Archive for 'How to Use R-pM'

R-pM community users ask questions about identifying enterprise capital, particularly for intangible assets, and defining specific capital solutions. Each question is answered by email, but we summarize common questions in the series of articles on How to Use R-pM. (Note: performance solution and performance structure  in Version 1 of R-pM are called capital solution and capital structure in Version 2 of R-pM).

Defining capital solutions is part of learning the business

Start with the definition of the business: “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Identifying and defining capital solutions is part of learning the actual enterprise business. Defining capital solutions is new, since capital solutions utilized by the business have never been identified and managed as a set. R-pM recommends setting up result teams to analyze and define results and performance teams of capital support personnel to analyze and define capital solutions. Defining and organizing capital solutions is part of business organization capital support. it is important to designate a capable business analyst to lead business organization capital, so that expertise is developed, and a specialist can guide others. Designate someone familiar with each capital category to take the lead with business capital, human capital, facility capital, and management capital. [more...]

According to the Business Change Forum “Investment analysis and capital development” is one of the top 10 problems of 20^th century management . This includes the problems with project management structures and systems.

Project management structures concentrate on managing activities and performance

Project management has always attempted to manage people, tasks, and activities. This is the cost side of the project. However, even with the attention to the cost side, there is no good method to manage costs. The benefit side is not managed.

The problems arise in investment analysis and capital development from three main sources:

1. Failure to plan and manage the economic outputs or results to be produced by utilizing the developed capital to set up value creation
2. Failure to define the capital being developed as specific solutions to be utilized in performance to produce economic outputs or results, to capture the cost of development, to set up specific capabilities to support and manage utilization of capital in operation, and to capture the cost of capital consumption in operations
3. Failure to organize and manage capital development projects as a business to utilize assigned capital in performance to produce project results as a sub-business of an enterprise result in progress like “implemented capital solution” or “development project in progress”

The failure to define results and performance solutions affects both the external management of the capital being developed by the project and the internal project management of performance solutions utilized to produce project results.

Project management problems arise because we do not organize and manage the business

These problems arise because we do not organize and manage the business. The precise definition of the enterprise business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. If we are going to plan, organize, or develop a business, including a project, we must plan, organize, and develop the three components of the business:

• Results: Specific economic outputs of value and quality produced at any level from business performance
• Capital: Specific invested capital available as solutions to be utilized in business performance
• Performance: Utilization of a specific solutions of worth to incur costs to produce specific results

20^th century capital development and project management structures manage the project to develop capital as tangible assets or a completed project, but do not manage the new results to be produced and the specific capital solutions needed to produce the results.< [more...]

Most managers think that they manage their business

Do you manage your business? What is the definition of the business that you manage? Ask a manager if he manages his business, the normal response is yes. Ask for the definition of the business they manage, and they do not have a precise definition. Most will describe the enterprise rather than the actual business.

No company, corporation, institution, or other enterprise manager manages the actual business today. The managers employ 20^th century management to administer the enterprise. It is impossible to manage the business today, because the business has never been defined properly or organized.

The business to manage has never been defined and actual business management has never been taught

What is the enterprise business? There are many conflicting and imprecise definitions for the word “business”. Proper definition of the business is hampered by the definition of performance to include both the utilization of capital in actions executed and the results accomplished. Business schools and management books teach 20^th century management to administer structures laid over the business, and do not define the actual business or teach us how to manage the actual business.

Outside of R-pM, there is no source of information on the real-life fundamentals of actual business organization and management. Since there has never been a precise definition of the business or teachings or books on actual business management, managers do not know what to organize in order to manage the business.

R-pM provides a precise definition of the business

So today, results, capital solutions, and performance in the utilization of capital to produce results continue to be confused by the definition of performance. We must separate results and capital utilized from performance using Result-performance Management (R-pM) in order to define and manage the business. [more...].

Business performance utilizes capital available to the business to produce business results

Result-performance Management (R-pM) defines the business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Every business in the world must produce specific economic output results in order to be successful. Every business in the world invests in capital, in order to have the capital needed to produce output results. Business performance is the actual utilization of capital to produce results.

20^th century business performance includes both actions executed and results accomplished

The 20^th century definition of performance used in business today includes both the actions executed and results accomplished. This definition causes many 20^th century management problems and prevents actual business definition and management. Business performance management, capital development, business processes, management reporting, key performance indicators, etc mix both performance and results produced together as performance. This causes problems today in actually distinguishing and separating results produced from the performance executed.

R-pM separates results from performance to manage the performance producing a result

Actual business performance does not include things accomplished or business results. R-pM separates out results as results produced by business performance and restricts business performance to the activity of the business and actions executed by the business. [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...].

When business started, the actual business was managed

The common definition of a business enterprise is “the activity of providing goods and services”. In other words, the business is “the utilization of capital in performance to produce value in results”. We all manage our actual personal business to utilize our capital in performance to produce value in results naturally, using common sense.

