Archive for August, 2007

There are a wide variety of performance managers in 20^th century management. Performance managers may be responsible for human performance management, business performance management, capital performance management, or management performance. Similar performance management responsibilities remain under 21^st Century Management. But under 21^st Century Management, performance management responsibilities are precisely defined.

20^th century management mixes results with performance and manages both as performance

One serious flaw of 20^th century management is the definition of performance. Performance is defined to include not only the activity of performance but also the results produced from performance. This definition prevents 20^th century management from managing the business defined as “the activity of providing goods and services”. Both the activity and the goods and services are defined as “performance”. Performance management systems, business performance management, business process management, and other 20^th century management methods employ this definition.

The performance manager must work in a poorly defined environment. [more...]

You may be asking; what is business capital? You hear of business organization, business processes, and business data; but do think of it as business capital? You likely do not, because 20^th century management does not organize and manage business capital as the capital that is directly utilized to produce an economic output result. 20^th century management administers known tangible capital, rather than managing capital. Capital is lumped together as an asset, much never been documented and managed as capital, and much is labeled as “intangible assets”.

Logically all capital must be defined as performance solutions to be deployed and utilized to produce a specific result. The post on August 6, 2007, The Logic of Capital Management, provides the background.

Capital utilized by the business is organized into four categories

Capital utilized by the business requires different professional capabilities to be professionally managed, which organizes four categories of capital:

• Business organization, process, and data capital to manage capital that directly produces a result and cannot, generally, produce another result. Business capital requires business knowledge and analytical capability
• Human personnel, capability, and knowledge capital to support and develop the worth of human capital. Human capital requires human handling, development, and coaching capabilities
• Facility equipment, supply, and record capital to manage reusable and consumable tangible assets and records. [more...]

The Chief Executive Officer is responsible for the quality and value of results produced by the enterprise from suppliers to the customer, value creation in the enterprise strategy, the return from capital development projects, the worth of human and other capital employed, and creation of shareholder value. The CEO must do this in spite of the fact that 20^th century management used today, does not provide the means to manage any of these CEO responsibilities.

But today, there is a new management breakthrough Result-performance Management (R-pM). R-pM organizes the actual business for 21^st Century Management. R-pM establishes management results and provides the CEO the full set of solutions needed to manage the current and strategic business.

The CEO must overcome the unsolvable problems of 20^th century management

If you are a CEO, you know that you face many problems with current management methods. You have one fundamental problem. 20^th century management used today does not organize and manage your business. You lay an organization structure over your business, instead of organizing the business. This is a fatal error, since an unorganized business cannot be managed. [more...]

Previous articles The Logic of Business Organization and The Logic of Business Management discussed logically organizing the business and managing the business. This article discusses the logical need for one integrated structure for business organization and management. Business management is discussed for the classical management duties for planning, direction, reporting, and control. There is also the need to organize and manage capital development as an integral part of the business.

20^th century management lays organization and management structures over the business

20^th century management separates organization and the management duties to use different structures laid over the business. 20^th century management does not organize or manage the business. The enterprise is organized by an organization structure. Strategic planning lays a corporate plan over the business. Other plans and budgets from various parts of the enterprise are laid over the business. Management direction can use a variety of structures such as business processes or administrative structures. [more...]

Human Resource Managers are important capital managers

Are you a human resource manager? How do you approach your work? As a routine administration function? As responsibility for the enterprise human capital to ensure that human capital maintained ready to perform, is developed to acquire new capabilities to increase human worth, and provided with knowledge needed to provide value to the business?

If your answer is closer to the latter, you will clearly benefit from R-pM. The impact of R-pM on human resource management is explained in the Human Capital Management Forum, and in human capital articles, such as “Integrate Human Capability Capital with the Business” in 21^st Century Management Magazine. R-pM goes beyond 20^th century human resource administration to provide professional 21^st Century Human Capital Management.

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

The means to understand the actual business and the human capital that you support 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 human and other capital consumed in performance to generate the costs incurred by the business to produce result value

Even as human capital manager, you manage only these two entities in your business, as a sub-set of the enterprise business. [more...].

20^th century capital development is not integrated with the business

20^th century management provides no business framework for capital development, particularly for new solutions that must be integrated with the business. Most capital is not recorded as capital. Much capital is considered as “intangible assets” and is ignored. There is no direct management of capital developed to provide the return on capital development investments. Capital is developed as a fixed asset or simply as a project outcome.

