Archive for July, 2007

20^th century management does not organize the business

20^th century management contrives an organization structure that is laid over the business. The organization structure defines organization units, positions, functions, jobs, reporting relationships, hierarchies, etc. in a rigid structure. The structure does not organize the business; the structure organizes the enterprise. The rigid organization restricts business flexibility and conflicts with business change. Eventually the unsolvable reorganization problem arises to contrive a new organization structure more closely aligned with the actual changed business. If the business is organized, the organization changes with each business change and never needs reorganizing.

The organization structure is the fatal error of 20^th century management. The contrived organization does not provide an enterprise or business management structure. Once the organization structure is laid over the business, the business can never be managed! [more...]?

Line Department Managers are the most important result managers

Are you a line department manager, responsible for contributing to enterprise revenues and profits? If you are, how do you define and organize the part of the business that you manage? What are the entities that you manage in your position? What are the entities you utilize to contribute to revenues and profits?

Most of you will answer based on the contrived structures that your enterprise has always used for organization and management. It is unlikely that you answered in terms of the actual business. You have much to gain by understanding the actual business that you are managing.

Result-performance Management (R-pM) organizes the business for 21^st century management

The means to understand the actual business that you manage is through Result-performance Management (R-pM). The enterprise business and your business is defined by only two entities:

• Results: The economic outputs that create the value from the business
• Performance Solutions: The capital consumed in performance to generate the costs incurred by the business to produce result value

You manage only these two entities in your business, as a sub-set of the enterprise business. Planning, gathering information, and managing other entities like activities, tasks, functions, positions, etc. [more...]>

The business must be integrated from several perspectives

The business must be integrated for proper organization and management from several perspectives:

• Management phases for organization, planning, directing, and controlling must be integrated to use the same structure and set of information
• Operations and development must be integrated as one continuum to fit development as part of the strategy and to properly utilize developed solutions
• Capital utilized by the business must be integrated as one set to manage the commonalities of all capital utilized, to organize capital for support, and organize capital again for utilization
• Results produced by the business must be integrated as one set to manage the commonalities of all results and to manage relationships between results
• Business processing must be integrated to utilize managed capital in processing to produce managed results in one integrated business structure
• Information must be integrated to capture actual business data and to integrate information capital to produce information solutions and to integrate the information capital solutions to produce results

The business can be properly organized and managed only through one integrated business structure that is utilized for integrated organization, management, operations, and development through all management phases.

20^th century management cannot integrate the business or business entities

The 20^th century business today is not integrated. 20^th century management lays incompatible structures for organization, planning, management, and accounting over the business. These overlaid structures prevent actual business management and business integration.

Therefore, the current 20^th century enterprise is unable to integrate management, operations and development, business processing, capital utilized, results produced, and information capital and solutions. Overlaid organizations, strategies, business processes, information systems, charts of accounts, control panels and scorecards, etc. cannot even be aligned, much less integrated into one consistent structure.

Capital that is labeled as “intangible assets” and is not defined as performance solutions cannot be integrated. Economic output results that are randomly identified as other entities and not managed as results cannot be integrated or inter-related, or integrated with performance to integrate the business. Information that is managed as technology and related to poorly-defined contrived overlaid entities, rather than built up from actual business data, cannot be integrated.< [more...].

Business or Systems analysts work with structures laid over the business

Historically, the business or systems analyst has never had a good business framework for disciplined analysis. The analyst usually works with an isolated problem or set of user requirements and creates a business process or system solution. The solution does not actually manage the business, but is laid over the business. The business tends to change while the solution remains rigid, requiring continuing solution maintenance to align the solution with the changed business.

Most corporations do not understand the role of the business analyst and do not properly organize their business capital. Often the systems analyst is placed in IT, which removes him from the business and provides a computer processing focus, rather than a business requirements focus.

R-pM organizes the Business Structure to provide a framework for analysis

R-pM provides a new environment for the business or systems analyst. R-pM organizes and manages the business, “the activity of providing goods and services”. R-pM organizes the activity as business performance and the goods and services as business results in a simple, easy-to-manage Business Structure defined by only two entities:

• Results: Specific economic outputs that must be produced by business performance
• Performance Solutions: Specific capital that must be utilized in performance to produce specific results

Results are the inputs to and the outputs from performance. A result is a specific accomplishment, like customer order recorded, that can be counted and measured. [more...].

Line Department Managers are the most important result managers

Are you a line department manager, responsible for contributing to enterprise revenues and profits? If you are, how to you define and organize the part of the business that you manage? What are the entities that you manage in your position? What are the entities you utilize to contribute to revenues and profits.

