Archive for April, 2008

All capital development should develop capital, plus business results for return on investment

Every business enterprise must produce output results that lead to goods and service results to create value. An expanding enterprise must produce new results of increasing value. The enterprise needs additional capital in order to produce new results as part of the business. The capital must be acquired or developed, implemented as specific performance solutions, and then utilized to produce improved or new results of increased value. The value added to new business results must justify the capital expenditure to acquire or develop needed solutions and provide the return on investment.

All capital development is really result and capital development to develop capital as performance solutions to be utilized to create additional value in output results produced by the business. The additional value of output results provides the return on the capital development investment. If the performance solutions utilized and the results produced by the business are not managed, result and capital development cannot be managed properly and the return on investment cannot be measured. Even physical capital development, like a new building, produces performance solutions to produce results, be it the enterprise office facility solution or a facility solution to produce lease or rental income results.

20^th century management does not organize or manage results or performance

20^th century management does not manage the enterprise business, defined as “the utilization of capital of worth in performance to incur costs and produce value in results”. The business has three components: 1. capital available as performance solutions, 2. results required, and 3. performance in the utilization of a specific solution to incur costs and produce value in a specific result.

20^th century management does not define specific results produced and performance solutions utilized to be managed as sets. Added result value cannot be managed to provide benefits and specific performance solutions developed cannot be managed to know costs. Capital development is a difficult exercise separate from the business context to develop performance or tangible assets to produce some estimated return on investment. Much capital development and performance solution implementations fail to create the added result value needed for the return on investment.

R-pM manages result and capital development as part of the business for measured and managed return

The answer for all future result-capital development is Result-performance Management (R-pM) to organize the business for 21^st Century Management. R-pM manages performance solutions utilized and the business results produced to plan and manage the value added to results. R-pM provides 21^st century Result-performance Development to manage new performance solution development to produce new or improved results. R-pM manages each result-capital development project as part of the business with its own project business structure. R-pM manages implemented solution development and operating costs and the additional value-added to results to measure the actual return on investments. R-pM is the essential approach for any new result-capital development. It is all described in The R-pM Toolkit, your 21^st Century Management Manual

Result-capital development arises from the business requirements to improve results or produce new results

Result-performance Development is initiated by result symptoms in missing or deficient results. [more...].

Methods like Total Quality Management and ISO 9000 Standards did not provide the quality management needed

We have had structures like Total Quality Management (TQM) and the ISO quality system for ISO 9000 standards and certification, which were found lacking as a management method. We also reengineered our business process with BPR, specifically to help us manage performance quality. But, performance quality proved difficult to comprehend and manage. Six Sigma provides another structure for our final production quality. Now we have business process and performance management (BPM) to manage the quality of our processes and performance. Even with all this, we still have not found a way to manage quality as the business routine of everyone in the enterprise.

R-pM manages customer determined quality result by result

Result-performance Management (R-pM) organizes the business by organizing results produced across the business as one-off results or as result chains and by organizing the capital utilized as performance solutions to produce each result. With an organized business, the company can manage quality as an attribute of results, not performance, and can manage real quality for any result, not just final results from production. Every result has a customer who is willing to pay a result value for a determined level of quality. Quality and value of each result must be acceptable to the customer. [more...].

Most managers think that they manage their business and make business decisions

Do you manage your business? What is the definition of the business that you manage? Ask a manager if he manages his business and makes business decisions, the normal response is yes. Ask for the definition of the business, and they cannot give a precise definition. Most will describe the enterprise rather than the actual business.

No corporation, institution, or other enterprise manager manages the actual business today. The managers employ 20^th century management to administer the enterprise. Managers make enterprise decisions to manage and change the enterprise, rather than business decisions to manage and change the business. It is impossible to manage the business today, because the business has never been defined properly or organized.

The business to manage has never been defined and actual business management has never been taught

What is the enterprise business? There are many conflicting and imprecise definitions for the word “business”. Proper definition of the business is hampered by the definition of performance to include both the utilization of capital in actions executed and the results accomplished. Business schools and management books teach dead-end 20^th century management to administer structures laid over the business, and do not define the actual business or teach us to manage the actual business.

