Problems/Solutions

20^th century management laid rigid organization, process, system, and account structures over the business in order to manage before Information Technology (IT) existed. Now, instead of utilizing IT to manage the actual business, we utilize IT to lay ever more complex and costly process and system structures over the business compounding 20^th century problems and propagating bad practices.

Unsolvable 20^th century problems, such as the examples below, will continue, until Result-performance Management (R-pM) organizes and manages the business as one integrated business structure and replaces costly and irrelevant 20^th century structures.

The integrated R-pM business structure is like a big spreadsheet with business performance solutions, the invested capital utilized by the business, down the rows; and business results, the economic outputs produced by the business, across the columns. A cell records business activity, where a specific performance solution is utilized to incur costs and to create value in a specific result.

Failure to organize and manage the business: If the business is organized the organization changes with business change, eliminating reorganizations. Instead, rigid enterprise organization structures laid over the business create the re-organization problem. Since the business is not organized, the business cannot be managed. The enterprise is managed through contrived strategy, process, accounting, administration, performance, project, reporting, and other rigid structures laid over the business.

The organization structure is the fatal error of 20^th century management. Early enterprises were structured before information technology managed business details. Today, there is no excuse for laying an arbitrary 20^th century organization structure over the business, condemning the enterprise to unsolvable problems.

Creating business and information complexity: Each overlaid structure defines different information entities that must be managed. The organization is departments, functions, and positions; the strategy is objectives, operations, and target groups: the chart of accounts is centers, objects, and codes; the process is activities, stations, and checkpoints. Each overlaid structure creates “business complexity” and the conflicting information entities create information complexity. The structures are irrelevant to the business, since no structure manages the actual business.

The business must be organized as one integrated structure with five consistently-defined information sets for results like material, products, reports, and orders to manage value created; performance solutions like employees, assets, and supplies to manage capital consumed and costs; capital in performance solutions and investment results to manage enterprise worth; enterprises like subsidiaries, suppliers, and customers to manage business interactions: and time periods like months to strategic horizon or milestone dates and project duration to manage change over time.

Problems recording and reporting the actual business: We have strict accounting principles, but arbitrary account structures that do not record the actual business. Accounting records money from the time received until spent or invested. Business management requires accurate information on result value and performance costs from the time money is spent or invested until money is received.

We need to go beyond accounting to professional records management to record the full business cycle for accurate financial, statistical, document, image, and other records of performance solutions utilized and results produced, as normal byproducts of actual business management.

Problems governing the corporation: Corporate governance problems stem from managing structures laid over the business, rather than managing the business. The board, auditors, market analysts, and other stakeholders use reports that mystify more than inform. We cannot manage the business, so we enforce rules and try to fix the problems by adding more accounting, audit practices, and statutory reporting.

We can never gain good corporate governance by improving or adding overlaid structures. We need to organize the corporate business, remove the structures that hide the business, and institute transparent management of strategic value creation.

The way the enterprise invests our investments: As investors, we study our options and itemize the benefits to see the potential return and growth. Can the enterprises we invest in itemize benefits of capital investments? Do sophisticated cost-benefit and internal rate of return analysis guarantee an accurate answer?

The only way to itemize benefits to manage return is to manage the specific results that must increase in value and the specific performance solution investments that must be utilized to incur costs and increase the value of results.

A lot of talk about value with no substance: People talk about strategic value creation, value propositions, customer value, value chains, shared value, etc. But, what does this value mean, how is it calculated, how do we share value across enterprises?

Results gain value when external and internal customers are willing to pay. We need to manage results to know strategic and customer result value. We can link results in a natural chain, and capture costs of performance solutions used, to manage result value added at each link. We can re-link the chain with R-pM partners, who use the same definitions, to share a final result value for a total performance cost.

Solutions that are problems for users: 20^th century methodologies for performance improvement, solution implementation, and capital development cannot ensure that users are satisfied and benefit is gained. How can we go from implementing changes and costs to implementing solutions and value for users?

Users know their result symptoms, when quality is defective, sales are down, reports are late, etc. We must alleviate user result symptoms and enable users to produce valuable new results to benefit from business change and investments. We must implement result value-added not just changes and costs.

Administrative functions of high cost and low value: What is the purpose of administration? Why do administrators so often lack the capability to do what management wants? How do you manage administration? How can we ensure that we manage capital properly to provide result value greater than the performance cost?

We need to change the objective and mindset from administration as an overhead to capital management to produce results of value greater than cost to develop and support capital, and performance management to provide qualified performance solutions that are utilized properly to create user result value and be of high-worth.

The CIO problem: CIOs have a problem. One person must possess capabilities in strategic management, business operation, systems application, data processing, technology, and equipment and network management. Now, some are proposing CTOs and other chiefs to solve the problem. Could the problem and solution be fundamental to the way we organize IT and other capital?

