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...]

The organization structure is the "fatal error" of 20^th century enterprise management

Once an enterprise organization structure is laid over the business, the business can never be managed. Consistent, comprehensive, and accurate business data can never be captured and reliable business management information can never be reported to management. The enterprise must be managed by laying business process, corporate plan, account chart, performance management, cost activity, quality assurance, data reconciliation, and other structures over the business. Data is gathered against arbitrarily defined overlaid structures, rather than the business, providing management with an overload of inconsistent, inaccurate, and very incomplete information.

Organize the business as one management and reporting structure

The business consists of three components: 1) results needed for success, 2) investments in capital solutions to produce results, and 3) the performance of each capital solution to produce each result. These three components are organized in the business structure for use in all business planning, direction, control, reporting, and governance. Actual business data is captured when capital solutions of worth and qualifications are utilized in cost-effective performance to produce value and quality in a result. The structures laid over the business are no longer needed. Management has one set of consistent, complete, and accurate information to manage the actual business. [more...]

Today it is not possible to manage businesses as part of a corporation, industry, or economy

Companies and corporations today are arbitrarily organized and managed through structures laid over the business. The business is not organized, actual business data is never captured, and real business management information is never generated, recorded, or consolidated to describe the actual company, corporation, industry, or economy in real business terms.

Businesses must be organized as business structures that build up to multiple-business corporations, industries, and economies

Businesses must be organized instead of companies or corporations. The business organization structure must define economic output results produced in chains of results across the complete business, all investments made in the business as specific human and other capital solutions implemented to produce specific business results, and the utilization of each solution to incur the costs and to create the value in each business result. The consistently-defined organized businesses can then be consolidated into the complete economic output results produced by a corporation, industry, or economy. All capital investments are managed to know and consolidate the return in result value-added to date and the capital worth (asset value) in the projected continuing future result value-added. The utilization of all capital solutions in performance to produce results are managed to know and consolidate all result volumes produced, performance costs, result value created, result value-added over performance costs, performance effectiveness, and much more vital and accurate business management information.

21^st century business management provides the structure required to manage each business and consolidate multiple businesses

21^st century business management structures each enterprise business to manage all capital investments, the performance of each investment in the business, and the economic output results produced from the utilization of specific capital investments. Enterprise businesses are consistently consolidated to the corporation business to record and manage all businesses within the corporation. Consolidation is possible for all the businesses in an industry, market, economy, or other business indicator against which enterprise business data is collected. [more...]

Today, your actual business is hidden under 20^th century enterprise management structures

As we said in many previous articles, the current economic crisis is caused by one fundamental problem, the failure to manage the business. Many large financial institutions and corporations have shown that they are unable to manage the various parts of the corporation in various divisions, business units, and subsidiary companies scattered around the world. Managers today think that they are managing their business. However, no manager today manages his actual business. Managers manage the enterprise through generally-accepted structures laid over the business. These overlaid structures hide the business and prevent actual business management.

You must learn your actual business and the entities that comprise your business

The generally-accepted definition of the business enterprise "the activity of providing goods and services". The enterprise must manage the utilization of capital in business activity or performance providing high-value and high-quality goods and services as results for its customers in order to manage the business directly. 20^th century management utilized today does not organize and manage the enterprise business, but rather organizes and manages the enterprise through structures laid over the business. This causes many unsolvable problems with reorganizations, unknown investments and returns, unknown capital worth, unknown result value and quality, IT overheads, misleading management information, change management, corporate governance, business collaboration, and on and on.

Gain control of your business and abolish structures laid over your business

The only solution to the problem causing the economic crisis is to manage your actual business. You must organize and manage your business activity in the utilization of capital as specific capital solutions. You must organize and manage your goods and services as specific economic output results that are produced by the business. The business is then organized as one integrated structure for all management needs by utilizing specific capital solutions in performance to produce specific results. Actual business data is captured on result volumes, value, and quality produced by the capacity, cost, and effectiveness of solutions utilized in performance. You have one consistent set of clearly-defined management information on the current business and progress to the strategic business defined by a strategic business structure. You can manage cost-effective performance to produce high-value and high-quality goods and services as input results to the customer business. Corporations manage various divisions, business units, and subsidiary companies as businesses that consolidate up to the complete corporation business. [more...]

