Governments and corporations are looking for a unifying structure for best business market, financial, and economic management

Over the past year, governments have been meeting to construct an international response to the economic crisis. They discussed new best business management practices to solve problems that caused the crisis, and new structures for the financial system and economic management to prevent future crises. Again, as always in the past, they failed to comprehend and address the unsolvable 20^th century enterprise management problems that cause the crisis. Governments add new practices and regulations on top of existing dead-end 20^th century enterprise structures, and claim to have solved the problem.

In order to make real progress, those involved must set current structures aside and take a completely new look at what comprises a business and how businesses relate to industries, markets, financial systems, and economies.

Business management is the only solution available to eliminate unsolvable problems that caused the crisis

The actual business is “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. 20^th century enterprise management structures are replaced by one business structure to eliminate unsolvable problems in unknown capital solution investments in the business, unknown economic output results produced in chains across the business, unknown value of results from the business, unknown costs of performance to produce results, unknown value-added to manage the complete business, unknown performance effectiveness to manage result quality, unknown returns on capital investments from the added value to results, unknown capital worth in future output and disposal result value, and on and on. Business management captures actual business data to manage all corporations, financial institutions, and other enterprises properly and to report on the actual business to regulators.

The business is the only unifying structure to integrate corporation, market, industry, financial, and economic management to prevent future crises

Business management builds up from the business structure to consolidate actual business in structures by corporation, industry, or economic area or sector to consolidate actual business data. Data can be consolidated by market for business input and output results and capital solution utilization. Industries, such as the financial industry, can be managed for the value and quality of results and the utilization of financial and other capital solutions. Economies and markets can be clearly viewed and managed to identify and plan for cycles, to anticipate and plan for surpluses and shortages, to manage interest rates and monetary supply, to plan and manage trade, and take other actions that are prevented by obsolete 20^th century enterprise management today. [more...]

20^th century management does not maintain accurate financial and non-financial records on the actual business

Management needs complete and accurate information on the actual business for good corporate governance and business management. This is not possible with 20^th century management used today, which does not organize or manage the actual business. Records are not kept on the capital investments utilized as capital solutions by the business as a set or on the economic output results produced by the business as a set. Thus, there is no set of complete and accurate records on the business to provide actual business management information. Instead, information is maintained against contrived structures laid over the business, such as organization, planning, budget and account, and reporting structures.

Instead of accounting for the business, a chart of accounts is laid over the business. Accounting maintains a sub-set of enterprise records in financial and statistical accounts. The full cycle of performance costs incurred and result value created is not recorded. Many non-financial records that should be maintained are not considered as accounting responsibility and are never recorded and managed as information capital.

The records management problem is getting serious with the explosion in email, file transfers, and other records created, entering, and leaving the enterprise. The enterprise has no way to reference records to the actual business, to prevent records being lost due to information complexity, and to properly manage records as information capital.

Rule No. 4 for 21^st century business management: Keep financial and non-financial records on full business operations and development

21^st century business management requires accurate financial and non-financial records for the full cycle of business operations, along the chain of results produced by the business, and across the operation-development continuum. Business management maintains financial and non-financial records on the actual business to provide accurate and complete management information. The actual business is recorded so that one consistent set of accurate and complete facility records can be maintained on the business and accurate reports on the full business cycle of cost-effective performance producing value-quality results, the results from supplier-provided input results and through enterprise business results to final customer results, and the investment costs in new capital solutions and the return in new result value are provided. 21^st century business management broadens traditional accounting to professional records management for complete financial and non-financial business records. [more...]

20^th century enterprise management administers human resources as employees

20^th century enterprise management administers human resources and is unable to manage human capital as capital utilized by the business. The business is not organized to produce specific economic output results and human capital is not organized as capital solutions, within the full set of capital solutions utilized to produce the results. Human capital management addresses general human resource development, rather than specific development to add value to the business and increase human capital worth.

Rule No. 8 of 21^st century business management: Manage human personnel, capability, and knowledge capital to increase human worth

Human capital must be managed as readiness capital to keep personnel ready to produce results, production capital to provide the capabilities to produce specific results, and information capital to provide the knowledge required to produce high value-quality results. The objective of human capital management must be to increase human capital worth by producing results of higher value to the business.

The enterprise must organize the business to utilize human capital to produce business results

To follow Rule No. 8, the enterprise must organize the business to invest in and utilize human and other capital as specific solutions in performance to produce high value and high quality results. Human capital is maintained to be ready to produce results. Human capital is developed as capability solutions to utilize specific business processes to produce specific results. Human personnel and capabilities also are supported with the knowledge needed utilize other capital solutions and to produce specific results. [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...]

