Actual business decisions are not supported by today's 20^th century enterprise management

All business decisions involve what do we want to accomplish in the business and how do we accomplish it. Each business decision seeks to answer the basic question: What specific output result is to be produced and what specific capital in human and other capital solutions are to be utilized to produce the result?

20^th century enterprise management used today does not support management decision-making. Results produced by the business and capital solutions utilized in business performance are not identified and managed as data sets or reported to management. Therefore, decisions cannot be implemented to change or improve the business. Changes are implemented through an organization structure, changes are executed through business process, information system, and function structures, changes are tracked through an account, costing, or quality structure, and changes are reported through financial statement and other management reporting structures. The actual decision is not recorded or reported.

Results produced and capital solutions utilized must be managed to implement, track, and measure management decisions

We can implement, followup, manage, and evaluate decisions made only if we implement, execute, track, measure, and report each specific result to be produced in the set of business results needed for business success; and the human and other capital investments utilized as specific capital solutions in the set of capital invested in the business. We must manage the value of the result produced, the cost of performance in producing each result in order to manage the value-added and other direct impacts of the decision on the business.

Organize the business as one business structure to manage all business decisions

Business management organizes business results produced and capital solutions utilized to produce each result. Management decisions are directly implemented, executed, tracked, measured, and evaluated. Good decisions are identified quickly and built upon. Bad decisions are identified quickly and changed. The business is flexible to quickly implement and change decisions to keep ahead of the competition. [more...]

Effective business collaboration is prevented by 20^th century management

Each enterprise today lays a different collection of structures over the business, and each structure defines the enterprise differently, and captures inconsistently-defined data against the various structures. The 20^th century method of business collaboration is for businesses to lay the same process, information system, or data reconciliation and information reporting structure over the business. This is very expensive and still does not provide a satisfactory solution, since none of the collaborators actually organizes or manages the business.

Rule No. 9 of 21^st century business management: Collaborate to maximize shared value and minimize shared costs

Effective business collaboration and outsourcing requires that the business of each collaborator be managed. If the business is managed, there are common definitions for value creation, performance costs, quality levels, and other business measures that can be managed consistently for each business and across businesses. 21^st century business management requires that businesses be managed to enable collaboration by maximizing shared value and minimizing shared costs.

One simple business structure is used by all businesses to enable collaboration and integration

21^st century business management organizes the business as one consistent structure to define the results, capital investments, and capital utilization in performance to produce results. Results produced by the business are defined to know result volumes produced, result quality, result value, result costs, and result value-added across the business. The capital investments in the business are defined as capital solutions to know investment amounts and unamortized balances, investment returns, and capital solution worth. Capital solutions utilized to produce each result are defined to know performance costs incurred against the result and the value added to the result. The business structure can be managed within a business or across businesses to create result value-quality chains where each result is produced for the highest value and quality for the lowest cost. [more...]

Unreliable and inadequate accounting arises from failure to manage the business

Incomplete and inaccurate accounting is one of the major outgrowths from the failure to manage the business of enterprises today. Since the business is not managed, actual business transactions are not recorded and actual financial and non-financial management information is not reported. Many managers complain about the shortcomings of today's accounting, but the problems and shortcomings continue to be ignored by the accounting profession. Financial statements only report known capital and expenditures in whatever accounts are maintained, and often mislead management, shareholders, and regulators.

Today's accounting does not record the business or provide the information needed for business management

Significant problems arise due to the failure to account for capital invested in the business as specific solution investment balances, capital worth decline in performance costs as solutions are utilized or consumed, business result value and value-added after performance costs, return on solution investments as payback in costs and gain in result value-added, capital solution worth (asset value) in the value of utilization and disposal over the remaining life, and business performance statistics that add meaning to financial and cost records.

The business must be managed in order to account for the business

Since the business is not managed the business cannot be accounted for. The actual business structure in results produced, capital solution investments, and utilization of solutions to produce results provides the only valid business recording (or account) structure. In the absence of a valid structure, a generally-accepted chart of accounts is laid over the business for hit and miss 20^th century accounting to record actual and accrued cash expenditures and known capital. Therefore the first step to complete and accurate 21^st century financial, cost, statistical, and qualitative records management and accounting is to learn and organize the actual business. [more...]

Conventions, definitions, and standards used in 20^th century enterprise management are inconsistent and confusing

20^th century enterprise management does not organize the natural business or apply common-sense management, as we do in our personal business. Arbitrary contrived structures are laid over the business. Each structure has its own set of conventions, definitions, and standards. Added together this produces an inconsistent hodge-podge of conventions, definitions, and standards that are applied separately for organization, planning, processes and systems, accounting, administration, IT architectures, performance management, reporting, and other parts of enterprise management.

