Archive for the 'Breakthrough Innovation Management' topic

20^th century enterprise management used today lays various plans over the business

20^th century enterprise management cannot plan the business directly because the business is not organized. The enterprise is planned through various structures laid over the business. These overlaid planning structures include:

• Strategic plans using such structures as maps and corporate plans
• Financial plan and budget structures
• Information technology plans and enterprise architectures
• Capital development plans and investment analysis structures
• Human resource hiring and development plans
• Other operational plan structures

Each of these planning structures uses its own set of entities to describe the enterprise, uses different information systems, and requires its own support staff. Each plan must be maintained and updated with actual progress against the planned entities, and reported. The plans plan the enterprise in various ways depending on the particular structures implemented.

None of the overlaid plans plan the actual business

Since the business is not organized, the business cannot be planned. The results produced by the business cannot be planned as an interrelated set. Some results may be planned in isolation as separate entities such as product sold and revenue received. The plans are usually created from estimates rather than a period by period build up from the existing business. Since the business is not planned actual business data is not planned for actual measurement; such as performance costs, performance effectiveness, result value, result quality, capital worth, investment returns, etc.< [more...].

The academic approach dictates incremental improvement and prevent breakthrough thinking and innovations

20^th century enterprise management methods, used today, are devised using the “academic approach” that accepts the solutions in place and the existing body of knowledge as the basis and seeks to make improvements. The academic approach may produce incremental improvements, but it also prevents new management thinking and breakthroughs. New management methods build on old methods. New management books and articles must be substantiated as accurate by footnoting previously published works and referencing existing methods in use.

There are many fundamental problems with traditional organization and management methods that cannot be changed by traditional change methods

What if the body of knowledge in the “published record” is inaccurate or if basic management methods in use are flawed? The academic approach then propagates inaccuracies and flaws. The Business Change Forum contains hundreds of examples where today’s 20^th century organization and management methods, principles, structures and definitions are flawed and inaccurate. So, new methods build on flawed old methods. New books repeat old inaccuracies.

The Business Change Forum discusses unsolvable 20^th century management problems that have never been solved despite thousands and books and methods based on the academic approach to management improvement. [more...]s

Minimize capital investments and business performance to produce essential business results

Many socially-responsible enterprises are looking for methods to utilize capital assets effectively to reduce waste, conserve energy, and provide an innovative work environment. The basic way to do this is to directly organize and manage the business in the utilization of capital assets in business performance to produce valuable economic outputs in business results. Result-performance Management (R-pM) provides the knowledge and procedures to organize the business for socially-responsible 21^st century management

Capital assets are managed directly to produce results

The managed business replaces administration with capital management and organizes all tangible and intangible capital assets as specific capital solutions to be utilized to produce specific business results. All capital is organized to be professionally-managed by those with the capability. The objective is to minimize performance and to maximize the value and quality of results. So, all capital is utilized effectively to prevent waste. All performance costs and captured and charged to the result value produced from the performance. Capital not required by the actual business is placed with another enterprise that can make use of the capital.

The managed business reduces overheads and waste

The managed business eliminates 20^th century enterprise management structures laid over the business. The most costly structures are the monolithic business processes and information systems laid over the business. [more...].

Over the past three months, the Business Change Forum published a series of articles on the “Ten Rules to Organize the Business for 21st Century Management” to guide business organization for competitive 21^st century business management.

The ten rules of 21^st century business management are:

1. Organize and manage the business
2. Generate revenues from a chain of known value and quality
3. Organize and manage capital for high utilization and return
4. Keep accurate financial and non-financial records on the full business cycle in operations and development
5. Operate to optimize operations, result value-added, and the profit result
6. Plan and govern the transition from today’s value to approved strategic value
7. Manage all capital investments to gain a planned return through results
8. Manage human personnel, capability, and knowledge capital to increase human worth
9. Collaborate to maximize shared value and minimize shared costs
10. Employ 21^st century business management conventions and standards

The ten rules are described in the linked article and under the forum “Ten Rules for Business Management”. [more...]

The enterprise organization structure prevents management of your company business today

All enterprises employ 20^th century enterprise management, which lays organization and management structures over the business to manage the enterprise. Once an enterprise organization structure is laid over the business, the business can never be managed. The enterprise organization structure is rigid while the business changes. This produces the reorganization problem. If the business is organized, the organization changes with business change eliminating the reorganization and change management problems.

Your company business consists of five important areas that must be managed for value, cost, and profits

The company 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 manage the business, five important areas must be managed.

• Value and quality in results: Economic output results needed for business success must be managed to produce interrelated outputs across the business and manage the value added to the profit result
• Capital investments in the business:  All capital investments must be managed to acquire, develop, and implement capital solutions needed to produce specific results, to plan the value added to results, to plan the worth of solutions, to know the cost of investments, and to justify the return of investment
• Implementation and maintenance of capital as solutions: Capital utilized by the business must be supported and managed as specific solutions implemented to produce results and provide the actual result value-added return on investment
• Costs and effectiveness of performance: Business performance must be managed to utilize capital solutions cost-effectively to produce value-quality output results
• Strategic result value creation: Business performance must be managed over time to create value in results and develop new solutions needed against strategic business plans

The company business must be managed as one current in operation business structure and the planned strategic business structure. Once the business is organized; organization, planning, accounting, performance management, reporting, and other structures used today to manage the enterprise are no longer needed.

Manage the value and quality of all results produced by your company business along the full revenue-generation chain

The objective of every company business is to produce products and services and other economic output results in a chain of results that lead to the revenue and profit results. [more...].

