Governments seek New Best Business Practices to prevent Future Financial Crises
Many Governments want new Best Business Practices that provide transparent business management and reporting
The current financial crisis and economic recession is also a crisis in the management of the corporations involved. Many governments seek new best business practices to prevent future problems from arising within corporations and financial institutions. They want proper business management and control, so that management is aware of what is happening in the business and government is aware of what is happening in the economy to prevent problems from arising. They want transparent reporting of the actual business, so that regulators gain an accurate picture.
The barrier faced by governments is the unknown problems and solutions
The obvious barrier to these efforts is that no one knows what specific best business management practices will actually solve the problems and prevent future crises. Measures taken in past crises strengthened government regulations and compliance reporting, but did nothing to solve the fundamental business management problems. We can see that the measures taken so far to address the current crisis are guesswork, in hopes of improving the situation. The fundamental problem is that 20th century management used by all enterprises today prevents organization and management of the actual business.
Fortunately the real answer is available today in Result-performance Management (R-pM) to organize and manage the actual business to provide a firm foundation for business, financial, and economic management and stability. R-pM has set out a Business Management Program that can be led by a government, with business and industry cooperation, to encourage and support local enterprises to organize the business for breakthrough competitive advantage to prosper in the eventual recovery. These governments are supported by a free 36-page download “A Government Business Management Program to Answer the Economic Crisis”. The download, which is available at result-performance-management.com, is explained further in the recent article of October 28, 2008.
Many arbitrary practices have been contrived over the years, but none are best business practices
Throughout the 20th century, various practices and structures for organizing, developing, operating, and managing the enterprise have been contrived and refined, becoming the conventional practices and structures used today. The problem is that the structures do not organize and manage the business, so none are best business practices. Instead, structures laid over the business organize departments and positions and manage functions, maps, accounts, processes, activities, tasks, scorecards, and numerous other entities. Leading to the financial crisis, banks contrived arbitrary new structures for mortgage-backed security product definitions and product management that were not well understood and could not be managed within the business context. The many overlaid structures hide the business and compound management problems. Each structure uses different terms and definitions creating information complexity and proliferation of information systems.
Practices used today cause unsolvable enterprise management problems
Once an organization structure is laid over the business, the business can never be managed. The business changes, while the organization structure remains rigid, building pressure for reorganization and upheaval. Other structures for processes, accounts, human resources, performance management, etc are laid over the organization structure. The actual business lies hidden under a proliferation of structures. We improve management and effect change by laying new contrived structures over the structures in place. Even with all the improvements, we continue to have well-known unsolvable problems with re-organizations, intangible assets, accounting limitations, capital worth, investment returns, cost control, information management, alignment, project management, change management, and on and on. The problems are unsolvable, because they can never be solved by new or improved 20th century management structures.
Result-performance Management (R-pM) provides the one set of best practices to organize and manage the business
Result-performance Management (R-pM) provides the one right set of actual business practices to organize and manage the 21st Century business as one structure, and leave problems with 20th century practices and structures behind.
The business definition is “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. Existing management practices and structures do not identify and manage the three entities that comprise the business and must be managed as distinct sets:
- Results: Specific economic outputs of value and quality produced at any level from business performance
- Capital: Specific invested capital available as solutions of an investment cost and worth to be utilized in business performance
- Performance: Utilization of specific solutions to incur performance costs to produce value-added in specific results
These three entities are organized and managed in Result-performance Management to organize and manage the business. One business structure defines capital solutions available to the business, implementation of specific solutions to be utilized in performance to produce specific results, and the results produced as outputs from the business. Results form result chains to manage value-added across the business.
The business organization changes naturally as results are added, changed, or closed; and with each new capital investment to implement solutions, redeploy solutions, or to close old solutions. Business organization unit solutions are deployed to be responsible and utilize their capital to produce specific results. Human capital solutions are deployed where they have the capability to manage and produce results. Other capital is implemented as specific solutions to produce specific results.
Management strategy plans strategic results and the existing and new capital solutions needed to produce the results in a strategic business structure . Result goals and performance expectations are planned by period to create the strategic result value. Proposed new capital and development must be justified by documented solution worth in the value to be added to specific results. Capital solutions are developed as results from investment projects to capture investment costs and are implemented to produce specific results. Investment costs are amortized as solution worth declines through performance costs charged against the result value produced to manage result value-added. Result value added contributions by solution determine return on investment to date and current solution worth in future and disposal result value-added. Corporate governance manages the transition from the current to the strategic business.
Business data is captured on result volumes produced, result value, performance costs, result value-added, capital investment costs, unamortized investment cost balances, return on specific capital investments, and solution worth that cannot be captured today. All tangible and intangible assets are managed as assets of positive capital worth and as liabilities in solutions of negative capital worth to manage business net worth.
One set of consistent, accurate, and complete management information is provided on the actual business for effective and transparent business management. Business management has a clear view of capital solutions utilized in performance to incur costs and produce results across the business. Accurate business management reports can be provided to regulatory authorities for a transparent view of the actual business. Governments can build up a consistent business structure for an industry and area or sector of the economy. Markets can be viewed consistently by customer result supply and input result and capital solution demand.
R-pM is the breakthrough needed for effective and transparent business management
R-pM eliminates the unsolvable problems and high costs of structures laid over the business. R-pM manages the current and strategic business for strategic value creation, result value-quality chains, transparent governance, innovation management, beneficial development projects, accurate financial and non-financial business records, cost and value accounting, capital worth management, managed investment returns, efficient IT utilization, result-performance optimization, business collaboration, solution-sharing, and many other advantages prevented by 20th century structures.
If governments want to institute real best business practices and transparent business reporting, the only solution is R-pM
Governments that want to prevent future corporate financial, management, and governance problems should investigate the Business Management Program to assist their corporations to manage the actual business with R-pM. Future reporting should require transparent reporting of capital worth, utilization of capital solutions in performance to produce results of value that lead to revenues, the performance costs to produce the results that utilize expenditures, and the value-added that leads to profits. The cost of the program will be paid back manifold in the increased competitiveness of the corporations and the increases in government revenues.
When we employ R-pM, we have the right best business practices to organize and manage any enterprise business for 21st century management, and leave all the obsolete bad practices and unsolvable 20th century problems behind.
The R-pM Solution to the Economic Crisis is explained in free downloads
Three free white papers explain the dead-end 20th century management problems that caused the economic crisis, the way R-pM eliminates the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building an architecture 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 R-pM solution
- The Only Solution to the Economic Crisis explains how R-pM manages the business to capture actual business data and provide management the information needed for actual business management
- A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management 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 and password. Your email address is protected and used only for download problems and occasional R-pM Member news and white papers.
