Archive for the 'Business Management Information' topic

20^th century management lays reporting structures over the business

Since the business is not organized or managed today, the actual business cannot be reported. Management reporting is against the myriad of organization, management, administrative, and other structures laid over the business. Each structure employs its own terminology and information systems to produce reports on the structure. This produces a myriad of unrelated management reports for plans, business processing, resource planning and utilization, manufacturing, supply chains, customer relationships, accounting, quality control, financial management, human resource management, information technology management and on and on. The reporting possibilities create information complexity with no specific framework to relate all the reporting. Despite all the reports and complexity, there is no direct reporting on the actual business.

We try to bring together information from the diverse structures by adding special 20^th century reporting structures, such as:

• Performance management: Control panels, dashboards, scorecards and various other structures to capture and report information
• Strategic enterprise management: Structures to consolidate defined information from specific information systems
• Data reconciliation: Structures to gather and redefine inconsistent data from diverse systems
• Decision support and drill down: Structures to allow management to search and find information in diverse systems
• Categorization: Structures laid over information to reconcile and restructure information and to manage records, documents, reports, content, and other information sub-sets

These various reporting structures and supporting information systems constitute a large overhead and contribute to rather than solving information and business complexity problems. Management information produced is inconsistent, inaccurate, and incomplete in terms of what is actually happening in the business.

Business management reporting must be against the current and planned business

In order to report the business the actual business must be organized, planned, directed, and controlled as explained in previous articles. Actual business reporting is provided by reporting the three components of the business:

• Results: The economic outputs of value and quality produced across the business
• Capital: The investments in capital as specific solutions that must be acquired and developed to provide the capability to produce future results and that must be utilized in business performance to produce actual results
• Performance: The deployment and utilization of a specific capital solution to incur costs and provide effectiveness in producing a specific result in a performance domain

The business can be reported only by organizing the actual business as current results produced, invested capital available to the business, and performance in the utilization of a capital solution to produce a result. [more...].

Methods like Total Quality Management, Six Sigma, and ISO 9000 Standards do 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.

Customer-determined quality is managed result by result by managing the businss

Quality must be managed as part of the managed business defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. By definition, in the business, value and quality are attributes of results, the economic outputs produced across a managed business. Result-performance Management (R-pM) provides the knowledge and procedures to organize the business by organizing results produced across the business as one-off results or as result chains and by organizing the capital utilized as solutions in business performance 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. [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...]

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 fundamental cause of the economic crisis is failure to manage the business

One major problem causing the economic crisis was the lack of accurate management information on the actual business of investment institutions, banks, corporations, and other enterprises. Financial institutions cannot manage “asset value” in the worth of capital, companies do not know full costs or customer value provided, and corporations can not consolidate actual business information from the various units in the corporation.The fundamental problem is the lack of one complete and accurate set of information on the actual business, due failure to manage and measure the business.

20^th century management reports against structures laid over the business

The generally-accepted definition of enterprise business is “the activity of providing goods and services”. In order to organize and manage the business, we must organize and manage the activity of providing in the utilization of capital in the performance required to provide. We must also organize and manage goods and services as output results provided to customers.

20^th century management used today does not provide a structure to do this. Instead of organizing the business, an organization structure is laid over the business to define organization units, functions, and positions. Since the business is not organized, management structures must be laid over the business. A business strategy defines visions, objectives, maps, owners, and other entities. The chart of accounts defines centers, objects, and codes. Business processes, activity costing, performance management and the many other structures laid over the business produce information complexity and hide the actual business.

Overlaid structures capture vast amounts of data and report mountains of information, but not on the actual business

None of these structures captures actual business data or reports actual business information. [more...].

Investors are the big losers in the economic crisis

Corporate investors have lost trillions of US Dollars in the current economic crisis. The recession appears to be long and deep delaying any gains in a recovery. Investors need to understand the fundamental problem causing the widespread problems in financial institutions and corporations around the world. Corporate investors are up against conventional corporate management thinking, which propagates dead-end 20^th century management and prevents 21^st century business management. Every business in a corporation must be managed consistently to consolidate into one corporate business. Corporate shareholders must pressure corporate management to manage the actual corporate businesses to eliminate the problems that caused past and present crisis, and surely will cause future crisis.

Investors lose because they invest in corporations that do not organize, plan, direct, or control the business

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Corporations do not manage the business today. They organize the corporation with an organization structure, plan with strategy and corporate plan structures, direct with function and process structures, control with account and quality structures, report with compliance and financial reporting structures. The structures laid over the business are not related to the business, often are not related to each other, consume enormous IT resources and costs, and do not collect or report actual data concerning the business.< [more...].

