Archive for 'R-pM Application to Today's Enterprise'

Separate organization and management structures have always been laid over the business causing complexity

Since the beginning, enterprises have implemented organization, process, account, performance, project, IT architectures, administrative functions, and other structures. Each of these many structures must be maintained and managed producing business complexity. Many conflicting entities that define each structure produce information complexity, prevent consistent and accurate management information, and require high-cost information technology overheads. Each structure is fixed and rigid and conflicts with the ever-changing business. Periodically, reorganization and change management is required to bring the fixed structures into closer alignment with the business.

Experts have wanted to find one structure to organize and manage the enterprise as one consistent whole

Over the years, there have been many efforts to create one simple and consistently-defined structure for complete and consistent business data capture, reliable communications, accurate management information, use of common solutions, business collaboration, and other needs. The answer, so far, is to lay higher-level management structures over existing structures to reconcile data from various unrelated structures and to consolidate information. However, until now, no one has defined the one integrated structure that can replace all existing structures and be used to organize and manage any enterprise in any industry.

The one integrated structure has existed all along; it is the business

There is one structure. It has been there all along! That structure is the business itself! [more...]f!

Many arbitrary management structures have been contrived over the years

Throughout the 20^th century, various management structures for operating and developing the company have been contrived and refined, becoming the conventional management structures that we use today. The structures organize and manage the company or other enterprise. Structures such as the organization, business processes, accounts, costed activities, system architectures, scorecards, and on and on are utilized to manage the enterprise.

We improve management and effect change by laying new contrived structures over the company or enterprise business. Even with all the enterprise organization and management structures, we continue to have fundamental problems with re-organizations, intangible assets, accounting limitations, cost control, information management, alignment, etc. We still have not found the one right method to organize and manage the company business.

Conventional management structures are the generally-accepted wrong ways

Over the past decades, we implemented breakthroughs like business process re-engineering, business transformation methods, business performance management, and enterprise resource planning. But, these turned out to be just new  conventional management structures laid over the business and other structures to manage the enterprise the same as before.

Why are there so many different management structures to do the same thing? Why isn’t there just one right management structure? [more...].

20^th century enterprise management cannot define and organize real value chains

Much is written about the theory of value chains and various structures have been contrived to lay value chains over the business. But, value chains cannot be defined and organized today, because 20^th century enterprise management organizes and manages the enterprise, but does not define or organize the actual business. The actual business is defined as “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. A value chain consists of a chain of results of value produced in sequence to provide a final result of value to an enterprise customer. In order to build a value chain results, capital solutions that produce results, and the performance of each solution to produce each result must be defined and organized as a sets.

21^st century business management organizes the business to provide natural value chains

Result-performance Management (R-pM) provides the knowledge, concepts, and procedures for 21^st century business management. We cannot build natural value chains, until we organize and manage the business. Business management organizes results as the links in the chain, capital solutions to deploy and implement the capital solutions needed to produce each result, and performance in the utilization of one solution to produce one result. Each link in the chain consists of one result and the capital solutions utilized in performance to produce the result. Result relationships link results in sequence and manage the complete chain.< [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...].

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...].

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 management 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 management problems with business change, unknown business data like costs and value creation, unknown investment data like capital worth and investment returns, excessive IT and other capital overheads, mismanaged capital development, business and information complexity, unknown business management information, unsupported corporate governance, 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 organizing the business for 21^st century business management. [more...].

20^th century management lays a contrived Chart of Accounts over the business

20^th century management used by all enterprises today cannot account for the actual business, since the business is not organized or managed. Instead, an arbitrary Chart of Accounts is contrived and laid over the business. The Chart of Accounts is, by definition, an inaccurate substitute for the business and often contains distortions introduced by management or accounting to meet their own agenda. The chart of accounts is designed to record accrued and actual cash receipts and disbursements and the arbitrary worth of known assets less the worth of known liabilities.

