Archive for the 'Corporate Governance' topic

20^th century management lays reporting structures over the business

Since the business is not organized or managed 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 Result-performance Management (R-pM) 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 the capital to produce results. [more...].

20^th century management lays structures over the business to control the enterprise

The operations and development of the enterprise today are controlled by structures laid over the business for:

• Financial and statistical accounting through a chart of accounts structure
• Cost accounting through activity, center, and product structures
• Capital development control through project structures and asset registers
• Quality control through TQM, six sigma, and other quality structures

The control provided by each of these structures is limited to known entities and certain elements. Financial control covers capital for tangible assets and finances for cash receipts and expenditures, cost control is limited to known costs against selected elements like activity or project, non-financial control is sporadic depending on individual management, and quality focuses on performance producing selected end-product results.

Accounts record accrued and actual receipts and expenditures from point money comes in to the point money is spent. There is no control of the business cycle from the point money is spent until value is created to enable money to come in. Accounting control is enforcement of rules and principles rather than providing accurate information for business control.

Capital development lumps costs together as a project or tangible asset. The range or performance solutions developed are not controlled and may be classified as intangible assets. No method or information is provided to plan and control return on specific capital investments in performance solutions. Projects are not organized to capture development costs for implemented solutions and plan value-added to the business from solution utilization. Capital worth numbers are sporadic for some asset and liability solutions, but real capital worth in the capability to produce future business value is unknown.

Each structure is separate from other structures and uses its own terminology and definitions to describe the enterprise. Each structure introduces high costs and much effort to collect and report information. But, none of these overlaid structures can control the actual business.

The actual business must be controlled for each component of the current and planned business

In order to control the business the actual business must be organized, planned, and directed as explained in previous articles. [more...].

What is the definition of your business?

Have you organized your business? Do you manage your business day by day? What is the definition of the business that you have organized and that you manage? Most managers think that they are organizing and managing their business. But when asked they cannot define the business that they have organized and are managing. They usually define the enterprise, rather than the business, since they have actually organized and are managing the enterprise, and not the business.

It is important to have a clear definition of the enterprise business

It is important to have a precise definition of the enterprise business that is organized and managed. Otherwise, we will never know if we are organizing and managing the actual business. Today there are many conflicting definitions of the word business, none defining what is organized and managed to manage the business. [more...].

R-pM is a breakthrough to manage the actual business and leave 20^th century management problems behind

R-pM organizes and manages the actual business, “the utilization of capital of worth in performance to incur costs and produce value in results”, without 20^th century management problems with reorganization, business change, business and information complexity, complex and costly IT infrastructures, unknown costs and value, unknown capital worth and returns, excessive overheads and costs from overlaid structures, and on and on.

R-pM is a new natural business perspective requiring little investment or risk

R-pM minimizes capital to that required by the business, optimizes business performance to reduce performance costs and increase result value, and manages result value-quality chains to produce customer input results. R-pM provides enormous competitive advantage, while the investment and risk is minimal. R-pM is mainly a change in thinking, which requires time to take hold. Human capital learns to operate and manage the actual business, instead of structures laid over the business. Existing information systems likely can be utilized as business process solutions, if the business is properly defined and organized.

The existing business is gradually redefined into result value-quality chains and one integrated business structure. Obsolete structures laid over the business and unsolvable 20^th century management problems are gradually abolished. As the enterprise learns R-pM, implementation accelerates and the competitive advantage of R-pM increases until the complete business is organized for 21^st Century Management.

Owners, investors, shareholders, lenders and others with a financial interest must lead the way to manage the actual business

Business owners, shareholders, potential investors, lenders, etc have the most to gain by being among the first to use R-pM. [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...]:

Structures laid over the business produce enormous information complexity

20^th century management does not manage the actual business, but manages the enterprise using a multitude of organization, process, account, performance, system, administration, etc structures laid over the business. The structures are rigid and do not change with actual business change. No structure captures consistent, complete, and accurate business data. The various structures use different names for the same entity and different definitions for the same part of the enterprise. Information systems computerize the various structures producing enormous amounts of incomplete, inconsistent, and inaccurate information. This causes the exploding information complexity and information management problems enterprises are experiencing today.

Information generally is not organized and managed as capital

Information capital management is not well organized. Accounting is responsible for financial records, information technology may perform data management and record retention, there may be a function for knowledge management, record management, or business or management intelligence. Even with this, there is little management of information for application to improve the business. There is no structure to relate information directly to the business and no data is collected on the actual business as a related set.

The explosion in enterprise information problems and investments demands a basic rethink

These problems are aggravated by the proliferation of IT use for email, Internet information storage and downloads, information exchanges, imaged documents, etc. New corporate governance requirements demand a solution to these problems. [more...]s.

Corporate Governance is one of the top 10 problems of 20^th century management!

Corporate Governance problems are “solved” my more imposed governance

We have all heard of the recurring crisis in cooperate governance. Governing the corporation is a big problem because we cannot manage the corporate business. We overlay a myriad of contrived structures on the business to organize and manage various entities like units, functions, activities, processes, objects, jobs, etc. Corporate governance itself may be through a contrived corporate governance structure laid over the business to extract and reconcile information from other overlaid structures.

Corporate governances problems are “solved” by adding to the problems with more stringent and costly requirements for outdated 20^th century accounting, auditing, and compliance reporting.

Corporate governance problems must be solved through governance of the actual corporate business

Corporations will be governed effectively only after corporation businesses are organized and managed. The strategic corporate business must be defined as strategic results and the new and improved performance solutions to produce the strategic results. Result goals and performance expectations must be established period by period to the strategic horizon. Corporate governance can then manage actual result value creation against goals and strategic estimates, corporate responsibility for actual business practices, and corporate information capital as part the actual business. The solution to the corporate governance problem is Result-performance Management (R-pM) to organize the corporate business for 21^st Century Management. Review the article “Seeking Good Corporate Governance by strengthening Bad Governance” at Result-performance-Management.com.

Corporate Governance Problem

We overlay structures on the corporate business, and fail to organize the business

We do not organize the business. Instead, we lay many structures over the business for organization, strategy, planning and budgeting, business processes, information systems, performance management, accounts, administration, etc. We gather data on all the entities used and compile a wide variety of management and statutory reporting, but we cannot capture actual business data. Each overlaid structure creates business and information complexity, obscures the view of the business, and compounds the problem of corporate governance. [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!

All business decisions boil down to “what result must be produced as output by the business, what human capital should be responsible, and what other capital should be utilized to produce the result?” Strategic decisions involve the strategic results needed in the future and the capital investments to acquire or develop the capital as performance solutions to produce the strategic results. Management goals involve results to be produced within a certain time. Performance expectations involve the level of performance expected from the human and other capital utilized as specific performance solutions.

Business decisions can be managed only by separately managing results to be produced and the performance solutions to be utilized.

20^th century management does not support business decisions

20^th century management does not define the results to be produced by the business or the performance solutions utilized in business activity as specific managed items, to support business decision-making. Both results accomplished and actions executed have been defined as performance, dating from the 15^th century.

Management decisions are often stated in terms of performance as tasks, activities, jobs, work assignments, etc instead of output results to be produced by when. If management makes a decision to produce a result by whom and by when, the decision can not be implemented and managed as part of the business.

Decisions must be implemented and managed through separate structures laid over the business. The organization structure is updated to say who should carryout the decision. [more...]