Archive for the 'Management Responsibilities' topic

20^th century enterprise management does not enable governance of the corporate business

20^th century enterprise management used by corporations today prevents actual governance of the corporation business. Organization and management structures are laid over the business preventing actual business management. Corporation management receives mountains of reports against structures laid over the business. The reports are inconsistent since each structure defines the corporation differently. The reports are incomplete since actual business data is not captured and reported. There is no consistent framework for business management and governance. The corporation strategy map or corporate plan is different from business processes, projects, and functions, used to direct the corporation, which are different from the chart of accounts, activities for costing, or quality structures used for corporation control. These structures may have their own reporting that is different from corporation management reporting through various performance management control panels, scorecards, etc. The structures laid over the business prevent good corporate governance of the actual corporate business.

Corporate governance is through compliance with rules and regulations

Since the corporation is unable to manage and govern the actual business, corporate governance is not positive in ensuring that the business is properly governed. [more...]s

Most managers think that they manage their business

Do you manage your business? What is the definition of the business that you manage? Ask a manager if he manages his business, and the normal response is yes. Ask for the definition of the business they manage, and they do not have a precise definition. Most will describe the enterprise rather than the actual business.

No company, corporation, institution, or other enterprise manager manages the actual business today. The managers employ 20^th century enterprise management to administer the enterprise. It is impossible to manage the business today, because the business has never been defined or organized properly.

The business to manage has never been defined and actual business management has never been taught

What is the enterprise business? There are many conflicting and imprecise definitions for the word “business”. Proper definition of the business is hampered by the definition of performance to include both the utilization of capital in actions executed and the results accomplished. Business schools and management books teach 20^th century management to administer structures laid over the business, and do not define the actual business or teach us how to manage the actual business.

Outside of our explanations of business management, there is no source of information on the real-life fundamentals of actual business organization and management. Since there has never been a precise definition of the business or teachings or books on actual business management, managers do not know what to organize in order to manage the business.

Business management provides a precise definition of the business

So today, results, capital solutions, and performance in the utilization of capital to produce results continue to be confused by the definition of performance. We must separate results and capital utilized from performance in order to define and manage the business. [more...].

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

The day to day operations of the enterprise today are directed through a variety of structures laid over the business. These structures focus on enterprise performance, which mixes the actions of performance together with the results accomplished. The main structures used to direct the enterprise are:

• Processes, which define the flow of performance across the enterprise
• Functions, which define activities performed by the enterprise
• Information systems, which provide the flow of information processing
• Work assignments and tasks, to perform ad-hoc activities
• Projects, to perform one-time enterprise endeavors

These structures are used to direct performance of the enterprise and to produce results as separate entities, such as products, services, sales, and revenue.

None of the overlaid structures directs the actual business

The actual business consists of results produced, capital available in performance solutions, and performance to utilize solutions to produce each result. None of the overlaid structures direct the utilization of capital solutions to produce results. Most enterprise direction is up to the experience and capability of the manager to make decisions and take actions without a business framework.

Structures used to direct the enterprise do not relate to other management structures

The structures used to direct the enterprise do not relate directly to the structures used to organize, plan, control, and report the enterprise. A prior article showed that certain structures are used to plan the enterprise in strategic maps and corporate plans, financial plans and budgets, information technology plans and architectures, investment and capital development plans, and operational plans. The structures used to direct the enterprise are not connected to or do not necessarily refer to the structures that plan the enterprise. Enterprise direction and management is disconnected among a wide variety of structures that can be contrived and laid over any business, such as business process, administrative function, risk management, performance management, and information system structures.< [more...].

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...].

Business owners and investors lose the most due to the unmanaged business

Business enterprises today manage the enterprise as a company, corporation, or other form of organization. The business owner and shareholder profits are reduced due to the waste and inefficiencies involved in managing the enterprise using structures laid over the business. The enterprise invests in capital, but the capital investments are not defined or managed as part of the business. The enterprise must produce specific goods, services, and other output results to be successful, but these results are not defined and managed as part of the business. The capital investments must be utilized in business performance to produce specific results but business performance is not defined or managed. The rigid enterprise organization, corporate plan, financial account, cost account, business process, performance management, and other structures, used for enterprise management, conflict with the changing business causing unsolvable 20^th century enterprise management problems.

Business owners have the most to gain from directly managing 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”. The business can be organized only by organizing specific capital investments in the business as specific human and other capital solutions of managed worth to be utilized in business performance, organizing specific output results of managed value that must be produced by business performance, and organizing business performance in the utilization of specific solutions to produce specific results to manage costs and result value-added across the business. Organizing the business for 21^st century management slashes costs and compounds competitive advantage.

Business owners, from small businesses to corporate investors, have the most to gain by organizing and managing the business. [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...].

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...].

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...].

The G20 failed to identify or address the problems that caused the economic crisis

Many government and non-government experts have identified the need for new business practices and management structures to solve the problems within financial institutions and corporations, in order to prevent repeat the losses and failures that led to the economic crisis. The fundamental problems with risk management, capital worth (asset value) measurement, financial management, output result and value management, recording of financial and non-financial business data, consistent and accurate business management information, consolidation of businesses of corporations and institutions, and the many others must be solved in order to prevent future crisis. These 20^th century enterprise management problems are identified and described in detail here at the Business Change Forum.

Descriptive white papers on 21^st century business management; the only solution to the economic crisis, and on a government business management program to address the crisis were sent to all government agencies and multilateral institutions related to finance, commerce, banking, economy, and business worldwide. The information conflicts with the conventional thinking that limits the possibilities of these agencies, so it is deleted or ignored.

The G20 successfully repeated the mistakes of the past

The G20 meeting is being hailed as a success. The contributions to the IMF and the World Bank should help recovery in some needy countries. But, the biggest success of the G20 was to repeat prior successes in similar government action following earlier financial, economic, and corporate governance problems. One objective of the summit was to restore confidence in the methods, systems, structures, and regulations that caused the economic crisis. Like the response to all previous crises the G20 tweaked a few existing methods and called for expanded regulation of corporations, financial institutions, and tax havens.< [more...].

The Economic Crisis is caused by failure to manage businesses

Managers of financial institutions and other corporations that suffered large losses in the economic crisis blame the problems on unreliable accounting information and ineffective management structures. Financial institutions say that they are unable to manage “asset value” as one reason for the current economic crisis. The term “asset value” shows that they do not manage the business of the corporation. All businesses are “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Much capital is not managed and is labeled as “intangible assets”. Other capital is not managed for the return on investment and the worth of the capital is not managed as a specific solution to be utilized and sold or disposed of at the end of its useful life. The term “asset value” shows the failure to manage the business. Assets are specific capital solution investments of positive capital worth. Value is an attribute of output results, such as interest and dividends earned, that provide the return on the solution investment. Result value-added is the value less the full performance costs of the solutions producing the result. [more...].