Organize your new start-up enterprise, without 20th century problems
The organization structure is the fatal error of 20th century management
Every day new enterprises are started-up around the world. New enterprises have the one-time opportunity to organize and manage the enterprise business from scratch. These new enterprises unthinkingly adopt obsolete 20th century management and doom themselves to the burden the unsolvable 20th century problems discussed here at the Business Change Forum. They waste the precious “green field” advantage of no legacy structures and the opportunity to do it right from the start.
Conventional wisdom says copy an existing business model or organization theory and do not “reinvent the wheel”. This “wisdom” replicates other enterprises’ problems.
Many new start-up enterprises retain management consultants to conduct an organization study. Management consultants still recommend that new enterprises lay obsolete 20th century management structures over the business, rather than organizing and managing the business for significant competitive advantage.
Do not lay an organization structure over your business!
Once a new enterprise lays a rigid organization structure over the business, the business can never be managed. The enterprise must lay additional management structures over the business. The many inflexible structures conflict with the business causing unsolvable 20th century problems with business change, unknown costs and value creation, unknown capital worth and investment returns, excessive IT and other capital overheads, mismanaged capital development, business and information complexity, unsupported corporate governance, alignment, collaboration, and so on.
New enterprises must not waste that precious “green field” advantage
New start-up companies have the opportunity to do it right from the start by using R-pM to organize the business for 21st Century Management.
Result-performance Management (R-pM) defines the enterprise business as “the utilization of capital of worth in performance to incur costs to produce value in results”. This definition includes the current business that must be conducted every day to utilize capital the enterprise invests in to produce results needed for business success. The definition also includes the future business that must be the objective or the business strategy to produce strategic results utilizing capital that must be available when needed.
From the definition and analysis of the business, we can see that the business consists of three components:
- Capital defined as “the set of assets and capabilities in specific performance solutions of positive (asset) or negative (liability) worth invested in and supported for utilization to produce specific business results”
- Performance defined as “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”
- Results defined as “the set of economic outputs of positive or negative value that can be counted and measured and are produced within a time period against goals”
In order to define, organize, and manage the business we must define, organize, and manage capital, performance, and results. Every business decision and business change involves results to produce and capital to utilize in performance. It is much easier to organize and manage the business in a new start-up enterprise, rather than having to change 20th century methods embedded in an existing enterprise.
Managers and consultants must employ the best structure available to protect future shareholder worth
Any manager or management consultant involved in organizing a new enterprise has a duty to study all options to protect the worth of the shareholders’ investment. Most will take refuge in tradition and rely on the excuse that they did what everybody else does. But, the capable professional will learn and use the best organization and management structure available. With knowledge of R-pM, it is irresponsible to set up a new enterprise to use obsolete 20th century management.
The best organization and management structure is the enterprise business
There is no better organization and management structure than the enterprise’s own business. So before making the fatal error of overlaying an arbitrary organization structure of organization units, positions, etc. on the business, the new enterprise must organize the actual business with R-pM.
Any new enterprise must define the chain of results needed to produce customer value, the results needed to support capital and new investments in the business, the strategic results that create future value, the result goals by period to reach strategic results, and the investment needed in performance solutions to produce the results. The new enterprise must organize human and other performance solutions to produce specific current results; and then use the same structure to manage the creation of strategic result value. The business structure is used for all business organization, planning, direction, control, and reporting. No structures should be laid over the business, since they just create business and information complexity and confuse actual business management.
R-pM significantly reduces capital investments by focusing on operating and developing the business
R-pM eliminates the need for capital employed to operate and maintain structures laid over the business, including significant Information Technology investments. All capital invested in the business is analyzed as a performance solution to produce one or more results and must be justified by result requirements and the value added to results. All results produced by the business are managed to have a positive value added after performance costs. All capital invested in the business is managed to add value to results that utilize the capital. Underutilized and ineffective capital is avoided and quickly identified, if implemented in the business.
Any new enterprise can use R-pM to organize the business for 21st century management.
Any new enterprise can organize the business for 21st century management today no matter what information or accounting systems are used. The organization units and responsibility centers are defined by sets of results, products and services produced are specific results, and the capital managed and expenditures are defined by performance solutions. The new enterprise has many immediate competitive advantages instead of the competitive disadvantage of being new to the industry and behind the competition.
The R-pM Toolkit, your 21st Century Management Manual, provides the learning and guidance on organizing and managing the business of any new or established enterprise. Any toolkit user can contact result-performance-management.com with particular problems not resolved by the toolkit, and new toolkit updates will be developed and issued to all users.
Learn more about the R-pM breakthrough for 21st century management and subscribe to the R-pM Toolkit, including free updates, at result-performance-management.com.