Most development is performed as an ad-hoc project, and managed as an isolated undertaking to implement new structures and solutions over the business. This makes it difficult to manage the relationship between the project and the business, gain business user acceptance of new solutions implemented, and plan and measure return on the capital development investment. A previous post in this series discussed the Logic of Business Change, which provides some background.

Capital is developed and utilized to produce business results

The purpose of enterprise capital is to provide the performance solutions needed by the business to produce value in business results. [more...].

Corporate Directors have a responsibility for best business management

Corporate Directors and other business governors need to ensure that a viable business strategy is in place to create planned future value, that capital investments provide itemized returns by creating strategic value, that the business is managed to create strategic value, that accurate financial and non-financial records are kept on the business, and that progress in executing the approved business strategy is maintained.

20^th century management prevents corporations and their directors from doing any of this. The actual business is not organized or managed, so most business data is not captured. Strategies are contrived overlays on the business, not actual business strategies. Corporate investments are based on guesses and estimates, not actual business measures. A contrived chart of accounts keeps partial financial records and does not record the actual business. Management information solutions provide enormous quantities of information on contrived structures laid over the business, but only incidental information to manage the actual business.

Result-performance Management (R-pM) organizes the business for 21^st Century Management to provide good corporate governance, as explained in the earlier post “Corporate Governance is a Small Part of the Big Corporate Management Problem”.

R-pM provides transparent business organization and management

As a Director, you approve the business and financial results in the economic outputs to be produced by the business. You approve capital investments and financial expenditures needed to provide the capital to produce results. [more...].

Corporations are governed by enforcing rules, because we do not manage the corporate business

Corporations do not organize and manage the actual business, “the utilization of capital in performance to produce value in results”. Actual business data is not captured and business management information for performance capacity, cost, and effectiveness producing result volumes, value, and quality is not available to govern approved business strategies and plans.

Instead of organizing and managing the capital utilized and output results produced by the business, organization and management structures are laid over the business. These contrived structures prevent the actual business from being managed or governed. Management information does not measure and report the actual business, but measures and reports against contrived overlaid structures, such as corporate plans and budgets, business processes, charts of accounts, scorecards, and the like. This requires a large effort by the corporation to collect duplicate and conflicting data related to each structure and to process high volumes of reports that do not report the actual business.

Corporations can only govern by enforcing rules and regulations. 20^th century management always addresses the corporate governance problem from the governance side with more costly rules and reporting requirements, instead of addressing the large corporate management problem on the corporate side.

We need to govern strategic value creation by managing the corporate business with R-pM

Good corporate governance requires that we clear away contrived 20^th century management structures laid over the business that complicate management, and directly organize, manage, and report the business to simplify management and governance. The means to do this is Result-performance Management (R-pM), as explained further in the article “Seeking Good Corporate Governance by strengthening Bad Governance“.< [more...].

Capital Management is the management of enterprise capital in performance solutions to produce results of value needed by the enterprise. Capital management is an important part of 21^st Century Management.

Capital is not managed in 20^th century management

20^th century management does not manage capital. 20^th century management provides administration functions like finance, accounting, human resource administration, purchasing, information technology, and corporate planning to administer selected tangible capital. Most capital is not identified or managed by the enterprise. Much capital is created and used in the enterprise, but is known only in the department that keeps it. Much enterprise capital is assigned to a responsibility center and managed no further. The capital in administrative units is administered rather than managed to provide solutions, control costs, create value, and increase in worth.

Capital investments are not managed to develop specific capital to produce value in results

Enterprises invest significant sums in the capital used, but these investments are not managed to provide the specific returns. The tangible capital is normally developed as a lump sum for an asset or a project. [more...]

Accounting Managers are important facility capital managers

Are you a accounting manager? How do you approach your work? As a routine financial accounting function? As responsibility for the enterprise records to ensure that the business is recorded properly and that business record solutions are provided on time to support the business and management to produce enterprise results?

If your answer is closer to the latter, you will clearly benefit from R-pM. The impact of R-pM on accounting is explained in the article “Broaden Financial Accounting to provide Professional Records Management” in 21^st Century Management Magazine. R-pM goes beyond accounting to provide professional facility records capital management.

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

The means to understand the actual business that you record and support 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

Even as facility records manager, 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...].