Archive for January, 2008

All business decisions boil down to “what result must be produced as output by the business, what human capital should be responsible, and what other capital should be utilized to produce the result?” Strategic decisions involve the strategic results needed in the future and the capital investments to acquire or develop the capital as performance solutions to produce the strategic results. Management goals involve results to be produced within a certain time. Performance expectations involve the level of performance expected from the human and other capital utilized as specific performance solutions.

Business decisions can be managed only by separately managing results to be produced and the performance solutions to be utilized.

20^th century management does not support business decisions

20^th century management does not define the results to be produced by the business or the performance solutions utilized in business activity as specific managed items, to support business decision-making. Both results accomplished and actions executed have been defined as performance, dating from the 15^th century.

Management decisions are often stated in terms of performance as tasks, activities, jobs, work assignments, etc instead of output results to be produced by when. If management makes a decision to produce a result by whom and by when, the decision can not be implemented and managed as part of the business.

Decisions must be implemented and managed through separate structures laid over the business. The organization structure is updated to say who should carryout the decision. [more...]

Financial Management is one of the top 10 problems of 20^th century management

Financial Management manages money separate from other tangible assets

The early 20^th century enterprise was concerned about managing and protecting cash. Financial management fundamentals were established to manage actual and accrued cash from the point received until the point that it is invested or spent. Financial management problems such as unknown capital worth, unknown costs, unknown value creation, and unknown return on capital investments have never been solved by traditional financial management. Financial management tends to be equated with capital management. This allows non-financial capital to be administered, rather than managed, or to be labeled as “intangible assets” and not accounted for or managed. Today, financial capital is managed largely by computers. Non-financial capital and intangible assets are an increasing percentage of enterprise worth and must be managed properly.

R-pm manages financial capital with other tangible facility capital to create value in results

Result-performance Management (R-pM) utilizes conventional financial management capabilities to manage all tangible facility assets in the 21^st century. Financial assets and facilities are a sub-set of reusable facility equipment, cash is a sub-set of consumable facility supply, and accounts are sub-set of facility financial records.

All facility capital requires similar application of expertise to operate and maintain, to supply, and to record. R-pM ensures that all facility capital is supported for operation and development and for utilization to produce value in results.

R-pM also integrates financial parts of other results that have been separated out. Management strategy capital includes financial strategies as an integral part of management strategy solutions. Investment management results manage shareholder funds for investment, capital development, and shareholder value results.

The Financial Management Problem

20^th century financial management gives us intangible assets, unknown costs, unknown value, and unknown worth

Now, as we go into the 21^st century, there is a growing need to go beyond financial management fundamentals and change the way enterprise capital is managed: [more...]

Business transformation was big ten to fifteen years ago. But, did it actually transform the business? Did it solve fundamental problems with a sound structure for on-going business success, or did it simply rearrange the management structures that cause business problems?

“Business transformation” could not transform the business, because the business was never organized

The enterprise business is defined as “the activity of providing goods and services“. Organize and manage the business means organize and manage “the activity of providing goods and services”.

20^th century business organization structures never organized the business. If the business was organized, business change would change the organization automatically, instead of having separate reorganization and business change projects. The business changes with every business decision to change business activity or goods and services provided, not every few years when management decides it is time for business change. Since the business is not organized, “business change” and “business transformation” cannot actually change or transform the business.

20^th century management manages the enterprise by laying structures over the business

20^th century management manages the enterprise by laying organization and management structures over the business. Once an organization structure is laid over the business, the business can never be managed. Additional management structures for strategy, business processes, information systems, accounting, performance management, administration, etc must be laid over the business. Management information is reported against various contrived structures, producing inaccuracies, discrepancies, and complexity, without reporting the actual business.

Business transformation changed the organization, business process, information system, and other overlaid structures, rather than organizing the business. The benefits proved elusive and business transformation got a bad name. Some popular “business transformation” methods of the time are generally discredited today.

21^st century management manages the enterprise business as one integrated structure .

In order to organize and manage the business, we must organize and manage “the activity of providing goods and services”. [more...]

Accounting is part of one of the top 10 problems of 20^th century management

A chart of accounts is laid over the business, rather than recording the actual business

20^th century management historically has separated cash from other capital to be managed in financial management and to be accrued and recorded through accounting. The need for the separation has decreased due to technology and advanced solutions. Technology has also led to high-worth information and intellectual capital that needs to be accounted for and managed. But the separate focus on cash tends to prevent other capital of worth from being managed professionally. Capital and cash transactions that are recorded are recorded against a contrived chart of accounts, rather than accurately recording the complete financial status of the actual business.

