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...]

20^th century capital development is ad-hoc and separate from the business

Capital is not acquired, developed, or managed as part of the business today. Capital financial investments are made by a financial unit in isolation from the business or returns needed for the business. Capital development investments are normally ad-hoc projects to produce a new fixed asset or to lay a new structure over the business. The specific solutions involved, the investment cost by solution, or the output results of benefit to be produced by the investment rarely are known.

Capital development must develop specific solutions to utilize in performance to produce measured results

Capital solutions needed by the business must be planned and developed by result to be produced by utilizing the capital. Each result absorbs a portion of the investment cost and provides a value-added to contribute to the return on the solution investment. The full set of solutions needed to produce the result must be planned and integrated to produce results successfully with a high value-added. Capital solutions must be produced as results of a development project to utilize project capital and capture full costs of the solution. The solution is implemented with the investment balance to be amortized against the results produced over the solution life.

21^st century capital development produces result value-added for solution return and worth

Implemented solutions are utilized to produce each volume of output results. The performance costs are captured against each result and reduce the unamortized investment balance and capital worth to pay back the investment. The result value-added over total performance costs should be positive to provide a further gain on the investment. The future solution worth is determined by the continuing absorption of performance costs until paid back and the future result value-added from solution utilization over the remaining life and later sale or disposal. [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...]

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 economic crisis shows the confusion in business, finance, and economic management

The economic crisis causes serious concerns about the methods for business, financial, and economic management. All of a sudden, banks, financial institutions, and other enterprises realize that they do not manage their actual business and finances. We see the impact in the worldwide economic downturn. The crisis has shown one thing conclusively. We do not understand fundamental business, financial, and economic management problems. Efforts to date are guesswork at ways to ease the situation.

We need a new solution to business, corporation, financial, and economic management

Continual business, financial, and corporate governance problems are caused by deficient 20^th century management used today to manage the enterprise rather than the business. Economic crises occur because businesses are not managed in concert with markets, demand, supply, and coherent government policy. But, no one knows real business management. Corrective actions address conventional enterprise management, and impose more government regulation and compliance reporting on enterprises.

Now is the time to wake up to the unsolvable problems inherent in 20^th century management that lays easily-distorted contrived structures over the business, preventing actual business management.

Business management is the fundamental solution to business, financial, and economic management problems

Business management is the only way to manage the actual business as the foundation for 21^st century corporate, financial, and economic management. Business management replaces overlaid 20^th century structures with one business structure. Information technology focuses on detailed business data on capital invested, economic output results produced, performance utilizing capital solutions to produce results, business descriptors, enterprises, and time periods for strategic planning for one accurate set of management information. Corporations are managed as consolidations of corporate businesses. Finances are managed as part of capital invested in the business. The actual business is manage and consolidated as part of the economy, in concert with markets, demand, supply, and government policy.

We must open our minds to the new business management solution needed

Business management often is rejected, as not the way things are done. But, we cannot continue to manage the enterprise as has always been done. We must open our minds to unsolvable 20^th century management problems and expose the actual business hidden under overlaid structures. The current recession is the ideal time to address the problem, while business is slow, capital solutions are under-utilized, the problems are fresh, and new solutions are being sought. [more...]

Many managers are interested in business management, but are concerned about the authenticity

Now with the economic crisis, 21^st century business management is gaining more recognition as the only solution to eliminate the 20^th century management problems that enabled the crisis. But, people ask how business management originated. Some people are concerned about the authenticity and viability of business management.

20^th century management problems were encountered and the need for business management was conceived piece by piece in work as a management consultant for over 30 years. I specialized in business organization, management improvement, and information system development projects with such firms as Booz Allen and Hamilton, Multinational Management, Price Waterhouse, A.T. Kearney, and Arthur D. Little.

Business management was originally developed as aids to capital solution development and management improvement projects

Business management concepts first evolved as an aid to business and information systems design and later to manage business change projects, both the project and the changes to the business as the results of the project. It became clear that the only solution to business organization and management problems was to organize and manage the business. Contrived organization and management structures laid over the business had to be eliminated.

Formal development of business management began in 2002

After retiring from active consulting, work began in 2002, to develop and document business management knowledge as Result-performance Management (R-pM) to provide the one structure to organize and manage the business. The Business Management Toolkit is now available, and continues to be developed as business management evolves. Business management is now launched for use by forward-looking enterprises that want to learn their actual business, and then organize and manage the business for breakthrough cost reductions and competitive advantages. Business management is available for use by governments as the basis for a Business Management Program, to solve the problems that caused the economic crisis and build a new architecture for corporate, industry, and economic management. [more...]

