What is business performance?
Business performance utilizes capital available to the business to produce business results
Result-performance Management (R-pM) defines the business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Every business in the world must produce specific economic output results in order to be successful. Every business in the world invests in capital, in order to have the capital needed to produce output results. Business performance is the actual utilization of capital to produce results.
20th century business performance includes both actions executed and results accomplished
The 20th century definition of performance used in business today includes both the actions executed and results accomplished. This definition causes many 20th century management problems and prevents actual business definition and management. Business performance management, capital development, business processes, management reporting, key performance indicators, etc mix both performance and results produced together as performance. This causes problems today in actually distinguishing and separating results produced from the performance executed.
R-pM separates results from performance to manage the performance producing a result
Actual business performance does not include things accomplished or business results. R-pM separates out results as results produced by business performance and restricts business performance to the activity of the business and actions executed by the business. The R-pM definition of business performance is “the utilization of capital by the business in specific performance solutions at a level of effectiveness to incur costs and create value and quality in specific results”. The objective of business performance is to produce business results. Business performance is executed by human capital solutions using various other solutions or may be automated to be executed by other capital solutions. Business performance is managed for both capital utilized as solutions and the results produced.
Performance is measured in performance indicators by capital solution, to produce results, result by result
Business performance utilizes capital that is organized as specific solutions that have defined descriptors like description, category, class, vendor, vendor support, problems, etc and updated performance indicators in development and operation costs, a level of effectiveness, a capacity to produce certain volumes of results, potential uncertainty, expectations to meet, etc. Business performance utilizes capital to produce output results. Results have a certain defined descriptors like group, customer, product line, symptoms, etc and updated metrics in value, quality, volume, risk, goals to achieve, etc. Actual performance happens solution by solution and result by result to know the performance of each solution to produce each result. Performance incurs costs to contribute to the value of the result, has a level of effectiveness to contribute to the quality of the result, provides a level of capacity utilization to contribute to a volume of results, may involve uncertainty in delays or non-performance that introduces risk in result production, provides a level of performance against expectations, and may encounter various problems that may produce result symptoms.
The business is organized by deploying a solution to be utilized in performance to produce a result
The business is structured as results that must be produced for business success and the capital invested in the business that is available as performance solutions to produce results. The business is organized when specific capital solutions are deployed to produce specific results. The solution normally is deployed to create a performance record with any rules or exceptions needed on performance capacity constraints of the result, how to determine performance effectiveness and relate it to result quality, how to charge performance costs to the result, how to handle performance uncertainty to reduce risk for the result, performance indicators to measure, special expectations for the result, and potential performance problems.
Performance is recorded in business transactions
Performance is recorded in a business transaction by result identifier and performance solution identifier to record the cost, effectiveness, uncertainty, utilization, problems, and other performance indicators against a result produced. A business transaction is recorded for each solution utilized to produce a result and totaled to the performance record. Performance costs and other indicators are totaled for the performance solution and solution expectations. Performance costs and other indicators are totaled as meaningful against the result to know value-added after costs, etc. Result metrics transactions are recorded for the total value, quality, volume, and risk produced by all solutions utilized for the result. Most detailed business transactions can be generated automatically, when a volume of results is produced.
Result performance is managed by result along a result chain or across the business
Result performance is the individual and total effectiveness of solutions utilized to produce as specific result under the responsibility of a result manager. The result manager is responsible for the value, quality, volume, and risk involved in producing a result and for reaching result goals. The main metric used by the result manager is result value-added which must be positive over time for each result in a result chain or set of results. Should performance costs exceed result value, costs must be reduced or value increased for future results. The result manager must also monitor result quality to identify a defective or low quality result. If identified, the result chain is traced back to see if an input result is defective. If the result itself is the problem, capital solutions are checked to determine the ineffective solution. Should solution improvements be required the result manager works with the performance manager for the specific solution.
Capital performance is managed by solution across results
Capital performance of specific solutions is the responsibility of a performance manager. A performance manager is deployed to produce performance management results for all or selected solutions within a capital category. The performance manager is responsible for the performance of the solution to produce each result that utilizes the solution. The performance manager becomes familiar with solutions managed to know the costs, effectiveness, expectations, uncertainty, and problems involved with each solution. The result manager responsible for utilizing the solution to produce results contacts the performance manager for problems or result requirements for specific solutions. The performance manager must solve performance problems by improving the solution, providing a new solution, or justify the deterioration in results through lower or avoided performance costs, producing a higher value-added.
Capital solutions are deployed when needed to produce a new result
When a new result is to be produced, a business organization unit normally is deployed as the business organization solution to produce the result. Business organization units have a set of capital solutions to utilize to produce results. A manager within the unit is deployed as the result manager to be responsible for a result. Each solution utilized to produce a result has a performance manager. There may be several performance managers responsible for the various solutions that produce a set of results under the responsibility of a result manager. New solutions are added or solutions are strengthened as needed to produce new results. When a result is closed all performance solutions are first undeployed or redeployed to produce other results.
Performance is optimized by providing and improving the performance to produce high value-quality results
Capital solutions are periodically reviewed by the performance manager with the result manager to optimize the performance of solutions utilized to produce the best possible results. Performance expectations are reviewed for contribution to meeting result goals. If total performance costs exceed result value, the result has a negative value-added. In this case, the result must be closed and not produced, or the performance costs must be reduced, or the result value must be increased and the value of other results in the chain decreased to keep within the total value of the chain final result. If result quality is defective or if result risk occurs the ineffective or uncertain solution is improved or replaced as able. Potential for solution improvements and costs are assessed and results evaluated for added value potential to justify improvement.
This is the fifth 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 21st Century Management. The is the fifth article in the forum. A new article will be posted every Friday.
