Investors lose Money because Corporations do not manage the Business
Investors are the big losers in the economic crisis
Corporate investors have lost trillions of US Dollars in the current economic crisis. The recession appears to be long and deep delaying any gains in a recovery. Investors need to understand the fundamental problem causing the widespread problems in financial institutions and corporations around the world. Corporate investors are up against conventional corporate management thinking, which propagates dead-end 20th century management and prevents 21st century business management. Every business in a corporation must be managed consistently to consolidate into one corporate business. Corporate shareholders must pressure corporate management to manage the actual corporate businesses to eliminate the problems that caused past and present crisis, and surely will cause future crisis.
Investors lose because they invest in corporations that do not organize, plan, direct, or control the business
The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Corporations do not manage the business today. They organize the corporation with an organization structure, plan with strategy and corporate plan structures, direct with function and process structures, control with account and quality structures, report with compliance and financial reporting structures. The structures laid over the business are not related to the business, often are not related to each other, consume enormous IT resources and costs, and do not collect or report actual data concerning the business.
The actual business is hidden under the structures laid over the business. Corporations are unable to manage result value-quality chains, full costs of doing business, value-added across the business, capital investments in tangible and intangible assets, the return on specific capital solution investments, performance effectiveness producing result quality, the worth of capital solutions (asset value) in investment portfolios and utilized to produce output results, and many other capital measures, performance indicators, and result metrics.
Multinationals and other large corporations have obvious problems managing all of their parts
The financial crisis shows clearly that large corporations do not have an effective means to consolidate and manage the many subsidiaries, business units, projects, divisions, programs and other parts of the corporation. Several corporations have been brought down by large unknown losses in one part of the corporation that could not be managed as part of the overall corporate business. Investors eying profits from one part of the corporation are ambushed by losses in another part of the corporation.
The only solution is to organize and manage each corporate business
Corporations have corporate businesses scattered around the world. Each corporate business is organized, operated, and developed through the only three entities that are direct components of the business; results produced, capital solutions invested in the business, and business performance in the utilization of a solution to produce a result.
The actual business consists of one business structure to manage each corporate business that replaces the various structures laid over the corporate businesses today. The business organization unit is implemented as a business solution to produce specific results. Result managers are implemented as human solutions to be responsible for results. A sub-set of the business structure is inverted to show results to be produced by an organization unit or result manager. All other business terms used such as center, activity, process, object, project, assignment, and objective are defined as precise results to produce and capital solutions to utilize.
The business is managed through new business management information, not available to corporate managers today, in related capital measures, performance indicators, and result metrics.
- Result values and full performance costs to manage result chains and result value-added across the business
- Capital solution qualifications and performance effectiveness to manage quality result by result
- Capital solution reliability to manage performance uncertainty producing result risk
- Capital solution capacity utilized in performance to produce a volume of results
- Planned strategic result value and the solutions required to produce the results
- Actual results against period goals and performance against ongoing expectations
- Period by period result value creation and updated strategic result volume, value, and value-added estimates
- New capital investments justified by the planned strategic result value-added
- Capital development projects managed as a business to know the amount invested in all tangible and “intangible” assets
- Individual capital solution measures in investment amount, amortization of investments in performance costs as worth declines, and the return on investment
- The “asset value” which is the worth of each capital solution from utilization to produce result value-added and the result value-added from sale or disposal
This information essential for good corporate management and governance. Corporate management is handicapped today by the lack of information needed to manage the corporate businesses. Corporate management problems such as unknown investment and performance costs, unknown capital worth or asset value, unknown losses or returns on investments, unknown customer value creation, unmanageable value and quality chains, unknown positive or negative value-added by result, etc are eliminated.
The corporation business is a consolidation of all the businesses in each part of the corporation
Every part of a corporation with a set of results to produce and a set of capital to utilize in performance is a business. This includes any division, business unit, subsidiary, or other part that is consolidated as part of the corporation. Normally project, program, and campaign business structures produce a result in a division, business unit, or subsidiary business structure. The corporation itself is one large business structure that is the sum of all the businesses within the corporation. Each corporate business industry, sector, area or other breakout is a structure of businesses or business results included.
Problems in any business in the corporation show up in the corporate business structure and can be traced to the business to be resolved. The business structure is automated to be immediately updated as business is executed around the world. Results and capital solutions can be summarized at any level of detail. Queries and reports can be directed at business structures at any level of the corporation.
Shareholders must demand that corporations manage the business
Business owners and shareholders lose the most from the unmanaged business and gain the most from a managed business. Corporate executives have lifetimes invested in 20th century management learning and experience. They do not have the awareness, inclination, or authority to move from dead-end 20th century management to actual business management for the 21st century.
Business owners and shareholders must require that corporate management use the economic recession as the time to organize and manage the business to gain significant competitive advantage in the upcoming recovery. Investors should make it plain that they will no longer invest in corporations that put investments at risk, because they do manage the business.
Result-performance Management provides the knowledge to manage the business
Result-performance Management (R-pM) provides the knowledge to organize the business for new 21st century management conventions and standards. Visit result-performance-management.com to learn the significant advantage of organizing and managing the corporate business and the business in every part of the corporation. Join the R-pM community to download documents that explain corporate business management. The R-pM Business Management Toolkit, is available today and is under continual development to expand and refine business management and to document new 21st century management conventions and standards. Download your Business Management Toolkit, and provide your email address for future updates, 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 investment analysis, that caused the economic crisis, the way business management 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 21st century solution
- The Only Solution to the Economic Crisis; Manage the Business explains how to manage the business to capture actual 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 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.
