Eliminate Problems by consolidating Corporate Businesses into one Corporation Business
The Economic Crisis is caused by failure to manage businesses
Managers of financial institutions and other corporations that suffered large losses in the economic crisis blame the problems on unreliable accounting information and ineffective management structures. Financial institutions say that they are unable to manage “asset value” as one reason for the current economic crisis. The term “asset value” shows that they do not manage the business of the corporation. All businesses are “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Much capital is not managed and is labeled as “intangible assets”. Other capital is not managed for the return on investment and the worth of the capital is not managed as a specific solution to be utilized and sold or disposed of at the end of its useful life. The term “asset value” shows the failure to manage the business. Assets are specific capital solution investments of positive capital worth. Value is an attribute of output results, such as interest and dividends earned, that provide the return on the solution investment. Result value-added is the value less the full performance costs of the solutions producing the result. Capital asset solution worth is the attributed result value planned from the utilization of the solution over its remaining useful life, plus the result value from the sale or disposal of the specific solution. Financial institutions are not able to manage result value-added, capital solution investment return, and capital solution worth, and other measures because they fail to manage the business.
Corporations are unable to control the many parts as a manageable whole
Corporations state that they are unable to manage the many parts of the corporation scattered around the world as a reason for their problems. Consolidated financial statements and management reports do not provide the adequate and accurate information needed. Corporations define their parts as departments, divisions, business units, joint ventures, subsidiary companies, projects, programs, and various other kinds of units. Each unit is organized through an arbitrarily defined organization structure that is laid over the business. The organization structure is not related to the corporate business and does not fit into one consistently defined corporate whole. Different management structures are laid over each part of the corporate business for planning, direction, control, reporting, and governance. Corporations cannot manage value created in the various parts that add up to corporate value, full performance costs from all capital utilized, full investments and returns in specific tangible and intangible capital solutions, full capital solution and corporate worth, and many other important capital measures, performance indicators, and result metrics.
These are just a few examples of the hundreds of unsolvable problems caused by the failure to manage the business in 20th century management used by all enterprises today. Now we see governments around the world planning economic recovery programs, various guises of corporate bailouts, and new regulations with no attempt to understand and solve the fundamental corporate management problem.
20th century management manages various structures that are laid over the corporate business
The fundamental problem that has caused past economic, financial, business management, and corporate governance problems and that will surely cause future problems is failure to manage the business. Corporations conduct organization studies and apply organization theories to lay organization structures over the business. This is the fatal error of 20th century management. The business is not organized and, therefore, the business cannot be managed. Management structures such as corporate plans, charts of accounts, administrative functions, performance management scorecards, quality management, and many more are used to manage and report the corporation.
Rigid overlaid structures conflict with the actual changing business creating the multitude of unsolvable 20th century management problems. 20th century management is a dead-end, since the problems can never be solved by new or improved structures. Excessive information systems are used to capture and report massive amounts of data and information on overlaid structures, but do not capture basic business data or provide real business management information. The problems must be eliminated by organizing and managing the business as one structure, and leaving all 20th century structures and problems behind.
Each part of the corporation must be managed as a business
The business organization structure is not a management prerogative, political football, or consultant recommendation. The business organization is business capital that must be professionally-managed and continually-updated to define all the capital investments in specific capital solutions utilized to operate the business or to provide income results in an investment portfolio. The business organization must define all the output results that must be produced across a particular business, including those in the chain leading to customer results and those produced from investment solutions. The business is organized when specific capital solutions are implemented to be utilized in performance to produce specific results.
The professionally-managed business organization structure also is used for all business planning, direction, control, reporting, and governance. 20th century management structures laid over the business are needed no longer, and are cleared away with the intrinsic problems and workloads.
