How to Gain Competitive Advantage in the 21^st Century

Competitive differentiation and advantage requires a new business structure

Now is the time to take a new look at how you organize and manage your business, in order to compete in the 21^st century. In the near future, your enterprise will have to compete with companies that take advantage of information technology to organize and manage the actual business. Organized businesses gain competitive advantage through effective business collaboration and utilization of information technology to deliver customer value and quality. Your unorganized business, burdened by obsolete 20^th century enterprise management structures, will be at a distinct competitive disadvantage.

21^st century competitive differentiation and advantage requires utilization of technology to produce customer value and quality

20^th century management structures used by all enterprises today cannot meet 21^st century needs. Advances in information technology have made it imperative that the enterprise quickly change and adapt to serve customers and markets. Technology enables the enterprise to focus on the specific economic output and input results that form a value-quality chain from within suppliers, through the enterprise and business-partner collaboration, and on into customers’ value-quality chains. Technology has enabled changes in capital management to move from cash and accruals to the total worth of tangible and intangible assets. Technology enables us to simplify the enterprise to directly organize, plan, and manage the business. Technology enables us to collaborate with partners and market our products around the world. Competitive advantage in the 21^st century goes to the company that best uses technology effectively to manage the business, manage business collaboration, and deliver customer value and quality.

20^th century enterprise management structures do not meet 21^st century needs

Management structures used today were contrived in the 19^th and 20^th century, based on the management needs and technology available at the time. Information technology was not available to manage the business, so simple organization and management structures were laid over the business. Information technology evolved, but was used to computerize overlaid structures, such as corporate plans, business processes, account charts, scorecards, etc instead of managing the actual business. IT now makes overlaid structures ever more complex, creating costly information complexity and IT overheads with data reconciliation, enterprise information management, and various IT architectures. The rigid overlaid structures conflict with the business causing unsolvable problems with reorganization, alignment, intangible assets, unknown costs and value, unknown worth and investment returns, and on and on. Our organization and management structures must be reassessed to take advantage of modern technology.

Conventional thinking prevents proper definition and management of the business

The main barrier to competing effectively in the 21^st century is conventional thinking that says management improvement and new structures must be based on existing structures and methods. Management improvement books are substantiated as accurate by footnotes that prove that they are based on old thinking. New advances for competitive advantage attempt to improve structures laid over the business, which can never solve unsolvable problems. Throughout the 20^th century, conventional thinking has prevented the simple analysis of what constitutes the actual business and how should modern technology be used manage the business. Instead, we continue costly and wasteful structures that prevent solution to unsolvable problems and breakthrough competitive advantage.

Utilize information technology for breakthrough competitive differentiation and advantage

Information technology can be utilized for breakthrough competitive advantage in the 21^st century by directly organizing and managing the enterprise business as “investments in capital as solutions of worth utilized for cost-effective performance to produce value and quality in results”. The actual business consists of three components:

1. Results: Economic outputs of value and quality produced by business performance
2. Capital: Investments in specific human and other solutions of worth that are implemented to produce specific results
3. Performance: Utilization of specific capital solutions to incur costs and be effective to produce results of value

These components are the only three that define the enterprise business. But, today these components not defined as elements and sets that comprise the business. Those elements that are defined are mixed together in actions executed and results accomplished and defined as performance for performance management, preventing actual business management.

Results and capital solutions are separated from performance to organize the business for competitive advantage in the 21^st century. The enterprise business is organized as a business structure with results across columns, capital solutions down rows, and performance in a cell (performance domain) to utilize a specific solution to produce a specific result. Results include product, order, satisfaction confirmed, service or project or assignment completed, or other output that can be counted. Capital includes all tangible and intangible assets organized as specific solutions. Human capital includes personnel solutions utilized and capability solutions provided to produce results. Business transactions are generated each time capital solutions are utilized to produce a count or volume of full or partial results. Business transactions record results produced, capital utilized, enterprises involved, the time of the transaction, and business descriptors to identify a region, customer segment, product line, etc that sub-describe the business. All data captured today that is not related to the business only creates management confusion and is eliminated.

The business is organized and managed using one business structure for the current business and another business structure for the strategic business to organize strategic results and capital development required. Result goals show strategic value creation by period from the current to strategic business. The current and strategic business structures are used for all business organization and management to replace organization and management structures laid over the business today.

The value and quality of customer results is managed for competitive differentiation and advantage

One competitive advantage of the managed business is the capture of actual business data that is not captured today, and utilization of actual business management information. The main advantage of the business is in the value and quality of results that go to the customer. The business creates value through results. Quality is an attribute of the result, not of the performance. Value must be added to results to justify improvement or development. Costs are incurred through utilization of capital in performance. The performance cost can only be charged against the value created in the result produced. Performance effectiveness puts quality into results. Proper utilization of capital capacity in performance is needed to produce a volume of results. Performance improvement or development can produce benefit only by adding value to results. The business must manage costs, value, benefits, worth, volumes, quality, risk, uncertainty, and other attributes of capital, results, and performance for competitive advantage. Capital solutions utilized in performance must be managed to produce value and quality in each result in the chain of results that produce customer satisfaction and willingness to pay.

20^th century management will be a significant competitive disadvantage tomorrow

Unorganized businesses burdened by obsolete 20^th century organization and management structures can compete today because competitors are burdened with the same problems, costs, and inflexibility. But, as corporations and other enterprises directly manage their business, obsolete organization and management structures become severe competitive disadvantages. It is now becoming imperative to organize and manage the business for competitive advantage through 21^st century business management. Move beyond conventional thinking to evaluate the competitive differentiation and advantage of utilizing information technology to organize and manage your business.

Result-performance Management (R-pM) provides the knowledge for actual business management

Result-performance Management (R-pM) is the only source of knowledge and expertise on how to manage the actual business. Forward-looking enterprises are now using R-pM guidance to organize and manage their business to gain breakthrough advantages over competitors burdened by unsolvable 20^th century management problems. Business management is explained and documented in the Business Management Toolkit. The Toolkit provides procedures for actual business management and maintains emerging 21^st century management conventions, definitions, and standards. Management consultants who base 21^st century business management services on R-pM knowledge are licensed to help enterprises learn, organize, and manage the actual business. Business management knowledge and the Business Management Toolkit are available and supported today at result-performance-management.com.

The Solution to the Economic Crisis is explained in free downloads

Three free white papers explain the dead-end 20^th century management problems, such as the failure to plan, account for, and manage the actual business, that caused the economic crisis, the way to eliminate the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building a structure for financial and economic management, and organizing local businesses to flourish in the eventual recovery.

• How to Eliminate Problems that caused the Economic Crisis explains the major unsolvable 20^th century management problems and the solution to eliminate the problems
• Business management; the only Solution to the Economic Crisis explains how to plan and manage the business to capture business data and provide management the information needed for actual business, corporation, industry, and economic management
• A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management, stimulate the economy, restore confidence, organize businesses to flourish in the recovery, and manage economic cycles to prevent future crisis

These three white paper downloads are available to R-pM Community Members at result-performance-management.com. There is no cost or obligation to join the R-pM Community. Join by entering your email address and personal password. Your email address is protected and used only for download problems, product updates, and occasional R-pM Member news and white papers.