20th century enterprise management lays various performance management structures over the business
20th century enterprise management manages enterprise performance through many performance management and reporting structures and financial and business models. Performance structures, contrived for various situations and industries, are laid over the business. Capital measures, result metrics, and real performance indicators that are known are mixed together and called performance indicators.
Performance data collected is not related to actual business performance
Performance data is gathered related to structures laid over the business, and much more performance information is calculated through contrived formulas, producing a maze of performance information. Performance information has meaning only in relationship to the overlaid structure, rather than the actual business. Information across structures is inconsistent and difficult to relate. Other structures are then introduced to reconcile data and integrate information and performance management systems are added for scorecards, control panels, dashboards, etc to extract from the maze of information. Each overlaid structure obscures the view of the actual business. No common method exists to be used by any enterprise to capture actual business performance data or provide an accurate view of the business. Management tries to optimize functions, activities, processes, units, jobs, centers, and other contrived entities because it has little information related to the actual business performance.
Real business performance problems fester unknown under overlaid structures
Performance problems continually exist in actual business entities that are hidden under the performance structures, for which data is never collected and information is never reported to management. Problems fester and small performance problems build to big performance problems before coming to management attention. Symptoms of business performance problems appear in structure alignment, delayed process outputs, low output quality, unknown costs and value, customer complaints, inaccurate information, reconciliation obstacles, and other unsolvable symptoms. Addressing the symptoms with 20th century performance management structures has always been and will always be futile.
21st century business management measures capital solutions, performance of the solutions, and results produced
The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Business management defines and organizes the specific attributes and measurements of capital solution measures, solution performance indicators, and result metrics to manage and optimize the actual business. Business management integrates capital potential, strategic result goals and performance expectations, with current operations, development, reporting, and control.
The business is managed top-down through the result structure
Results are structured at three levels; end-results from performance, set-results to manage a set of end-results or other set-results, and key-results to manage the results produced at the highest level for business success. Managers are responsible for every key-result and manage managers responsible for lower level set-results, who manage managers responsible for end-results in the set. Managers often are responsible for results at multiple levels. The manager responsible for a set-result cannot accomplish the result until all end-results in the chain or set are accomplished. The manager responsible for a key-result cannot complete the key-result until all required set-results are complete. Every result has a customer that receives and utilizes the result. The customer must be willing to pay a sufficient value in order for the result to be produced. Result value and other metrics are summarized or allocated as needed between levels to report complete metrics at all levels.
The business is managed bottom-up through performance domains
Performance domains are defined when a specific capital solution is implemented to be utilized to produce a specific result. The domain is identified by result-capital solution identifiers. Result managers understand the attributes of their results. Capital and performance managers understand the development and improvement of qualified solutions in their category. Capital solutions are measured through capital measures related to the solution. Performance managers understand the attributes of their solutions and the attributes of performance in utilizing the solutions. Performance of a solution to produce a specific result is measured through performance indicators that relate to both the result produced and capital solution utilized in a performance domain. Results are measured through result metrics related to the result. Result and performance managers periodically optimize the utilization of solutions by domain, within their management domain.
Capital measures, performance indicators, and result metrics must be measured and managed to optimize the business
Capital solutions provided and performance in utilization of solutions to produce the best results are managed together to optimize the business. The diagram shows the relationships between capital measures, performance indicators, and result metrics, which must be managed to optimize the cost-effectiveness of capital utilized and the value-added and quality of results.
The business is managed by managing capital measures for solutions available, performance indicators for the utilization of solutions, and result metrics for results produced. Capital solutions, results, and performance have inter-related attributes that are optimized to produce the best results. The business is managed further by managing results in the result structure to produce the best higher-level results. The best results are optimized to work together to produce the best set results that go to the customer, and the best key results that produce overall business success.
Capital capacity utilization in performance produces the volume of results within a time period
Capital capacity is utilized in performance to produce a volume of results. Capital capacity is optimized to provide sufficient capacity in the lowest capacity solution utilized and to control over-capacity in other solutions. If result volumes or progress are not tracking to goals or deadlines, there may be a need to increase utilization of capital solution capacity in performance or to increase the capacity of the restricting solution.
Capital investment costs are amortized as performance costs and charged against result value
Capital investment costs are captured against each capital solution acquired or developed. The total investment amount is amortized in performance costs to record a decline in solution worth. The performance costs reduce solution worth, reduce the unamortized investment balance, increase the cost payback for determining the return, and are charged against result value for the volumes of all results produced by the solution. Certain solutions for human personnel time, supplies, and services utilized incur performance costs at actual consumption costs. The performance costs for all solutions utilized add up to the total performance cost for the volume of results produced. The total performance costs for all solutions is charged against the value created by the volume of results produced. This provides the main business management result metric result value-added.