20^th century accounting does not keep accurate and complete records on the actual business as needed for good management and governance:

• Facility records, including accounts, are not managed as capital of worth to be maintained to provide capital solutions needed to produce business results
• Accounting records only a part of the business cycle from the point that cash is received until cash is spent, but does record from the point that cash is spent until cash is received
• Accounting may include statistical accounting within the chart of accounts, but tends to resist keeping full financial records or non-financial records, so that other business records must be kept by other organizations or individuals or fall through the cracks
• Much capital that incurs expenditures or costs against the actual business is not defined as an asset or is labeled as “intangible assets” producing inaccurate net worth and unknown costs
• Important business data on the value of economic output results from the business, the costs incurred to produce the results, the result value-added, and the worth of capital utilized to produce the value-added is not captured or reported
• Accounting is separate from the business rather than being part or every business decision made, both in making the decision and in recording the decision made
• 20^th century accountants are given a narrow education and taught to follow proscribed principles, rather than being prepared to understand and record the actual business and provide information solutions needed for actual business management
• Accountants have a conflict between many masters, the dictates of accounting, the dictates of external auditors, or the dictates of management that pays their salary
• Contrived 20^th century accounting principles are valid only because they are “generally-accepted” rather than fundamentally-valid principles that accurately record the actual business
• Accounting does not view it role as maintaining accurate records of the actual business as information capital and providing accurate and timely information from records as solutions for good corporate management and governance

The limitations of accounting and the information provided by accounting for management and governance is one of the serious unsolvable problems of 20^th century management.

21^st Century Management records and manages the actual business

Rule No. 4 of the 10 rules of 21^st Century Management: Keep accurate financial and non-financial records on the full business cycle in operations and development. 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”. In order to plan, budget, account for, manage, report, or govern the business, all investments in specific capital solutions, all economic economic output results produced, and each capital solution utilized in performance to produce a specific result must be managed. [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 owners and corporate shareholders are the big losers from the economic crisis

Corporate management may have lost out on some big bonuses and property owners may have to wait for the worth of their properties to recover. But, the business owners and shareholders have lost trillions of US Dollars on their investments due to the continuing failures of obsolete 20^th century management. They have invested in corporations and institutions that are unable to manage their business in the costs and planned worth of investments, the cost and effectiveness of specific capital solutions utilized in performance, the value and quality of results produced from performance, and the historic return and future solution worth from the value added to results. These failures cause the continuing cycle of corporate management problems.

The corporate management problem must be simplified to manage the actual corporate businesses

The only solution is to simplify business management down to the three components of the business and three additional data entities that must be managed to manage the business effectively. The corporation must organize and manage the actual business to clear away the myriad of enterprise management structures laid over every business. Actual business data, unknown today, must be collected and one consistent set of complete and accurate actual business management information, not available today, must be utilized to manage the business. Each corporate headquarters, division, business unit, subsidiary company, or other venture is a business. Each business is consistently-defined according to 21^st century business management conventions and standards to add up to one consistent corporate business. Any potential problem appearing at the corporate level can be traced to a particular capital solution utilized to produce a result at a business level.< [more...]s

R-pM Applications for the Corporation and Management Consultants

Result-performance Management (R-pM) is the conventional method to organize the business for 21^st Century Management, and avoid the problems that enabled the economic crisis. Many enterprises want to use R-pM, but want to apply R-pM a bit at a time before undertaking complete organization of the business. R-pM can be applied for immediate benefit in any enterprise. Simply understanding and applying R-pM concepts enables day-to-day improvement. Applying R-pM to specific management or performance problems enables the enterprise to isolate and solve the problem and to gain experience with R-pM in practice. Once R-pM is proven in a few applications, the enterprise can embark on the full transition to 21^st Century Management. The critical applications for any enterprise embarking on business change is Business Change Management and Project Management to avoid the serious problems and lack of benefits arising from 20^th century business change management.

