Business “Results” and “Performance” are not clearly defined today

The definition of “Performance” is a major 20^th century problem

Performance management is a fundamental concept in 20^th century management. Look up the definition of “performance” or “performance management” in your management books and methods. You will find that the definition includes two components of performance.

• The activity component using words such as action, activity, capability, capital utilization, execution, expectations, flow, function, mission, operation, process, support, system, task, work, etc
• The output result component using words such as accomplishment, achievement, deed, feat, goal, goods, input, objective, outcome, output, product, result, service provided, work completed, etc

The generally-accepted 20^th century definitions of performance and performance management mix performance of capital utilized, as in human performance, together with performance in results produced, as in sales performance. Look at your Key Performance Indicators (KPI), performance reports, performance structures, and business processes. You will see that performance activity indicators like asset utilization, time per task, and average transactions per period are mixed with result output metrics like products produced, customer satisfaction, or profits; and all are defined as “performance”.

The definition of “Result” is another major 20^th century problem

If you look up “result” and “result management”, you will not find common definitions that are precise to the business. During the 20^th century, several methods were advanced such as “Managing for Results” and business process re-engineering and management. These methods manage results as economic outputs from performance that leave the enterprise and are viewed from outside the enterprise, rather than as economic outputs from performance that are produced and managed within the enterprise.

Certain results are managed within every enterprise as separate items like product, service provided, contract signed, project closed, report produced, machine maintained, etc. But the enterprise has no way to manage and measure results as one complete set in the chain that leads to results that leave the enterprise. Generally, results within the enterprise are managed as part of “performance”. Quality is managed as “performance quality” rather than managing the quality of each result.

We cannot manage the business, if we do not separate results from performance

Look up the definition of the enterprise business. One definition of an “enterprise” is organizations and people formed to create and deliver products to customers. The generally-accepted definition of “business” is the activity of providing goods and services. These definitions show that our enterprise business has two components:

• Performance in using organizations and people in the activity of creating and providing
• Results in the products, goods, and services created and delivered

In order to organize and manage the business, we must organize and manage organization, human, and other capital utilized in performance activity as one component of the business. We must separately organize and manage results in products and services provided, as another component of the business.

The 20^th century definition of results as performance prevents separate organization and management of specific capital utilized in performance to produce a specific result.

Result-performance Management (R-pM) separates results from performance to manage the enterprise business

Result-performance Management (R-pM) defines an “enterprise” as any endeavor that utilizes capital in business performance to produce value in business results, and “business” as the utilization of capital in performance solutions to produce value in results. R-pM separates results from performance to organize and manage the two components of the enterprise business, performance as the activity component and results as the output component:

• “Business Performance” is defined as the utilization of capital in measurable performance solutions to incur costs and produce business results
• “Business Result” is defined as an economic output of positive or negative value produced by business performance

With R-pM, for the first time, the enterprise is able to organize the business as a business structure. Capital utilized in performance is organized as one component. Results produced by the business are organized as the other component. The business is organized when specific performance solutions are deployed to be utilized in performance to produce specific results. The strategic business structure is planned in strategic results to be produced and the capital to be developed and utilized. The current and strategic business structures are used for all business direction, control, and reporting.

R-pM implementation and utilization is supported by the R-pM Toolkit. Terms used in R-pM are defined in the 21^st Century Management Glossary. Visit Result-performance-Management.com to learn more about R-pM and to download the R-pM Toolkit, your 21^st Century Management Manual.