Archive for the 'Organization and Management' forum

The organization structure is the fatal error of 20^th century management

Every day new enterprises are started-up around the world. New enterprises have the one-time opportunity to organize and manage the enterprise business from scratch. These new enterprises unthinkingly adopt obsolete 20^th century management and doom themselves to the burden the unsolvable 20^th century problems discussed here at the Business Change Forum. They waste the precious “green field” advantage of no legacy structures and the opportunity to do it right from the start.

Conventional wisdom says copy an existing business model or organization theory and do not “reinvent the wheel”. This “wisdom” replicates other enterprises’ problems.

Many new start-up enterprises retain management consultants to conduct an organization study. Management consultants still recommend that new enterprises lay obsolete 20^th century management structures over the business, rather than organizing and managing the business for significant competitive advantage.

Do not lay an organization structure over your business!

Once a new enterprise lays a rigid organization structure over the business, the business can never be managed. The enterprise must lay additional management structures over the business. The many inflexible structures conflict with the business causing unsolvable 20^th century problems with business change, unknown costs and value creation, unknown capital worth and investment returns, excessive IT and other capital overheads, mismanaged capital development, business and information complexity, unsupported corporate governance, alignment, collaboration, and so on.

New enterprises must not waste that precious “green field” advantage

New start-up companies have the opportunity to do it right from the start by using R-pM to organize the business for 21^st Century Management. [more...].

20^th century management used today does not organize the business

20^th century management lays a contrived enterprise organization structure over the business, instead of organizing the business. This is the fatal error of 20^th century management. If the business is not organized, the business cannot be managed.

The contrived organization structure follows one of many 20^th century organization theories to organize the enterprise. The business, which we have defined as “the utilization of capital of worth in performance to incur costs and produce value in results” is not organized. The rigid organization structure goes out of “alignment” with every new or closed result or change to a performance solution utilized. Eventually there is need for reorganization to contrive a new organization structure that is closer aligned to the actual business, and the cycle is repeated.

The need for reorganization shows that the business is not organized

Some may argue that their business is organized. Ask if they ever reorganize the business, and they will answer yes, of course. Reorganization is needed because the business is not organized. [more...].

R-pM is the natural way to organize and manage a business

Result-performance Management (R-pM) is the natural way you organize and manage your personal business. Your personal business is “the utilization of your capital of worth in performance to incur costs to produce value in your results”.

You plan and produce results in the things you accomplish. You organize the capital you have available in your time, capabilities, residence, tools, equipment, money, plans, instructions, vehicles, information etc to be available to produce results. Your capital has worth in the time and money you invested and in the capability to create value in your future results. You utilize your capital as performance solutions to incur costs and produce value in results, such as a prepared meal, repaired item, arrived at destination, or a good time.

The value of the result must exceed performance costs in order for you to be happy with the result. Your own and your capital’s performance effectiveness produces result quality. Your own and your capital’s performance uncertainty introduces a risk that the result may not be produced, produced late, or not up to your standards. You use R-pM instinctively because R-pM is the only way to organize and manage your personal business or any other business.

At work, you must use contrived 20^th century management

You do not lay organization, account, process, system, administration, or other structures over your personal business. But, on your job, you no longer utilize capital as performance solutions to produce results naturally. [more...].

Today’s playing field is level because all enterprises have the same problems

20^th century management continues today, because all enterprises are burdened with the same costs and problems. 20^th century management organizes and manages the enterprise through contrived structures laid over the business. The contrived organization, process, system, account, administration, IT architectures, maps, scorecards, and other rigid structures conflict with the business causing unsolvable problems.

20^th century management is a dead-end that can never solve today’s management problems

20^th century management is a dead-end that causes many unsolvable problems like reorganization, business change management, unknown costs and value, unknown capital worth and returns, intangible assets, sporadic effectiveness and quality management, business and information complexity, rampant IT investments and costs, inaccurate and conflicting enterprise information, little actual business management information, business collaboration obstacles, and on and on. The only solution 20^th century management can offer is to lay new or improved structures over the business. This is a dead-end, since the problems are unsolvable because they can never be solved by more structures laid over the business. The unsolvable problems can only get worse as enterprises grow and IT utilization increases.

