Manage capital as qualified solutions for cost-effective performance

The enterprise today does not manage specific capital investments for return and worth

20^th century management invests enormous sums in capital, but specific capital items are not managed to be utilized by the enterprise or to produce measured returns. The enterprise has never defined the specific capital solutions that are available to be utilized by the business from its investments. The enterprise has never defined the set of specific output results produced from utilizing its capital that represent the value created and the benefit of the investment. Costs arising from the decline in worth of the solution over its life are largely unknown, and known costs are charged to contrived entities in overlaid structures, like activities or centers, that are not part of the business.

20^th century management administers capital by performing functions. The emphasis is on administering financial capital and the financial aspects of capital. Administration is a routine and rarely has stated capital management responsibilities and goals. Administration covers mostly tangible assets and often mixes together categories of capital that require different professional capabilities to support and manage properly. Much capital is assigned to responsibility centers and neglected. Much high-worth business, management, and information capital of growing importance is labeled as “intangible assets”, and has no function responsible. Capital worth is not managed. Financial investment worth usually is set at a fixed amount, rather than worth in utilization by the business and disposal after utilization. Some capital worth is administered by depreciating fixed assets, but the costs and worth derived are not related to the real worth of the solution to the business. The failure of financial institutions and corporations to manage capital properly contributed significantly to the losses incurred and the current worldwide economic crisis.

Result-performance Managements manages capital investments as solutions in the set of all capital

There are no administration functions or “intangible assets” under R-pM. R-pM establishes capital management to manage all capital, to be utilized to produce results. All capital solutions are tangible, since they require investment to acquire, develop, and implement. Capital is managed by category for support and operation. Each category is sub-divided by capital class to utilize capital properly to be ready to produce a first result in a set, to produce each specific result, and to access and update information.

Capital solutions are organized for support by human capability needed

All capital solutions require specific capabilities and experience to manage. A basic principle of 21^st Century Management is to match the human capability that is required by the business process with the capability of personnel required to utilize the process to produce the result. Capital category organizes capital by the human capabilities required by the business processes that produce capital management results. Four distinct categories of capital require different and specific management and support capabilities.

• Business capital is the organization, process, and data that directly produce a result or set of results and cannot be used for results in general. Business capital requires business knowledge and analysis capabilities
• Human capital is the internal and external personnel employed in the business, specific capabilities that can be applied to produce difficult high-value results, and knowledge to assist human capital utilize specific solutions and produce specific results. Human capital requires human handling and development capabilities
• Facility capital is the traditional tangible assets of the enterprise in the reusable infrastructure and equipment, investments in financial facilities, consumable money and supplies, and tangible financial and non-financial information in records of the business. Facility capital requires administration capability and expertise with the specific capital
• Management capital is the aids that help manage the business in the business strategy and plans, business and competitive tactics and result evaluations and capital assessments to keep operations on track, and analyzed data and records and external intelligence to provide management information. Management capital requires management analysis and research capabilities

The four categories of capital are managed by capital result units that are responsible for developing and maintaining capital and providing qualified solutions to produce results. Capital that may be administered today as organization and methods, information technology, finances, corporate plans, audit reports, legal items, etc are incorporated under the appropriate category for professional management of the specific capital solution. Capital files on employees, assets, accounts, etc continue to maintain details. Accounting is provided by facility records management for all financial and non-financial information produced by the business. Special non-business accounts may be maintained, if needed to meet government accounting and reporting requirements.

Capital solutions that must be integrated and utilized together are organized for utilization

Capital must be organized differently in order to be integrated and utilized seamlessly to produce results. Therefore, each category of capital is organized into three classes of capital:

• Readiness capital must be in place to provide the capital for an organization unit responsible for a set of results. Readiness capital includes the business organization, human personnel, facility equipment, and management strategy
• Production capital is utilized directly when producing a specific result. Production capital includes business process, human capability, facility supply, and management tactics
• Information capital provides the information to be accessed together to utilize solutions and produce results and the means to document and record results. Information capital includes business data, human knowledge, facility records, and management intelligence

Capital is organized by capital class to be integrated and utilized by the result manager to produce results. Twelve solution types can be organized either by capital category or by capital class in the business structure.

Existing and new investments are solutions to produce specific results for return and worth

Every capital solution investment with R-pM is directed at producing specific output results. The solution is selected or developed based on the qualifications to produce the results and the ability to add value to the results produced. It is the result value in actuality to date attributed to the solution that provides the return on the solution investment. The future result value over the remaining life and sale or disposal of the solution provides the solution capital worth.
All investments are defined as capital solutions that are qualified to produce specific results and are managed to produce attributed result value to return the investment and to project future capital worth for the remaining useful life. Attributed result value that provides the return on solution investment in utilization to date, and solution worth in future utilization includes two components; 1) the payback in performance costs that amortize the solution that are absorbed by the result, and 2) the result value-added after all solution performance costs that is the gain or loss on the solution investment that is added back to the solution. If the result value-added is negative, there is a loss return or decline in solution worth. If the current solution worth is less than the unamortized investment balance, there is a capital management problem to understand the cause and handle additional performance costs to reduce the unamortized balance. Capital management becomes ingrained, as experience is gained, to ensure cost-effective solutions to increase value-added and profit margins.

Administrative functions are replaced by capital management to support, develop, and improve all capital

Capital management organizes the capital management responsibilities to replace administrative functions and adds capital management responsibility for currently unmanaged or intangible capital. Capital is categorized by results that require the same specific professional capabilities needed to support and manage the capital. Capital is classified to be integrated with business capital to be accessed and utilized to produce specific results. Capital worth is managed in the capability to produce value in results over the remaining solution life, plus result value-added from sale or disposal. The total investment amount in each solution is captured and amortized in performance costs against results produced as solution worth declines over the solution life.

The return on a capital investment project is assessed as the attributed result value produced by the investment to date, compared with result value with no investment. The total worth of capital is managed to help understand the full enterprise business worth. R-pM ensures that all capital investments made by the enterprise are in solutions that are qualified to produce intended results. Implemented capital solutions are managed as part of the business for cost-effective utilization in performance to produce quality results of high value to provide the return on every capital investment, and to know and manage all capital worth. Many of the problems that caused the economic crisis are eliminated by effective capital management.

The R-pM 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 and manage actual business results, that caused the economic crisis, the way R-pM eliminates the problems, and a government program to address the crisis by stimulating the economy, solving the problems, building an architecture 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 R-pM solution to eliminate the problems
• The Only Solution to the Economic Crisis explains how R-pM plans and manages 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 and password. Your email address is protected and used only for download problems and occasional R-pM Member news and white papers.