Archive for July, 2009

20^th century enterprise management has no consistent conventions, definitions, and standards

20^th century enterprise management, used by all enterprises today, lays a wide variety of organization and management structures over the business, and, therefore, cannot manage the business. A different set of conventions, definitions, and standards is used for each of the structures laid over the business. The many 20^th century enterprise management books contain different conventions, definitions, and standards. The many different business processes, information systems, IT architectures, costing and accounting, performance reporting, and administration structures each have their own set. The enterprise employs a wide variety of conventions, definitions, and standards to manage the enterprise, rather than one limited and consistent set to manage the business.

20^th century management does not support common solutions, collaboration, or measurement across enterprises

The lack of consistent conventions, definitions, and standards prevents business collaboration and integration, common solutions that any enterprise can use, business measurement for comparison across enterprises, common learning that can be applied to any business, educated and trained personnel that can fit into any business, and other long-unfulfilled business needs.

Rule No 10: Employ 21^st century business management conventions and standards

Rule No. 10 of 21^st century business management eliminates the problems of conflicting and confusing business conventions, definitions, and standards by providing one set related to directly organizing and managing the actual business. Terminology that is not related to the actual business and conventions and standards established to maintain structures laid over the business are not continued.

21^st century business management provides one set of consistent conventions, definitions, and standards for the actual business

21^st century business management is documented in the knowledge and procedures provided by Result-performance Management (R-pM). [more...].

Economic output results produced by your company business are not managed today

Every enterprise, including your company business, produces economic outputs. These outputs are results, even though they are not called results and are not managed as entities in a set of results. But, the objective of every company business is to produce products and services and other economic output results in a chain of results that lead to the revenue and profit results. Some results are identified as entities such as; design completed, material item received, machine maintained, product produced, business service rendered, production waste recovered, order delivered, etc and are managed separately.

Other results usually are not defined or managed, such as business organization updated, new personnel recruited, capability development completed, knowledge document created, computer network hour operated, supplies procured, record transaction processed, strategy approved, pricing policy initiated, market study completed, investment justified, etc.

Results are not managed as a set of outputs or accomplishments by your company business today because your company is managed as an enterprise, not as a business. The business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Every business in the world invests in capital. The capital solutions acquired and developed from investments are implemented to be utilized in business performance. The utilization of capital solutions in performance produces business results. [more...].

Business collaboration is a 20^th century management problem

Business collaboration and outsourcing is recognized as a major problem today. Businesses cannot collaborate if the actual business of each partner is not organized or managed. There is need to organize the business of each partner, to integrate suppliers and customers with the enterprise business, to integrate business partners and outsource providers in value chains, and to consolidate business operations. There is a need to know the specific business requirements of customers. There is a need to know the costs incurred and value created by partners in a value chain.

Business collaboration solutions require expensive IT investments

The solutions proposed for 20^th century business collaboration involve heavy investments in common information technology to capture and report consistent information across partners, or to reconcile and recast inconsistent data maintained by partners. Often another structure is laid over the business for activities to capture known costs or contrived “value chains’ to estimate values. Even with these investments, no method has been found for real flexible and accurate business collaboration, since the business is not organized or managed.

Rule No. 9 of 21^st century business management: Collaborate to maximize shared value and minimize shared costs

Business collaboration and integration is an important requirement of 21^st century business management. [more...].

The enterprise organization structure prevents management of your company business today

All enterprises employ 20^th century enterprise management, which lays organization and management structures over the business to manage the enterprise. Once an enterprise organization structure is laid over the business, the business can never be managed. The enterprise organization structure is rigid while the business changes. This produces the reorganization problem. If the business is organized, the organization changes with business change eliminating the reorganization and change management problems.

Your company business consists of five important areas that must be managed for value, cost, and profits

The company business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. In order to manage the business, five important areas must be managed.

• Value and quality in results: Economic output results needed for business success must be managed to produce interrelated outputs across the business and manage the value added to the profit result
• Capital investments in the business:  All capital investments must be managed to acquire, develop, and implement capital solutions needed to produce specific results, to plan the value added to results, to plan the worth of solutions, to know the cost of investments, and to justify the return of investment
• Implementation and maintenance of capital as solutions: Capital utilized by the business must be supported and managed as specific solutions implemented to produce results and provide the actual result value-added return on investment
• Costs and effectiveness of performance: Business performance must be managed to utilize capital solutions cost-effectively to produce value-quality output results
• Strategic result value creation: Business performance must be managed over time to create value in results and develop new solutions needed against strategic business plans

The company business must be managed as one current in operation business structure and the planned strategic business structure. Once the business is organized; organization, planning, accounting, performance management, reporting, and other structures used today to manage the enterprise are no longer needed.

Manage the value and quality of all results produced by your company business along the full revenue-generation chain

The objective of every company business is to produce products and services and other economic output results in a chain of results that lead to the revenue and profit results. [more...].

20^th century enterprise management administers human resources

20^th century enterprise management provides the human resource function to administer human resources. Human resources provide administration for recruitment, actions, payroll, and some development functions. While human capital may be called human capital, rarely is there any real effort to develop humans as actual capital solutions to meet the specific business needs and increase individual human worth to the enterprise.

