Archive for 'The 21st Century Enterprise'

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

Every day new enterprises are being organized around the world. As described in the previous post, enterprises go to the drawing board to organize and manage the start up, but they do not know what to draw. So, virtually all of these new enterprises simply adopt generally-accepted 20^th century management methods and doom themselves to the unsolvable problems discussed here at the Business Change Forum. These enterprises waste the precious “green field” advantage of no legacy structures and the opportunity to do it right from the start.

Conventional wisdom says copy a business model and do not “reinvent the wheel”. The model involves products, marketing, customers, etc but does not provide a real model or organization for the actual business. New enterprises adopt a typical 20^th century organization structure that does not organize or model the business.

Management consultants still recommend that new enterprises lay traditional organization and management structures over the business, rather than organizing and managing the business for significant competitive advantage.

Managers and consultants must employ the best structure available to protect future shareholder worth

Any manager or management consultant involved in organizing a new enterprise has a duty to study all options to protect the worth of the shareholders’ investment.

Most managers and consultants do what everybody else does and erroneously assume that the enterprise organization structure they adopt actually organizes their business. [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>.

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...]:

Our personal business is the way that we organize and manage our daily life

Each of us has our own personal business that must be organized and managed just to get things done in our daily life.

We organize our personal business naturally

We have things to accomplish, whether it is a prepared breakfast, arrived at work, entries in a “to do” list, items purchased, or going out for a good time. Each thing we accomplish is a result. We do not consciously think of them as results, we just accomplish them naturally. The results we produce are distinct outputs or accomplishments that can be described and counted.

In order to produce results, we naturally utilize our capability, knowledge, reusable equipment, a process, consumable supplies, tactics, etc. The things we use in performance are our personal capital, such as our residence, our belongings, our car, our money, and our own time. We use capital as the appropriate performance solution to produce the result, such as a capability we have, a tool or equipment, a recipe, specific supply items, etc. We organize these performance solutions in our residence so that we know where solutions are, when we need to produce a result. We all organize our business results and performance solutions in the same way, because it is the natural way to organize.< [more...].

Today’s change driver is globalization and new technologies

Businesses across the world are still coping up with the changes triggered by globalization and explosive growth of information and communication technologies.

Businesses are still exploring the ways and mean of improving operational efficiencies through systematic deployment of IT infrastructure and automating the business processes along the supply chains spanning across the businesses and in many cases across the continents.

Economic liberalization in developing countries has opened new opportunities and challenges and national companies are transforming themselves into international firms to take the advantage of growth markets and low cost sourcing hubs all over the world. In the course of doing so, the firms are putting their might in tackling with the associated issues such as growing competition and M&A mania among other things.

Tomorrow’s change driver is environment protection

As the businesses are trying to come to terms with these complex issues, early warning signals of next driver of global change are already showing up. This change driver has the potential to change the way we look at business and for that matter the world around us.

This is climate change, which is subtly but surely making its impact on the businesses all over the world. It is only a matter of time before this dreaded aspect becomes an integral part of the business and concern shifts from doing well to doing good.

There is an urgent need for businesses to realize that environment is no longer a image building exercise with corporate social responsibility. There is a far greater need for the companies to discover the impact of carbon economy on their business. Impact on operational efficiencies may be quite obvious for many but the real challenge for the companies is unearth the strategic imperative of this change driver, so as to gain sustainable competitive advantage through eco-friendly processes and products.

The businesses must respond to the change proactively, as the luxury of reacting to the change, as has been the general trend with changes in the past, is not an option in this case. Such an attitude may prove too costly, not for the business or community in which the business operates but for the whole planet. The time to think creatively and act is now. This must be on the top of leadership agenda no matter where you operate, or which industry you belong to. .

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.

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 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 and the business to consolidate information and reconcile data from other structures. 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!

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...].