A fundamental business management solution to prevent business, financial, and economic crises

We can see that no one has a good approach to solve business, financial, and economic crises

All of us have watched the news on the economic crisis and see the confusion and disagreements on the steps to alleviate problems. There seems to be growing agreement on the need to improve best business management practices, but no real understanding of actual best business management practices. Experts, managers, government officials, and commentators show wide disagreements on the causes and solutions.

Conventional 20^th century management improvements and added regulation only propagate problems

The usual approach is to call for management improvements and to strengthen regulations and compliance reporting to control what enterprises can do. But, there appears to be recognition that, this time, usual approaches will not suffice. There is a need to go back to the drawing board to identify the real causes of business, corporate, financial, and economic problems and to address these fundamental causes.

There is one fundamental cause; the business is not managed

There is one fundamental cause of 20^th century management problems; the failure to organize, plan, direct, control, report, and govern the actual business. Enterprises are managed by laying organization, corporate plans, processes and functions, accounts and costing activities, asset and employee registers, risk and quality management, performance management, and many other structures over the business. The rigid structures conflict with the changing business causing well-known unsolvable problems with reorganization, alignment, unknown investments and returns, unknown performance costs, unknown “asset value” in capital solution worth, poor project management, intangible assets, unknown value creation, unmanaged value and quality chains, business and information complexity, obstacles to business collaboration and integration, incomplete and inaccurate management information, and on and on.

Business, corporate, financial, and economic management must be based on proper business management

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in output results”. All the problems of the economic crisis that are identified and discussed are caused by failure to manage the business, such as:

• Financial management through structures and models laid over the business, rather than as part of actual facility capital management
• Failure to manage the components of the business to capture actual business data and report accurate business management information
• Risk and quality management through arbitrary overlaid structures and models, rather than as attributes of every business result
• Asset value managed through arbitrary numbers, rather than evaluated result value and assessed capital worth period by period as part of the business
• Executive rewards based on unrealistic projections, rather than remuneration on planned and agreed attributable future result value-added substantiated by result goals, and rewards based on a portion of prior period attributable result value-added in excess of result goals
• Accounting and financial reporting based on arbitrary accounts rather than against the transparent actual business
• Corporation management based on consolidating inaccurate financial statements and reports on overlaid structures, due to the inability to consolidate corporate businesses into one corporation business

These are just a sample of the wide range of unsolvable 20^th century management problems contributing to the economic crisis. 20^th century management problems can never be solved by improving 20^th century management or by more government regulation of enterprises.

Business management provides the foundation for proper business, corporate, financial, and economic management

Business management provides the foundation for new solutions by organizing the business for 21^st Century Management. The business manages capital investments in specific solutions, the utilization of solutions in performance to produce economic output results, and the specific results that are implemented as capital solutions or are transformed by the business to produce final results for the customer.

All overlaid structures are replaced by current and strategic business structures. Financial management is part of the business in facility capital management to manage all reusable financial and asset facilities, consumable cash supply facilities, and financial records. Transparent management and regulatory reports are based on verifiable actual business data. The business is managed in concert with markets, demand, supply, and government policies to support economic management.

Governments now must study business management for new business, financial, and economic management programs

All governments must rethink their approach to local business management, financial management, and economic management. A fundamental part of the new approach must be actual business management to enable all local enterprises to manage their business properly, to compete against other enterprises and countries managing their businesses, to provide accurate and verifiable reporting on the business, and to integrate all businesses as part of the national and world-wide economies. Other recent articles in 21^st Century Management Magazine have explained business management as a solution for various aspects of the financial crisis. Additional details and procedures are provided in the Business Management Toolkit.

Result-performance Management (R-pM) provides the knowledge for actual business management and reporting

Result-performance Management (R-pM) is the only source of knowledge and expertise on how to manage the actual business. Forward-looking enterprises are now using R-pM knowledge to organize and manage their business to gain breakthrough advantages over competitors burdened by unsolvable 20^th century management problems. Business management is explained and documented in the Business Management Toolkit. The Toolkit provides procedures for actual business management and maintains emerging 21^st century management conventions, definitions, and standards. Management consultants who base 21^st century business management services on R-pM knowledge are licensed to help enterprises learn, organize, and manage the actual business. R-pM and business management are supported at result-performance-management.com.

The Solution to the Economic Crisis is explained in free downloads

Three free white papers explain the dead-end 20^th century management problems, such as the failure to plan, account for, and manage the actual business, that caused the economic crisis, the way to eliminate the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building an architecture for financial and economic management, and organizing local businesses to flourish in the eventual recovery.

• How to Eliminate Problems that caused the Economic Crisis explains the major unsolvable 20^th century management problems and the solution to eliminate the problems
• The Only Solution to the Economic Crisis; Manage the Business explains how to plan and manage the business to capture business data and provide management the information needed for actual business, corporation, industry, and economic management
• A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management, stimulate the economy, restore confidence, organize businesses to flourish in the recovery, and manage economic cycles to prevent future crisis

These three white paper downloads are available to R-pM Community Members at result-performance-management.com. There is no cost or obligation to join the R-pM Community. Join by entering your email address and personal password. Your email address is protected and used only for download problems, product updates, and occasional R-pM Member news and white papers.