Outside of R-pM, there is no source of information on the real-life fundamentals of actual business organization and management. Since there has never been a precise definition of the business or teachings or books on actual business management, managers do not know what to organize in order to manage the business.

R-pM provides a precise definition of the business

We must separate performance from results using Result-performance Management (R-pM) in order to define and manage the business. R-pM defines the business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. [more...].

The enterprise business is “the activity of producing goods and services”

The common definition of a business enterprise is “the activity of producing goods and services”. If the enterprise is to organize and manage the business, it must organize “the activity of producing goods and services”. Business activity is business performance and goods and services are business results. Performance is the utilization of enterprise capital to produce results. Therefore, to organize the business the enterprise must organize capital, performance, and results.

The enterprise must abolish all the outdated organization, strategy, process, account, performance management, information architectures, and other structures now laid over the business that create enormous overheads and prevent the business from being organized and managed.

R-pM organizes the business to simplify 21^st Century Management

Result-performance Management (R-pM) goes back to the basics to organize the business to utilize capital in performance to produce value in results. R-pM structures the results to be produced to create value and the capital in performance solutions available for deployment in as a business structure. The business is organized when specific performance solutions are deployed to produce specific results. The responsible organization unit is deployed as a business organization solution and the responsible manager is deployed as a human personnel solution to produce the specific result.< [more...].

The fundamental problem of 20^th century enterprise, the failure to organize the business

The generally-accepted definition of the enterprise business is “the activity of providing goods and services“. Therefore, the activity of providing goods and services must be organized in order to organize the business. However, 20^th century organization theories organize “the enterprise” into organization units, positions, functions, reporting relationships, etc. to produce a contrived “enterprise organization structure” that is laid over the business. The organization structure is the fatal error of 20^th century management. Once an organization structure is laid over the business, the business can never be managed.

The business must change continually, while the “enterprise organization structure” remains rigid. The rigid organization structure hampers business change, creates change management problems, and eventually creates pressure for reorganization to contrive a new “enterprise organization structure” that is aligned closer to the actual business. If the business was organized the organization would change with business change.

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

Result-performance Management (R-pM) organizes the activity of providing goods and services into a business result-performance structure. The business activity is organized into capital defined as specific performance solutions. The business goods and services are organized as specific results that are produced by utilizing specific performance solutions in business activity. The organized results to be produced across the business and the organized capital invested in performance solutions are combined to organize the business, by deploying specific solutions to be utilized to produce specific results to organize performance. The cost-effectiveness of each solution utilized is managed against the value-quality of the result produced. By organizing the business, instead of the enterprise, the business itself is used as one structure to integrate enterprise organization and management.

20^th century theories organize the enterprise and not the business, dooming the enterprise to problems

Many organization theories and methods were developed throughout the 20^th century promoting different ways to organize the enterprise. Organizing and reorganizing the enterprise became big business for management authors and consultants. The problem is that once the enterprise organization structure is implemented over the business, the enterprise is doomed to unsolvable 20^th century problems, for the following reasons: [more...]:

The typical corporation has enormous IT overheads, but still has no system to manage the business

The typical corporation spends enormous sums on Information Technology and has a large IT overhead with many complex information systems. But with all this, the corporation still does not have the one information system really needed to manage the actual business. Information systems lay additional structures over the business or manage other structures laid over the business. This produces enormous business and information complexity. Corporations invest in additional systems for data reconciliation and information management, rather than simplifying information to one consistent set that reports the actual business.

The corporation has much capital administered as Information Technology instead of being managed for corporate benefit, and has much information administered as technology instead of being managed to provide information solutions for business and management results. There are no unifying business entities to be referenced to control all information in, entering, or leaving the enterprise, including emails, Internet downloads, and file transmissions.

Result-performance Management (R-pM) manages the business as one integrated information system

Result-performance Management (R-pM) uses IT to manage the actual business as one simplified Result-performance Management System. R-pM manages other simplified application programs as performance solutions integrated with the business process, where needed, to produce a specific result.

