Build strong Business Structures to prevent future Crisis

20^th century management structures laid over the business prevent business management

Enterprise management today is built on a variety of enterprise structures such as organization charts, corporate plans, account charts, business processes, information system flows, administrative functions, scorecards, etc. The structures do not define the actual business, but are laid over the business to manage the enterprise. The structures do not enable business management, but rather prevent the business from being managed. The structures are rigid and difficult to change, and the definitions used by the structures vary widely. Data is collected against the structures, not the business. Large quantities of management information are reported against overlaid structures, but actual business management information is not reported. The business changes continually, and conflicts with rigid overlaid structures causing unsolvable 20^th century management problems. Eventually, there is upheaval in “business change” to align rigid overlaid structures closer to the real business.

The overlaid structures prevent business management and cause the fundamental problem underlying the economic crisis, the failure to manage the business. Governments today are not able to solve the economic and financial crisis because they do not understand the underlying problem, the failure to manage the business.

The actual business must be organized to provide a structure for 21^st Century Business Management

Business management manages the business directly, rather than managing structures laid over the business. The enterprise business management foundation is provided by the business structure. The structure itself is not subject to change, but is flexible for change and growth as business components and data entities change. Current and strategic business structures are used for all business organization, planning, direction, control, reporting, and governance.

The business structure defines the business through the three components of any business:

• Results: The economic outputs of value that must be produced by business performance for success
• Capital: The investments in capital solutions of qualifications and worth to be utilized in performance to produce results
• Performance Domains: Implementation of a capital solution in a domain to be utilized in performance and incur the costs to produce a specific result

Any other entity used to manage the enterprise business must be defined by results and capital solutions. Business management is supported by six data entities results, capital solutions, performance domains, internal and external enterprises, business descriptors, and time periods. All the other data entities maintained and reported today are not needed for business management and add confusion, IT resources, time waste, and excessive costs.

The only reason for any business is to produce planned results of value

Businesses are established to produce results. Therefore, businesses must be organized and managed to produce these results. Results include all economic outputs of value produced anywhere in the business. Results can be counted and measured. Results include inputs to the enterprise such as material and components that are transformed to produce enterprise results. Results also include capital solutions acquired or developed before they are implemented to be utilized in performance. Results include all revenue results along a chain such as product produced, product placed for sale, product included in customer order, customer order booked, customer order invoiced, customer order delivered, customer payment received, revenue booked, product returned by customer, etc along the chain to a final customer result. Results include capital results such as business organization or data updated, human personnel paid or other action complete, facilities or supplies maintained, and plan or management report accepted. Results include investment results such as result research project closed, capital development project closed, and strategic value created. Project results are managed in a separate business structure, sub-ordinate to the closed project enterprise result. All business results produced by the business have common attributes and are managed as one consistent data set in the result structure.

Capital investments in solutions are planned, developed, implemented, managed, and measured to produce result value

Businesses invest large sums in capital. Therefor each capital expenditure must be defined as specific capital solutions utilized to produce income and growth results or utilized by the business to produce other business results. Capital solutions include any infrastructure, tool, relationship, method, information, individual time, individual capability, plan, or competitive measure implemented to be utilized to produce a result. Capital solutions include the organization unit, specific business and information system processes, data accessed or updated, management and staff time, developed human capability applied, human knowledge utilized, equipment or financial facilities utilized, cash or supplies consumed, records researched or updated, strategy followed, tactics employed, and customer or competitor intelligence accessed or gleaned. All capital solutions have common attributes and are managed as one data set in the capital structure.

The business structure is built from results to produce, investments in capital solutions, and the utilization of solutions to produce results

The enterprise business is organized by the results that it must produce, the capital invested in the business, and the performance that produces results. Results are organized in the result structure. Capital is organized as capital solutions in the capital structure. The business utilizes capital solutions in performance to produce results. Therefore capital solutions must be related to the results they produce. The performance to produce a result is defined through performance domains organized in the performance structure. A performance domain is like a cell in a spreadsheet where the vertical result column intersects with a horizontal performance row. A performance domain is defined when a capital solution is deployed from the capital structure and implemented to produce a specific result in the result structure. The domain record identifier is the result identifier plus the capital solution identifier.

Multiple solution domains normally are utilized to produce one result, and multiple result domains may utilize one solution. Performance domains can be defined and redefined at any time to change results and performance. Each domain is under the responsibility of a result manager and a performance manager. The management domain includes the results under one result manager and the solutions utilized under the responsibility of one performance manager. The result manager is responsible for utilizing implemented solutions to produce the result. Each capital category has a capital manager responsible for supporting and improving the capital. Performance managers report to the capital manager and are responsible for the provision and maintenance of qualified solutions to produce results.

Business data is collected on the utilization of every capital solution to incur costs and add to the value of specific results

Real business data is generated when a specific capital solution is utilized in performance to produce a volume of a specific result. Therefore, each capital solution must be related to the result produced in a performance domain as a set of data on business performance. All performance domains have common attributes and are managed as one data set in the performance structure. Business performance transactions update the domain record when the capital solution is utilized to produce the result, plus the solution record totals in the capital structure and the result record totals in the result structure. Business transactions also update the financial and non-financial data maintained in facility records to record results, capital solutions, and performance domains for the complete business. Data sets and facility records on all results produced and capital solutions available build the foundation for a business information base and for actual business management reporting that is not possible today with 20^th century management. Management intelligence capital analyzed business data and facility records against external research to produce management information solutions.

The business structure is used for all business organization, planning, direction, control, reporting, and governance

The complete enterprise business structure, in terms of all that is done and all the resources used, can be constructed from performance domains. A strategic business structure is used to plan future results and capital solutions needed for performance to produce the results. These basic business structures are used for all business organization, planning, direction, control, reporting, and governance, eliminating the need for structures laid over the business. Structures for multiple enterprise businesses consolidate into structures for corporate management, business collaboration, industry management, market management, and economic sector management.

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

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 guidance 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 a structure 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
• Business management; the only Solution to the Economic Crisis 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.