Rule No 9: Collaborate to maximize shared value and minimize shared costs

Business collaboration is a 20^th century management problem

Business collaboration and outsourcing is recognized as a major problem today. There is need to integrate suppliers and customers with the business, to integrate business partners and outsource providers in value chains, and to consolidate business operations. There is a need to know the specific business requirements of customers. There is a need to know the costs incurred and value created by partners in a value chain.

Business collaboration solutions require expensive IT investments

The solutions proposed for 20^th century business collaboration involve heavy investments in common information technology to capture and report consistent information across enterprise, or to reconcile and recast inconsistent data maintained by partners. Often another structure is laid over the business for activities to capture known costs or contrived “value chains’ to estimate values. Even with these investments, no method has been found for real flexible and accurate business collaboration.

Rule No. 9 of 21^st Century Management: Collaborate to maximize shared value and minimize shared costs

Business collaboration and integration is an important requirement of 21^st Century Management. Businesses must be able to produce a result, where the highest value-quality result can be produced for the most cost-effective performance. Result-performance Management (R-pM) provides the means for business collaboration and integration by consistently organizing every business involved in a value-quality chain starting within suppliers, moving through the enterprise and business partners, and continuing within the customer. Results can be outsourced to the provider that provides the best quality for the lowest cost. Business collaboration is simplified when each collaborator follows the ten rules of 21^st Century Management.

Use R-pM to define result chains and the capital utilized for each result as a basis for collaboration

Business collaboration is enabled by organizing and managing the actual business of each participant. The business is defined as a chain of economic output results to be produced using standardized capital as consistently defined solutions to produce each result. Each result has a customer who is willing to pay a value for the result of a defined quality or the result is not produced. So, value and quality required is known for each result along the chain. The result can be produced by any business that can provide the required value and quality.

Standardize capital definitions and full cost capture

Tangible and intangible capital employed is consistently organized and sub defined as specific performance solutions incurring a known cost. Costs are captured by solution within the standard solution type for comparison. The costs of solutions utilized are captured against the result produced to know the result value-added. The total result values within the chain cannot exceed the value of the final result from the chain. Costs incurred can be benchmarked to know and compare consistently-defined costs across businesses.

Manage costs and value across business collaborators

R-pM enables management of result value-added and quality across a chain of results. The result is best produced by the business that provides the highest value-added and quality. The chain can be re-linked to add or remove results and to produce results in a different business to achieve the highest shared value-added.

Use R-pM to enable business collaboration, business integration, and business consolidations

Business collaboration and integration and result outsourcing are no longer problems. Results and performance is managed among businesses the same as within a business. This simplifies business collaboration, integration, and consolidation. Business management information is captured and reported by any flexible general ledger or information management system. The means for business collaboration is explained in The R-pM Toolkit, available now at result-performance-management.com.