Rule No 10 of 21^st century business management: Employ 21^st century business management conventions and standards

The 21^st century business must avoid the problems inherent in 20^th century enterprise management. This is done by organizing the business for 21^st century management. 21^st century business management uses one set of conventions, definitions, and standards that are applied to the actual business and used for all management organization, planning, directing, control, and reporting. Common conventions, definitions, and standards enable business collaboration and education, solutions, and services that can be applied to any business.

One consistent set of conventions, definitions, and standards define 21^st century business management

21^st century business management is guided by Result-performance Management (R-pM) knowledge and procedures. 21^st century business management conventions, definitions, and standards are defined, updated, and maintained in the R-pM Business Management Toolkit to support the organization and management of any business. The conventions, definitions, and standards can be followed by any education institution, solution developer, or service provider to meet the needs of any 21^st century business. [more...]

Today, data is collected and information is reported against structures laid over the business

Today, companies and other enterprises collected data against organization, account, activity, process, information system, and other structures laid over every business. Enormous amounts of data is collected against the overlaid structures, but actual business data is never captured and actual business management information is never reported. Enterprise and corporation management is hampered by the overload of conflicting information on enterprise structures and the lack of management information on the actual business.

Business management captures actual business data and reports actual business management information

Business management captures one set of complete, consistent, and accurate data against the actual business structure and reports one set of relevant, complete, and accurate management information. Actual business information is reported at the enterprise business level and consolidated in the corporation business structure at the corporate level. Government business reporting requirements can consolidate consistently defined enterprise business data in government business structures by industry, economic sector, market, or economy.

Management has the complete and accurate information to manage and optimize the business and new investments in the business

Management has information that is not available today to manage the actual business. Capital investments are managed to provide the planned and measured return and to manage the ongoing worth of capital solutions utilization and eventual sale or disposal. This includes the "asset value" of capital investments in securities and other instruments to produce income, dividend, and growth results. Business operations are managed as result value-quality chains to manage result value-added across the business to produce profit and shareholder value results. Management has one set of management information needed for business organization, planning, direction, control, reporting, and governance. [more...]

The 21^st Century Business Management Consulting Model organizes and manages the business to avoid unsolvable problems

Enterprises today do not manage their business. They manage the enterprise by laying organization, corporate plan, business process, account, and other structures over the business. Unsolvable problems occur due to clashes between overlaid structures and the actual business. The problems disappear when the actual business is organized to manage one business structure to integrate planning, directing, control, and reporting.

The 21^st Century Business Management Consulting Model guides the enterprise and consultants to organize the actual business and work together to achieve new business value in result value-quality chains, result-performance costing, strategic value management, result-performance optimization, project result management, human capability management, and other new concepts not possible with 20^th century enterprise management.

Opportunities are emerging for management consultants to support 21^st century business management

21^st century business management will ultimately replace obsolete 20^th century enterprise management, creating a demand for business management consultants. The knowledge and procedures for managing the business and the 21^st Century Business Management Consulting Model are provided and supported by Result-performance Management (R-pM). Business management and business management consulting sales and delivery are supported by R-pM websites, The R-M Business Management Toolkit, and other business management documentation. Professional management consultants and firms, who want to provide professional services that provide planned and measured enterprise benefit, will gain significantly by registering and practicing as 21^st century business management consultants. [more...]

Actual costs and value cannot be managed today, because the business is not managed

Real costs and value cannot be managed today because the business is not managed. Instead contrived structures are laid over the business to collect known cost data on tangible assets and charge the costs against activities, centers, jobs, projects, and other data entities that are not related to the business. Cost accounting and financial accounting utilize separate contrived structures that do not account for the actual business. Value cannot be managed today. Numbers called "value" may be contrived through various rules and formulas, but the value does not represent real business value.

Business costs are incurred by capital solution utilization in performance to create value in results

Costs are incurred by the utilization of specific capital solutions in business performance. Value is created in the output result produced by the utilization of all capital solutions to produce the specific result. Value is determined by the willingness to pay by the customer who receives and uses the result in his part of the business. The result value less total performance costs incurred provides the result value-added, which is managed along result chains that stretch across the business.

The only way to manage costs, value, and value-added is to manage the actual business

The actual business must be managed in order to manage real business costs, business value, and value-added across the business. Financial, cost, and statistical accounting and other business record keeping is integrated and consistent against the one business structure. Contrived activity costing and financial account structures laid over the business today are needed no longer. [more...]