Organize the Business, then deploy Human Capital

20^th century organization structures do not organize the business

According to the Business Change Forum, “Re-organization” is one of the top 10 business problems in the 20^th century enterprise. The “re-organization” problem arises from 20^th century business organization methods that lay an organization structure over the business and do not organize the business. If the business was organized, the organization would change automatically with each business change and there would never be upheaval in re-organizations.

Result-performance Management (R-pM) organizes the business for 21^st Century Management

Now we have a significant new breakthrough Result-performance Management (R-pM) to organize and manage the business by the capital solutions of worth utilized and consumed in performance costs to produce economic output in result value over planned time periods. The business changes with every management decision to produce a new result, close a finished result, or utilize a different capital solution in performance. These decisions are implemented in an updated business organization solution with R-pM. Download the R-pM management guide “How to Organize the 21^st Century Business”. This comprehensive guide provides detailed instructions to organize results, capital, and performance, so that your business organization is updated with every new result produced or capital solution utilized.

The organization structure laid over the business is the fatal error of 20^th century management

With 20^th century management used today, the organization is not seen as a business organization capital solution to be utilized to produce results, even though investment is required to develop the organization solution. The organization structure is considered a management prerogative and often becomes a political football to decide on the arbitrary organization structure to lay over the business. The rigid organization structure prevents the business from being managed, which leads to a multitude of other unsolvable problems. So, the fundamental thing to get right in 21^st century management is the business organization solution.

I participated in many organization studies, as a management consultant. My approach was to organize the business first, and then assign the people to manage and operate the organized business.

But, I always found that others concentrated on organizing the people and general functions first in an enterprise “organization structure”, and then make the business adjust to the organization structure. Many alternative organization structures may be created and considered. This, by definition, makes the eventual organization an arbitrary structure that organizes the enterprise, but does not organize the business.

In your last reorganization, did you organize the business or organize people

Think of your own enterprise. How was it organized? If there was an “organization study”, or if there were discussions of alternatives, or if you were concerned about your place in the organization; you likely have an arbitrary rigid organization. Organizing the business means organizing the business, not organizing people. You and the others in your enterprise are human capital that is deployed in an organized business to get results.

There are many ways to organize people, but only one way to organize the business

Inevitably, the organization structure selected is one of the many wrong ways to organize, rather than the one right way, which introduces unsolvable problems.

• Contrived entities like departments, sections, functions, positions, etc., are defined, which then are managed instead of the components of the actual business
• Other contrived structures for planning, processes, functions, accounting, reporting, etc. are required for management, since the business is not organized. Structures are designed to fit the organization rather than the business, define additional entities to be managed, and are also laid over the business
• Managers and staff can justify their existence by filling an organization position, independent of the value produced for the business
• Capital is assigned to the organization to reside, rather than to the business to be utilized
• The organization is measured for time consumed, money spent, etc. rather than the business result value, cost, and value-added
• By definition, whenever the organization or management structure differs from the business, it is a structure laid over the business and prevents one structure to integrate planning, control, and managing the business
• The organization structure is fixed in place, while the business continually changes, creating pressure for organization change and the upheavals called re-organization. Re-organization begins another cycle of unsolvable problems

20th century management organizes the enterprise, and not the business. The business organization is not recognized as capital. But now, people are being recognized as human capital that should be utilized in the business like other capital assets. This means that we must reconsider the method of enterprise and business organization.

Results must be defined separate from the activity in performance

The main barrier to organizing the business has been the 20^th century definition of performance that includes not only the utilization of capital in actions executed but also the results accomplished, as performance. This imprecise definition is still causes results, capital, and performance to be mixed up in business processes, performance management structures, and key performance indicators (KPI).

As we said, the most important capital solution to get right in 21^st Century Management is the business organization. The business organization is not a management prerogative, but capital in a performance solution to produce results. So, let’s go back to organizing the business. The business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”.

The business consists of very specific output results produced that can be counted and measured. The results relate to each other and must be organized to organize the business. The results require capital investments in specific solutions of worth. The results can only be produced by utilizing capital as specific solutions in performance. The results produced, capital available, and capital solutions deployed to be utilized in performance to produce results define one very precise organization of the business at any particular point in time.

Therefore, results as outputs must be defined separate from the capital utilized and the utilization of capital solutions in performance. Once you have defined your results, your capital utilized and your performance in the utilization of solutions to produce results, you have defined your actual business. They are not contrived departments, functions, positions, etc., which mean nothing on their own. They describe what you are actually using and producing in day to day business performance.

Result-performance Management (R-pM) enables the enterprise to organize the business

The means to get the business organization performance solution right is provided by Result-performance Management (R-pM), which simplifies the organization to the only three components that comprise the business:

• Results: The specific economic outputs of value produced by the business
• Capital: The specific capital solutions of worth utilized to produce specific results
• Performance: The utilization of a specific solution to incur costs to produce a specific result

With R-pM, the business, or any part of the business, can be viewed as a spreadsheet with results to be produced organized in columns across the top and the capital solutions to be utilized in rows down the side. Each cell with a solution deployed to produce a result is a performance domain to record performance costs and effectiveness. The total costs of solutions utilized down a result column gives the result cost. The total costs of a solution to produce results across a row gives the total solution cost.

R-pM establishes new business organization principles for 21^st Century Management

R-pM is based on new principles of business organization, to provide the solution for 21^st Century Management:

• The enterprise organization is business capital and the organization structure is a business organization  solution.
• The business organization solution sets the integrating framework for other performance solutions for result, capital, and performance management
• The business organization organizes business results first, not capital solutions, like human personnel or capabilities. Capital solutions are deployed and redeployed as needed to produce specific organized results
• Human capital includes personnel, capability, and knowledge solutions that are deployed to the business organization to produce specific results
• The organization is a professionally managed solution, not a management prerogative. Management defines strategic results and performance solutions to be developed
• The business organization solution comes from an analysis of the future and current business results and the capital available and needed to produce specific results
• A strategic business structure is planned for results to produce and capital required at the strategic horizon as a basis for operation and development management
• The business organization solution is not static, but is managed continually for change and improvement, producing a living organism that changes with every business change, and eliminates reorganizations
• Business result responsibility is established by deploying a result unit as business organization capital and a result manager as human personnel capital
• Once the business is organized other capital is deployed, where it can best be utilized to provide the capacity needed to produce results

These principles establish the business organization as one integrated solution for result, capital, and performance planning, operation, development, and reporting.

The business organization is a living solution that changes naturally with result change

The business organization becomes a living organization, when the solutions to be utilized in performance are deployed to the specific results to be produced. Any activation, changes, or deactivation to results requires redeployment of performance solutions and requires updating of the business organization solution. This makes the business organization a natural organization that changes as the business changes and eliminates re-organization upheavals.

The business organization is the solution for 21^st Century Management

With R-pM, the business organization is the fundamental solution for 21st century management. Rule #1 of 21^st Century Management is “Organize and Manage the Business“. Set your enterprise apart from your competition. Organize your business results, and then deploy human and other capital utilized to produce your results, as your business organization solution for integrated 21^st Century Management, and leave 20^th century re-organizations behind.

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