20th Century Management Structures used today are the Problem, not the Solution
Many arbitrary management structures have been contrived over the years
Throughout the 20th century, various management structures for operating and developing the company have been contrived and refined, becoming the conventional management structures that we use today. The structures organize and manage the company or other enterprise. Structures such as the organization, business processes, accounts, costed activities, system architectures, scorecards, and on and on are utilized to manage the enterprise.
We improve management and effect change by laying new contrived structures over the company or enterprise business. Even with all the enterprise organization and management structures, we continue to have fundamental problems with re-organizations, intangible assets, accounting limitations, cost control, information management, alignment, etc. We still have not found the one right method to organize and manage the company business.
Conventional management structures are the generally-accepted wrong ways
Over the past decades, we implemented breakthroughs like business process re-engineering, business transformation methods, business performance management, and enterprise resource planning. But, these turned out to be just new conventional management structures laid over the business and other structures to manage the enterprise the same as before.
Why are there so many different management structures to do the same thing? Why isn’t there just one right management structure? It is simply because all of these different management structures are wrong way to manage a business, and we do not know the one right way to manage a business. Since all the different structures we use are wrong, we can only define the right way by identifying the wrong structures that are generally-accepted. The basis for our management and accounting methods is not that they are the fundamentally-sound and understood right ways to manage the business, but that they are the generally-accepted wrong ways. When we come up with the one right way to manage the business, it will be known and accepted, and all of the wrong ways will be obsolete.
Conventional thinking prevents the new breakthrough needed
Since the beginning of business, no one has ever stopped to think, “Are the management structures that have always been used the best way to manage the business”. We accept existing management structures as the basis and try to improve the structures.
New management structures contrive ways to alleviate the symptoms of fundamental problems inherent in the way things have always been done. This we can do ad infinitum without ever solving the problems. How many structures do we have and how many books have been written about corporate governance, business organization, change management, investment management, capital development, performance management, cost and value accounting and management, solution alignment, intangible assets, IT architectures, business collaboration, etc. Why do we keep coming up with new management structures, if previous structures were supposed to have solved the problem?
Management improvement books are written using the existing body of knowledge or published record as the valid basis. Many of the books cut, reorganize, and paste what has already been written. Other books describe innovative ways enterprises are coping with contrived management structures. These approaches prevent new breakthroughs and can, at best, produce some incremental improvement.
Conventional 20th century business methods do not organize and manage the business
The problem is that conventional business organization and management methods do not organize and manage the business. Instead we contrive management structures to organize and manage people, departments, functions, activities, duties, positions, tasks, and numerous other entities. Each structure defines these entities in its own way. Each structure is laid over the business obscuring the actual business and compounding the problems of business change. The many different management structures describe the company with different entities and definitions creating information complexity and proliferation of information systems.
The organization structure is laid over the business. The business changes, while the organization structure remains rigid, building pressure for reorganization and upheaval. Other management structures are laid over the organization structure for planning, accounting, business processes, performance management, IT architectures, asset management, human resource management, reporting and various other management needs. The actual business lies hidden and un-managed under a proliferation of structures.
We need one right way to organize and manage the enterprise business
We need to step back and take a completely new look at the basics of our company business and build the one right method to organize and manage the business. Conventional business organization and management methods manage contrived entities, but fail to specifically define the business and manage specific business entities.
The business definition is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Conventional business management methods do not identify and manage the three entities that define the business and must be managed:
- Results: Specific economic outputs of value and quality produced at any level from business performance
- Capital: Specific invested capital available as solutions to be utilized in business performance
- Performance Domains: Utilization of specific solutions of worth to incur costs to produce specific results
These three entities are used in 21st century business management to organize and manage the company or other enterprise. Any other entities used must be defined in terms of results produced, capital investments as solutions, and performance domains in solutions utilized to produce results.
The business organization changes naturally as results are added, changed, or deactivated. The business organization changes with each new capital investment to implement solutions or to discontinue old solutions. Human capital personnel and capabilities are deployed as solutions where they have the capability to manage and produce results. Other capital is deployed as well as specific solutions to be utilized in performance to produce a result. The business organization changes with each redeployment of a solution to be utilized in performance to produce a result.
21st century business management is the new breakthrough needed
21st century business management is a new breakthrough that defines the results that enterprise management wants to produce and adds and deletes results as needed. Capital utilized as solutions in performance are developed and implemented to show how costs are incurred. Solutions are implemented for specific results to be utilized in performance to show total performance costs against the result value created.
Once the organization is simplified, 21st century business management manages the enterprise in three dimensions for ongoing advantage
- Result: Manage economic output to create value reach revenue goals
- Performance: Manage invested capital in performance to control costs and reach profit-margin goals
- Management: Manage operation to create strategic value and development to develop worth and achieve returns against period goals
New capital solutions are developed over time to create value in new results. The enterprise business performance is governed over time to create strategic value.
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. 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 Crisisoutlines 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.
