Archive for the 'Organization Methods' topic

The organization structure is the fatal error of 20^th century management

Every day new enterprises are started-up around the world. New enterprises have the one-time opportunity to organize and manage the enterprise business from scratch. These new enterprises unthinkingly adopt obsolete 20^th century management and doom themselves to the burden the unsolvable 20^th century problems discussed here at the Business Change Forum. They waste the precious “green field” advantage of no legacy structures and the opportunity to do it right from the start.

Conventional wisdom says copy an existing business model or organization theory and do not “reinvent the wheel”. This “wisdom” replicates other enterprises’ problems.

Many new start-up enterprises retain management consultants to conduct an organization study. Management consultants still recommend that new enterprises lay obsolete 20^th century management structures over the business, rather than organizing and managing the business for significant competitive advantage.

Do not lay an organization structure over your business!

Once a new enterprise lays a rigid organization structure over the business, the business can never be managed. The enterprise must lay additional management structures over the business. The many inflexible structures conflict with the business causing unsolvable 20^th century problems with business change, unknown costs and value creation, unknown capital worth and investment returns, excessive IT and other capital overheads, mismanaged capital development, business and information complexity, unsupported corporate governance, alignment, collaboration, and so on.

New enterprises must not waste that precious “green field” advantage

New start-up companies have the opportunity to do it right from the start by using R-pM to organize the business for 21^st Century Management. [more...].

20^th century management used today does not organize the business

20^th century management lays a contrived enterprise organization structure over the business, instead of organizing the business. This is the fatal error of 20^th century management. If the business is not organized, the business cannot be managed.

The contrived organization structure follows one of many 20^th century organization theories to organize the enterprise. The business, which we have defined as “the utilization of capital of worth in performance to incur costs and produce value in results” is not organized. The rigid organization structure goes out of “alignment” with every new or closed result or change to a performance solution utilized. Eventually there is need for reorganization to contrive a new organization structure that is closer aligned to the actual business, and the cycle is repeated.

The need for reorganization shows that the business is not organized

Some may argue that their business is organized. Ask if they ever reorganize the business, and they will answer yes, of course. Reorganization is needed because the business is not organized. [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 the natural way to organize and manage a business

Result-performance Management (R-pM) is the natural way you organize and manage your personal business. Your personal business is “the utilization of your capital of worth in performance to incur costs to produce value in your results”.

You plan and produce results in the things you accomplish. You organize the capital you have available in your time, capabilities, residence, tools, equipment, money, plans, instructions, vehicles, information etc to be available to produce results. Your capital has worth in the time and money you invested and in the capability to create value in your future results. You utilize your capital as performance solutions to incur costs and produce value in results, such as a prepared meal, repaired item, arrived at destination, or a good time.

The value of the result must exceed performance costs in order for you to be happy with the result. Your own and your capital’s performance effectiveness produces result quality. Your own and your capital’s performance uncertainty introduces a risk that the result may not be produced, produced late, or not up to your standards. You use R-pM instinctively because R-pM is the only way to organize and manage your personal business or any other business.

At work, you must use contrived 20^th century management

You do not lay organization, account, process, system, administration, or other structures over your personal business. But, on your job, you no longer utilize capital as performance solutions to produce results naturally. [more...].

Most managers think that they manage their business and make business decisions

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

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

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 dead-end 20^th century management to administer structures laid over the business, and do not define the actual business or teach us to manage the actual business.

Outside of R-pM, 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.

R-pM provides a precise definition of the business

We must separate performance from results using Result-performance Management (R-pM) in order to define and manage the business. R-pM defines the business as “the utilization of capital of worth in performance to incur costs and produce value in results”. [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...]:

20^th century management problems are caused by structures laid over the enterprise business

The generally accepted “enterprise business” definition is the activity of providing goods and services. The failure of 20^th century management to organize and manage the activity of providing goods and services creates unsolvable management, business, and performance problems.

The fatal error of 20^th century management is laying a rigid and arbitrary enterprise organization structure over on the business, rather than organizing the business. Since the business is not organized the business cannot be managed, therefore, rigid enterprise management structures for planning, processes, systems, accounts, quality, administration, performance, reporting, etc must be contrived and laid over the business. Structures laid over the business conflict with the actual business, restrict business flexibility, move out of “alignment” as the business changes, and prevent direct business data capture and management.

20^th century management improvements can never solve unsolvable problems

We continue to teach 20^th century management, contrive new 20^th century structures and “business solutions” to lay over the business, and write more 20^th century management books, but we can never solve the top ten problems of 20^th century management. [more...].

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

Alignment covers many problems arising from conflicts between the actual business and overlaid structures

We keep hearing about alignment problems. Alignment problems are caused because the business is not organized. Alignment problems arise from actual business change in results produced and capital utilized as performance solutions, which remain undefined and unorganized. Instead, the enterprise is organized, planned, directed, controlled, and reported through separate and distinct structures laid over the business. With every business change, rigid overlaid structures go out of alignment with the business. Many solutions are available supposedly to enable alignment. Many books have proposed alignment solutions. However, in spite of all of these solutions and books, alignment problems remain. The alignment solutions attempt to align organization and management structures with each other with nothing to align against. “Alignments with the business” do not actually define the business to align against.

Result-performance Management solves the alignment problem by organizing and managing the business

The various alignment problems are eliminated by organizing the business. Result-performance Management organizes and manages the business through one integrated result-performance business structure, which aligns all deployed performance solutions with the output results they produce. With R-pM, there is only one business structure and no alignment problem. Structures laid over the business are removed. One business structure is used for all organization, planning, directing, control, and reporting.

The Alignment Problem

The conventional enterprise faces many unsolvable alignment problems

We have such well-known alignment problems, such as the following, because of rigid structures laid over the business: [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!