The economic crisis and growing recession is caused by one problem: the failure to manage the business

20^th century management of all enterprises today lays organization and management structures over the business to manage the enterprise, rather than managing the business. This causes the fundamental problem in all enterprise management that has caused all previous crises and is the underlying cause of the current financial and economic crisis. The problem is the failure to manage the business.

The symptoms of current problems are numerous and complex. But, the problem is basic and simple. Today, all governments, enterprises, and experts are trying to understand the symptoms and to alleviate the symptoms. No one is trying to get beneath the layers of symptoms to solve the basic problem. The only real solution is to organize and manage the business to eliminate overlaid structures, capture actual business data, and produce one accurate set of transparent information needed to account for and manage the business.

20^th century management used today does not provide the information needed for business, financial, and economic management

20^th century management does not manage important result metrics like result value, result volume, result quality, result value-added, and result risk; important performance indicators like performance costs, capital utilization, performance effectiveness, and performance uncertainty; or important capital measures like investment costs, capacity, qualifications, reliability, investment return, and solution worth.

Financial institution and corporate problems invariably point to the lack of information on return on capital investments, planned and current capital solution worth, capital amortization in performance costs as solution worth declines, new product result value, planned future value-added from product results, and other information needs that are blocked by 20^th century management used by all enterprises today.

The only solution is to learn, organize, and manage the business for breakthrough advantage

To solve today's problems and prevent future losses, each enterprise must take advantage of advanced information technology (IT) to learn, organize, and manage actual business. 20^th century management used today evolved before IT and is a time bomb for all enterprises in the world. All enterprises either will experience continued losses due to the problems of 20^th century management or will lose out to competitors who are now organizing their business for 21^st Century Management.

The current and strategic business structures are managed for complete, consistent, and accurate 21^st Century Management information. The business provides a consistent and standardized architecture to summarize managed businesses into manageable corporations, industries, and economies for global financial, economic, and business management and future stability. [more...]

The experts show their ignorance of real problems and solutions to the economic crisis

The World Economic Forum just concluded in Davos, Switzerland. The many speeches, interviews, and panel discussions did not show anyone who knew the real problems in financial institution, corporate, financial, and economic management that caused the current economic recession. There were discussions of the obvious symptoms in the poorly-defined and managed financial products, the credit freeze, greed, ineffective management structures and systems, ineffective regulation, ill-informed management, lack of transparency, lack of leadership and coordinated government responses, etc. Many pointed out the need for new management structures, new multilateral regulation and management mechanisms, and improved governance. But there was no awareness of the fundamental problem and the real solution needed.

All the symptoms discussed at the World Economic Forum arise from one problem; the failure to manage the business

Every symptom, root cause, and problem are really outgrowths of one problem: the failure of financial institutions, corporations, and governments to manage the business. The problem is built into the existing 20^th century management structures used to manage enterprises today that prevent actual business management. The new structure or system needed is simple business management. The business must be organized, planned, directed, accounted for and controlled, reported, and governed. The actual business is transparent, and when reported management and the board have the information to prevent problems, carry out their responsibilities, and exercise good governance.

21^st century business management is the answer to prevent future economic crisis

The only way to manage the real business is provided in Result-performance Management (R-pM) knowledge, as explained in many articles in 21^st Century Management Magazine. 21^st century business management replaces 20^th century enterprise management structures laid over the business with one business structure to manage business results, business performance, and the capital utilized as solutions by the business. The current business structure and progress is managed by time period against result goals and performance expectations to the strategic business. Business management eliminates all the unsolvable problems of 20^th century enterprise management that were discussed at the World Economic Forum. Business management provides a new structure for corporation, industry, market, finance, and economic management based on managed businesses. [more...]

Unsolvable problems have persisted throughout 20^th century management leading to the current crisis and recession

Throughout the 20^th century, we have had continual problems with re-organizations, business complexity, intangible assets, alignment, change management, unknown costs and value, unknown capital worth and returns, ill-informed corporate governance, and so on. These unsolvable problems are the underlying cause of the financial crisis and recession. Thousands of new methods have been contrived and books have been written to solve 20^th century problems once and for all. So, why do we still have the problems?

The top ten problems of 20^th century management arise from failure to organize and manage the business

We have only one fundamental problem in 20^th century management. The business has never been organized and managed. We organize people into an organization structure that is laid over the business. We then lay more management structures for strategy and planning, accounts, business processes, performance management, administration, etc over the business. The 20^th century change management approach is to improve the overlaid structures or to lay more structures over the business. The government response to business, financial, and economic problems is to impose more regulations and reporting on the business. No one addresses the well-known 20^th century management problems.

