Archive for the 'Performance Management' topic

Redefining BPM: Why Results and Performance Must Be Separated

The June 2008 issue of BPM Business Performance Management Magazine carries a lead article explaining the business organization and management breakthrough with Result-performance Management (R-pM). The article, “Redefining BPM: Why Results and Performance must Be Separated”, explains the superiority of R-pM over 20^th century management methods like BPM, be it business performance management or business process management. The article explains problems with 20^th century management and why R-pM as the only way to organize the business for 21^st Century Management to eliminate 20^th century management structures laid over the business.

20^th century definition of performance prevents business organization and management

One of the main problems of 20^th century management methods like business performance management (BPM) is the definition of performance to include both the utilization of capital in actions executed and results accomplished. Performance management methods and Key Performance Indicators (KPI) mix together capital utilized, performance at an ongoing level, and results produced as economic outputs in a time period. Business Performance Management (BPM) does not identify or manage results, capital, and performance as entities and sets of items to be managed. This prevents the business, which the article defines as “the utilization of capital of worth in performance to incur costs and produce value in results” from being managed.

Results and performance must be separated to organize and manage the business

Result-performance Management manages results separate from capital, and the utilization of capital in performance. [more...].

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...].

Business performance utilizes capital available to the business to produce business results

Result-performance Management (R-pM) defines the business as “the utilization of capital of worth in performance to incur costs and produce value in results”. Every business in the world must produce specific economic output results in order to be successful. Every business in the world invests in capital, in order to have the capital needed to produce output results. Business performance is the actual utilization of capital to produce results.

20^th century business performance includes both actions executed and results accomplished

The 20^th century definition of performance used in business today includes both the actions executed and results accomplished. This definition causes many 20^th century management problems and prevents actual business definition and management. Business performance management, capital development, business processes, management reporting, key performance indicators, etc mix both performance and results produced together as performance. This causes problems today in actually distinguishing and separating results produced from the performance executed.

R-pM separates results from performance to manage the performance producing a result

Actual business performance does not include things accomplished or business results. R-pM separates out results as results produced by business performance and restricts business performance to the activity of the business and actions executed by the 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...]

Methods like Total Quality Management and ISO 9000 Standards did 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.

R-pM manages customer determined quality result by result

Result-performance Management (R-pM) organizes the business by organizing results produced across the business as one-off results or as result chains and by organizing the capital utilized as performance solutions 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. Every result has a customer who is willing to pay a result value for a determined level of quality. Quality and value of each result must be acceptable to the customer. [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...].

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

Business change cannot be managed directly because the business is not managed

Business change is a mystery to the 20^th century enterprise because the business, the activity of providing goods and services, is not organized and managed. The enterprise is organized and managed through organization and management structures laid over the business. 20^th century “business change” is not change to the business, but is change to structures laid over the business. Most “business change” lays new organization, process, or system structures over the business with little positive change to the business itself. Since the business is not managed, the value created by change cannot be planned or managed and the return on change investments cannot be measured.

Result-performance Management (R-pM) organizes the business for direct management of business change

Business change is a change to either an output result produced by the business or a performance solution utilized by the business. When the business is organized and managed, business change automatically reorganizes the business and can be managed as the routine. R-pM organizes results and performance solutions to change the business as the daily routine. Business change projects involve result-performance development to increase the value of results or to enable new results, by implementing new or improved performance solutions. If the enterprise does not manage results and performance, it is difficult to manage change to results and performance.

The Change Management Problem

20^th century business change is change to overlaid organization and management structures

Even accepting 20^th century management change to overlaid organization, process, information system, account, performance management, and other structures, there are another set of problems. [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!

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

The definition of performance and performance management is a fundamental 20^th century management problem

Performance is defined as both the actions and results of performance. The definition prevents management of results separate from performance and restricts enterprise management to one confused performance dimension. Performance Management is a big part of 20^th century management, with a variety of structures like processes, dashboards, and scorecards laid over the business. Key performance indicators (KPI) mix result volumes and performance levels. Business process re-engineering focuses on business process management and performance quality to produce a process output. Many performance and productivity methods and consultants redefine costs out of the process and into other capital utilized in the business.

R-pM separates results from performance to enable 21^st Century Management

Result-performance Management (R-pM) separates results from performance to organize the enterprise business in results produced and capital utilized in performance solutions. The enterprise business changes each time management decides to produce a new result, close a finished result, or utilize a different performance solution. Performance management provides and maintains cost-effective performance solutions. [more...].

Administration is one of the top ten problems of 20^th century management

20^th century management includes wasteful and counterproductive administrative functions

20^th century administration performs a function involving fixed routine tasks. Responsibility is for the function or the process of administering, rather than producing results. Administration is responsible for managing enterprise capital, but few administrators recognize this responsibility, in effect preventing proper capital management. Much capital is assigned to centers or labeled as “intangible assets”, removing it from professional management. Other capital is loosely administered through functions, instead of being specifically managed to produce benefit and achieve a return on the enterprise investment. The emphasis is on administrative performance rather than capital result management.

R-pM converts administration to professional capital management

Result-performance Management (R-pM) organizes all enterprise capital for professional 21^st century management for operation, support, development, and utilization to produce results. R-pM replaces administration with capital management. Capital managers must produce capital management results to develop, maintain, and improve the worth of capital to provide specific solutions. Performance management, within capital management, deploys and maintains solutions to produce revenue, capital, and investment results.< [more...]