Organize your new start-up business, without today’s management 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 management 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 management problems with business change, unknown business data like costs and value creation, unknown investment data like capital worth and investment returns, excessive IT and other capital overheads, mismanaged capital development, business and information complexity, unknown business management information, unsupported corporate governance, 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 organizing the business for 21st century business management.
The enterprise business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality 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 in the set of assets and capabilities in specific capital solution investments of positive (asset) or negative (liability) worth implemented for utilization to produce specific business results
- Performance in the set of capital solutions utilized at a level of effectiveness to incur costs and create value and quality in a specific result
- Results in 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 solutions, performance domains for the solution utilized to produce each result, and results produced. 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 21st century business management, 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.
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 capital solutions to produce the results. The new enterprise must organize human and other capital 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 are laid over the business, since they just create business and information complexity and confuse actual business management.
Significantly reduce capital investments by focusing on operating and developing the business
21st century business management 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 capital 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 organize the business for 21st century business 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 business organization solutions implemented to produce a set of results, products and services and revenues produced are specific results, capital assets and liabilities are managed as specific solutions, and expenditures are generated by the utilization of capital solutions in performance to produce a volume of results.
The new enterprise has many immediate competitive advantages instead of the competitive disadvantage of being new to the industry and behind the competition.
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 Solution to the Economic Crisis is explained in free downloads
Three free white papers explain the dead-end 20th century management problems, such as the failure to plan, account for, and manage the actual business, that caused the economic crisis, the way to eliminate the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building a structure for financial and economic management, and organizing local businesses to flourish in the eventual recovery.
- How to Eliminate Problems that caused the Economic Crisis explains the major unsolvable 20th century management problems and the solution to eliminate the problems
- Business management; the only Solution to the Economic Crisis explains how to plan and manage the business to capture business data and provide management the information needed for actual business, corporation, industry, and economic management
- A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management, stimulate the economy, restore confidence, organize businesses to flourish in the recovery, and manage economic cycles to prevent future crisis
These three white paper downloads are available to R-pM Community Members at Result-performance Management.com. There is no cost or obligation to join the R-pM Community. Join by entering your email address and personal password. Your email address is protected and used only for download problems, product updates, and occasional R-pM Member news and white papers.
