Poor corporate governance allows economic crises and large business losses

Many experts rightly point out that one of the main causes of the economic crisis is the lack of corporate governance. But the solutions they advocate are stronger government regulation and stricter reporting requirements. Corporate regulation is not corporate governance.

How much more will corporations spend conforming to corporate regulations, before we realize that the whole approach to corporate governance is wrong? Today corporations measure and report contrived overlaid structures, rather than the actual business. Corporations govern by enforcing policies and rules, instead of governing approved business strategies and plans. Corporations and authorities address the symptoms of the corporate governance problem from the governance side with more rules and regulations, instead of solving the problem from the corporate side, by organizing and managing the business. We are now repeating the same past mistakes in response to the current economic crisis.

Good Corporate Governance manages the transition of the current business to the approved strategic business

Corporate governance is internal so that the corporate management has the capabilities to ensure continuation of a strong and ethical corporate business that is planned and managed to create strategic result value, maintain and manage capital worth, and control on-going performance costs. Rule No. 6 of 21^st century business management: Plan and govern the transition from today’s value to approved strategic value. Business management eliminates contrived 20^th century structures that cause our corporate governance problems and, instead, organizes the business itself as one integrated structure for 21^st century business management and governance. The future business is planned and approved in the strategic business structure to plan the value of strategic results and the result research, capital solution development, and strategic value creation needed. Result goals are set and managed time period by period to the strategic business. [more...]

20^th century accounting does not keep complete or accurate financial records on the business

Today's enterprise faces many obstacles to professional record capital management because of several 20^th century management problems. Financial accounting is often seen as enterprise records management, but maintains a professional view of what it will record, and acts as an administrative function. Financial accounting records some financial data against a chart of accounts laid over the business. Financial accounting does not keep complete and accurate financial and non-financial records of the actual business. Most actual business data is not captured in financial, statistical, or cost accounts or other enterprise records today. Most other enterprise records are not maintained as information capital to be available to provide needed management information solutions. Problems with intangible assets, unknown value creation, unknown costs, unknown capital worth, inaccurate business net worth, etc have never been solved. Records management is a growing problem in today's enterprise requiring a comprehensive professional records management solution.

21^st century business management maintains complete and accurate financial and non-financial records of the actual business

Business data and record transactions are captured against one business structure to integrate organization, planning, directing, control, and reporting. Structures laid over the business and irrelevant bases of data collected against the structures are removed. Management information includes result value, performance costs, result value-added in excess of costs, capital worth, and capital investment returns that are "unknown" today. Tangible information capital is maintained as facility records to record all financial and non-financial business transactions and activity in computer records, documents, images, archives, etc. Accounting continues independently but can be incorporated as one sub-set of professional records management.

Business management provides an opportunity for accounting to broaden to professional records management

Managing the actual business provides a unique opportunity for the accounting profession to expand to professional records management and eliminate unsolvable accounting and financial management problems. Professional facility records management maintains financial and non-financial facility records of the actual business, and provides information capital solutions from records, where needed to produce results at all levels of business management. [more...]

Rule No. 1 of the 10 rules of 21^st century business management: Organize and manage the business

The conventional definition of the enterprise business is the activity of providing goods and services. The 20^th century enterprise has never organized or managed the activity of providing goods and services, but, instead, lays rigid enterprise organization and management structures over the business. Business change conflicts with the rigid structures, creating unsolvable problems that can only be eliminated by organizing the business for 21^st century business management.

Eliminate unsolvable problems by organizing and managing one integrated business structure

The business must be organized as one structure to integrate enterprise business organization and management. Business activity is organized as capital solutions utilized in performance. Goods and services are organized as the results produced by business activity. Business results and capital solutions are organized together into a business structure. The business is organized by deploying specific capital solutions to performance domains to utilize in performance to produce specific results. The one integrated business structure is utilized for all 21^st century management planning, directing, control, and reporting to leave 20^th century organization and management problems behind. [more...]

Corporations today are not able to manage their businesses as part of a corporation business

All business managers are familiar with such 20^th century management problems as unknown costs, unknown value and quality chains, unknown investment costs, unknown return on investments in specific capital items, unknown capital worth (asset value), intangible assets, inaccurate and missing management information, and on an on. These unsolvable problems are symptoms of the one fundamental corporate management problem the failure to manage the corporate business. Corporations today lay organization and management structures over the businesses at headquarters, division, subsidiary, and other levels that prevent management of corporate businesses. The various corporate businesses cannot be consolidated into one corporation business.

Business management at all levels is the only solution for effective corporation business management

Business management is the only method available to consolidate and manage the corporation business. Each part of the corporation must be organized and managed as a business. Businesses at a lower-level add into the businesses at a higher-level until the corporation is managed as one business with one complete, accurate, and transparent business structure. All 20^th century management structures laid over corporate businesses at all levels and the related unsolvable problems are left behind. [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 lays strategic structures over the business

20^th century enterprise management contrives structures to define the corporate strategy in corporate plans, maps, investment plans, IT plans, financial plans, and other structures laid over the business. The strategic business is not planned. The overlaid structures do not relate to the actual business and may conflict with structures used to manage the corporation. Strategic value numbers are pulled out of the air. There is no good method to govern the transition from the current corporate status to the strategic objective. Corporate governance cannot govern the actual business, so it governs through compliance with arbitrary rules and regulations.