Management consultants today are enterprise consultants not business consultants

Management consultants today utilize conventional 20^th century management practices to manage the enterprise through contrived organization and management structures laid over the business. Many consultants claim to be business management consultants, but in fact have no concept of what the business is and how to manage the business.

Management consultants must learn to organize and manage the business to become 21^st century business management consultants

Management consultants must learn to organize and manage the actual business by utilizing the knowledge and guidance provided by Result-performance Management (R-pM). Management consultants utilizing R-pM knowledge are licensed as 21^st century business management consultants. The decade of the 2010's will be the decade of business management as enterprises organize the business to rectify and prevent the problems that led to the current economic crisis.

The 21^st century business management consulting model guides enterprises and consultants to work together to manage the business

R-pM is described in the R-pM Business Management Toolkit, which guides both the enterprise client and the consultant to work together to organize and manage the business. The Toolkit includes the 21^st century business management consulting model which provides the framework and guidelines for the consultant to work in partnership with the enterprise to organize and manage the actual business for significant competitive advantage and future business success. [more...]

Alignment is an unsolvable 20^th century enterprise management problem

Many books have been written offering solutions to the "alignment problem"; to align outsourced and internal solutions, processes and information systems with the business, capital development and business operations, customer solutions and the business, etc. Despite all the books the alignment problem continues unsolved today.

The business must be organized to provide the structure for alignment

The alignment problem cannot be solved because the business is not organized. Capital investments in the business are not identified as specific solutions. Solutions provided by other parties such as outsourced solution providers, business partners, or customers are not identified as solutions to be managed. The results produced by the solutions are not identified as a set of economic outputs from the business. Therefore, the business cannot be organized by aligning the internal and external solutions utilized in performance with the result produced.

Aligned solutions are integrated to produce results as part of the business

When the business is organized all capital invested in the business and all the outsourced, business partner, or customer solutions utilized are aligned and related to the results produced by the solution. The full set of solutions can then be integrated to work together to produce a specific result. The result manager is responsible to utilized the full set of internal and external solutions to ensure that the result is produced to meet solution performance expectations and achieve result goals. [more...]

Business management eliminates the cause of the economic crisis

Business management is the new breakthrough to organize the enterprise business for 21^st century management. Business management captures actual business data and provides actual business management information not available to management today. Business management eliminates the unsolvable problems that caused the economic crisis such as intangible assets, unknown costs and value creation, unknown capital worth and investment returns, financial management through structures and models instead as part of capital management, lack of business management information, inability to manage the corporation business as the sum of corporate businesses, and lack of a consistent structure for economic management.

Business management is real business transformation, not a structure laid over the business

Business management is not another business change or transformation methodology that lays structures over the business like business process management, business performance management or quality management. Business management is the final business transformation. Once the business is organized the business organization changes with each business change and the actual business is planned, directed, reported, and governed.

The knowledge is available today to learn, organize and manage the actual business

The recession provides the ideal time for the transition to business management, when business is slow and management time and resources are available. Forward-looking enterprises are now organizing the actual business for significant competitive advantage to flourish when the economy recovers. Many immediate benefits are gained by learning the business to be ready to organize the actual business. Business management is applied immediately to any business change or capital development project to prevent undesirable change or mismanaged investments. The knowledge needed to manage the actual business is provided by Result-performance Management (R-pM) through the Business Management Toolkit and the R-pM websites. [more...]

The inability to manage capital worth is a large problem that contributes to the economic crisis

Many financial institutions and corporations cite the inability to know and manage "asset value", which is actually capital worth, as a contributor to the economic crisis. Usually, capital worth is not managed until it comes time to sell or liquidate the asset, when the actual worth turns out to be much less than worth in the books causing large and sudden write-downs. In other cases, corporations are forced to state the worth according to an arbitrary rule like "mark to market", which may not reflect the plan for utilization of the asset in the business.