R-pM eliminates overlaid 20^th century business information systems and the need for a large IT overhead. Information technology capital, support, and capabilities are no longer managed separately as “Information Technology”, but are integrated as part of normal capital management. R-pM references all information to the actual business and integrates all information as capital in one Business Information Base to produce data, knowledge, record, and intelligence solutions needed to produce specific business results.

R-pM enables simplified information systems, integrated capital management, and integrated information capital solutions

Result-performance Management eliminates the Corporate IT Empire and the complex information systems laid over the business by organizing and managing the actual business with one simplified system, by simplifying applications to produce specific results, and by properly managing information technology and capital as capital.

IT capital is organized with similar business, facility, and management capital to be managed by professionals. IT systems needed by the business are integrated with the business process to produce specific results. One set of complete, consistent, and accurate management information is reported against the actual current and strategic business, including measured performance costs, result value and value-added, capital worth, and return on capital investments that cannot be measured today.

IT systems and overheads not needed for the business are eliminated. New IT investments are restricted to Result-performance Management Systems to manage actual business results. IT expenditures and investments are reduced dramatically to only those needed to support and manage the actual business.

Learn more in the article “IT Empires and Systems that do not manage the actual Business“, which explains the problems with 20^th century information systems and the administration of high-worth enterprise capital as “information technology”. .

20^th century management problems are caused by structures laid over the enterprise business

The generally accepted “enterprise business” definition is the activity of providing goods and services. The failure of 20^th century management to organize and manage the activity of providing goods and services creates unsolvable management, business, and performance problems.

The fatal error of 20^th century management is laying a rigid and arbitrary enterprise organization structure over on the business, rather than organizing the business. Since the business is not organized the business cannot be managed, therefore, rigid enterprise management structures for planning, processes, systems, accounts, quality, administration, performance, reporting, etc must be contrived and laid over the business. Structures laid over the business conflict with the actual business, restrict business flexibility, move out of “alignment” as the business changes, and prevent direct business data capture and management.

20^th century management improvements can never solve unsolvable problems

We continue to teach 20^th century management, contrive new 20^th century structures and “business solutions” to lay over the business, and write more 20^th century management books, but we can never solve the top ten problems of 20^th century management. [more...].

20^th century management administers the human resource function

Today’s 20^th century management generally administers human resources as employees. Human capital management is talked about, but is not truly understood and is rarely put into practice. Since the business is not managed, human capital can not be managed as a part of the business. Humans tend to be assigned to a responsibility center to be managed by a specific manager, with human utilization and development depending on the outlook of the manager.

Human and knowledge development tend to be directed at the general needs of the enterprise, rather than the specific needs of the business. Humans are not developed and utilized as enterprise capital to create the highest value and to increase human capital worth.

R-pM manages human capital worth to produce result value-added for 21^st Century Management

Result-performance Management (R-pM) organizes the business for 21^st Century Management. R-pM follows 21st Century Management conventions, definitions, and standards to enable business collaboration and integration, common solutions and outsourcing, and an environment for human capital development that can be applied to any business. R-pM includes fundamental principles to improve the worth of human capital and the value-added to business results:

• Enterprise capital is organized by the human capabilities required to manage, develop, and support the capital
• Enterprise result sets are organized to utilize a common set of performance solutions, particularly human capability and outlook
• Human capital is organized as one category to be managed by those with human management and development capabilities
• Human personnel is readiness capital to maintain human capital ready to produce a set of results under a result management responsibility
• Human capability is production capital to define the capabilities needed by the business process for difficult high-value results to acquire or develop specific capabilities needed by the business
• Human knowledge is information capital to create and manage the knowledge to develop capabilities, and to utilize specific performance solutions to produce specific results
• Human capital worth is increased by additional capabilities developed and knowledge established through knowledge creation to produce results
• Human capital worth is assessed against the known result value-added produced and other factors to ensure that human remuneration is in line with the value created in the business

Human capital is the most difficult to acquire, develop, and manage in any business. R-pM places human capital where they have the interest, outlook, and capability to produce specific results and develops capabilities where humans have the interest, innate foundation, and prior experience.< [more...].