Archive for the 'Business Collaboration' forum

Rule no. 2 of 21^st century business management: Generate profits from a chain of managed value and quality

21^st century business management manages economic outputs from the business as results, manages investments in the business as specific capital solutions, and separately manages performance in the utilization of specific capital solutions to produce specific results. Separating results and capital from performance enables the enterprise business “the activity of providing goods and services” to be managed directly.

Goods and services are final results that go to the customer and have value in the customer willingness to pay and must be of the quality to satisfy the customer. The final goods and services results are produced by a chain of results of value starting from input results from the supplier. Business activity is the utilization of human and other capital in performance to produce a given result. So the business in “the activity of providing goods and services” must be managed by managing the performance producing each result of managed value and quality in a chain of results from supplier input results, through internal result transformation, to the final customer results. The result value-added in excess of performance costs across the chain contributes to the profit result.

20^th century management manages performance across processes and information systems

20^th century enterprise management, used by all enterprises today, does not recognize or manage output results from the business as a business entity. Results or accomplishments are managed as a component of “performance” along with the business activity in utilizing capital in performance to produce the result. [more...].

The economic crisis arises from “failure to manage the business”

Many articles in the Business Change Forum cite “failure to manage the business” as the cause or the current and previous financial and economic crises and corporate governance scandals. What precisely is the business and why is the business not managed today?

What is the definition of your business?

Have you organized your business? Do you manage your business day by day? What is the definition of the business that you have organized and that you manage? Most managers think that they are organizing and managing their business. But when asked they cannot define the business that they have organized and are managing. They usually define the enterprise, rather than the business, since they have actually organized and are managing the enterprise, and not the business.

It is important to have a clear definition of the enterprise business

It is important to have a precise definition of the enterprise business that is organized and managed. [more...]s.

Result-performance Management (R-pM) replaces business process management with value chain management to enable business collaboration

Result-performance Management (R-pM) replaces business process management with result-performance management and re-engineered business processes with result value-quality chains. This enables the enterprise to manage result value-added and to collaborate with business and outsourcing partners, who use R-pM, to re-link value-quality chains for shared value. Review the article “Business Process Management that Prevents Value-quality Chains” to learn more about result value-quality chains.

R-pM manages the result value and performance costs for each result in the chain, to manage result value-added across the chain

R-pM can do this because R-pM defines and manages the result, which provides the specific economic output of value that forms each link in the chain. R-pM also manages each capital solution utilized to produce the result to determine the total performance cost and value-added at each link in the chain. Capital solutions are classified and categorized to have comparable and benchmarked costs for alternative solutions used to produce a result. This enables comparison of alternative linking of value-quality chains with business collaboration and outsourcing partners to produce the highest shared value-added. [more...].

20^th century management plans the future enterprise and does not plan the business

20^th century management used today develops strategies and plans using maps, corporate plans, budgets, etc that are laid over the business. Corporate plans plan the corporation and are unable plan the strategic value to be created by the business and the capital development needed to create strategic value. The business is not planned and strategies and plans become invalid as the business changes. New plans try to bring the enterprise plans in closer alignment with the current and future business.

The business is “the utilization of capital of worth in performance to incur costs to produce value in results”

Result-performance Management (R-pM) is based on the definition of the enterprise business as “the utilization of capital of worth in performance to incur costs to produce value in results”. This definition includes the current business that must be conducted every day to utilize capital the enterprise invests in to produce results needed for business success. The definition also includes the future business that must be the objective or the business strategy to produce strategic results utilizing capital that must be available when needed?

The management strategy plans the business at the strategic horizon

The strategic business is “the utilization of capital of worth in performance to incur costs to produce value in results at the strategic horizon”. The strategic business is described as management strategy capital. The business strategy, strategic business structure, and business plans to execute the strategy are management strategy solutions.< [more...].

Structures laid over the business produce enormous information complexity

20^th century management does not manage the actual business, but manages the enterprise using a multitude of organization, process, account, performance, system, administration, etc structures laid over the business. The structures are rigid and do not change with actual business change. No structure captures consistent, complete, and accurate business data. The various structures use different names for the same entity and different definitions for the same part of the enterprise. Information systems computerize the various structures producing enormous amounts of incomplete, inconsistent, and inaccurate information. This causes the exploding information complexity and information management problems enterprises are experiencing today.