The business must be managed to manage capital solution worth as part of the business

Corporations do not manage the business today, so capital worth cannot be managed as part of the business. Capital is not managed as specific solutions utilized to produce results of known value, with many solutions unknown or labeled as intangible assets. Results are not managed as a set to determine the costs absorbed and value-added in the utilization to produce the result and value-added in the disposal of the solution, which determines the worth of the solution.

Total capital worth and result value-added must be managed to manage total business worth

Since capital solutions and results are not defined and managed as data sets today, actual business data cannot be captured and actual business information cannot be reported to management. This includes the positive worth of asset and negative worth of liability solutions utilized by the business, which adds up to the total business worth. The total business worth is also assessed by the total result value-added to be produced by the business over the future business payback period at the cost of capital or other return desired. This again can only be estimated in an unmanaged business. [more...]

The economic crisis arises because there is no structure for business, corporate, industry, financial, and economic management

All corporations, financial institutions, governments, and other enterprises today have no structure for business, financial, and economic management. Instead of organizing and managing the actual business, enterprises lay organization, plan, account, process, performance, function, quality, and other structures over the business. The actual business cannot be managed and is hidden under the overlaid structures. The changing business conflicts with rigid structures causing unsolvable 20^th century management problems and the fundamental problem underlying the economic crisis, the failure to manage the business.

Business Management provides a firm business structure that changes with business change and will never be obsolete

Business management is the only solution to the economic crisis, being experienced around the world today. Business management organizes the business to build a strong business structure for any enterprise or group of enterprises. The actual business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The business structure is built from the capital investments in the business to define specific solutions available. The business structure is built from the economic output results that must be produced across the business for success. The business structure is built from performance domains that implement specific capital solutions to produce specific results. Capital solutions, results, and performance domains are the three components of the business, and must be managed as complete data sets.

The business structure generates actual business data and provides complete and accurate management reporting

The business structure generates actual business data each time a volume of results are produced and maintains totals by performance domain, result, and capital solution. The business structure reports one set of complete and accurate business management information not reported today. Corporations can organize all corporate businesses to build one organized corporation business structure. Governments can undertake Business Management Programs to organize businesses and build comprehensive structures for industry, financial institution, economic sector, and economy management. [more...]

The fundamental cause of the economic crisis is the failure to organize the business in banks, corporations, and other enterprises

20^th century management used by banks,corporations, and other enterprises today lays a contrived enterprise organization structure over the business, instead of organizing the business. This is the fatal error of 20^th century management. If the business is not organized, the business cannot be managed. The enterprise must be managed by laying additional structures over the business. The overlaid structures prevent capture of actual business data and reporting actual business management information.

A rigid organization structure is contrived and goes out of alignment with every business change leading to the reorganization problem

The contrived organization structure follows one of many 20^th century organization theories to organize the enterprise. If the business is organized the business organization changes with each business change, and the unsolvable reorganization problem is eliminated. But, the rigid organization structure goes out of “alignment” with every new or closed result or change to a capital solution utilized. Eventually there is need for reorganization and change management to contrive a new organization structure that is closer aligned to the actual business, and the cycle is repeated. Reorganization does not organize the business, but produces a new rigid enterprise organization structure that is laid over the actual business.

The solution is to organize the actual business so that the business can be planned and managed

Real business management organizes the actual business in “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The actual business does not consist of departments, positions, functions, reporting relationship and other contrived organization entities. The actual business consists of capital investments in the business to provide the solutions needed to produce economic output results from the business. The business structure is organized by implementing specific capital solutions to produce specific results. Business organization solutions are implemented to be responsible for sets of results. Human personnel solutions are implemented to manage each result produced. All structures laid over the business today are replaced by the one organized business structure. [more...]