Most of you will answer based on the contrived structures that your enterprise has always used for organization and management. It is unlikely that you answered in terms of the actual business. You have much to gain by understanding the actual business that you are managing.

Result-performance Management (R-pM) organizes the business for 21st century management

The means to understand the actual business that you manage is through Result-performance Management (R-pM). Your business is defined by only two entities:

• Results: The economic outputs that create the value from your business
• Performance Solutions: The capital consumed in performance to generate the costs incurred by your business to produce result value

These are the only two entities that you need to manage to manage your business. Planning. [more...]>

Business management manages the business. A previous post on the Logic of Business said the generally accepted definition of business is “the activity of providing goods and services”. The article logically defined the business as “the utilization of capital in performance to produce value in results”. Business management, therefore, manages “the utilization of capital in performance to produce value in results”.

20^th century management manages structures laid over the business

20^th century management does not manage the business. The 20^th century business has never been organized, so it can never be managed. Management must manage the enterprise by managing structures laid over the business.

An organization structure is contrived and laid over the business. The organization may be reflected in responsibility centers in the contrived chart of accounts that is also laid over the business. The strategic or corporate plan does not plan the actual business, and is another contrived structure laid over the business. Business processes are contrived to mix business results and performance together in a monolithic business process that is laid over the business. Information systems do not capture actual business data and do not provide actual business management information. Information systems are laid over the business to manage the information entities produced by the various other organization and management structures laid over the business.

Corporate investors invest in high overhead 20^th Century Corporations that do not manage the business

Last month, we discussed “How the Business Owner Benefits from R-pM“. This month, we take the different perspective of the corporate investor and shareholder.

Corporate investors invest in corporations that do not manage their business and are burdened with many unwieldy overhead structures. Corporate shareholders have to incur the costs of the many unsolvable 20^th century problems, described at the Business Change Forum. Every article posted shows different unnecessary costs absorbed by the 20^th century Corporation that ultimately reduce shareholder value.

Corporate investors benefit by investing in 21^st Century Corporations

Many corporations are researching Result-performance Management (R-pM) and making plans to move to 21^st Century Management, so corporate investors should watch for announcements.

21^st Century Management with R-pM provides many advantages to the Corporation and the Corporate Investor that no 20^th century corporation provides today, such as.

• An organized and directly managed business with one integrated and transparent business structure that shows capital in performance solutions utilized to produce results, at selectable levels of summarization or detail
• Abolished costs and overheads by removing the costly and irrelevant overlaid structures that prevent business management and cause unsolvable problems
• A clear value-creation strategy described in a strategic business structure showing strategic result value and the planned capital development for specific performance solutions needed to create result value, by time period as needed
• Complete and accurate financial and non-financial business records on relevant result value created, performance costs incurred, result value added, corporate and capital worth, result quality, performance effectiveness, result goals, performance expectations, result symptoms, performance problems, etc.
• Result value-added management to manage result value less all performance costs for all results between supplier-provided input results, through the enterprise result value-quality chains to final results that are customer input results
• Good corporate governance directed at period by period result and performance development and result value creation to achieve the approved result value established in the strategic business structure
• Managed shareholder value result that is continually updated from result value created and performance costs incurred
• Flexibility for fast change, since change is simply a matter of producing new results and utilizing new solutions in an updated business structure
• Streamlined information capital maintained on only those entities relevant to actual business management and timely information solutions to utilize performance solutions effectively to produce quality results
• Significantly reduced information technology overheads by focusing on those few information systems needed to directly manage the business and by properly managing capital that is now managed as information technology
• Eliminated administration overheads by managing capital management results, plus performance management results to provide qualified solutions
• Significantly reduced costs and capital requirements by focusing on only the performance solutions needed to produce value-quality justified results
• Optimized utilization of capital to produce results through professional capital performance management and result and performance optimization
• Planned and justified investment and capital development management to produce the specifically itemized result value from developed performance solutions, supported by result goals that are set to achieve the planned return on every investment and capital development project

These are just a few of the advantages of R-pM to the corporate investor that are not possible with rigid structures laid over the business of the 20^th century Corporation.

When will the Corporations you invest in now move to 21^st Century Management

There are two considerations for the corporate investor on moving to 21^st Century Management.

• When will the Corporations they invest in move to 21^st Century Management to gain competitive advantage and increased profit and shareholder value results
• When will the industry competitors move to 21^st Century Management, putting the Corporation and their shareholders at a significant disadvantage

Check with the Corporations in which you have invested. Chances are, you will find strong resistance to improvement and 21^st Century Management. But, maybe you will be fortunate enough to discover and invest in the forward-looking corporations that are working with R-pM to organize their business for 21^st Century Management. These corporations will have significant cost-effective performance and value-quality result advantages over 20^th century corporations, still held back by unsolvable problems.

