Archive for the 'Best Practice Management' topic

Redefining BPM: Why Results and Performance Must Be Separated

The June 2008 issue of BPM Business Performance Management Magazine carries a lead article explaining the business organization and management breakthrough with Result-performance Management (R-pM). The article, “Redefining BPM: Why Results and Performance must Be Separated”, explains the superiority of R-pM over 20^th century management methods like BPM, be it business performance management or business process management. The article explains problems with 20^th century management and why R-pM as the only way to organize the business for 21^st Century Management to eliminate 20^th century management structures laid over the business.

20^th century definition of performance prevents business organization and management

One of the main problems of 20^th century management methods like business performance management (BPM) is the definition of performance to include both the utilization of capital in actions executed and results accomplished. Performance management methods and Key Performance Indicators (KPI) mix together capital utilized, performance at an ongoing level, and results produced as economic outputs in a time period. Business Performance Management (BPM) does not identify or manage results, capital, and performance as entities and sets of items to be managed. This prevents the business, which the article defines as “the utilization of capital of worth in performance to incur costs and produce value in results” from being managed.

Results and performance must be separated to organize and manage the business

Result-performance Management manages results separate from capital, and the utilization of capital in performance. [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 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...].

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>.

Methods like Total Quality Management and ISO 9000 Standards did not provide the quality management needed

We have had structures like Total Quality Management (TQM) and the ISO quality system for ISO 9000 standards and certification, which were found lacking as a management method. We also reengineered our business process with BPR, specifically to help us manage performance quality. But, performance quality proved difficult to comprehend and manage. Six Sigma provides another structure for our final production quality. Now we have business process and performance management (BPM) to manage the quality of our processes and performance. Even with all this, we still have not found a way to manage quality as the business routine of everyone in the enterprise.

R-pM manages customer determined quality result by result

Result-performance Management (R-pM) organizes the business by organizing results produced across the business as one-off results or as result chains and by organizing the capital utilized as performance solutions to produce each result. With an organized business, the company can manage quality as an attribute of results, not performance, and can manage real quality for any result, not just final results from production. Every result has a customer who is willing to pay a result value for a determined level of quality. Quality and value of each result must be acceptable to the customer. [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...]:

The typical corporation has enormous IT overheads, but still has no system to manage the business

The typical corporation spends enormous sums on Information Technology and has a large IT overhead with many complex information systems. But with all this, the corporation still does not have the one information system really needed to manage the actual business. Information systems lay additional structures over the business or manage other structures laid over the business. This produces enormous business and information complexity. Corporations invest in additional systems for data reconciliation and information management, rather than simplifying information to one consistent set that reports the actual business.

The corporation has much capital administered as Information Technology instead of being managed for corporate benefit, and has much information administered as technology instead of being managed to provide information solutions for business and management results. There are no unifying business entities to be referenced to control all information in, entering, or leaving the enterprise, including emails, Internet downloads, and file transmissions.

Result-performance Management (R-pM) manages the business as one integrated information system

Result-performance Management (R-pM) uses IT to manage the actual business as one simplified Result-performance Management System. R-pM manages other simplified application programs as performance solutions integrated with the business process, where needed, to produce a specific result.

R-pM eliminates overlaid 20^th century business information systems and the need for a large IT overhead. Information technology capital, support, and capabilities are no longer managed separately as “Information Technology”, but are integrated as part of normal capital management. R-pM references all information to the actual business and integrates all information as capital in one Business Information Base to produce data, knowledge, record, and intelligence solutions needed to produce specific business results.

R-pM enables simplified information systems, integrated capital management, and integrated information capital solutions

Result-performance Management eliminates the Corporate IT Empire and the complex information systems laid over the business by organizing and managing the actual business with one simplified system, by simplifying applications to produce specific results, and by properly managing information technology and capital as capital.

IT capital is organized with similar business, facility, and management capital to be managed by professionals. IT systems needed by the business are integrated with the business process to produce specific results. One set of complete, consistent, and accurate management information is reported against the actual current and strategic business, including measured performance costs, result value and value-added, capital worth, and return on capital investments that cannot be measured today.

IT systems and overheads not needed for the business are eliminated. New IT investments are restricted to Result-performance Management Systems to manage actual business results. IT expenditures and investments are reduced dramatically to only those needed to support and manage the actual business.

Learn more in the article “IT Empires and Systems that do not manage the actual Business“, which explains the problems with 20^th century information systems and the administration of high-worth enterprise capital as “information technology”. .

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...].

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...].

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!

Processes and systems are monolithic entities laid over the business

Over the past 15 years, corporations and other enterprises have implemented business process and packaged information systems, like ERP, SCM, MRP, and CRM. These processes and systems are laid over the actual business and provided general improvement, but usually still include extra costs and inefficiencies. Often old performance problems remain after new process and system implementation. Many enterprises want to improve their process and system utilization, but lack a fundamentally-sound method. This subject is explained further in the article “How to maximize Benefits from existing Processes and Systems” published in 21^st Century Management Magazine.

R-pM can make significant improvements to existing processes and systems

R-pM provides the method by identifying and managing the actual business that lies hidden under the processes and systems. Performance problems are inherent in specific performance solutions. R-pM redefines processes and systems as value-quality chains, so the enterprise knows the specific results produced and performance solutions utilized along the chain. R-pm integrates the business and system processing as the business process solution and separates other solutions utilized. The enterprise can then solve performance problems with specific solutions, and minimize the performance and maximize the result produced at each link in the chain. This enables the enterprise to solve problems, reduce performance costs, and manage result value and quality across existing processes and systems.

Analyze existing processes and systems as a value-quality chain

The only method available to redefine existing processes and systems is explained in the download “How to Build Value-quality Chains“. The only method to manage business change effectively is explained in the download “How to Manage Business Change“. The only method to manage a business change or capital development project properly is explained in the download “How to Manage Projects in the 21^st Century“. The full details to improve existing processes and systems are provided in The R-pM Toolkit, your 21^st Century Management Manual. These downloads are available now at Result-performance-Management.com. .