The economic crisis shows the failure to manage capital investments and utilization

The economic crisis shows the importance of managing capital properly. But, businesses today use 20^th century management and cannot manage capital in the set of solutions utilized by the business in performance to produce output results. Capital is lumped together as a fixed asset, developed but never identified as capital, or is labeled as intangible assets. The business does not know the amount invested in solutions, costs of utilization of capital, the worth of capital available, the specific utilization of capital by the business, and the actual return on the capital investment.

Managed capital shows investments and return, performance costs, and worth by solution

All tangible and intangible capital must be identified and organized as the specific solutions available to the business to produce specific results and to record all investments in the solution. Capital solutions are implemented when deployed to a result to set up a performance domain to record business transactions. Capital solution utilization generates business data on solution performance costs, performance effectiveness, result value-added, and other data not captured today. Result value-added by solution provides return on investment and establishes the worth of the solution.

Capital must be managed as part of the managed business

The economic crisis is caused by failure to manage the business. Financial institution cannot manage asset-value, which is actually capital solution worth. Corporations cannot manage costs or margins, because capital solutions are not identified and result value-added is unknown. Corporate financial statements record partial capital in balance sheets and report erroneous business net worth. The only solution is Result-performance Management (R-pM) to organize the business, and capital as part of the business, for 21^st Century Management, and leave 20^th century management problems behind. [more...]

Financial management used today has never solved financial management problems

Why do we have unsolvable financial management problems like intangible assets, unknown costs and value, distorted capital worth, un-managed investments and returns, and ill-informed corporate governance? The problems exist because we do not organize and manage the business and we do not organize and manage the capital utilized in the business. Financial management of cash and accruals does not provide accurate business financial management, and is separated from other tangible capital creating capital management problems.

R-pM manages financial and other capital as part of the business

The solution is Result-performance Management (R-pM) to organize the business and the capital utilized for 21^st Century Management. Financial facilities are part of facility capital that manages traditional tangible assets. Financial management is part of facility capital management to integrate and manage all facility financial and equipment assets, facility supply, and financial and non-financial facility records. R-pM eliminates unsolvable financial management problems and manages and reports all financial and other capital as part of actual business operation and development.

R-pM develops specific capital solutions, utilizes all solutions to produce value in results, and manages all investment returns

R-pM provides comprehensive facility capital management to manage all financial and non-financial reusable facility equipment, consumable facility supply, and facility record capital to produce value in results. R-pM manages all capital as part of the business to be developed and supported, and to be utilized in performance to produce output results of value. R-pm uses information technology to manage all capital solutions to know capital worth, development costs, un-amortized balance, performance costs, attributable result value-added, and return of the solution investment. [more...]

Accounting, today, does not maintain accurate business records

20^th century management does not organize or manage the business. This makes it impossible to keep records on output results of value produced by the business and the consumption of capital in costs to produce each result. Instead of recording the actual business, a chart of accounts is laid over the business to record income and expenses and the worth of certain known assets. 20^th century accounting records the cash generated and spent by the business, rather than recording the complete development and utilization of capital and the complete economic output results produced by the business.

Accounting, today, contains many unsolvable 20^th century problems

Accounting is one of the main unsolvable problems of 20^th century management. Accounting is separate from the actual business, records only a small sub-set of needed financial and non-financial business records, sees it role as control rather than capital management and business support, allows financial management problems such as intangible assets and unknown costs to persist, does not provide accurate business information needed for corporate management and governance, and on and on.

R-pM accurately records and accounts for the actual business for 21^st Century Management

21^st century management uses Result-performance Management (R-pM) to organize the actual business as one integrated business structure. The business structure replaces all organization, accounting, planning, performance, costing, reporting, and administration structures laid over the business. R-pM employs professional records management to manage facility records as capital, to maintain complete and accurate financial and non-financial records on the actual business, and to provide information performance solutions from records for good corporate management and governance. Records management is integrated within the business to be utilized to make decisions at all levels and to record accurately actual business decisions made [more...]

20^th century management does not manage capital. Certain capital is administered and other capital is neglected. Facility capital includes all reusable and consumable assets and business records. But, the stress is on administering financial capital at the expense of other capital of increasing importance and worth. Financial management and accounting have developed their own principles and practices that isolate financial management from the business and often conflict with the needs of general business management.

R-pM manages all financial and non-financial facility capital as one category containing three classes in facility equipment reused to produce a set of results, facility supply consumed in producing specific results, and facility records for complete documentation of the business in solutions utilized and results produced. This enables integrated planning of the solutions needed to produce results, integrated utilization of solutions that produce the specific result, and integrated record-keeping and record extracts as performance solutions to produce new results. [more...]