R-pM offers the only solution; organize the actual business for 21^st Century Management

But now there is an alternative to traditional 20^th century management Result-performance Management (R-pM) provides the only possible solution by organizing the actual business for 21^st Century Management to leave 20^th century management structures and problems behind. R-pM provides significant cost reductions and value and quality increases that go to profits, minimizes development investments and manages the planned return, and enables collaboration and low cost solutions across businesses. Using R-pM to manage the enterprise business, provides significant advantages over managing the enterprise with 20^th century management. [more...]a>.

R-pM is a breakthrough to manage the actual business and leave 20^th century management problems behind

R-pM organizes and manages the actual business, “the utilization of capital of worth in performance to incur costs and produce value in results”, without 20^th century management problems with reorganization, business change, business and information complexity, complex and costly IT infrastructures, unknown costs and value, unknown capital worth and returns, excessive overheads and costs from overlaid structures, and on and on.

R-pM is a new natural business perspective requiring little investment or risk

R-pM minimizes capital to that required by the business, optimizes business performance to reduce performance costs and increase result value, and manages result value-quality chains to produce customer input results. R-pM provides enormous competitive advantage, while the investment and risk is minimal. R-pM is mainly a change in thinking, which requires time to take hold. Human capital learns to operate and manage the actual business, instead of structures laid over the business. Existing information systems likely can be utilized as business process solutions, if the business is properly defined and organized.

The existing business is gradually redefined into result value-quality chains and one integrated business structure. Obsolete structures laid over the business and unsolvable 20^th century management problems are gradually abolished. As the enterprise learns R-pM, implementation accelerates and the competitive advantage of R-pM increases until the complete business is organized for 21^st Century Management.

Owners, investors, shareholders, lenders and others with a financial interest must lead the way to manage the actual business

Business owners, shareholders, potential investors, lenders, etc have the most to gain by being among the first to use R-pM. [more...].

The business is defined as “the utilization of capital of worth in performance to incur costs and produce value in results”. Every business in the world invests in capital, the capital is utilized in performance, and utilization of capital in performance produces output results. The three components of the business are capital, performance, and results.

The objective of every business is to produce results

Results are the outputs of value that must be produced across the business for success. Revenue management results include products, services, customer contacts, sales orders, revenues, and profits. Revenue support results include advertisement run, market surveyed, customer followed up, etc. Capital management results include payroll paid, human training executed, asset maintained, marketing tactic devised, information created, etc. Investment management results include new product developed, information system implemented, new equipment procured and installed, etc. Every output that must be produced by the business is a result. Results must have a value that exceeds the cost of performance to produce the result for a successful business. [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...]:

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...].

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

Alignment covers many problems arising from conflicts between the actual business and overlaid structures

We keep hearing about alignment problems. Alignment problems are caused because the business is not organized. Alignment problems arise from actual business change in results produced and capital utilized as performance solutions, which remain undefined and unorganized. Instead, the enterprise is organized, planned, directed, controlled, and reported through separate and distinct structures laid over the business. With every business change, rigid overlaid structures go out of alignment with the business. Many solutions are available supposedly to enable alignment. Many books have proposed alignment solutions. However, in spite of all of these solutions and books, alignment problems remain. The alignment solutions attempt to align organization and management structures with each other with nothing to align against. “Alignments with the business” do not actually define the business to align against.

Result-performance Management solves the alignment problem by organizing and managing the business

The various alignment problems are eliminated by organizing the business. Result-performance Management organizes and manages the business through one integrated result-performance business structure, which aligns all deployed performance solutions with the output results they produce. With R-pM, there is only one business structure and no alignment problem. Structures laid over the business are removed. One business structure is used for all organization, planning, directing, control, and reporting.

The Alignment Problem

The conventional enterprise faces many unsolvable alignment problems

We have such well-known alignment problems, such as the following, because of rigid structures laid over the business: [more...]: