that must be managed together.
All results have a count, a measured output volume, result value, a total cost for producing the result, result value-added, result quality, a risk in terms of producing the result effectively and on time, goals to produce a certain volume and value with a time period, symptoms when something is wrong with the result, someone responsible for producing the result, a customer who wants the result produced, and other result descriptors.
Results produced have value and determined quality
Results have monetary value determined by the willingness to pay by the customer who wants the result produced. The business is willing to pay for supplier results as inputs to the business that confers a value on the result. The external customer is willing to pay for the final result from the business to confer a value on the result. The internal customer must be willing to pay for internal results produced. The total value of input results and internal results cannot exceed the value of the final customer result. The result value less the total cost of producing the result is the result value added. The value of the result must exceed performance costs or the result should not be produced. If the result is required, the performance costs must be reduced or the value increased and the value of other results in the chain decreased to stay within total chain value.
All results have a quality determined by the customer appropriate to the value set in order to be satisfied with the result. The determinates are set with measures or rules to determine actual result value before producing the result. Setting quality determinates is important for results along the chain to produce customer results, for recurring results like a machine repair, and for one-off results such as a study report. The determined quality level must enable reasonable result production with performance costs within the appropriate result value.
Results are related to each other and form a chain to produce a final result
Results are not produced in isolation. Results depend on other results for inputs to use. Results impact other results. Result relationships are established to show where one result is dependent on another result being produced first, where a result is part of a higher-level result in the organization, where a result adds cost and value to another result, where a result allocates part of its cost and value to another, results that belong to a chain, a result in sequence in a chain, and results that impacts the value or quality of another result.
Key-results are about 10-30 high-level results that must be produced across the business for capital management, revenue management, and investment management. End-results are produced directly from the utilization of capital in performance at the lowest level across the business. Set-results organize end-results and other set-results within a key result.
End-results add costs, value, and volumes to higher level results produced. End-results to produce a final customer set-result form a result value-quality chain that add costs and value to the final result. Results like order booked, order filled, order invoiced, order delivered, etc form a value-quality chain to produce the order fulfilled set-result. An order returned result impacts the value of the order fulfilled result.
Results are planned with goals and the performance solutions needed
Everyone involved in the business works to produce results. Their contribution to the business is measured in the volume, value, and quality of results produced. Business assignments are made by deploying an organization unit or result manager solution to be responsible for the result. Result value and quality with goals to produce a volume or value of results within a time period are agreed with the result manager. Other capital in a performance module or individual solutions is planned with charging rules and deployed to produce the result.
The result manager is responsible for utilizing performance solutions deployed to produce results and reach result goals. If a result manager has a performance problem with a particular solution, he contacts the appropriate performance manager.
Results must be managed to manage the business
Top management must produce high-level results like sales, revenues, and profits. Lower-level managers produce results that contribute to sales, revenues, and profits. Results must be measured to know the volumes or counts of outputs produced, the value created by the business, the cost of creating the value, the value-added after costs, the quality produced, actual accomplishments against goals, symptoms affecting the business in results that are late or defective, etc. Results must be reported to manage the business to know value-added contributions to profits, actual against goals, progress and new estimates for results at the strategic horizon, results incurring excessive costs, results needing assistance or improved performance, etc. Results must be the focus of every manager and person in the business to ensure that the business progresses successfully.
This is the third article under the forum “Why Manage your Business”
The Business Change Forum is now running series of articles under the forum “Why Manage your Business?” to explain Result-performance Management (R-pM) fundamentals for actual business organization and management for the 21st century. The is the third article in the forum. A new article will be posted every Friday.
