The Enterprise Performance Problem and the Business Performance Solution
The Enterprise Performance Problem
Enterprises developed conventional ways of operations and administration over the years to arrive at the 20th century enterprise management used today.
Enterprise performance structures are laid over the business
Business performance used today is a misnomer. It is really enterprise performance and is unrelated to actual business performance. The fundamental problem is that today’s enterprise performance structures are laid over the business, rather than directly managing business performance in the capital solutions utilized to produce business results.
The generally-accepted definition of performance includes not only capital solutions utilized in the actions executed in performance, but also the output results accomplished from the performance. Results produced, capital utilized, and performance in the utilization of capital to produce results are defined together as performance and are not separately defined or managed in business processes, performance management methods, resource planning systems, and key performance indicators (KPI).
Business processes are re-engineered to improve enterprise performance and “performance quality”. Business process management lays a process structure over the business to produce an output result from the process, but does not organize the business to utilize capital solutions in performance to produce output results, within the process. Business process management manages quality checkpoints or other contrived methods to manage performance quality, but does not manage the cost-effectiveness of specific capital utilized in performance to manage result value and quality along the chain of results.
Enterprise systems are laid over the business for system processing
Enterprise information systems are implemented through conversions as additional overlays on the business, without positive business change. Some transactions are still performed manually or on PCs and the database is not authoritative for the enterprise business. The enterprise environment changes but the 20th century management traditions remain sacred.
Enterprises organize by function to perform similar tasks rather than organizing to achieve important results. Performance reporting measures level of activity rather than real performance producing results. The function is the driver of business practices and methods. Few enterprise functions are directed towards their internal or external customer. Functions are performed whether they are important to the core business or not.
Enterprises rarely evaluate to cost of overlaid business performance structures
Enterprises rarely evaluate the cost and benefit of the existing way of doing business. In many enterprises, processes are re-engineered without changing the functional empire or considering enterprise system needs. Performance structures are laid over the business without understanding the value or benefit that should be provided. Business change is change to overlaid structures, not the business, and is the responsibility of the consultants or change team, rather than the line management. Much change ends up being cosmetic, rather than addressing the fundamental hard-to-solve problems. Over the years, the cost of change multiplied while the benefits remained marginal.
The Business Performance Solution
The generally-accepted definition of enterprise business is “the activity of providing goods and services”. The definition shows that the business has multiple components. Activity is the utilization of capital invested in the business utilized in business performance, and goods and services are business output results. A more-precise definition of the business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Business performance is the utilization of specific capital solutions to produce specific results. But, today, capital solutions are not identified and managed as part of the business and output results produced are not identified and managed as part of the business. Therefore, actual business performance cannot be managed.
Business results and capital solutions must be managed to manage business performance
In order to manage the actual business, results and capital solutions must be defined separate from performance. Results must be managed as one set of business outputs required for business success. Capital investments must be managed as capital solutions in one set of capital available for utilization by the business. Performance must be managed in the utilization of specific solutions to produce specific results in one set performance records and transactions.
Business performance is the performance of capital solutions utilized to produce results
Business performance is the utilization of specific capital solutions in performance to produce specific results. Business capital consists of organization, process, and data solutions that are designed to produce that specific result, and cannot be utilized for results in general. Other human, facility, and management capital solutions are integrated with business solutions for each result produced. Business performance then is managed to produce a chain of specific results. The chain is defined by the relationship between results, rather than a contrived process flow. Quality and value is managed for each result in the chain, rather than the futile attempts to determine performance quality or value. Specific capital solutions are managed for cost and effectiveness in producing specific business result value and quality.
Business performance improvement is improvement in the capital solutions utilized to produce results
Real business performance improvement must improve specific capital solutions utilized in business activity, in order to improve enterprise goods and services and other output business results produced.
But, businesses cannot improve performance without change. The change must be positively directed toward achieving results, providing customer service and satisfaction, and generating profits. Business performance improvement cannot occur in isolation. All the business, human, facility, and management capital solutions utilized to produce a result must be improved and integrated.
The line manager responsible for the results are responsible for utilizing solutions to produce a value-quality result. Result managers are given result goals that require business performance improvement to achieve. In this way, business result management and staff are instrumental in devising new capital solutions and putting them to work. Result managers are supported by performance managers responsible for providing cost-effective capital solutions and assisting the utilization of the solutions. Capital managers are responsible for the acquisition, development, and improvement of qualified capital solutions needed by result and performance management to utilize in performance to produce results.
Business management organizes the business as capital solutions to be utilized and results to be produced
The means to manage performance is actual business management which organizes business results to be produced, the capital solutions to be utilized, and performance in the utilization of a specific solution to produce a specific result. Human capital is defined as specific capital solutions deployed to manage and produce specific results. No organization or other structures are laid over the business.
Performance is directed toward accomplishing a result rather than performing tasks. The result should be important to the success of the enterprise. If not, perhaps someone else could produce the result better and for lower cost. Accomplishing critical key results is the purpose of the enterprise’s core business. Best practices are not what others are doing, but the best utilization of qualified capital solutions to produce a high value-quality result. Business processes are replaced by result value-quality chains, that manage the minimum performance needed to produce each result in the chain. Partnerships and extensions to the enterprise are designed as part of the business, result value-quality chains.
Corporation performance is managed through managed businesses
Many financial institutions and corporations today have severe management problems in managing the performance of different divisions, subsidiaries, projects, and other enterprises. Business management provides the solution. Each enterprise within the corporation is managed as a separate business with specific result management, capital management, and performance management responsibilities. Each enterprise business is part of the larger corporation business and each business structure is automatically updated to the overall corporation business structure. Problems shown at the corporation level can be traced to the enterprise business level and corrected. Everybody in the corporation and each enterprise understands their role to utilize specific solutions in performance to produce specific results.
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 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.