Capital qualifications are utilized for performance effectiveness to produce quality in results
Capital solutions are qualified to be utilized to produce a value-added and quality of result in order to be implemented in the domain for the result. Performance effectiveness is managed to utilize capital qualifications to produce result quality. If a low-quality result is detected, the solution utilization in performance is checked to find the solution that was not utilized effectively or that lacks the qualifications to produce a quality result.
Capital reliability is managed for performance uncertainty that contributes to result risk
Capital solution reliability is managed to have adequate and certain solutions available, when needed to produce results. Performance uncertainty that solutions will not be available or perform as needed, introduces result risk. Solution reliability and performance uncertainty are managed to reduce the risk of result delays or defects. Performance uncertainty applies both to internal and external solutions that must perform to produce a result. Uncertainty in customer performance to produce a result is managed by the result manager. Perhaps backup or insurance solutions or performance checks are needed to manage result risk for areas of performance uncertainty. Perhaps additional results for inspection, insurance claims, hedging, etc are required to offset result risk.
Result value-added is attributed on the productivity of each solution utilized for return to date and future solution worth
Result value less performance costs for the volume of each result is the result value-added. Result value-added is optimized to be positive within a result chain and to maximize the value-added in the final customer result. If the value-added to a result is negative the result must be closed, or performance costs must be reduced, or result value must be increased and other result value in the chain decreased. Result value-added provides a gain or loss to each solution utilized based on the productivity of the solution in the total solutions producing the result. The attributed result value-added for all results produced is added to the gain or loss for the return on investment in the capital solution. The currently-expected future result value-added attributed from solution productivity is added to total of the unamortized balance and the expected sale or disposal result value to determine the current solution worth (often called asset value today). Solution worth is periodically assessed to validate performance cost and worth decrease determinates, and to validate the future utilization and disposal solution worth. The current solution worth must exceed the unamortized balance of the solution. If solution worth is less than the unamortized balance, the solution worth must be investigated, and additional performance costs must be incurred and managed to reduce the unamortized balance to the solution worth.
Capital deficiencies cause performance problems reflected in result symptoms and corrected through capital solution improvements
Poorly-qualified or unreliable capital solutions can cause performance problems. Performance problems appear as result symptoms in a late, costly, or low-quality result. The only way to alleviate or remove result symptoms is to identify and solve performance problems, which may be due to ineffective solution utilization or may be caused by a particular defective solution. In the latter case, the capital solution must be improved or replaced to remove the cause and provide the solution to the performance problem.
Capital potential is planned in performance expectations set to meet result goals
Every qualified capital solution has the potential to produce certain results. Performance expectations are the expected level of utilization of this potential to produce results and reach or exceed result goals. If result goals are not met, more of the solution potential must be expected to produce the result, or a solution with greater potential is needed. Result goals that are realistic and still are not met, indicate performance problems. Other capital measures and performance indicators are checked to identify the problem and improve the solution.
Measurement and management of capital measures, performance indicators, and result metrics are part of the business routine
Capital measures, performance indicators, and result metrics are monitored continually to identify and manage exceptions, in order to provide best capital utilization in the most cost-effective performance to produce the best value-quality results. In a managed business, this quickly becomes part of the normal routine.
The business is managed from the top down to optimize results, capital solutions, and performance enterprise wide. Key-results can be evaluated down through the set-results to specific end-results. Capital categories can be managed down to solution types and through to the integration of solutions to produce results. Performance is managed in the business data and facility record transactions that record the utilization of a solution to produce a result against expectations and any problems or uncertainty arising.
The business is optimized by managing capital solutions, solution utilization in performance, and the result produced
The business is optimized by measuring and managing related capital measures, performance indicators, and result metrics for the complete business. Business management designs results that will create high future value-added, controls investment costs to provide the precisely-qualified solutions needed to produce the quality result, minimizes performance costs in optimized utilization of the solutions in performance, and maximizes the value-added and planned quality of actual results. Results within the result structure are optimized to produce the end-results that produce the best set-result, and set-results that produce the best key-result to maximize managed profit and shareholder-value results. Business results and performance are managed over the management dimension period by period to maintain the optimized enterprise. Strategic result metrics are evaluated each period with updated plan-to-date progress. New strategic estimates are calculated for continuing progress against strategic result goals.
The business is managed and optimized to prevent management problems and be the best it can be
The business cannot be managed or optimized today because essential business data on capital investments in the business, utilization of capital solutions to produce specific results, and results produced by the business is not captured. Enterprise management never receives the information needed to manage and optimize the business. Unsolvable enterprise management problems can never be properly understood or solved.
Business management provides the tools to optimize the enterprise business to be the best it can be and prevents unknown capital worth, unknown progress against strategic value creation, and other unsolvable problems present in every enterprise today. Business result metrics, performance indicators, and capital measures can be managed up and down the businesses in the corporation business, and for businesses in a managed industry, product line, market, region, economy, or other aggregation of businesses.
Result-performance Management (R-pM) provides the knowledge and procedures for actual business management and reporting
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 20th 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 21st century management conventions, definitions, and standards. Management consultants who base 21st 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.
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