Archive for the 'Capital Development Plans and Projects' forum

20^th century management lays structures over the business to control the enterprise

The operations and development of the enterprise today are controlled by structures laid over the business for:

• Financial and statistical accounting through a chart of accounts structure
• Cost accounting through activity, center, and product structures
• Capital development control through project structures and asset registers
• Quality control through TQM, six sigma, and other quality structures

The control provided by each of these structures is limited to known entities and certain elements. Financial control covers capital for tangible assets and finances for cash receipts and expenditures, cost control is limited to known costs against selected elements like activity or project, non-financial control is sporadic depending on individual management, and quality focuses on performance producing selected end-product results.

Accounts record accrued and actual receipts and expenditures from point money comes in to the point money is spent. There is no control of the business cycle from the point money is spent until value is created to enable money to come in. Accounting control is enforcement of rules and principles rather than providing accurate information for business control.

Capital development lumps costs together as a project or tangible asset. The range or performance solutions developed are not controlled and may be classified as intangible assets. No method or information is provided to plan and control return on specific capital investments in performance solutions. Projects are not organized to capture development costs for implemented solutions and plan value-added to the business from solution utilization. Capital worth numbers are sporadic for some asset and liability solutions, but real capital worth in the capability to produce future business value is unknown.

Each structure is separate from other structures and uses its own terminology and definitions to describe the enterprise. Each structure introduces high costs and much effort to collect and report information. But, none of these overlaid structures can control the actual business.

The actual business must be controlled for each component of the current and planned business

In order to control the business the actual business must be organized, planned, and directed as explained in previous articles. [more...].

20^th century management used today lays various plans over the business

20^th century management cannot plan the business directly because the business is not organized. The enterprise is planned through various structures laid over the business. These overlaid planning structures include:

• Strategic plans using such structures as maps and corporate plans
• Financial plan and budget structures
• Information technology plans and enterprise architectures
• Capital development plans and investment analysis structures
• Operational plan structures

Each of these planning structures uses its own set of entities to describe the enterprise, uses different information systems, and requires its own support staff. Each plan must be maintained and updated with actual progress against the planned entities, and reported. The plans plan the enterprise in various ways depending on the particular structures implemented. It is difficult to understand and manage the actual business from these plans.

None of the overlaid plans plan the actual business

Since the business is not organized, the business cannot be planned. The results produced by the business cannot be planned as an interrelated set. Some results may be planned in isolation as separate entities such as product sold and revenue received. The plans are usually created from estimates rather than a period by period build up from the existing business. [more...].

What is the business and capital as part of the business?

The business is defined as “the utilization of capital in performance to produce value in results”. Every business in the world invests in capital needed, in order to utilize capital in performance, in order to produce output results. The capital must have a worth that justifies the investment costs for acquisition or development and implementation as performance solutions.

Capital is the investments in the business to have the capability to produce results

The only reason to invest in capital is to provide the capability to produce results. Capital is all the tangible and intangible assets available to be utilized by the business. Capital includes the business organization, processes and systems, humans and their capabilities, facility equipment and supplies, management plans and tactics, and information capital. Capital has a worth in the capability to create result value-added attributable to the capital over the capital life.

20^th century management fails to organize and manage capital as part of the business

Today, people think of capital as items in an asset register or on the payroll, rather than as items to be managed and utilized as part of the business. Businesses invest in enormous sums of money capital and then fail to identify the specific capital items developed, the costs of developing the capital, the worth of the capital as developed, the utilization of the capital to create value, the cost of capital utilization or consumption as capital worth deteriorates, and the value created to return the original investment. [more...].

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...].

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...].

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

Business change cannot be managed directly because the business is not managed

Business change is a mystery to the 20^th century enterprise because the business, the activity of providing goods and services, is not organized and managed. The enterprise is organized and managed through organization and management structures laid over the business. 20^th century “business change” is not change to the business, but is change to structures laid over the business. Most “business change” lays new organization, process, or system structures over the business with little positive change to the business itself. Since the business is not managed, the value created by change cannot be planned or managed and the return on change investments cannot be measured.

Result-performance Management (R-pM) organizes the business for direct management of business change

Business change is a change to either an output result produced by the business or a performance solution utilized by the business. When the business is organized and managed, business change automatically reorganizes the business and can be managed as the routine. R-pM organizes results and performance solutions to change the business as the daily routine. Business change projects involve result-performance development to increase the value of results or to enable new results, by implementing new or improved performance solutions. If the enterprise does not manage results and performance, it is difficult to manage change to results and performance.