Several hundred years ago, all business was in individual or small enterprises that managed actual business activity in the utilization of capital available in humans with capabilities and knowledge of the business, business practices followed, management methods and intelligence on customers, and facilities in business locations, equipment, tools, money, and supplies available. They used this capital to produce output results in goods they had to buy, goods produced or improved and relocated, final results in goods and services they had to sell, and money received from sales.

They managed their business naturally by managing utilization of capital in performance to produce value in results. Common sense told them that costs were in the consumption of capital in business activity or performance, and that value created was in results leading to the final goods and services results sold. They realized that customer willingness to pay placed value on the total of raw material results and results in their chain. They realized that profit results came from result value-added that exceeded performance costs. They realized that they had to invest in capital as specific performance solutions to be able to produce results, and that result value had to increase to repay the investment. They realized that performance in capabilities and tools had to be effective to produce a high-quality result. They realized that capacity in time, capabilities, and facilities limited the volume of results produced. They realized that performance uncertainty in producing results as needed posed risk that final results would not be produced as planned. To reduce risk, they managed the performance utilized to produce each result one by one in the chain of results needed to produce final results for their customers.

When businesses grew, enterprises were organized and managed rather than the business

In recent centuries, as businesses grew, the complete sets of capital employed and results produced became difficult to manage. There were no information systems to help manage the actual business. So, enterprises in companies, associations, and institutions were formed. New structures were contrived to manage the business enterprise, rather than the enterprise business. [more...].

R-pM Community members and R-pM Toolkit users ask questions about identifying and defining business results, such as new product or service developed, products produced, product or service sold, services delivered, capital supported, capital developed, projects completed, etc. Specific questions are answered by email, but we summarize common questions in the series of articles on How to Use R-pM.

Defining business results is new, since results produced by the business have never been identified and managed as a set. First, it is important to designate a capable business analyst to lead business organization capital, so that expertise is developed, and a specialist can guide others. Also, use The R-pM Toolkit, which has layouts, guidelines, and the answers to most questions.

Some businesses simply ask managers to define results they produce. This can provide a first cut, but managers need explanations and guidance. Result teams for the whole business or parts of the business should analyze, brainstorm, and define the results to be produced by the future business, to be explained to and reviewed with management.

Identifying and defining results is difficult at first, but gets easier as understanding and experience is gained. Eventually it becomes the business routine. [more...]

The Result-performance Management Group at ma.gnolia.com contains bookmarks and a short synopsis of articles on R-pM posted at Business Change Forum, the 21st Century Management Magazine, and other internet sites. Browse the articles to read and print those of interest to assist you to get the most from your business change and improvements.

New R-pM articles will be appearing in on-line and print media and will be bookmarked in the Result-performance Management Group, so bookmark the group yourself for easy access to the latest on R-pM.

There are many business management articles and a lot of talk about value, be it value creation, value propositions, value management, or value chains. With 20^th century management all we can do is write articles and talk. We cannot build actual 21^st century value-quality chains as explained in the new download “How to Build Value-quality Chains“, available now at Result-performance-Management.com.

20^th century management cannot build or manage value or quality chains

20^th century management mixes performance and the output results together as “performance” and manages “performance quality”. 20^th century business process and information systems are directed at a final result and do not specifically define or manage the results leading to the final result. So, there is no way to manage value or to build value or quality chains.

The link in the value-quality chain is the economic output result

Value-quality chains form naturally by organizing the business for 21^st Century Management using Result-performance Management (R-pM). The business consists of two entities.

• Results: The economic outputs from business production that form the links in the chain
• Performance solutions: The capital utilized in business production to produce a result at each link

Any area of the business can be organized by defining the results produced and the performance solutions utilized.

Each result in the value chain has a value, costs, and a value-added

Results form a natural chain of results that starts with input results from suppliers. [more...]

Business change is a mystery today! We have no idea how to identify specific business problems, define the changes to make, determine the benefits of change, manage change projects, or follow-up to measure the return on the change investment.

Business change is a mystery because we do not manage the business. If we do not manage the business, we cannot manage change to the business. Learn “How to Manage Business Change” from the new download document available now at result-performance-management.com.

There is only one method for successful business change, define the business first and then change the defined business

The enterprise business is the utilization of capital in performance to produce value in results. In order to manage business change, we must define the business for that area of the enterprise that we want to change. The business is defined by using Result-performance Management (R-pM) to identify the results to be changed and the capital utilized as performance solutions to produce the results.

Symptoms of business problems appear in defective results, but the actual problems lie in ineffective or high-cost performance solutions. Change is specific new or improved performance solutions utilized. The benefit or change is in the value added to results by removing result symptoms. Change projects are managed by developing and implementing new solutions as project results. The return on investment is in the measured result value-added over the pay back period.

How to Manage Business Change is explained in a new download document

Learn the completely new and correct method to manage business change in the download document “How to Manage Business Change”, available now at result-performance-management.com. Once you understand how to manage business change, download “How to Manage Projects in the 21st Century” to manage your business change project. The R-PM Toolkit contains the detailed guidance and instructions needed for using R-pM for business change, organization, and management.