The economic recession is caused by one problem: the failure to manage the business

20^th century management employed by all enterprises today lays organization and management structures over the business to manage the enterprise arbitrarily, rather than managing the business. 20^th century management produces mountains of “management information” on arbitrary structures, but does not provide the one set of complete, consistent, and accurate business management information needed. This causes the fundamental problem in all business management that has caused all previous crises and is the basic cause underlying the current economic crisis and recession. The problem is the failure to manage the business.

The current business, financial, and economic symptoms of the problem are numerous and complex. But, the problem is basic and simple. Today, all governments, enterprises, and experts are trying to understand the symptoms and to alleviate the symptoms. No one is trying to get beneath the layers of symptoms to solve the one fundamental problem. The only real solution is to organize and manage the business with Result-performance Management (R-pM).

20^th century management does not provide basic information for business, financial, and economic management

20^th century management used today does not capture actual business data on the three components of the business: all results to be produced across the business for success, all capital solution investments, and utilization of capital solutions in all performance to produce specific results.

Because of this, enterprises cannot manage result chains and important result metrics like result value, result volume, result quality, total result performance costs, result value-added, and result risk against result goals; important performance indicators like performance costs, capital utilization, performance effectiveness, value contribution, and performance uncertainty against performance expectations; or important capital measures like investment costs, total solution performance costs, un-amortized balance, solution capacity, qualifications, investment return, solution worth, and solution reliability against solution potential.

All “problems” that cause the economic recession identified to date, such as problem financial products, the credit freeze, sudden need for large write-offs and losses, sudden losses appearing in various corporate units, etc are symptoms of the failure to manage the business. [more...].

The economic crisis is caused by one problem: the failure to manage the enterprise or corporate business

No corporation, financial institution, or other enterprise today is able to manage the business. This is because 20^th century management practices propagated by all business schools, management books, and management experience say to use one of many organization theories to organize the enterprise through various organization units, positions, functions, and reporting relationships. This is the fatal error of 20^th century management. The organization structure is laid over the business, preventing the actual business from being organized or managed. The enterprise must be managed by laying additional structures over the business for plans, processes, accounts, performance, quality, costing, data reconciliation, and on and on. The business changes, while overlaid structures remain rigid, causing the many unsolvable 20^th century management problems, that have never been solved and can never be solved by laying new structures over the business. All 20^th century management problems arise from one fundamental problem, “the failure to organize and manage the business”. Therefore, 20^th century management problems must be eliminated by organizing and managing the business.

The problems and the solutions for corporations and governments are explained in three free white paper downloads available to R-pM Community Members at Result-performance Management.com.

Financial institutions cannot manage “asset value” and corporations cannot manage the many corporate units

Troubled financial institutions say they could not manage asset value, which is the actually the worth of the capital in their investment portfolios and capital utilized within the institution. [more...]s

Governments are looking for a unifying architecture for best business management and market, financial, and economic management

Governments will be meeting to construct an international response to the financial crisis. They will discuss new best business management practices to solve problems that caused the crisis, and new architectures for the financial system and economic management to prevent future crises. Again, as always in the past, they likely will fail to comprehend and address the unsolvable 20^th century management problems that cause the crisis and will add new practices and architectures on top of existing dead-end 20^th century management structures, and claim to have solved the problem. In order to make real progress, those involved must set current structures aside and take a completely new look at what comprises a business and how businesses relate to industries, markets, financial systems, and economies.

R-pM is the only solution available to eliminate unsolvable problems that caused the crisis

Result-performance Management (R-pM) organizes the actual business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. 20^th century management structures are replaced by one business structure to eliminate unsolvable problems in unknown capital solution investments in the business, unknown economic output results produced in chains across the business, unknown value of results from the business, unknown costs to produce results, unknown value-added to manage value and quality, unknown returns on capital investments from the added value to results, unknown capital worth in future output and disposal result value-added, and on and on. R-pM captures actual business data to manage all corporations, financial institutions, and other enterprises properly and report on the actual business to regulators.

R-pM is the only unifying architecture to integrate businesses, markets, industries, and financial and economic management to prevent future crises

R-pM builds up from the business structure to provide actual business architectures by industry or economic area or sector to consolidate actual business data. Data can be consolidated by market for business input and output results and capital solution utilization. Industries, such as the financial industry, can be managed for the value and quality of results and the utilization of financial and other capital solutions. [more...].

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...].