20^th century enterprise management cannot capture and report essential business management information

20^th century enterprise 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 essential business data and report actual financial and non-financial business management information.

20^th century enterprise 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 worth is usually mislabeled as “asset value” today. [more...].

The enterprises, where we work, do not manage the business

Enterprises today do not manage the business, which is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Instead of organizing the actual business, an organization structure organizes people, positions, functions, and reporting relationships and is laid over the business. The organization structure is the fatal error of 20^th century management. Once an organization structure is laid over a business, the business cannot be managed. The enterprise is managed using process, function, account, performance management, activity, and other structures laid over the business.

We utilize our capital in our performance to produce results naturally, utilizing common sense

We all know how to manage a business. We naturally manage our personal business using common sense. We do not lay organization charts, business processes, or functional procedures over our personal business. We manage our personal business as a chain of results to be completed: such as up and dressed, breakfast prepared, breakfast consumed, and arrived at work. In order to complete each result, we utilize our personal capital in our time, capabilities, knowledge, possessions, supplies, tactics, and process followed. [more...].

The enterprise organization structure is the fatal error that prevents business management

I have participated in many organization studies in my years as a management consultant. My approach to organization studies was to organize the business first, and then assign the people to manage and operate the business.

If the business is not organized the business cannot be managed. The business must be managed to prevent the problems that underlie the current economic crisis such as “unknown asset values”, unwieldy and unmanageable corporations, unknown business information for government regulatory and economic management, the focus on performance and not the results produced, the consequential lack of management information on result value and the cost of producing results, and governance through regulation because the business cannot be governed.

Conventional business organization prevents business organization and management

But, I always find that others concentrate on organizing the people first in a contrived enterprise organization structure and then laying the structure over the business, making the business adjust to the way people were organized. This prevents the enterprise from organizing and managing the business and invariably introduces many more unsolvable problems.

• Contrived entities like departments, sections, functions, positions, etc., were defined, that did not relate to the business and restricted business flexibility
• Since the business was not organized, the business could not be managed
• Other structures used for planning, direction, accounting, performance, reporting, etc. were overlaid or changed to fit the organization, rather than using the business for management
• Managers and staff could justify their existence in the enterprise by filling an organization position, with no reference to the value they created through their performance
• Capital was assigned to the organization to reside rather than to the business to be utilized
• The organization was measured for time consumed, money spent, etc. rather than measuring the business. The organization may have been re-engineered into a process in order to measure the process rather than the business
• By definition, since the organization was different than the business, the enterprise was laying structures over the business and preventing integrated business planning and management
• The organization structure is fixed in place, while the business continually changes, creating pressure for organization change and upheavals in re-organization and change management problems. Re-organization begins another cycle of unsolvable problems
• The list of unsolvable problems is infinite, and the problems can never solved by improving structures laid over the business

So, let’s go back to organizing the business first. If the business is organized, the organization changes with business change, eliminating reorganization and change management problems. The first thing you have to do is to understand the reality of how your business operates and define how it should operate. To do this, you must understand what the business is. [more...].

We have been indoctrinated to accept contrived 20^th century enterprise management as the way that things are done

All existing business methods, all business school teachings, all new business and management solutions, and all management books produced today propagate contrived 20^th century enterprise management, which manages the enterprise by laying organization, account, process, activity, and other management structures over the business. Here at the Business Change Forum we have hundreds of articles that explain the fatal flaws and fundamental unsolvable problems with obsolete and outdated 20^th century enterprise management. We explain the alternative for natural 21^st century business management to manage the business directly as one business structure.

Even with all their flaws, 20^th century business organization and management structures are generally-accepted. People do not want to think and analyze to solve problems; they want a ready-made proscribed solution based on familiar methods. But since 20^th century management is a very costly and flawed way to manage, all we do is propagate bad management, high costs, and unsolvable problems.

Problems are unsolvable, when our mind is closed to solutions

The biggest obstacle to solving business management problems is not finding the solution, but opening our minds so that we can see the solution. Even if the solution is right in front of us and should be obvious, we are blinded by a mind that is closed to the solution. Many experts and analysts are looking for a solution to prevent future economic crisis. The obvious solution, manage the business, cannot be seen. [more...].

Business transformation has a bad name today because of past problems and failures

20^th century business transformation was a big thing over the past twenty years. But did it transform the actual business and solve fundamental problems with a sound structure for business success; or did it simply rearrange the 20^th century management structures and methods that are the cause of business problems? We see the problems suffered by financial institutions that cannot manage “asset value”, corporations that are unable to manage their businesses, and limited and inaccurate accounting that cause the financial crisis and economic recession.

20^th century transformation did not transform the actual business or provide expected benefits

20^th century business transformation changes the organization structure, strategy structure, business process structure, performance management structures, account structures, information technology architectures, management information structures, and other structures that are laid over the business, rather than organizing and managing the actual business. Conventional 20^th century enterprise organization theories never organized the business. If the business is organized, routine business change updates the business organization continually, instead of having separate business change and transformation projects.

The business changes with every business decision, not every few years when management decides it is time for business change. The only reason that business transformation is needed is because the business is not organized and managed. Conventional business change and transformation is not change to the business, but change to the structures laid over the business. Many 20^th century business transformation methods, like total quality management (TQM), business process reengineering (BPR), and activity-based costing (ABC) laid new contrived structures over the business, and are no longer considered viable today.

Business transformation must organize and manage the business as one structure

Business transformation describes what is needed to learn, organize, and manage the actual business for 21^st century business management. [more...].