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...]

Business processes and information systems laid over the business today prevent management of costs, value, and quality

20^th century management lays monolithic business processes and information systems over the business to manage business performance. Results produced by the business are defined as performance and are not specifically identified and managed as a set or chain leading to final results that go to the customer. This prevents to business from managing the cost of producing a result, the result value, the result quality, and the result value added. Much time and money is wasted trying to reconcile ill-defined processes and systems for business collaboration, since result chains cannot be organized or managed.

Rule No. 2 of the 10 rules of 21^st century business management: Generate profits from a chain of managed value and quality

21^st century business management organizes the capital investments available to be utilized in business performance, performance producing each result, and business output results as value-quality chains. This allows capital solutions to be utilized in cost-effective performance to produce value-quality results leading to high-value and high-quality customer results.

Customer results are outputs from managed result value-quality chains

Business management redefines business processes and information systems as process solutions by the results produced and manages each result in the result value-quality chain starting from input results from the supplier, result value added along the enterprise result chain, and the final result to the customer. Result value-added is managed across the chain to contribute directly to the profit result. The business can integrate and manage the chain to help suppliers meet enterprise input needs and to add more value by meeting customer needs. [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...]

It is impossible to manage capital development properly today with 20^th century management

20^th century management used today does not provide a framework for proper capital development. Capital development develops specific solutions that must be utilized by the business. Capital development incurs the costs of development and sets up the cost of capital utilization. But today, capital is not defined and managed as a set of capital solutions available to the business. Capital is categorized as employees, fixed assets, intangible assets, etc.

Implemented capital is utilized in business performance to produce output results of value. Result development provides the benefits of development and the value-added that provides the return on investment. But today, results are not defined and managed as a set to be produced by the business. Some results are managed as separate items, such as product, sales order, revenue, etc. 20^th century management manages capital development separate from the business to develop certain known capital.

The business must be organize to enable result-capital development

21^st century business management organizes the business in results that must be produced for business success, capital that must be invested in the business to produce results, and performance in the utilization of specific implemented capital as solutions to produce specific results. Once the business is managed, it is straight forward to identify new results required to improve and expand the business. Once the business is managed, it is also straight forward to identify the capital solutions needed to produce the results. New result development and new capital solution development is planned and managed as part of the business. [more...]

20^th century management used today cannot plan the business

Since the business today is not organized or managed, the business cannot be planned. The enterprise is planned through strategic maps, corporate plans, IT, financial, human resource and other functional plans, and budgets that are laid over the business. The planning structures use different terminology, and often do not relate to each other or to management and reporting structures used to manage the business.

R-pM plans the actual business in a strategic business structure in 2-5 years

Result-performance Management plans results of a value that a customer is willing to pay that must be produced by a particular time. Capital is planned for solution investments needed and costs to produce each specific result giving result value-added. Time periods are planned to produce results that are needed for business success. Result value-added is planned to ensure "the bang for the buck" and profitability.

Future results are researched to determine customer needs and preferences, and to design results. Capital development is planned to produce specific results of added value-added for the investment return. The business is planned in a strategic business structure at a selected horizon in 2-5 years. Result goals and performance expectations are planned by period from the base business to the strategic business.

Responsible managers learn results and capital solutions to plan results, performance, and management over time

As experience is gained, business planning becomes more precise and reliable. All responsible managers learn their results and capital solution performance in order to professionally determine future result value and capital solution needs. The planned period by period business provides a clear view for managing progress to achieve future results. This enables managed course correction and lets all see their part in strategic result value creation. R-pM is the only way to manage planned strategic result value creation and result value-added time period by period starting from the base period. [more...]

The economic crisis is caused by the failure to manage the business and results as part of the business

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. In order to manage the business, three components of the business must be managed; the capital investments in the business as capital solutions of worth, performance of the business in utilization of specific capital solutions to incur costs and produce specific results, and output results of managed value and quality produced across the business.