20^th century enterprise management cannot develop and apply human and knowledge capital directly to the business

Some more advanced companies try to develop human capital, but as humans rather than as the specific capital solutions needed by the business. They are at a disadvantage because the business is not organized to define specific business needs, to understand where special capabilities are required in the business, to understand the value created in the business through application of human capabilities, and the added worth of human capabilities through value creation.

Rule No. 8 of 21^st century business management: Manage human personnel, capability, and knowledge capital to increase human worth

21^st century business management organizes the business results produced and human capital as specific solutions to be utilized to produce specific results. Rule No. 8 requires that human capital be identified as specific capital solutions utilized to produce business results, investments be made to develop human capital to increase the value of assigned results, human capital performance be managed against the results produced to increase human worth, and that human reward be a commensurate part of proven human worth to the business. As part of this rule, there are business management principles for strong human capital management:

• Define economic output results that must be produced across the business and those high-value results that require specific human capability solutions
• Analyze the business process to produce difficult high-value results and describe how human capabilities must utilize the process
• Define specific high-worth capabilities to produce high-value results as capital solutions for specific human knowledge and human capability development
• Focus human capital on results, so that they always know the results expected and how to apply their capabilities to produce results
• Develop human capabilities as specific capital solutions to produce specific high-value results
• Support human capital with knowledge capital to utilize specific capital solutions to produce specific results
• Let human capital know the value of their results and how their performance can add value to results
• Let human capital know the relationship between the value added to results produced and their worth to the enterprise as human capital
• Compensate and reward human capital in accordance with their human capital worth

Strategic human capital development develops the capabilities described in the business process and the knowledge required to produce new high-value strategic results. [more...].

Does your organization structure organize your business?

If you ask most managers if their enterprise organizes the business, they will answer “yes”. However, if you ask them to described how the business in organized they will say that the business is organized into departments, functions, regions, etc. But, is this organizing the business?

Look up the definition of business enterprise. You will likely find that the business is “the activity of providing goods and services”. When you organize your business, do you organize “the activity of providing goods and services”?

20^th century organization theories organize people and responsibilities

20^th century business organization theories provide all kinds of ways to organize people, regions, responsibilities, etc. but they do not organize the business. Instead, they contrive different kinds of organization structures that are laid over the business. [more...].

20^th century enterprise management cannot plan and manage investments for a specific return

20^th century enterprise management used today concentrates on performance and the need for performance improvement. Development planning and execution concentrates on the capital needed for performance. Investments are directed primarily at tangible assets or achieving a project outcome. Return on investments cannot be calculated, since specific capital items and business improvements are not defined. So, potential increases in sales, revenues, etc are estimated to justify the investment. Project management manages the project separate from the business as an entity in itself.

20^th century enterprise management objective is capital development without managing the capital developed

20^th century enterprise management supposedly manages capital development. The managed capital developed is limited to capital that is managed, primarily in assets and employees. Most other capital is not managed or is classified as intangible assets. Development costs are not captured against the specific capital items to be utilized by the business to provide the return. [more...].

The enterprise today has many unsolvable management problems

Today’s 20^th century enterprises have always had management problems, because they never managed the business “the activity of providing goods and services”. Instead, they laid organization, system, accounting, reporting, and other structures over the business. The business changes, while the overlaid structures remain rigid, creating problems with interfacing, communications, and generally managing the enterprise. The organization structure created silos, which interrupted the flow of goods and services across the enterprise. The solution to the problem was to re-engineer business processes to facilitate the flow of goods and services across the organization units involved.

Business process re-engineering solved some problems, but created others

Business Process Re-engineering (BPR) put in business processes leading to one output at the end of the process. BPR generally sped up the production of the final output, but introduced another set of problems. Results, capital utilized, and performance are not defined and are mixed together within the process. Quality management focused on performance quality. The process crosses organization units, which are expected to manage performance and performance quality to produce a final output result to go to the customer. [more...].

Rule No. 6 of the Ten Rules for 21^st century business management states: Plan and govern the transition from today’s value to approved strategic value. This rule requires the development of management capital in strategy to plan the strategic business, in tactics to evaluate and assess progress of the current to strategic business, and in intelligence to anticipate opportunities, threats, and new developments. The rule must be followed to ensure good corporate governance.

20^th century strategies are planned and described by laying structures over the business

Strategies are planned today by laying structures over the business such as corporate plans, maps, investment analyses, budgets, etc. Separate and unrelated plans are often prepared for operations, finances, information technology, capital development, human resources, and other areas. The strategic business is not defined and strategies do not relate to the actual business. Goals and value creation are estimates and projections rather than the planned transition from the existing business. The rigid structures laid over the business conflict with the actual changing business and do not provide a foundation for good corporate governance.

Corporations govern by enforcing rules, because they cannot govern the business

Corporate governance is an unsolvable 20^th century management problem that arises because corporations do not organize and manage the business. [more...]