20th century management manages the enterprise and does not manage the business of the enterprise
20th century management used by all enterprises today organizes and manages the enterprise and not the enterprise business. Organization and management structures laid over the business prevent direct management of “the activity of providing goods and services”. Today, you invest large sums in capital in order to utilize your capital in business performance to produce output results. But you are unable to measure and manage your actual business, since your business is hidden under overlaid organization charts, corporate plans, business processes, account charts, costing activities, administrative functions, scorecards, and other structures.
Organize and manage your business activity and goods and services provided to customers
You must gain control of your actual business to clear away all overlaid structures, and then directly organize and manage “the activity of providing goods and services” to provide high-value and high-quality goods and services to your customers. Any method can be employed to manage the enterprise. This leads to duplication, waste, and unsolvable problems. Only one method can be used to manage the enterprise business properly, so that business management is focused and productive and unsolvable problems are eliminated.
The actual business is very precisely defined for 21st century business management
A more precise 21st century definition of the business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Business management is a new breakthrough to organize and manage business activity as capital solutions utilized in performance and good, services, and other economic outputs as results produced. You can gain control of your business to directly organize and manage your investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results.
Organize and manage goods and services provided as business results
Every enterprise procures goods and services as input results to the business. The input results may be utilized by the enterprise business in one of two ways:
- Results, such as material or components, may be transformed into output results from the enterprise business
- Results may be implemented as capital solutions such as equipment, supplies, processes and systems, information etc to be utilized in the business to produce other results
Every business produces goods and services as output results from the business. Goods and services provided to a customer represent the value created by the business and contain the quality produced by business performance. Value is determined by the customer willingness to pay for the goods and services as input results to his business. Quality is in the customer perception of the suitability of the goods and services as input results to his business.
Goods and services are produced by utilizing capital solutions in performance to produce output results along a chain of results. For goods, the results may be material received, product produced, product placed for sale, product included in customer order, and product delivered to customer. For a services, the results may be service results planned, service agreement executed, service results delivered result by result, service results accepted by customer, and service invoice paid. The value and quality of goods and services provided can be managed only by organizing and managing the results in the result chain leading to the final results provided to the customer.
Results in the result chain must be organized and managed to provide high-value and high-quality input results for the customer result chain. Results are related in a result structure to manage volumes produced, result value, total performance costs, value-added, quality, risk, goals, and other result metrics.
Organize and manage business activity in the capital solutions utilized in business performance
In our personal business, we utilize capital solutions in our time, capabilities, equipment, cash, supplies, purchased services, plans and tactics, information, and other solutions to produce or procure the result desired. The result could be a pleasurable time, specific achievement, or purchased goods or service results. The value of the result must exceed the cost of performance in order for us to be happy with the result. Quality of the result is the pleasure we received, the objective satisfied, or the suitability of the result to be transformed to a final result like dinner, or to be utilized as a performance solution such as a tool, soap, or personal knowledge. We recognize that the quality of the result is a function of the effectiveness of our performance in selecting or producing the result. We do this naturally. We do not lay organization or management structures over our personal business.
Business activity is performance in the utilization of capital solutions to produce business results. Capital solutions have worth in the value they add to the results produced and contribute to our enterprise worth. Capital solutions must be organized in categories to apply the specific capabilities required to develop and support the solutions, as:
- Business capital in the business organization, business process, and business data utilized. Business capital is specific to the result produced and cannot be used to produce other results. Business capital requires business knowledge and analytical capabilities
- Human capital in the personnel, capabilities, and knowledge of individuals utilized by the business. Human capital requires human handling and development capabilities
- Facility capital in the reusable equipment, consumable supplies, and records kept on the business. Facility capital requires administrative ability and experience with the particular capital utilized
- Management capital in management strategies that plan the business, management tactics that keep the business competitive, and management intelligence that indicate business opportunities or threats. Management capital requires management analysis and research capabilities.
The capital must be defined as specific capital solutions that can be utilized in the business to produce specific results. Capital solutions must be organized by class to be integrated with like solutions to produce results effectively, as:
- Readiness capital to integrate the business organization with human personnel, facility equipment, and management strategy to be ready to produce the first result in a set of results that utilize the capital. Readiness capital provides the capital module utilized by the business organization unit solution to produce assigned results.
- Production capital to integrate the business process with human capabilities, facility supply, and management tactics that are utilized when producing a specific result
- Information capital to integrate business data, with human knowledge, facility records, and management intelligence that are needed to produce a result and to document results produced
All capital, including currently unmanaged capital and intangible assets, are organized and managed as individual solutions. Capital solutions are organized by category and class in one capital structure to manage capital investment costs, investment costs amortized as performance costs, investment balance unamortized, return on investment, capital worth, qualifications and potential to produce results, and other capital measures.
Organize and manage business performance in utilization of specific solutions to produce specific results
Organize your results that must be produced across the business, including the chain of results that produce goods and services, in the result structure. Organizes your capital solutions utilized in business activity in the capital structure. Organizes your business in results and capital in one integrated business structure by deploying specific capital solutions to domains in the performance structure to be utilized to produce specific results. Then you can capture actual business data on the value, quality, volume, risks, etc in results produced and the corresponding cost, effectiveness, capacity utilization, uncertainty, etc of solutions utilized in performance. The result value less total performance costs is the result value added that you managed across your result chain to maximize customer value while minimizing performance costs. You manage the effectiveness of each capital solution to manage the quality of each result in the chain to assure the quality delivered to the customer.
Results, capital solutions, and performance domains where a specific solution is utilized to produce a specific result are three business data entities maintained to describe the business. Information system files that describe results such as orders, products, payments received, etc are maintained as subsidiary records in the result data set. Information system records that describe capital solutions such as employees, fixed assets, and knowledge are maintained as subsidiary records in the capital solution data set. Three other data entities are maintained to plan, manage, and record the complete business. Enterprises describe related internal enterprises and external enterprises and individuals who interact with the business as customers, partners, suppliers, etc. Time periods describe the periods used for planning the recurring or ad-hoc business for current recording and historical analysis. Business descriptors describe the attributes of results, capital solutions, enterprises, and the business in general that must be recorded such as product groups, markets, customer segments, etc. These six data entities describe the complete business and other confusing data entities are no longer needed.
Your business in capital utilized in performance to produce results is hidden under overlaid structures today. The overlaid structures conflict with the actual business causing the unsolvable problems of 20th century management, such as the underlying problems creating the current economic crisis. You must gain control of your business by learning, organizing, and managing your capital, performance, and results directly and eliminating the structures laid over your business today.
Businesses in a corporation consolidate into the corporate business
A large corporation is made up of businesses in divisions, business units, and subsidiary companies that may be scattered around the world. Each business is managed as its own business to produce specific results. The business is also part of the corporate business. Each business in the corporation is updated with results produced and updates the corporate business structure. The corporate business structure manages the sum of results produced by all corporate businesses. Result symptoms appearing at corporate level are traced back to the business producing the result to identify performance problems and improve the capital solution that is the cause of the problem.
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 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. R-pM and business management are supported at result-performance-management.com.
The Solution to the Economic Crisis is explained in free downloads
Three free white papers explain the dead-end 20th 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 20th 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.