We need to organize all capital, including information technology, by the essential human capabilities required to develop, operate, and support the capital. Then the chief and those who support the capital need but one essential human capability.

Performance management that does not manage performance: When we say business performance management, it sounds like someone is actually managing performance. This is not the case, since performance management structures and KPIs mix performance and results together and define both as performance. The structure, laid over the business, reports various contrived entities, after the fact.

We need to separate results from performance to directly plan and manage each in its own proper way. Results have different attributes and descriptors from performance. Results must be managed by column in the business result units that produce them. Performance for each solution must be managed by row across business results.

Re-engineering processes and implementing ERP systems with little return on investment: Much has been written about the problem without ever presenting the solution. Were the processes and systems themselves what we should have been implementing? Were they implemented properly? What is the proper relationship between business processes and information systems?

Every new business process must be defined as a result value-quality chain. Simplified application systems must be integrated with the business process solution for each result. Then the process solution is implemented, with other solutions needed, to produce a high value-quality result. Continue result by result.

Administering information as technology to make information available: Information capital is not managed in most enterprises. Much is left over from system and process implementation to be used as needed. Accounting provides routine financial statements and reports from the records it keeps. Some knowledge may be managed for availability, if someone wants it. Much information is kept in departments, removed from enterprise use. Other information is administered as technology, rather than managed as capital to provide performance solutions. There are no integrating entities to integrate information and deliver it where and when needed.

Information must be managed as information capital in an Enterprise Information Base. Information solutions must be developed, implemented, and supported separately as business data, human knowledge, facility records, and management intelligence to apply proper support capabilities. Information solutions must be organized by result identifier and performance solution identifier to be integrated as information capital. Integrated information solutions can be delivered, or accessed with business data, to enable users to utilize specific performance solutions to produce specific results.

Using Information Systems to manage overlaid structures rather than the actual business: 20^th century information systems manage complex structures laid over the business, hiding the business and preventing actual business management. This creates the high IT overheads and costly IT empires. New IT investments manage the unnecessary complexity of IT systems and information maintained, rather than providing high-worth solutions for users to produce valuable new results.

The actual business across any corporation can be managed through one simple Result-performance Management System, using five consistently-defined information sets to capture actual business data and provide clear information to manage the actual business directly. Existing application programs are integrated with the business process and managed as performance solutions to produce specific results.

Aligning structures and solutions with nothing to align against: Much has been written about problems aligning operations with the strategy, information systems with the business, outsourced services with internal operations, tangible and intangible assets, etc. But no one has ever written about a solution.

The alignment problem comes from aligning overlaid organization and management structures, or ill-defined and unmanaged performance solutions, with each other. Each time the business changes, rigid overlaid structures go out of alignment.

Alignment requires something to align against. We cannot align solutions with solutions! We need one integrated business structure to align organized and managed solutions with their organized and managed input and output results. Solutions producing the same result are aligned.

Accepting the enormous overheads and costs of overlaid structures: The enormously costly process, information system, administration, and other structures are accepted as business as usual. These costs can continue because every enterprise has the same problems and incurs the same waste and inefficiencies. All business schools, business management publications, management consultants, and solution vendors continue to propagate bad 20^th century practices. No one stops to analyze the billions and billions of dollars wasted by 20^th century management. No one stops to analyze the cost reductions and quality improvements possible by managing the business directly and collaborating with other managed businesses.

Change and improvement requires the exceptional capable people, who are willing to think and lead change. The capable are now coming forward to support 21^st Century Management as enterprise managers and professionals, business school professionals, professional management consultants, business publishers, business solution providers, etc. Those at the forefront of 21^st Century Management will gain competitive advantage and have the knowledge and capabilities needed, when one company shows the advantages of 21^st Century Management and competitors can no longer accept the enormous overheads and costs of overlaid structures, as business as usual.

Benefiting from business organization and management consulting: Consultants employ consulting models to generate revenues. However, most models do not include the corollary of ensuring client value covering the revenues. Exposures, over the past few years, have damaged the image of consultants. How can we assure professionalism in management consulting? How can we ensure that clients receive value that is many times the cost of consultant services?

We need a new management consulting model, so that consultants work in partnership with enterprise customers to use R-pM to organize and manage the business for planned and measured result value-added success.

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The problems described above are only examples of the problems encountered regularly in the normal business routine. Thousands of new solutions and management books over the years have tried to solve the problems by improving 20^th century management. However, the problems remain unsolvable today, because they can never be solved by 20^th century improvements.

The only way forward is to use R-pM to organize the business for 21^st Century Management, to abolish costly and irrelevant structures, and to leave 20^th century problems behind.