Archive for April, 2006

In an article on 12 April, we discussed how we managed for results but never managed results. We have never managed results, because we have always confused results and performance. If we define results as performance, we can never separate and separately manage the performance and the result produced from performance.

We can eliminate this problem by defining performance as utilizing enterprise capital to produce value in results. Then, performance is the link between capital and results.

21^st Century Management manages results separate from performance

Result-performance Management (R-pM) is the conventional method to organize the business for 21^st century management. Result-performance Management (R-pM) defines and manages results. To learn more about results visit the “Results: Economic Output and Value Creation” at the R-pM website.

Results define the quality and value of enterprise economic output

Results are the outputs of value that we need to produce to execute a strategy and survive as an enterprise. The result is the fundamental element of economic output from the enterprise. Results are produced within the enterprise. Results are not economic indicators that reside outside the enterprise. This definition has historically prevented the enterprise from identifying and managing results. [more...].

In recent article posts we discussed “Separating Results from Performance Management” and “Years of Bad Management from Mindlessly Copying a Bad Definition” that discussed the serious management problems due to the flawed definition of “performance” and “performance management”.

We discussed how we must separate results from performance. Performance includes only the actions of performance. Performance is the utilization of capital to produce value in results. This definition of performance is very specific. We can no longer think of performance as going through the motions or producing something that others can appreciate. Performance can no longer be measured through various contrived methods and arbitrary indicators.

21^st Century Management Management manages performance to produce results

Result-performance Management (R-pM) is the conventional method to organize the business for 21^st century management. R-pM separates results from performance, and manages performance to utilize capital as performance solutions to produce results. R-pM organizes the capital utilized as specific performance solutions to be deployed to produce specific results. View the page “Performance: Cost-effective Capital Development and Utilization”

Performance utilizes capital in performance solutions to produce results

Performance provides the motor for the enterprise. Performance is what gets things done. Performance utilizes capital. What is the capital that is utilized? The conventional enterprise does not know what capital is utilized. The capital of the most worth in performance is “intangible”. [more...].

In an article posted on 16 March 2006 “Replacing Administration with Capital Management”, we discussed the problems with the way the conventional enterprise identifies and manages capital. Capital is assigned to responsibility centers, administered by functions, or just labeled “intangible assets”.

21^st Century Management organizes capital to be managed and utilized

Result-performance Management (R-pM) is the conventional method to organize the business for 21^st century management. R-pM organizes capital into specific performance solutions to be managed through capital management and to be provided to produce results through performance management. Capital is organized in two ways:

1. By the capabilities required to manage and support the capital
2. By the way it is utilized to be integrated to produce results

Learn more about performance at the R-pM website and in the R-pM community download “Organizing and Managing Performance”.

Capital is not organized and managed in the conventional enterprise

The conventional enterprise does not identify and manage its capital to produce the value and benefit potential. Much capital is not identified. The problem is ignored by labeling the capital as “intangible assets”. Most other capital is administered by administration functions that rarely view their role as managing and maximizing the worth of enterprise capital. For the most part their capital is not identified as solutions utilized in performance.

R-pM employs principles for Capital Management

R-pM takes a different view of capital embodied in the following principles:

• All capital in the enterprise must be identified and managed to maximize its worth. There are no such things as “intangible assets”
• Capital is broken down into specific performance solutions that can be managed and utilized to produce value in results
• Capital that must be supported together and that requires the same basic human aptitude and capabilities to manage and support must be organized together
• Capital must also be organized so that it can be effectively integrated and utilized by the organization to produce results

When the enterprise organizes capital to be managed by professionals with the proper aptitude and to be utilized by the line organization to produce results, then the enterprise can replace administration and unmanaged capital with capital management.

21^st Century Management eliminates 20^th century problems

Eliminate costly 20^th century problems by organizing your business for 21^st Century Management. Slash costs, simplify business management, and boost your competitive advantage through Result-performance Management (R-pM), the conventional method for 21^st century management.

Download your 21^st Century Management Manual today

Your 21^st Century Management Manual, The R-pM Toolkit, is available today and is under continual development to expand and refine 21^st Century Management. Learn more about the R-pM breakthrough for 21^st century management and subscribe to your 21^st Century Management Manual, including free updates, at result-performance-management.com.

The 20th century business organization is based on a flawed definition of performance

In an article on April 10, 2006, we discussed the years of bad management from mindlessly copying a bad definition, showing what we have endured because so many of our management methods and structures are based on a flawed definition of performance. Even today, performance is defined not only as the activity of performing to produce results, but also is defined as the result of the activity in goods and services and other outputs.

The flawed definition of performance prevents us from organizing and managing the business

Most on-line dictionaries define the enterprise business as “the activity of providing goods and services”. Business activity is performance and business goods and services are results. Therefore, in order to organize and manage the business, we must organize and manage performance and results. By defining performance to include both the activity and results of performance, we have prevented management of results separate from performance. In effect, we have prevented the organization and management of the enterprise business. Since we cannot organize and manage the business, we construct organization and management structures that are overlaid on the business.