Information generally is not organized and managed as capital

Information capital management is not well organized. Accounting is responsible for financial records, information technology may perform data management and record retention, there may be a function for knowledge management, record management, or business or management intelligence. Even with this, there is little management of information for application to improve the business. There is no structure to relate information directly to the business and no data is collected on the actual business as a related set.

The explosion in enterprise information problems and investments demands a basic rethink

These problems are aggravated by the proliferation of IT use for email, Internet information storage and downloads, information exchanges, imaged documents, etc. New corporate governance requirements demand a solution to these problems. [more...]s.

Much is written about the theory of value chains and various structures have been contrived to overlay value chains on the business.

21^st Century Management organizes the business to provide natural value chains

Result-performance Management (R-pM) is the conventional method to organize the business for 21^st century management. No one has ever organized the business to provide natural value chains, until Result-performance Management (R-pM). R-pM organizes results as the links in the chain and performance solutions to provide the capital utilized to produce each result. Result relationships link results in sequence and manage the complete chain.

Results are economic outputs that contain the value created

R-pM organizes and relates results from supplier input results, through results transformed by the enterprise, to final customer results. Customer payment confers final result value. Enterprise payment confers input result value. Internal customers confer value on internal results added to and transformed in the chain. The total input and internal result value cannot exceed final result value.< [more...]

In an article on 18 January 2006, we discussed managing the impact of competition and collaboration from around the world. We said that the Internet has had major impact on how we conduct business.

Corporations and companies worldwide must organize the business to be more flexible to take advantages of the opportunities and to meet the competition from the Internet. The Internet opens opportunities for business information and collaboration. Enterprise need a method to standardize output results and performance costs to simplify the business and enable collaboration. The answer is Result-performance Management (R-pM) which organizes the business for flexibility and collaboration, and explained in R-pM community downloads like “R-pM Applications to Improve your Enterprise Today”

R-pM organizes Corporations for Internet impact to gain competitive advantage through opportunities and to thwart competitive threats

Customers, collaborators, and competition can come from anywhere in the world. With the Internet, we must deal with enterprises around the world with differing organizations, standards, and ideas on how business is done. We must be able to anticipate and react quickly to change. We must be able to produce products to meet precise customer needs. Those of us in this situation, have problems leveraging the Internet and handling threats from the Internet. [more...]

Corporate quality is not in business process performance quality

Conventional business process re-engineering and management emphasizes the importance of performance quality. But the re-engineered business process mixes results produced in the process with the performance across the process. In an article posted on 16 February 2006, Striving for quality performance, we discussed how many enterprises emphasize performance quality in their business processes. This became the conventional method, after enterprises reengineered their business processes to manage performance quality.

Our conclusion was that we need a better way to understand quality consistently across the whole enterprise, to understand the impact of bad quality, and to isolate problems producing bad quality. To find out how Join the R-pM community to review the download “How to Build Result Value-quality Chains”

Do you look for performance quality when you buy an input to your value-quality chain?

Does “performance quality” make sense to you? When you buy something, are you concerned about “performance quality”? Even for a service, what is more important, the performance quality in delivering the service or the quality of the result of the service? The result of the service is your input result, which you expect to be of high-quality and to which you add value. [more...].

Many methods have been contrived and much is written these days about value management, value chains, value propositions, value creation, strategic value, etc. But, in all this has anyone precisely described where enterprise value really lies?

The problem creating value management and value chains

What is value an attribute of? What in your enterprise contains your value? When we create value, where does the value go? Is value an attribute of performance, the customer, the supplier, the proposition, the employee, the department, the function, the process, the system, a chain, the business, the enterprise, management, the strategy, or what? Can we manage value when we do not know what contains value?

There many contrived formulas to calculate value. But often the formulas calculate a value for entities that do not contain the value created by the enterprise. For example, there are many formulas to calculate different values of the business, but does the business contain the value we create.

There is a lot of talk about business collaboration in value chains across enterprises. But, what comprises a link in a value chain? What are the components that define a link in your value chain? If we cannot define a link, how can we create a chain?

There is only one solution to manage value creation and to link value chains

We cannot manage the value created in the business, if we do not use Result-performance Management (R-pM) to manage the business. The business is comprised of two entities:

• Results: The economic outputs from the business that actually contain the value created and are specifically defined to manage value
• Performance Solutions: The capital of worth, consumed in performance to produce result value, which are specifically defined to manage costs and the value added

The only way to manage value creation and link value chains is through R-pM as is introduced in the article Use R-pM to Make Value Really Valuable. [more...]