R-pM Applications to solve management and performance problems

Some examples of applications of R-pM to solve today’s problems are:

• Scaled-down Result-performance Improvement: Isolate a particular result or performance problem area and apply result performance management for near-term improvements
• Result-performance Simplification: Analyze a complex organization to eliminate low-value results, focus on high-value results, utilize high-worth capital solutions, and redeploy or liquidate low-worth solutions
• Enterprise Investment Analysis: Itemize and analyze the result benefit and performance cost, so that the investment produces valuable results and develops qualified capital solutions for cost-effective performance
• Result-performance Strategy Development: Define high-value future results needed and the means to build from current result value to strategic result value
• Revenue Result Organization: Streamline the line organization by identifying the results that comprise value-quality chains and adjusting the existing organization to better manage results
• Investment Management Organization: Set up an investment management capability to manage investment results, manage interim capital development, and prepare for R-pM transition
• Capital Result Organization: Restructure a problem administration area to produce capital management results and manage capital solutions
• Business Change Management: Define the results to improve and performance solutions to develop to itemize and manage both the benefits and costs of change for a particular scope of the enterprise
• Project Management: Organize project results and the capital solutions utilized as a business to effectively develop and implement capital solutions to produce new results for a particular scope of the enterprise
• Result-performance Reporting: Define results of specific value in existing systems and define specific capital solutions with performance costs as utilized to improve current management reporting
• Enterprise System Investment and Implementation: Determine benefits of investment, integrate business and information processing, and properly utilize the implemented system
• Enterprise Resource Planning System (ERP) Utilization: Improve information system benefit by identifying and analyzing the results produced and other capital solutions used to produce each result, augmenting other solutions, and integrating the system and solutions to maximize result value and minimize performance costs
• Business Information Management: Define and integrate the classes of information to begin a Business Information Base, organize information capital support, and relate information needed or records created with the specific result
• Result-performance Outsourcing: Relate outsourced solutions to input and output results and align with internal solutions utilized to produce the same results
• Value-quality Chain Management: Define a chain of internal results or results across collaborators that produce final results and analyze the capital solutions to identify cost-effective performance to maximize result value-quality
• Mergers and Acquisitions: Define the results produced and capital utilized in each of two enterprises to consolidate to a single enterprise with value-quality results and cost-effective performance

The applications contribute to the business structure and learning the actual business. The applications can be directly applied by the enterprise, but we recommend assistance from R-pM Consultants.

R-pM Management Consultants support R-pM applications

The applications can be incorporated into professional business services provided by business change consultants, computer and system implementation consultants, strategic management improvement consultants, human resource consultants for human capital utilization, and financial and strategic planning consultants for strategic value creation. License R-pM for a low introductory fee and utilize the R-pM Toolkit to assist enterprise clients. The current economic recession has increased the interest in R-pM, and R-pM provides management consultants with positive services to address the problems underlying the economic crisis.

Learn more about R-pM Applications

These examples of the near-term application are described in the document “R-pM Applications to Improve Your Enterprise Today” that is available in the R-pM Toolkit. The R-pM Toolkit provides explanations and procedures for complete use of R-pM. The R-pM Toolkit is available at a low introductory cost to members of the R-pM Community.

The R-pM Solution to the Economic Crisis is explained in free downloads

Three free white papers explain the dead-end 20^th century management problems that caused the economic crisis, the way R-pM eliminates the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building an architecture for financial and economic management, and organizing local businesses to flourish in the eventual recovery.

• How to Eliminate Problems that caused the Economic Crisis explains the major unsolvable 20^th century management problems and the R-pM solution
• The Only Solution to the Economic Crisis explains how R-pM manages the business to capture actual business data and provide management the information needed for actual business management
• A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management and manage economic cycles to prevent future crisis

These three white paper downloads are available to R-pM Community Members at Result-performance Management.com. There is no cost or obligation to join the R-pM Community. Join by entering your email and password. Your email address is protected and used only for download problems and occasional R-pM Member news and white papers. .