Business process re-engineering solved some problems, but created others
Since the beginning of business, enterprises have had a problem managing the quality and value of final results provided to customers as input into the customer value chain. Business Process Re-engineering (BPR) came along in the 1990’s to address the problem. BPR says that the important thing was the business process leading to one output at the end of the process. Results and performance within the process are mixed together. The process crosses organization units, which are expected to manage performance and performance quality to produce a final output result to go to the customer. This makes it difficult to manage value and quality of the results produced within the process leading to the final output.
The second rule of 21st Century Management is to “Generate Revenues from an Chain of Known Value”
The rule says to define business processes by the results produced and manage each result in the result value-quality chain starting from input results from the supplier, result value-added along the enterprise chain, and the final result to the customer. Manage the chain to help suppliers meet enterprise needs and to add more value by meeting customer needs. The means to do this are formalized as Result-performance Management (R-pM), to integrate business organization, planning, directing, control, reporting, and governance for 21st Century Management. R-pM replaces business processes with result value-quality chains to direct the actual business. Business process is one type of capital solution utilized to produce each result in a chain.
The monolithic business process mixes capital, performance, and results together
The reengineered business process produces a monolithic process that is governed by the process flow across organization units. The idea is to break down the walls between the organizations involved in producing the process output. In focusing on the process, Business Process Re-engineering mixes results, capital utilized, and performance together under the label performance. BPR emphasizes managing performance quality, which is difficult since quality is in the result; not in the performance. With the business process, it is hard to determine value, since value is now hidden in the results somewhere in the process. The process mixes business capital, the capital that produces a result in the process, together with other capital like people, equipment, management policies, etc. Business Process Re-engineering has now evolved into Business Process Management, which propagates these problems.
We should be building and managing result value chains rather than business processes
Instead of thinking of processes, we should be thinking of result chains, which define the results produced across the process. Only essential high-value results, for which a customer is willing to pay, should be in the chain. The flow should be determined by the relationship between the results. The process is the performance across the results for separately managed business, human, facility, and management capital. Result quality replaces performance quality, but depends on performance effectiveness. Input results to the chain, results in the chain, and the final output result, have customers who are willing to pay to determine the value of each result. The total result value cannot exceed the value of the final output result. Performance consumes capital and incurs costs. The cost of performance solutions utilized totals up to the cost of the result. Therefore, each result has a value added. A low value-added or quality result is identified quickly in the chain. If the problem was in the input result, this can be quickly determined. If the problem is the performance producing the result, the problem can be addressed and solved.
R-pM separates results, capital solutions, and performance domains where a capital solution is utilized to produce a result as separate data sets, with interrelated result metrics, performance indicators, and capital measures. The capital investment is amortized in performance costs each time the solution is utilized. The performance cost of a solution occurs because of the reduction in solution worth (sometimes called asset value today). The performance costs of all solutions utilized add to the total cost of producing the volume of full or partial results. The customer, who wants the result produced must be willing to pay a value for the result. The value of all input results and results produced in the chain must be within the value the external customer is willing to pay for the final result. The result value less total performance costs is the result value-added. Result value-added must be positive, else the result must be closed unless costs are reduced or the value is increased, requiring the value of other results in the chain to be decreased.
Capital solutions must be qualified in order to be implemented in a performance domain to produce a result. Performance must utilize the solution qualifications effectively to produce a quality result. If a result is low-quality, capital solution utilization in performance is reviewed to determine and correct ineffective performance or a less-than-qualified capital solution utilized. The result chain is managed further to manage the capacity of capital solutions utilized in performance to produce a volume of results to effectively utilize the capacity of the lowest-capacity solution and manage the costs of over-capacity in other solutions. The chain manages reliability of capital solutions producing performance uncertainty that introduces result risk to provide performance checks or added results to manage risk. The attributed contribution solution by solution to result value-added is managed to determine the return to date on the solution investment, and the current solution worth in future value-added over remaining solution life in utilization plus result value-added in the sale or disposal of the solution after use. Capital solution causes of performance problems produce result symptoms, which can only be removed by solving performance problems through improved capital solutions. Capital solution potential is assessed to justify performance expectations that are required solution by solution to meet result goals.
None of this is known or managed today because the result value-quality chain is hidden under the overlaid business process. R-pM manages capital worth continually to manage asset value. R-pM manages all tangible and intangible capital utilized to capture all costs. R-pM manages value-added across result chains and the complete business to manage and maximize margins, leading profit and shareholder value results.
Use R-pM to know value, cost, quality, effectiveness, goals, and expectations in Result Value-quality Chains
Instead of confusing our value, quality, costs, responsibilities, etc. in a business process, we need to clarify the attributes of results, capital solutions, and performance in a result value-quality chain. Instead of managing business processes, we must manage the three entities that define the business: results, capital solutions, and performance of a solution to produce a result. The method to redefine business processes to be result value-quality chains is Result-performance Management (R-pM).
Visit Result-performance-Management.com to learn more about organizing your business with R-pM for 21st Century Management, and the R-pM Toolkit, your 21st Century Management Manual. The Toolkit includes “How to Build Result Value-quality Chains” to learn to organize and manage the result value-quality chain to a final result for all attributes of results, capital solutions, and performance in the chain, and to collaborate with other 21st century enterprises for shared value-added and quality.
The R-pM Solution to the Economic Crisis is explained in free downloads
Three free white papers explain the dead-end 20th century management problems 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 20th century management problems and the R-pM solution
- The Only Solution to the Economic Crisis explains how R-pM manages the business to capture actual business data and provide management the information needed for actual business management
- A Government Business Management Program to Answer the Economic Crisis outlines a government program to encourage business management 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.