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...]

Capital investments must be organized as solutions to be implemented and utilized as part of the business

Many articles discuss how business results and capital solutions must be organized together in a business structure, to organize the business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Capital solutions are organized into a capital structure by category in the human capability needed to develop and support specific solutions and by class in the business utilization of solutions to be ready to produce output results, to produce specific output results, and to have the information to produce and document results.

Capital management manages capital solution acquisition, development, implementation, and support

Capital management is fundamental to acquire, develop, and support capital utilized to produce results, and performance management is fundamental to implementing and maintaining cost-effective solutions to produce value-quality results. Organized and managed capital is required to eliminate intangible assets, unknown costs, underutilized capital, business complexity, unknown capital worth or asset value, and other unsolvable problems. Organized and managed capital is required to establish value chains, develop capital for precise business needs, respond quickly to add or delete business results, optimize operations, have skills and responsibilities for capital development, measure the precise return on capital investments, and gain other benefits prevented by the unorganized and unmanaged capital used today. [more...]

The "alignment' problem hampers all enterprises today

All of us have heard of various alignment problems to align the organization, processes, information systems, human resource administration, financial and IT strategies, knowledge and capability development, accounts, capital development, outsourcing, supplier specifications, customer needs, tangible and intangible assets, etc with the business. All of these alignment problems are caused by rigid 20^th century organization and management structures that are laid over the business. The rigid structures conflict with the actual business, causing business change problems, and go further out of alignment as the business changes. Periodically new organization, accounting, process, administration, and other structures must be redesigned to align them closer to the business, and then the cycle is repeated.

All attempts to solve the alignment problem have failed and the problem remains unsolved today

Hundreds of books and solutions exist to solve the "alignment" problems, but alignment problems remain unsolved. Alignment problems can never be solved by laying new structures over the business, or by contriving methods to align overlaid structures with each other. The overlaid structures cannot be aligned with the business, because the actual business has never been defined or organized.

21^st century business management eliminates 20^th century alignment problems

The solution to the alignment problem is obvious. The generally-accepted definition of the enterprise business is "the activity of providing goods and services". The business has two components: "the activity of providing" and "the goods and services provided". We must organize the business to align the business activity in capital solutions utilized performance with the goods and services provided as results. This eliminates alignment problems by organizing the business for 21^st century business management. [more...]

Key performance indicators measure the enterprise and not the business

Key performance indicators produced today measure the various organization, process, system, performance management, and other structures laid over the business, rather then the actual business. To measure and manage the business, the attributes of capital utilized as solutions, output results produced, and performance in the utilization of a capital solution to produce a result must be measured and managed.

Key performance indicators mix capital, results, and other entities together under the heading performance

Performance is defined to include both the actions executed and results accomplished. This prevents the actual business from being organized and managed. Many performance indicators measure capital, results, and other entities. Very little actual business performance is measured of managed. Most actual business performance in costs, effectiveness, problems, uncertainty, value creation, etc remains unknown.

We must separate capital solutions, output results, and performance to measure and record the actual business

In order to manage the actual business, we must organize results, capital solutions, and performance of solutions to produce results in one business structure. Specific capital solutions are then implemented for utilization in performance to produce specific results. At this point, performance domain records are set up for each capital solution and result combination to capture the performance of the specific solution to produce the specific result in capacity utilization, costs, expectations, and other indicators. Performance transactions record actual performance costs, effectiveness, etc producing result value, quality, etc. Performance records, plus capital solution and result totals are updated, as needed, for each instance of performance. [more...]

Today we have many generally-accepted accounting problems

Accounting is a major problem in the 20^th century enterprise. Management is faced with generally-accepted accounting problems. The actual business is not accounted for. Financial records are missing for much of the business cycle. Financial management information is inconsistent, inaccurate, and incomplete. Many well-known problems like intangible assets, unknown costs, unknown capital worth, unknown investment returns, unknown value creation continue unsolved. Accounting is often equated to records management. Most enterprise non-financial records are scattered, missing, and mismanaged.

Organize your business for professional records management of all financial and non-financial facility records capital

21^st century business management organizes the actual business and builds professional records management to provide complete financial and non-financial facility record capital solutions. 21^st century business management manages the full business cycle to keep accurate records on all performance costs, performance effectiveness, result volumes, result quality, result values, result value-added, tangible and intangible assets of positive capital worth, liabilities as specific solutions of negative capital worth, and accurate enterprise business net worth. 21^st century business management provides one set of accurate management information on the strategic, planned, actual, and historic business. [more...]