Archive for the 'Management Responsibilities' topic

20^th century 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 manage 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 performance 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.

The business must be organized and planned to provide the basis for business direction

Before the business can be directed, the business is organized using Result-performance Management (R-pM) in the current business structure, and the business is planned in the strategic business structure with result goals and performance expectations by time periods from the current business. [more...].

20^th century management used today cannot manage business risk as part of the business because the business is not organized or managed. 20^th century risk management is separate from the business and concentrates on areas of proven risk, but does not cover the normal risk that is present and should be managed in everything the enterprise does.

Risk is inherent in every business and must be managed as part of the business. But, risk can be managed as part of the business only by using Result-performance Management (R-pM) to organize and manage the actual business.

Risk tends to be managed by a risk management process

Most enterprises say they manage risk. Many have risk management functions or processes to prove it. Risk is managed by risk management structures laid over the business.

There are specialists and companies devoted to risk management. Many books have been written on risk management. But, do they point us in the right direction or tell us what we really should be doing to manage day-to-day risks we face in our businesses?

Risk is an inherent part of the business

We all face the risk that things we want done or to happen will not be done or happen as wanted. [more...]

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...]

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 both the activity or performance involved in providing and also the goods and services provided to our customers.

20^th century management 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, owners, requirements, and other entities. The chart of accounts defines centers, objects, and codes. The business process defines process objectives, stations, performance activities, performance quality, and other entities. Information systems have their own built in file structures and entities. Cost accounting gathers known costs against activities, centers, selected final products, or other entity. Performance management systems require reporting on other sets of entities concerning the process, training, customer actions, etc. The many structures laid over the business produce business 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...].

20^th century management manages performance and not results

20^th century management used today does not define and manage output results that must be produced for business success. Instead, we define and manage “performance” in various functions, activities, tasks, processes, systems, work flows, etc. Performance per se has no value or meaning. The value and meaning of performance is in the output results produced that are not defined or managed in 20^th century management.

Wasteful performance structures are laid over the business

Since results are not defined, 20^th century management can not organize or manage the business. Instead of defining and organizing the business in the capital to be utilized to produce results, various organization and management structures are laid over the business. An arbitrary organization structure defines functions, jobs, etc. Management structures include strategies, processes, systems, cost accounting, performance management, and administration methods. Structures laid over the business conflict with the actual business and prevent actual business management. None of the structures captures actual business data on the output results produced by the business or the capital utilized by the business to produce results.

21^st Century Management focuses on utilizing capital to produce essential results

Result-performance Management (R-pM) organizes the capital actually needed and utilized to produce essential results for 21^st Century Management. Essential results are identified [more...]d

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 to produce valuable economic outputs in business results. Result-performance Management (R-pM) organizes the business for socially-responsible 21^st Century Management

R-pM directly manages capital assets to produce results

R-pM replaces administration with capital management and organizes all tangible and intangible capital assets as specific performance 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. Performance capital not required is placed with another enterprise that can make use of the capital.

R-pM reduces overheads and waste

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

The Chief Executive Officer is responsible for the quality and value of results produced by the enterprise from suppliers to the customer, value creation in the enterprise strategy, the return from capital development projects, the worth of human and other capital employed, and creation of shareholder value. The CEO must do this in spite of the fact that 20^th century management used today, does not provide the means to manage any of these CEO responsibilities.

But today, there is a new management breakthrough Result-performance Management (R-pM). R-pM organizes the actual business for 21^st Century Management. R-pM establishes management results and provides the CEO the full set of solutions needed to manage the current and strategic business.

The CEO must overcome the unsolvable problems of 20^th century management

If you are a CEO, you know that you face many problems with current management methods. You have one fundamental problem. 20^th century management used today does not organize and manage your business. You lay an organization structure over your business, instead of organizing the business. This is a fatal error, since an unorganized business cannot be managed. [more...]

Previous articles The Logic of Business Organization and The Logic of Business Management discussed logically organizing the business and managing the business. This article discusses the logical need for one integrated structure for business organization and management. Business management is discussed for the classical management duties for planning, direction, reporting, and control. There is also the need to organize and manage capital development as an integral part of the business.

20^th century management lays organization and management structures over the business

20^th century management separates organization and the management duties to use different structures laid over the business. 20^th century management does not organize or manage the business. The enterprise is organized by an organization structure. Strategic planning lays a corporate plan over the business. Other plans and budgets from various parts of the enterprise are laid over the business. Management direction can use a variety of structures such as business processes or administrative structures. [more...]

Corporate Directors have a responsibility for best business management

Corporate Directors and other business governors need to ensure that a viable business strategy is in place to create planned future value, that capital investments provide itemized returns by creating strategic value, that the business is managed to create strategic value, that accurate financial and non-financial records are kept on the business, and that progress in executing the approved business strategy is maintained.

20^th century management prevents corporations and their directors from doing any of this. The actual business is not organized or managed, so most business data is not captured. Strategies are contrived overlays on the business, not actual business strategies. Corporate investments are based on guesses and estimates, not actual business measures. A contrived chart of accounts keeps partial financial records and does not record the actual business. Management information solutions provide enormous quantities of information on contrived structures laid over the business, but only incidental information to manage the actual business.

Result-performance Management (R-pM) organizes the business for 21^st Century Management to provide good corporate governance, as explained in the earlier post “Corporate Governance is a Small Part of the Big Corporate Management Problem”.

R-pM provides transparent business organization and management

As a Director, you approve the business and financial results in the economic outputs to be produced by the business. You approve capital investments and financial expenditures needed to provide the capital to produce results. [more...].

Line Department Managers are the most important result managers

Are you a line department manager, responsible for contributing to enterprise revenues and profits? If you are, how do you define and organize the part of the business that you manage? What are the entities that you manage in your position? What are the entities you utilize to contribute to revenues and profits?

Most of you will answer based on the contrived structures that your enterprise has always used for organization and management. It is unlikely that you answered in terms of the actual business. You have much to gain by understanding the actual business that you are managing.

Result-performance Management (R-pM) organizes the business for 21^st century management

The means to understand the actual business that you manage is through Result-performance Management (R-pM). The enterprise business and your business is defined by only two entities:

• Results: The economic outputs that create the value from the business
• Performance Solutions: The capital consumed in performance to generate the costs incurred by the business to produce result value

You manage only these two entities in your business, as a sub-set of the enterprise business. Planning, gathering information, and managing other entities like activities, tasks, functions, positions, etc. [more...]>