Redefine “Performance” to Organize your Business

The 20^th century definition of business “performance” includes both the activity of performance and the result of the performance

The definition of “performance” used in 20^th century management includes two components:

• The actions or activity of performance, like acting performance in a stage play
• The outcome or results, such as the play as a good or bad performance

The impact of this definition is that not only the actions of performance but also the results produced by performance both are defined as “performance” and mixed together. Key performance indicators (KPI) used by business, corporate, and enterprise performance management; BPM, CPM, and EPM; mix performance indicators like costs and time consumed with measures of the results of performance like revenue and quality produced. Results and performance are mixed as “performance” in all process, system, account, reporting, and other structures laid over the business.

The definition of “performance” prevents the 20^th century enterprise from organizing the business. Instead, organization structures are laid over the business, creating the unsolvable reorganization problem to align the organization with the changing business. The organization structure is the fatal error of 20^th century management that prevents the business from being managed.

A sound business organization for the 21^st century requires that results and performance be separated.

The generally accepted definition of business is “the activity of providing goods and services”. The definition shows that the business has two components:

1. “The activity of providing”, which is performance in the utilization of human and other capital, such as equipment, supplies, processes, and tactics
2. “The goods and services provided”, which are the outputs or results produced from performance that can be counted and measured

The 20^th century definition defines both as “performance”. The definition of business shows that results must be separated from performance in order to organize directly the only two entities that describe the business:

1. The performance solutions that provide the capital utilized by the business to produce the results
2. The results that must be produced as economic outputs for business success

Performance is the utilization of capital. In order to organize capital, capital must be broken down into specific performance solutions like a human, a process, equipment items, etc. The performance solutions that are commonly utilized together by a business organization can be organized as a performance module.

Results are the economic outputs of performance. Results can be counted and measured. Results include input material from supplier performance that is transformed into an output product result, the product stored for sale, the order for the product, the invoice for the order, the revenue received, etc. Results include solutions developed to be implemented like an approved strategy, a trained human, repaired equipment, etc. Performance solutions as results can come from capital development like a new system or process, new equipment installed, etc. Performance solutions are developed as results and then implemented to become performance solutions.

Performance utilizes capital as specific performance solutions to incur the costs of creating value in specific results

In order to organize the business, all capital investments made by the business must be organized as one set of performance solutions. Specific solutions are utilized to incur costs to produce specific results. The results to be produced to reach business objectives must be organized as one set. Results are produced by performance solutions to create value across the business. Performance solutions must be related to results in order to know the costs of performance against result value created.

Relating the performance solutions utilized to the results produced organizes the integrated enterprise business structure. The business structure is used for all organization, planning, directing, controlling and reporting of operations and development.

The organized business reorganizes with business change and eliminates 20^th century reorganizations

The business organization itself is capital in business organization performance solution. The business organization is not a management prerogative. Management decides on strategic results to produce to reach objectives and investments to make to provide the solutions needed to produce results.

The organization unit name responsible for a result is an attribute of each result. The organization unit is described by creating a sub business structure showing the results the organization is responsible for and the performance solutions deployed to be utilized to produce results.

The business structure of results to be produced and performance solutions utilized reorganizes naturally with each new result needed, each completed result deactivated, and each performance solution deployed. This eliminates reorganization upheavals that are characteristic of 20^th century organization structures overlaid on the business.

Result-performance Management (R-pM) provides the only way to organize the business for 21^st Century management

Result-performance Management (R-pM) shows how we should have organized and managed the business all along. R-pM organizes results produced and performance that produces results into one integrated business structure. R-pM separately manages and optimizes results and performance to gain advantages not possible with 20^th century management. Everyone in the enterprise must perform to produce defined results. Every manager has specific result and performance responsibilities, period by period in the execution of the enterprise strategy.

Visit Result-performance-Management.com to learn more about organizing your business with R-pM for 21^st Century Management, and download the R-pM Toolkit, your 21^st Century Management Manual.