Rule No. 6 for 21^st century business management: Plan and govern the transition from today’s value to approved strategic value.

The business is “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. The business must be planned to know the economic output results that must be produced for business success and the capital investments in the business that are required to produce the results. The business must be managed to know result value, full performance costs, result value-added, complete capital worth, capital investment returns for all solutions, and other essential business measures that are unknown today. The strategic business structure provides the foundation for planning the results to be produced and capital to be utilized at a 2-5 year strategic horizon. Strategic result value is substantiated in specific period by period result goals requiring growth in value of current results and the value of new results enabled by implementation of capital of worth.

Business goals are planned from the current to strategic business for management and good governance

21^st century business management enables good management and governance of the transition to the strategic business by reporting financial and non-financial status against result goals and performance expectations, updating strategic estimates, providing result evaluations and performance assessments, and providing management information on anticipated opportunities, threats, and developments. Good corporate governance ensures responsible business management and planned progress to the approved strategic business. [more...]

There is but one natural way to organize and manage a business

You use the one natural way to organize your personal business. You produce results in the things you accomplish. To produce results, you acquire and maintain capital as solutions in your capability, time, tools, equipment, money, plans, instructions, etc. You utilize the capital solutions in your performance to produce a result of value, such as a prepared meal, arrived at a destination, a good time, etc. You manage your business through common sense. You do this instinctively because it is the only way to organize and manage your personal business or any other business.

Your company organizes and manages the company, rather than the business

But on your job, you no longer naturally utilize capital solutions to produce results. Your company does not organize or manage the business. The company lays contrived structures over the business to manage the company. All business schools, management books, packaged solutions, consulting advice, professional bodies, and on-the-job experience teach us to lay contrived structures over the business. You cannot manage or perform using common sense. You must follow various rules, regulations, and procedures to utilize arbitrary processes, systems, accounting, and other structures.

Use your natural method to organize your company business

Result-performance Management (R-pM) defines the natural way you organize your personal business. R-pM enables you to use your natural method of utilizing specific solutions in performance to produce specific business results. You will see improvement in the job you do today, and understand the potential to organize your company business for the breakthrough advantages of 21^st century business management. [more...]

Enterprises today are organized and managed using many structures

Throughout the 20^th century and continuing today, enterprises implemented organization, process, account, performance management, and other structures. The different entities used to describe each structure, produce business and information complexity. The fixed structures conflict with the changing business causing many other known 20^th century enterprise management problems. Many books have been written and additional management structures have been devised, but the problems remain.

Enterprises and management developers have been looking for one integrating structure

There have been many efforts to replace these structures with one simple and consistently-defined structure for business collaboration, reliable management information, use of common solutions, and other needs. Until now, no one has defined the one integrated structure that can be used to organize and manage any enterprise in any industry. Each new structure is laid over existing structures compounding the problems.

The one integrating structure exists; it is the business itself

There is one structure. It has been there all along! That structure is the business itself!

The enterprise business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The business consists of three components:

• Business results produced as economic outputs of value from the business
• Capital in the specific solutions invested in the business and implemented to produce results
• Performance in the utilization of each capital solution to produce each result

These components of the business are organized into the current and strategic business structures that replace all structures laid over the business for transparent management of strategic result value creation.

R-pM provides the only method to organize and manage the actual business

Today's unsolvable business problems are caused by conflicts between the actual business and structures laid over the business. Result-performance Management (R-pM) provides the knowledge and procedures to organize the business, as current and strategic business structures, for 21^st century management. All overlaid structures are replaced by the business structure to leave all unsolvable 20^th century management problems behind. [more...]

20^th century enterprise management lacks competitive differentiation and advantage for the 21^st century

Today's business enterprises manage the enterprise, and do not manage the business. Management structures laid over the business in today’s enterprises cannot create competitive differentiation and advantage from utilization of technology, the Internet, and intellectual capital. A new business structure is required to directly manage the business and enable competitive advantage in the 21^st century. The obstacle is conventional thinking that prevents a complete new definition of the business and continues to improve obsolete enterprise management structures laid over the business.

The 21^st century presents new requirements for competitive differentiation and advantage

In the 21^st century, business competition and collaboration can come from anywhere in the world. Competitive differentiation and advantage in the 21^st century requires that the business is simplified for fast and flexible change, is organized to utilize technology effectively and enable business communication and collaboration, and is managed to provide customer value and quality.

The business must be managed for significant new competitive differentiators and advantages for the 21^st century

21^st century competitive differentiation and advantage is gained by organizing and managing the business. Result-performance Management (R-pM) provides the knowledge and procedures required to manage the business. Information technology is employed effectively to organize the actual business for significant competitive advantage in the 21^st century. Capital invested in the business, performance to utilize capital, and output results produced by the business are managed directly to provide competitive differentiation in high value and quality customer results. The unorganized business burdened by overlaid structures will be a distinct competitive disadvantage as corporations organize their businesses in the decade of the 2010's. [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...]