Archive for the 'Capital Development Plans and Projects' forum

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 capital 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 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 capital solutions utilized and the results produced by business performance 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 capital 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 enterprise management does not organize or manage results or capital as sets

20^th century management used today does not manage the enterprise business, defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. [more...].

Management consultants and their clients are unable to work together to improve actual business management

Many capital development, business change, and management improvement projects involve management consultants. Since the business is not defined, organized, or managed, management consultants cannot work with client enterprises to improve the actual business. Each management consulting firm has their own approaches and methodologies that are not related to the business and are not familiar to the enterprise client. Misunderstandings often arise over the scope of the project and the responsibilities of the consultant and the enterprise.

Management Consulting today faces many unsolvable problems that prevent scoped and measured business change

20^th century management improvement consulting projects have many fundamental and unsolvable problems, such as:

• The enterprise business is not organized, so there is no framework to scope and plan change projects and services
• The business results to improve are not known or managed for added-value
• The capital solutions to acquire, develop, and utilize are not known and managed
• Performance in the utilization of capital solutions to produce results is not defined or managed
• The specific changes needed for success can not be identified and managed
• Consultant services do not change the business, but change structures laid over the business
• The enterprise must learn new organization, plan, process, system, or performance structures with added terminology and definitions
• Changed structures are implemented to adds costs, but not to create value
• The value-added by consulting services is not measured to know success
• The enterprise lacks the capability to manage the investment in development and change
  
• The enterprise does not lead and participate properly to best take over changes
  
• Human and other capital is not managed for utilization allowing change problems
  

These are some common problems with organization and management structures and management consulting approaches utilized today for capital development, business change, and management improvements. Today, the enterprise client and consultant must work in good faith in an unmanaged business environment to produce ad-hoc changes that may or may not improve business results. Business organization and management consulting services tend to be led by the consultant and the client enterprise awaits a deliverable and then decides whether the deliverable is acceptable.

Enterprise clients and management consultants need to work together in partnership to improve the actual business

The enterprise and consultant need a way to define the development and improvements that will provide clear and measurable benefits to the enterprise. The only way is to base business management improvements and management consulting services on the actual business. A new management consulting model is needed that:

• Provides services to help the enterprise organize, manage, improve and develop the business for measured value-added benefit
• Provides a method for enterprises to lead and participate properly in business change
  
• Provides a clear framework to understand scope and means of participation for both parties
• Provides a way to plan and measure the value added by business change to know the return on specific capital investments
• Provides a method to plan, acquire, develop, improve, and utilize specific capital solutions required
• Provides the organization and approach that eliminates the fundamental problems in current business change
  
• Provides a methods and tools that both the enterprise and consultant understand and use
• Provides a means to plan and measure the value the consultant provides and the value-added success the enterprise achieves.< [more...].

The economic crisis shows that banks and corporations cannot manage investment returns or capital worth

Many investors invested in financial institutions and other corporations only to discover that the corporation is unable to manage investments, the return on their investments, and the ongoing worth (asset value) of investments made. How much money must investors lose, before they wake up to the fact that no corporation today is able to plan and manage investments to ensure a positive return, is able to plan the capital worth of each investment, or is able to manage the changing on-going worth of capital investments as part of routine business management. As we saw, reductions in capital worth come to light only when there is an attempt to sell or dispose of the asset. Then, suddenly there are large capital write-downs and losses for investors.

The 20^th century corporation is not organized to manage investments

You likely invest in corporations. As an investor, you try to identify precisely how you are to gain a return on your investment and have some idea of what that return should be. Do you realize that the corporations that you invest in have no way to do the same when they use the money you have invested?

20^th century management does not provides a business structure or other framework to manage investments, specific capital solutions acquired or developed, solution investment costs, the worth of capital solutions, solution amortization in performance costs as solution worth declines, the value-added to the business over the solution life, or the worth of the solution to be sold or disposed of after its life with the corporation.

Corporations are not organized to manage investments, so corporations do not have a fundamentally strong means to plan and manage the return on their investments, from initiation through to measuring the return. So corporations rarely really invest, they either spend or speculate. [more...].