Actual business data is captured to produce one set of complete and accurate business management information
Actual 21st century business data is captured for each capital solution, performance domain, and output result, whenever an update is made or a volume of a result is produced:
- Capital solution capacity, investment amount, operational improvement amount, unamortized balance, total performance costs, qualification, reliability, return, worth, causes of problems, potential, and other capital measures
- Performance domain related to the solution and result for capacity utilization, performance costs, effectiveness, uncertainty, result value-added contributions, problems, expectations, and other performance indicators
- Result volume, value, total performance costs, quality, risk, value-added, symptoms, goals, and other result metrics
None of this essential business management information is known as one complete and accurate set in any financial institution or corporation at any level today. Existing data records on capital solutions such as employees, fixed assets, financial investments, consumable cash and supplies, etc are maintained subsidiary to capital solution records. Existing data records on results such as material in inventory, product produced, order executed, revenue or income received, etc are maintained subsidiary to result records. Business plans are recorded by time period as a data set. Enterprises that interact with the business are recorded as a data and facility record set. Business descriptors used to record the attributes of results, capital solutions, enterprises, and the business are another data and facility record set.
This financial and non-financial data is captured as business data and as business transactions to update facility records. Business data and facility records are routinely reported as business status solutions. Management intelligence capital analyzes business data and facility records to produce management information solutions.
The corporation business must consolidate corporate businesses
Corporations, financial institutions, and other enterprises may have many parts scattered around the world. These parts are organized with organization structures and not defined as parts of the whole corporation business. There may be a corporate organization structure to relate the various organization units and entities. The corporation uses separate strategic maps and corporate plans to plan, processes and functions to direct, account charts and quality methods to control, and data reconciliation and enterprise information structures to extract inconsistent information from various structures for reporting.
The actual business must be managed for each enterprise in the corporation to eliminate organization and management structures laid over the business. All operations, development, and management focus on utilizing specific capital solutions in performance to produce specific results to reach result goals by period leading to planned strategic result value. Each enterprise business has a current and strategic business structure with related business data and facility records that follow 21st century management conventions, definitions, and standards. The enterprise business structures can be consolidated into any corporate business area, sector, industry, region, or other corporate business descriptor. All subsidiaries, divisions, ventures, headquarters operation, or other business entities constitute enterprise businesses that are part of the corporation business are consolidated into the corporation business structure.
The corporation business structure provides an accurate view of the complete corporation business for all reported capital measures, performance indicators, and result metrics. All project, program, campaign or other business endeavors within an enterprise business are organized as a result in the enterprise business structure and supported by subordinate business structures. Any result symptoms, performance problems, or capital causes appearing at any corporate level can be traced down to the specific enterprise business to implement a new or improved capital solution. The complete business is simplified, consistent, and transparent at all levels. Both the current and strategic businesses are continuously managed and updated. Information technology, now used to process structures laid over the business, is focused on the corporate business as capital solutions are utilized in performance to produce results around the world.
When the corporation business is managed, shareholders have a transparent view of business plans and progress against plans, managers have the information to make business decisions to produce new results or invest in or change capital solution utilization, and personnel all at all levels are focused in producing their enterprise business results that produce corporation business results. Managers have the information needed for management and good governance, and can no longer blame incomplete and inaccurate accounts and reports or an ineffective management structure.
Higher level businesses must be managed for industries, business descriptors, markets, economies, etc
21st Century Management conventions and standards are employed to define capital solutions, performance, and results consistently in a business data and facility records, so they can be summarized to a higher-level business. The business can also be summarized by a defined descriptor of a business such as a product group result, businesses with the same objectives, businesses for a particular segment of customers, business interactions with particular markets, capital management results, investment management results, and any special descriptor defined by the corporation. Businesses can also be reported accurately by government-defined industries, markets, or economic sectors to support economic management. The business and all sectors and segments of the business are understood in terms of real business management information on capital measures, performance indicators, and result metrics.
Result-performance Management provides the knowledge and expertise to organize and manage the actual business
The problem of how to organize, manage, and account for the business is eliminated by Result-performance Management (R-pM). R-pM provides the knowledge and expertise to organize and manage the actual business. The Business Management Toolkit, contains the complete procedures and documentation to account for and manage your actual business, plus 21st century management conventions and standards. Subscribe to the Business Management Toolkit in the R-pM Community Section and the Member Download page, at result-performance-management.com. The Toolkit is updated with new advances. The subscription includes free new Toolkit versions sent to your R-pM Community Member email address.
The 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 to eliminate the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building an 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 21st century business management 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 free to R-pM Community Members through the Member Download page at Result-performance Management.com. There is no cost or obligation to join the R-pM Community. Join by entering your email address and password. Your email address is protected and used only for download problems, product updates, and occasional R-pM Member news and white papers.