R-pM establishes facility records capital to professionally record the actual business

Result-performance Management (R-pM) manages all capital, including currently undefined capital and “intangible assets”. R-pM manages accounts and other records of the business as facility records capital and provides performance solutions from records as information capital. Facility records are the tangible information capital of the enterprise. Facility records go beyond the limitations of accounting to record:

• Financial records for the full business cycle, including fundamental business data on performance costs, result value, and capital worth
• Non-financial records for statistical, documentation, images, and other records

R-pM requires broadening 20^th century accounting to professional records management to keep records on the actual business and to make records solutions available to produce high-value results.

The Accounting Problem

Accounting does not record the actual business

Due to 20^th century management problem number one, the business is not organized. [more...]

Reorganization is one of the top 10 problems of 20^th century management

The enterprise organization structure is the fatal error of 20^th century management

Why do we have to reorganize every few years? Why not organize just once and reorganize gradually as the business changes?

There are many 20^th century business organization theories and methods. Hundreds of books have been written on how to organize the enterprise, organization development, and organization change. There are many so-called business organization methods and structures, but these structures organize the enterprise and are laid over the business. The structures do not organize the actual business, causing the unsolvable reorganization problem.

Result-performance Management (R-pM) is the first structure to organize the business

The enterprise business is defined as “the activity of providing goods and services“. In order to organize the business, we must organize “the activity of providing goods and services”.

Result-performance Management (R-pM) provides the means to eliminate the reorganization problem by organizing goods and services and other economic output from the business as results, and by organizing the capital utilized in business activity as performance solutions. The business is organized by deploying specific performance solutions to be utilized to produce specific results. The business changes whenever management decides to produce a new result, close a finished result, or utilize a different performance solution to produce a result. Since R-pM organizes the results and performance solutions that define the actual business, the enterprise business organization changes naturally with business change.

The Reorganization Problem

20^th century corporate organizations organize people into contrived structures that are laid over the business

The organization structure is the fatal error of 20^th century management. [more...]

Accounting, today, does not maintain accurate business records

20^th century management does not organize or manage the business. This makes it impossible to keep records on output results of value produced by the business and the consumption of capital in costs to produce each result. Instead of recording the actual business, a chart of accounts is laid over the business to record income and expenses and the worth of certain known assets. 20^th century accounting records the cash generated and spent by the business, rather than recording the complete development and utilization of capital and the complete economic output results produced by the business.

Accounting, today, contains many unsolvable 20^th century problems

Accounting is one of the main unsolvable problems of 20^th century management. Accounting is separate from the actual business, keeps only a sub-set of needed financial and non-financial business records, keeps records against a contrived chart of accounts and not the actual business, sees it role as control rather than capital management and business support, allows financial management problems such as intangible assets and unknown costs to persist, does not provide complete and accurate business information needed for corporate management and governance, and on and on.

R-pM accurately records and accounts for the actual business for 21^st Century Management

21^st century management uses Result-performance Management (R-pM) to organize the actual business as one integrated business structure. The business structure replaces all organization, accounting, planning, performance, costing, reporting, and administration structures laid over the business. R-pM employs professional records management to manage facility records as capital, to maintain complete and accurate financial and non-financial records on the actual business, and to provide information performance solutions from records for good corporate management and governance. Records management is integrated within the business to be utilized to make decisions at all levels and to record accurately actual business decisions made.

The business is the only valid account structure

The business structure organizes the economic output results of value produced to give revenues and income, the capital in performance solutions utilized to incur costs, and the positive worth of capital as assets and the negative worth as liabilities; to provide the only valid account structure. The business structure is professionally maintained as a business organization solution to represent the actual business accurately. Accounts are maintained by professional facility records management to maintain full financial, statistical, and qualitative records on the complete business. The actual business provides the chart of accounts and records are updated from actual business data on result value produced, performance costs incurred, result value-added, and capital worth. Complete and accurate records are maintained on the full business cycle and the full business scope across the enterprise.

This is explained further in the article “Your Business is your only valid Account Structure” in 21^st Century Management Magazine. The guidance needed to organize, manage, and account for your actual business is provided in the R-pM Toolkit, your 21^st Century Management Manual, which can be downloaded from Result-performance-Management.com. .

Result-performance Management (R-pM) is the conventional way to organize the business for 21^st Century Management. An adjunct to the development of R-pM is the development of 21^st Century Management to provide a common business framework for business operations and development, business collaboration, business learning and education, common business services that can be applied to any enterprise, and common business software and solutions that any enterprise can utilize.