20^th century enterprise management cannot capture and report essential business management information

20^th century enterprise management lays separate structures over the business for management organization, planning, direction, control, and reporting, such as:

• Organization charts, reporting relationships, and job descriptions for organization
• Strategy, corporate plan, investment, and budget structures for planning
• Work flow, function, project, process, and system structures for direction
• Financial and statistical accounting, activity and project costing, and quality structures for control
• Financial statements, performance management, and strategic enterprise management structures for reporting

Each structure defines inconsistent and conflicting entities like business unit, department, center, function, activity, project, responsibility, etc. The overlaid structures can produce enormous amounts of information producing business and information complexity. But 20^th century management cannot capture essential business data and report actual financial and non-financial business management information.

20^th century enterprise management does not define the entities that contain cost, value, worth, and return

In order to capture data and report information about an entity, the entity must be defined and recorded. 20^th century management attempts to report cost, value, worth, and return without defining the entities that contain cost, value, worth, and return.

Costs are attributed to some known tangible assets and collected against contrived entities like activity, project, and accounts that were not produced by the costs. Numbers for value are produced by certain contrived methods and formulas to lay value chains over the business, without defining and managing the entity that contains value. Worth is defined by arbitrary depreciation formulas for fixed assets, but ignored for human and other capital. Much high-worth capital is labeled as “intangible assets” and not accounted for or managed. Capital worth is usually mislabeled as “asset value” today. [more...].

20^th century management consulting propagates the problems that caused the economic crisis

Many capital development, business change, and management improvement programs involve management consultants. 20^th century management consulting services normally add to or change organization, account, or management structures laid over the business. Each consulting firm has their own approaches and methodologies that are not familiar to the enterprise client. Services tend to be led by the consultant, with limited client participation, and the client must await a deliverable. Misunderstandings often arise over the scope of the project and the responsibilities of the consultant and the enterprise. 20^th century management consulting does not enable clients to manage their actual business and propagates the problems that cause the current economic crisis.

21^st Century Business Management Consultants help enterprises prevent problems that cause economic crisis

21^st Century Business Management Consulting is based on helping enterprise clients organize and manage their business in “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The current economic crisis is caused by one fundamental problem; the failure of financial institutions, corporations, and other enterprises to manage the business. 21^st Century Business Management Consulting is required to help client enterprises to organize and manage the business, and then to optimize the worth of solutions developed, the cost and effectiveness of solutions utilized in performance, the value and quality of results produced by the business, and the return on all capital solution investments.

21^st Century Business Management Consultants have a model to work in partnership with the enterprise

21^st Century Business Management Consultants work in partnership with enterprise clients in enterprise-led result-performance development projects to provide the needed capabilities and resources the enterprise lacks.  The enterprise and consultant define the development and improvements that provide planned and measured benefits to the enterprise, through a 21^st century business management consulting model that:

• Is based on organizing and managing the actual enterprise business
• Provides services to help the enterprise organize, manage, improve and develop the actual business for measured value-added benefit
• Provides a method for enterprise clients to lead and participate properly in business management improvement
• Provides a clear framework to understand scope and means of participation for both parties
• Provides the organization and approach that eliminates the fundamental problems in 20^th century business change and management consulting methods
• Provides methods and tools that both the enterprise and consultant understand and use
• Provides a means to plan and measure the value the consultant provides and the value-added success the enterprise achieves.
  

These standards cannot be met with 20^th century management structures and consulting approaches, since the structures hide the business, and there is no framework to scope change and measure the value produced from the specific scope of change.

Business management consulting organizes the actual business for 21^st Century Management

21^st Century Management Consulting is based on organizing and managing the actual enterprise business as one integrated and transparent business structure. [more...].

The economic crisis produced large investor losses

Several trillion dollars of investor funds were lost in the past six months. Investors, advisers, and experts point out many mistakes made, poor government oversight, the credit freeze, unknown asset value, investor greed, poor corporate governance, and other symptoms as the cause of investor losses. These mistakes are contributors, but not the cause of investor losses. Investment banks, investment funds, stock brokers, investment advisers, government regulators have demonstrated their lack of knowledge of what is really happening and the real cause of the financial and economic crisis and investor losses. They have demonstrated their inability to manage the problem or to identify real solutions. Blind investment professionals are leading blind investors.