The unsolvable problems must be eliminated by organizing the business with R-pM for 21^st Century Management

The only solution is to eliminate unsolvable 20^th century management problems by organizing the actual business as one business structure through Result-performance Management (R-pM) for 21^st Century Management. R-pM organizes, plans, directs, controls, reports, and governs the business through the current business structure and result goals by time period leading to the approved strategic business structure. The business structure provides the architecture for organizing all businesses in an industry and all businesses in an area or sector of the economy; so the government can manage businesses in an industry, such as the financial industry, and businesses in an economy. [more...]

The current financial crisis is caused by failure to manage capital worth as part of the business

Governments encouraged creation of mortgage securities to enable banks to loan more money and poorly-secured mortgages to enable low-income earners to own homes. Investment banks bundled mortgages to sell as capital investment security solutions, with unsubstantiated "asset value" or, in business terms, capital worth. A dangerous situation grew as housing prices spiraled up, while the actual worth of capital investment solutions decreased, but could not be managed by 20^th century management or detected by 20^th century accounting. The unaccounted for and unmanaged decline came to light as borrowers defaulted and suddenly we have a world financial crisis. The financial crisis shows the very serious unsolvable problems and significant financial losses incurred in the way all business are managed today that are explained in every article in 21^st Century Management Magazine.

Now is the time to replace 20^th century management with R-pM to ensure proper business management and prevent future crises

All financial and other business crises are caused by poor business management. The good business management needed is prevented by 20^th century management used by all government, financial, and other enterprises today. The only solution available is to enable good business management with Result-performance Management (R-pM) by clearing away 20^th century management structures laid over the business and managing actual business data and utilizing actual business management information. Specific capital solutions invested in the business and capital solution investments by the business must be managed for value-creation, costs of utilization, return on investments, and changing capital worth that is not managed today. Now is the time for governments, financial institutions, corporations, and other enterprises to wake up to fundamental management problems and institute the only solution to organize and manage the actual business. [more...]

The current financial crisis shows the need for actual best business management practices

After every corporate financial, management, or governance crisis or scandal the call arises for best business management practices. However, nobody knows what real best business management practices are, since no one has any experience in actually organizing and managing a business. The practices installed are never actual best business management practices, but are a collections of rules and regulations or methods to better manage structures that hide the business and prevent actual business management.

20^th century best practices are the best of bad business practices

20^th century best business practices are a collection of organization, process, system, and administration structures laid over the business for a particular purpose, which have proven effective elsewhere. All 20^th century best business practices are bad business practices, because they add to enterprise overheads and costs, and do not help the enterprise to operate or manage the actual business.

R-pM provides the business definitions and structure for good best practices

Result-performance Management (R-pM) instills best practices across the business for 21^st Century Management. R-pM manages the business by managing the capacity, investment, qualifications, reliability, return, and worth of capital solutions; utilization, cost, effectiveness, uncertainty, and value-added of each capital solution in guided performance; and the volume, total cost, quality, risk, value, and value-added of each result produced. The set of solutions deployed and utilized to produce a result is defined as a capital module. The capital module that produces the best value-quality result can be defined as a best practice. All best practices are then built into the business structure to operate and manage the actual business.

The only way to prevent future corporate financial, management, and governance problems is to use R-pM to organize and manage the businesses. Governments that want to improve local business competitiveness significantly and prevent future crises, must investigate R-pM. [more...]

Past and current financial crises have been caused by failure to manage the actual business

All financial crises, corporate governance problems, and other problems due to inadequate corporate or financial institution management have roots in one fundamental problem, the failure to organize and manage the actual business. 20^th century management lays many structures for organization, strategies, account charts, processes, scorecards, etc over the business to manage the enterprise. The actual business in the cash expenditures for specific capital investments, performance costs from capital utilization, value created in results, and value added providing profits, capital returns, and capital worth is hidden under overlaid structures and never reported to management.

Enormous sums of money are used to cover up actual problems and restore confidence

No attention is being paid to eliminating the pervasive financial institution and corporate management problems that led to the crisis. The funds are used to pay a higher worth for the currently worthless and unsellable assets of those who mismanaged corporate and personal funds, and transfer the potential further losses and gains to taxpayers. In effect, we keep covering up the unsolvable problems of 20^th century management that have never been solved and can never be solved by more 20^th century management.

Governments should help enterprises manage their actual businesses to eliminate 20^th century management problems

The big change is the change in thinking required to put aside the lifetimes of misleading teachings and experience and visualize and understand the business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Managing the business is common sense used by all to manage their personal businesses. The investment in managing the actual business is very small and recovered quickly in the added value-added of a managed business.

The cost of a government investment program to assist local enterprises to organize their businesses for 21^st Century Management is insignificant compared with the cost of bailing out companies and covering up the failures of 20^th century management. The program will provide transparent reporting of the business for management, shareholders, and regulatory authorities. The program will provide real economic boost in the new value created by organized and managed businesses. [more...]