Why plan the business?
20th century enterprise management used today lays various plans over the business
20th century enterprise management cannot plan the business directly because the business is not organized. The enterprise is planned through various structures laid over the business. These overlaid planning structures include:
- Strategic plans using such structures as maps and corporate plans
- Financial plan and budget structures
- Information technology plans and enterprise architectures
- Capital development plans and investment analysis structures
- Human resource hiring and development plans
- Other operational plan structures
Each of these planning structures uses its own set of entities to describe the enterprise, uses different information systems, and requires its own support staff. Each plan must be maintained and updated with actual progress against the planned entities, and reported. The plans plan the enterprise in various ways depending on the particular structures implemented.
None of the overlaid plans plan the actual business
Since the business is not organized, the business cannot be planned. The results produced by the business cannot be planned as an interrelated set. Some results may be planned in isolation as separate entities such as product sold and revenue received. The plans are usually created from estimates rather than a period by period build up from the existing business. Since the business is not planned actual business data is not planned for actual measurement; such as performance costs, performance effectiveness, result value, result quality, capital worth, investment returns, etc.
The business must be organized to provide the basis for business planning
Before the business is planned, the business is organized as “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. The business is organized as capital that is invested in the business as specific capital solutions, the results that must be produced by the business to create strategic value and business success, and the performance of the business to utilize specific capital solutions to produce specific results. Once the business is organized in the current business structure, there is a baseline and experience for business planning to plan the strategic business structures.
The organized business must be planned to reach the strategic business
Strategic business planning must plan the actual business at some future date called the strategic horizon. Business planning builds on the current business structure. The strategic business structure is defined to plan the added or developed results needed in detail and results continued unchanged from the current business in total. Strategic result value is planned across the business. Future capital is planned in the specific capital solutions that must be available to produce strategic results. Result goals are planned period by period to move from the current to strategic business. Strategic value creation planned is substantiated by result goals accepted by the responsible result manager. Capital development required for specific solutions to add or improve results is planned as well as the strategic result value increase provided by implemented solutions. The strategic business structure is management strategy capital and is approved by the board.
The diagram above looks complicated, but it simply shows the current business structure and the planned strategic business structure. The strategic business structure shows existing, new, and improved results to be produced at a future planned time called the strategic horizon. Result research is planned to identify and document new results required to grow the business. Capital development is planned to develop new and improved capital solutions needed to produce strategic results. Business plans document time period (month, quarter, etc) results and capital utilization to move from the base business structure to the strategic business structure.
The planned business provides a tool for corporate governance
The planned business provides the baseline for management reporting and the tools for good corporate governance to understand the actual status of the transition from the base business to the strategic business. Plans are updated each period with actual data and new strategic estimates to keep on track to the strategic business. Capital development projects are included in the strategic business structure and strategic plans. Proposed investments for capital development are analyzed and planned in detail as investment results. Approved investments are included in strategic plans. Capital development projects are planned as a subsidiary business are managed as investment results. The investment project result is supported by the project plans and the project business structure in progress. Once the project is complete, an investment return result manages the result value-added for the return on investment against goals.
The planned business provides the framework for changes to the business
New opportunities and threats to the business can be modeled in the strategic business structure. The status of the actual business and the impact of proposed result and capital solution changes are clearly understood and beneficial changes approved. New results and capital solutions are incorporated easily into the business. Results can be closed and solutions redeployed to other results easily. Business plans are kept current to reflect the actual planned and approved business.
Result-performance Management (R-pM) provides the knowledge for actual business management
Result-performance Management (R-pM) is the only source of knowledge and expertise on how to manage the actual 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. The Business Management Toolkit guide “How to Build Result Value-quality Chains” describes value chains in detail. 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. Business management knowledge and the Business Management Toolkit are available and supported today 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
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- 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.