Investors must look deep to understand the cause of loss to avoid future loss

Everyone looks for quick fixes and easy solutions every time there is a crisis, so the real fundamental problems continue unsolved. The fundamental problems require deep analysis and understanding of the actual business. Investors must understand the real reason for their losses. There is only on fundamental reason: the failure of financial institutions and other corporations to manage the business to plan the capital investments they must make to create value, manage the proper utilization of their investments to create value, and manage the results produced from their investments that provide value to investors.  Financial institutions and other corporations are not able to do this systematically. They cannot manage capital worth (often called asset value) in the future result cost absorption and result value-added from the utilization of investments and the result value-added to be available from the sale or disposal of the capital solution asset. They are unable to provide information on the transparent actual business for proper government supervision and informed investor decisions. Accounting accounts for cash in a contrived chart of accounts that is not related to the actual business. Arbitrary accounting principles, such as “mark to market” are employed instead of accounting for the business. Financial and risk models used are arbitrary and are not related to the business. Financial statements produced are inaccurate and limited and do not report the business to reveal problems.

Corporations lay structures over their business and manage the enterprise

All financial institutions and other corporations today employ dead-end 20^th century management. [more...].

Many of us have participated in business change projects. Likely, we share many experiences with the difficulties in gaining successful business change. We have read about many cases of problems and disasters.

Something must be wrong. Why after all this experience and the many stories of unsuccessful business change, do we continue to have problems? Have management consultants with their business change and system implementation methodologies provided the answer? Are the conventional methods we use adequate for business change management?

The real problems are fundamental in the way we organize the business. Conventional methods introduce unsolvable problems, so that no business change method or consultant methodology can work properly.

“Business change” is not change to the business, but change to structures laid over the business

The problems start with the fatal error of 20^th century management; the organization structure. [more...]

Business transformation has a bad name today because of past problems and failures

20^th century business transformation was a big thing over the past twenty years. But did it transform the actual business and solve fundamental problems with a sound structure for business success; or did it simply rearrange the 20^th century management structures and methods that are the cause of business problems? We see the problems suffered by financial institutions that cannot manage “asset value”, corporations that are unable to manage their businesses, and limited and inaccurate accounting that cause the financial crisis and economic recession.

20^th century transformation did not transform the actual business or provide expected benefits

20^th century business transformation changes the organization structure, strategy structure, business process structure, performance management structures, account structures, information technology architectures, management information structures, and other structures that are laid over the business, rather than organizing and managing the actual business. Conventional 20^th century enterprise organization theories never organized the business. If the business is organized, routine business change updates the business organization continually, instead of having separate business change and transformation projects.

The business changes with every business decision, not every few years when management decides it is time for business change. The only reason that business transformation is needed is because the business is not organized and managed. Conventional business change and transformation is not change to the business, but change to the structures laid over the business. Many 20^th century business transformation methods, like total quality management (TQM), business process reengineering (BPR), and activity-based costing (ABC) laid new contrived structures over the business, and are no longer considered viable today.

Business transformation must organize and manage the business as one structure

Business transformation describes what is needed to learn, organize, and manage the actual business for 21^st century business management. [more...].

Many enterprises have persistent performance problems. Maybe its gaining real benefit from new solutions, reorganizing to another unresponsive organization, or precisely managing what people are doing. Enterprises are not able to plan and manage their capital investments to determine or manage the return. They are unable to utilize tangible and intangible capital effectively in performance to produce results. They are not able to determine all costs incurred in enterprise performance against the value created by performance. They cannot manage value chains or value added along a chain. They can not determine the worth of their human or other capital investments or the worth of their business. Enterprises are sold one solution after another, but the fundamental problems remain unsolved.

Corporations face fundamental management and business change problems

Many enterprises want to go back to the drawing board to solve business change and management problems. Their problems are fundamental to the way they do business, and need new fundamental solutions. [more...]

Business change and change management are unsolvable problems of 20^th century management used by business enterprises today. The unsolvable problems are caused because the actual business “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results” is not organized or managed. 20^th century management fails to define, organize, and manage the three components of the business.

• Results: The economic outputs of value produced from business performance
• Capital: Investments in the business to provide capital solutions of worth to be utilized in business performance
• Performance: The specific capital solutions utilized in performance to incur costs and to produce specific results

There are only two entities that change in business change and in capital development – results and capital solutions. All business decisions and changes involve results to produce from the business and the human and other capital solutions to utilize in performance to produce results.

If the business is not defined, organized, and managed it is impossible to change the actual business. Instead of changing the business and managing business change properly, 20^th century management lays structures over the business. The organize structure is laid over the business. This is a fatal error. Once an organization structure is laid over the business, the business cannot be managed. [more...]