The Change Management Problem

20^th century business change is change to overlaid organization and management structures

Even accepting 20^th century management change to overlaid organization, process, information system, account, performance management, and other structures, there are another set of problems. [more...]

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

20^th century 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 and report essential business management information.

20^th century 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 development does not identify the precise capital items that are being acquired and developed or the planned utilization of the capital in the business to provide return on investments. [more...].

Capital Development Project Management is one of the top 10 problems of 20^th century management

20^th century management cannot plan, manage, or repay capital development projects

We have unsolvable problems in 20^th century capital development project planning, management, and return on the project investment, so we cannot:

• Plan and manage operations and development as an integrated continuum that is part of the business
• Itemize, plan, and achieve specific benefits from development projects
• Clearly and systemically understand what we must be implementing from projects as part of the business for ongoing management and return on investment
• Planning the output results to be produced from the project in specific capital items to be implemented and utilized by the business
• Utilizing users and administrative staff in proper roles in the project
• Utilizing contractors and consultants as solutions in an enterprise-managed project
• Documenting and recording the project so that all capital developed is fully documented and that knowledge required for use is created
• Managing the capital to be consumed in the project
• Managing the capital development project as part of the business
• Recording accurate development costs by capital item developed
• Implementing project results as capital items for direct utilization by the business
• Measuring the actual return of capital development investments

The unsolvable 20^th century management problems hamper project management, particularly for enterprise internal capital development and management improvement.

R-pM plans, manages, and repays projects by separate management of results and performance

Result-performance Management (R-pM) provides new breakthroughs for planning and managing enterprise capital development and planning and managing the capital development project.

Capital development develops two things:

• The capital to be utilized as performance solutions that incur costs
• The results to be produced by the developed capital to provide benefit and return

When we plan and manage a capital development project, we must plan and manage two things:

• The results to be produced by project performance
• The capital to be consumed and performance solutions to be utilized to perform the project

R-pM provides the methods to do both. [more...]

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

20^th century investment analysis cannot plan the actual return on investments

How does your company analyze strategic investments in capital development? Does your company perform a cost-benefit analysis? Are all the specific investments needed for business success planned? Are the costs of the investment analyzed, itemized, and scheduled? Are the benefits of the investment analyzed, itemized, and scheduled? Is the value to be added to the business planned and set up as goals to menage the return on investment?

For the most part, 20^th century investment management cannot itemize the costs or benefits of investment, particularly investments in management improvement and business change. Costs are project expenditures rather than investments in specifically-identified capital items. Benefits are usually estimates of increases in revenues or reductions in costs.

R-pM plans and manages the return on all investments through Result-performance Development

Result-performance Management (R-pM) manages the economic outputs of the business as specific results and manages the invested capital utilized to produce results as specific performance solutions. The benefits of development investments come from adding value to specific existing or new results. The cost of investments come from developing the capital needed as specific performance solutions to produce each result. The return on investments come from [more...]

Many capital development, business change, and management improvement projects involve management consultants. Each management consulting firm has their own approaches and methodologies that are not familiar to the enterprise client. 20^th century management consulting services tend to be led by the consultant, with limited client participation, and the client enterprise must await a deliverable. Misunderstandings often arise over the scope of the project and the responsibilities of the consultant and the enterprise.

Clients and management consultants need a framework to work together in partnership

An article on 24 May 2006, How Management Consultants and their clients can work in partnership, discussed the need for a framework for the consultant and the enterprise to work together. The article said that the enterprise and consultant need a way to define the development and improvements that will provide clear and measurable benefits to the enterprise, through a 21^st Century 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 clients to lead and participate properly in business 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 client and consultant understand and use
• Provides a means to plan and measure the value the consultant provides and the value-added success the client achieves.
  

We cannot meet these needs with 20^th century structures and management consulting approaches, since the structures hide the business, and we have no framework to scope change and measure the value produced from the specific scope of change.

Result-performance Management (R-pM) organizes the actual business for 21^st Century Management

The answer is provided by Result-performance Management (R-pM), to organize and manage the actual enterprise business for new 21^st century business management and management consulting. All business organization and management projects are based on organizing and managing the actual business as one integrated and transparent business structure. The objective of every enterprise development project is planned and measured result value added.< [more...]