20^th century management utilized by all corporations, financial institutions, and other enterprises today do not identify or manage specific capital solution investments as a complete data set and do not identify or manage specific output results produced as another data set. Financial institutions are not able to manage "asset value" in the worth of solutions in their investment portfolios. Corporations are not able to manage diverse businesses within the corporation as part of an integrated and managed corporate business. These are examples of causes cited for business failures and downturns that caused the economic crisis.

Result-performance Management organizes and manages the actual business and results as part of the business

R-pM organizes and manages one integrated enterprise business structure. The business structure is comprised of the result structure to organize and relate results required for business success, the capital structure to organize capital solutions available, and the performance structure to implement the capital that is utilized to produce specific results.

The key component of the business structure is the result structure that organizes economic outputs to be managed for the volume, value, and quality that lead to revenue, profit, and stakeholder value results. All enterprise management responsibilities are to produce specific results. Strategies are organized by the strategic results to produce in the strategic result structure. A well-managed enterprise business must manage the value and quality of all results produced by the utilization of specifically-qualified and cost-effective capital solutions. [more...]

Value has no value in 20^th century management used today

Value is an impressive word. People talk of value propositions, strategic value, value chains, value creation, and value management as if they were actually measuring and utilizing value as a day-to-day business metric. But looking further, we find that value is calculated from a contrived business overlay or formula.

20^th century enterprise organization and management prevents the utilization of value as a day-to-day business metric.

R-pM organizes the business to make value a manageable and valuable result metric

We must organize the business through Result-performance Management (R-pM) for day-to-day 21^st Century Management. Value is an attribute of output results produced by the utilization of capital in performance across the business. The value of input results from suppliers, plus each result in the business result chain, equals the value imparted to customer results in customer willingness to pay. [more...]

Value chain methods used today lay an additional contrived structure over the business

Methods used today lay contrived value-chains over the business. The chain is not integrated within the business to control actual costs against value-created or to produce value within total managed business value. These value chains have never been successful in actual business management.

R-pM is the first method to manage value chains as part of the managed business

There has never been a method to organize the business to provide natural value chains until Result-performance Management (R-pM).

R-pM employs information technology to manage all the results of value produced by the business and all capital solutions that incur costs in performance to produce each result. R-pM builds result value chains with end-results of value as a link in the chain, within a higher-level set-result that is the final result from the chain. Result relationships chain the end-result links together and each end-result to the final set-result. Each end-result has a managed value that adds to the total final set-result value.

The costs and value-added is managed at each link in the chain to manage total chain value-added

Supplier input results are transformed by performance through internal business results to customer final results. Each solution utilized incurs a performance cost. The total of solutions utilized is the cost of creating result value at each link. R-pM manages the end-result value-added at each link and the set-result value-added for the complete chain. Result value chains manage the value, quality, volume, risk, and goals for each result and the final result. Result value chains enable supplier-customer integration and business collaboration. [more...]

Management capital is required to plan and manage a competitive business and create strategic value

Rule No. 6 of the 10 rules of 21^st century management with R-pM: Plan and govern the transition from today's value to approved strategic value. All management planning, directing, control, reporting, and governance is against the current and strategic business, with no overlaid structures. Management capital produces solutions to support management at all levels of the enterprise to plan and execute a strategy and protect shareholder value.

Management capital today uses structures laid over the business

Few enterprises have a disciplined set of management capital, particularly as related to the actual business. 20^th century management and governance problems start as soon as an organization structure is laid over the business, instead of organizing the business so that the business can be managed. Management structures for strategy, planning, accounting, processes, reporting, etc. must be laid over the business as well, creating business and information complexity.

R-pM manages management capital as part of the actual business to support informed management

R-pM organizes the business in results needed for business success, capital invested in the business to provide solutions to be utilized, and performance in the utilization of solutions to produce results. R-pM develops and maintains management solutions to produce management results through three categories of capital: management strategy to plan and manage strategic result value, management tactics to guide and optimize results and performance, and management intelligence to inform of strategic and tactical status and forecasts.

Management capital specialists in each category develop professional capabilities in management analysis, research, and judgment to lead the enterprise in 21^st century manageme [more...]