We need to separate results from performance to organize and manage the business

When we separate results and performance, we can define the enterprise business as the utilization of capital in performance to produce value in results, and we can define results as the inputs and outputs of performance, not as a part of performance.

Results are the basic elements of economic output that embody the value created by the business. [more...]>

As we said last week, In the article Define your Enterprise to Utilize Capital in Performance to Produce Value in Results, we need to define the enterprise one way to describe precisely the fundamental reason for an enterprise. We base the definition on the definition of the enterprise business as “the activity of providing goods and services”. To be more precise, we define the enterprise as “an endeavor that utilizes capital in performance to produce value in results“.

Every enterprise must organize and manage based on the definition of the enterprise

How do we organize the enterprise based on this definition? What if we listed all the results the enterprise must produce to meet objectives, covering what everyone in the enterprise does?

In order to produce results the enterprise must have some capital in terms of money, equipment, personnel, knowledge, plans, processes, etc. What if we listed all of the capital the enterprise has, including both tangible and intangible assets?

So now, the enterprise must utilize the capital it has to produce the results it wants. We call this performance. So what if the enterprise assigned the capital utilized in performance to the results produced to understand how value is created and the cost of creating the value.< [more...]

We do not know the right way to organize the business, so we try to identify the best wrong way

On January 17, in the article Organizing through Theories and Infighting, we identified problems in organizing the conventional business enterprise. We do not know the one right way to organize, so we fight over, which is the best wrong way. Then, on April 13, 2006, we discussed how to organize the business as the activity of providing goods and services. The most important part of organizing the business of the enterprise is organizing results.

We must organize the enterprise to reach objectives as guided by Peter Drucker

In my days as a consultant studying organizations, I used to produce organizational alternatives. At that time, one of my biggest influences was Peter Drucker with his fine works on Management by Objectives and Managing for Results. The only problems I had with Drucker was that the objectives related to the employee rather than the organization, and results were moved to the future and placed outside the enterprise as the final result economic output. However, if we combine the principles of management by objectives and managing for results, we can see that enterprise strategic objectives should be defined by the future strategic results that the enterprise must produce. Near term objectives are achieved by producing final results from business performance.

We need to focus managers on producing results that lead to future strategic results

Drucker said to focus on the result not the activity, a sound concept that largely is ignored today. [more...]>

We lack a sound structure for packaged solutions

We have had a basic problem in developing packaged solutions for use by enterprises, due to the lack of a fundamentally sound structure for the enterprise. This is particularly true for application software solutions. The solutions have to overlay contrived data collection and processing requirements on top of whatever organization is in place, rather than implementing the natural data capture and processing of the organization.

Packaged solutions are becoming more complex for specific applications

At first packages were fairly high-level and incorporated the most widely used functionality, so they could be utilized by diverse enterprises. Then packages became more complex providing more than the 20 percent of the potential functionality used 80 percent of the time, making the 20 percent more difficult to use. Each industry wanted industry-specific solutions. Different solutions labeled their own set of methods as “industry best practices”. So, different solutions installed different best practices, requiring the same solution be used across collaborating enterprises.

Package solutions are dictating the enterprise organization and management

Package solutions are getting more specific for industry functions covering everything that the enterprise does. Different solutions enforce different ways of doing the same thing. [more...]>

What is the responsibility of a manager?

What should be the responsibilities of managers? Should they be responsible for whatever comes up? What is the possibility of focusing specific managers on specific things and supporting them with managers focusing on the other specific things needed? Can we develop management professionalism for every area of the enterprise?

Most managers are responsible for contrived entities related to performance

Most enterprises have managers focus on tasks, duties, functions, jobs, positions, activities, projects, and other things that describe performance. What do you want from your managers — performance or results? The only things that our enterprise and our enterprise managers produce are results. But, we never manage results we only manage performance. Does this make sense?< [more...].

Your company, organization, institute, agency, or whatever is an enterprise. How do you define an enterprise? If you look up “enterprise”, you will find many widely varying definitions. This enables us to set up enterprises any way we want with widely varying organization and management structures.

We need one fundamentally sound definition of an enterprise

We need to redefine the enterprise based on the fundamental reason for an enterprise. What are the fundamental commonalities of all enterprises? First, all enterprises have some objective and outputs that will provide value from their effort. We call these outputs results. In order to produce results the enterprise must have some capital in terms of money, equipment, personnel, knowledge, plans, processes, etc. The enterprise must utilize the capital it has to produce the results it wants. [more...]

What is value in the enterprise?

If we can understand value, is it possible to manage value? There is value-based management, but what value is this management is based on? We have value-added, value creation, value propositions, etc. What does the value mean? Value seems have a contrived definition for each situation. Can we standardize the definition of value and use value and value-added to help manage the enterprise? How can we do that?

What is the cost of creating value?

Every day we perform in our enterprises. [more...]>