The information to learn and use R-pM is in the R-pM Toolkit

R-pM is the future of business management. You likely still need a better understanding of R-pM. Go to result-performance-management.com to learn more under What is R-pM?. The guidance you, and the corporations you invest in, need to learn R-pM and gain immediate advantage from R-pM is provided in the R-pM Toolkit, the 21^st Century Management Manual, at result-performance-management.com. The R-pM Toolkit is offered at a nominal cost to encourage wide individual research into R-pM and wide corporate use of R-pM. .

Every Enterprise has an organization structure, which causes the unsolvable re-organization problem

We are all familiar with the organization structure. You likely think that an organization structure is good, since it shows you your department and position, who you report to, where others are, etc. However, this same organization structure is the fatal error of 20^th century business organization and management.

For many years, people have recognized the problem of a fixed and rigid organization structure, which is like a straight jacket placed on the business that constrains business flexibility and hampers business change.

We are all familiar with the re-organization problem, when the organization structure goes out of alignment with the changing business and a new structure is contrived to align the organization closer to the actual business. The difficulties in restructuring to a new rigid organization became known as the “change management” problem. Many books on organization theories and solutions to organize the business have been produced to solve the fixed organization structure, re-organization, and change management problems. Management consultants introduced “Change Management” services to help with the problems. But, despite all the “solutions”, the problems remain unsolved today.

There is only one structure to use to organize the business; the business itself

The solution to organize the business is obvious, if anyone stops to think. [more...].

Business change is change to the business

Business change is change to the business. A previous post on the Logic of Business said the generally accepted definition of business is “the activity of providing goods and services”. The article logically defined the business as “the utilization of capital in performance to produce value in results”. Business change is therefore change to “the utilization of capital in performance to produce value in results”. If the business is organized, normal business change changes the business as the routine. Business change is change to implement the new performance solutions needed to produce valuable new results.

20^th century business change is not change to the business, but change to the organization and management structures laid over the business. 20^th century methods do not plan and manage the individual costs and benefits of change. Costs may be captured against major capital items or the change project. Benefits are invariably stated expectations of performance improvements or estimated increases in sales or revenue results.< [more...]>

Chief Information Officers (CIOs) face a difficult situation

Much is written about the “CIO Problem”. Often it written to appear that the problem is with the CIOs, when the problem lies with the organization and management of Information Technology (IT). The main problems with normal corporate IT are:

• Information Technology has become a difficult to manage mixture of capital that is administered as technology, rather than being managed as capital
• The mixture of capital requires many basic human capabilities that no one individual can hope to possess
• Information systems have become very complex and difficult to maintain and manage
• The corporate data base maintains mostly information that is irrelevant to managing the actual business, creating information complexity and management difficulties
• The IT architecture, equipment, and networks are managed separately from other corporate infrastructure and is generally unwieldy
• Information capital in data, knowledge, and intelligence is managed as technology
• Information Technology is separate from the rest of the corporate business creating alignment difficulties
• Information Technology is administered rather than managed as capital to provide the solutions needed to produce other enterprise results
• The “technology” is no longer so specialized, or is sub-specialized in pockets, and is no longer a valid reason to group diverse capital together
• There is no business framework for managing Information Technology, making it difficult to plan and manage the specific results to be produced

These problems make it difficult for anyone as a CIO or Information Technology Manager to manage the scope and environment of information technology today.

Result-performance Management (R-pM) organizes Information Technology as capital

Result-performance Management (R-pM) organizes the business for 21^st Century Management. If you are not familiar with R-pM, review the posts under Learn the Basics of R-pM for the orientation you need.

R-pM has been accused of doing away with IT and the CIO position. R-pM does away with administration and Information Technology Units in order to organize enterprise capital to be properly managed by those with the specific basic capability. CIOs and IT managers accept substantial responsibilities for the management of the capital for which they are best suited.

R-pM organizes the capital involved in 20^th century Information Technology as follows:

• Business systems and data are business capital, used to produce a specific result, that must be organized and managed as business process, and business data capital
• IT architecture, equipment, and networks are facility equipment that must be managed together with communication networks and other enterprise infrastructure
• IT strategy is management strategy capital that must be managed together as a strategic business structure
• Information capital must be separately managed as business data, human knowledge, facility records, and management intelligence to provide needed information solutions to produce results

R-pM organizes business, human, facility, and management capital units to produce capital and performance management results.

Current information systems do not manage the business

Current information systems are large contrived systems that do not manage the actual business. [more...].