21^st Century Management is one consistent and clearly-defined set of business organization and management descriptions, conventions, standards, and definitions that eliminate the contradictions, inconsistencies, and unsolvable problems of 20^th century management. R-pM adheres to 21^st Century Management conventions and standards.

21^st Century Management is documented in the R-pM Toolkit

R-pM is documented in the R-pM Toolkit, your 21^st Century Management Manual. 21^st Century Management descriptions, conventions, standards, and definitions are also documented in the R-pM Toolkit. The R-pM Toolkit is under continuing development. The R-pM Toolkit already contains the fundamental documentation needed to begin learning, implementing, and utilizing R-pM. Those downloading the R-pM Toolkit today receive a subscription to all R-pM and 21^st Century Management advances and documentation as updates to the Toolkit.

21^st Century Management documentation includes:

• 21^st Century Management Descriptions: The specific concepts and approaches that constitute 21^st Century Management
• 21^st Century Management Conventions: Specific business operation and development rules, methods, and guidelines that are followed by all 21^st century businesses to enable collaboration and common services and solutions any business can utilize
• 21^st Century Management Definitions: The terminology and definitions used in 21^st Century Management to enable precise and consistent communication
• 21^st Century Management Standards: Specific capital levels, performance expectations, and result goals to meet in 21^st Century Management to enable benchmarking and improvement

21^st Century Management is under continual development. New 21^st Century Management documentation is added to the R-pM Toolkit as developed. 21^st Century Management development follows behind R-pM development to document those conventions that are proving particularly successful across the board in practice and to dovetail in on specific standards that should be met.

The 21^st Century Management Glossary is included in the current R-pM Toolkit

The 21^st Century Management Glossary is included in the R-pM Toolkit. The Glossary contains a comprehensive list of terms with the definitions as used in 21^st Century Management. Following are some of the basic terms used in R-pM Version 2 and 21^st Century Management and followed in articles posted in the Business Change Forum:

• Business: Investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results
• Business Structure: The planned or actual
  organization and relationships of specific results to be produced in the result structure, solutions available in the capital structure, and the deployment of specific solutions to domains in the performance structure to be utilized to produce specific results
• Capital: Assets and capabilities of worth, invested in the business, and organized as solutions that can be utilized and incur costs in utilization
• Capital Management: Responsibility to acquire, develop, maintain, support, and operate, as needed, for a category of capital solutions in the capital structure
• Capital Solution: An item of capital organized in the capital structure that can be deployed and utilized to produce a specific result
• Capital Structure: Solutions organized for support by those with the human capability and to be integrated with other deployed solutions to produce specific results
• Domain: The basic building block of the 21^st century business structure where one solution is utilized to produce one result, Also, a management domain where solutions under the responsibility of one performance manager produce results under the responsibility of one result manager
• Enterprise: A company, division, subsidiary, government, institution, project or any defined unit that has a set of results to achieve and performance solutions to use with a responsible manager and the authority to make changes
• Management: The organization, planning, directing, control, reporting, and governance of the current to strategic business in capital solutions utilized to produce results, and of capital solution investments and development to add value to results
• Organization: Structuring of a current or planned business or part of a business as results to be produced, capital solutions in development and available, and deployment of solutions to be utilized in performance to produce specific results
• Performance: The utilization of capital as specific solutions to meet expectations and produce specific results
• Performance Indicator: Measure of the level of capacity, cost, effectiveness, uncertainty, worth, and other attributes of specific capital solution utilization in performance by result and in total continuing over time
• Performance Management: Responsibility to provide and support qualified solutions that meet expectations in utilization to produce results
• Performance Structure: The set of domains for each specific solution deployed to produce a specific result with rules, exceptions, expectations, and performance totals
• Result: Economic output from business performance of positive or negative value that can be counted and measured
• Result Management: Responsibility to accept and utilize deployed capital solutions to produce assigned results and reach result goals
• Result Metric: Measure of the volume, value, quality, and risk, and other attributes of results produced within a time period
• Result Structure: Results produced by the business organized by value and cost hierarchy, organization management responsibility, and impact and chain relationships

These are just examples for some basic terms to understand R-pM and 21^st Century Management.

21^st Century Management is meant to be a product of the R-pM Community

In developing R-pM, we are developing the basics of 21^st Century Management and providing a vehicle for standardizing and documenting 21^st Century Management.

As R-pM comes into use, we encourage input from R-pM users, R-pM Management Consultants, R-pM Solution Providers, and R-pM educators on specific aspects of R-pM and 21^st Century Management. The Business Change Forum will provide a forum for discussion of proposed 21^st Century Management conventions and standards.

In this way, we can avoid the unsolvable problems that arose in the haphazard evolution of 20^th century management.