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. Businesses cannot collaborate if the actual business of each partner is not organized or managed. There is need to organize the business of each partner, to integrate suppliers and customers with the enterprise 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 partners, 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, since the business is not organized or managed.

Rule No. 9 of 21^st century business management: Collaborate to maximize shared value and minimize shared costs

Business collaboration and integration is an important requirement of 21^st century business management. Businesses of all partners are organized to produce managed results, invest in managed capital solutions, and to utilize managed solutions in business performance to produce managed results. Businesses must be able to produce a result, where the highest value-quality result can be produced for the most cost-effective performance. Business management 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 partner that provides the best quality for the lowest cost. Businesses can be integrated with suppliers and customers. Business collaboration is simplified when each partner follows the ten rules of 21^st century business management.

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 partner. 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. Result value is created when a volume of full or partial results is produced. 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 capital solutions of a known investment amount and incurring known performance costs for amortization and operation. Capital solutions are implemented in the business to produce specific results in performance. Performance costs are captured within the standard solution type for comparison. The performance costs of solutions utilized are captured against the volume of each result produced to know the total costs against the result value giving 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

21^st century business management enables management of result value-added and quality across a chain of results. The result value-added may be negative, if total performance costs exceed the result value for the volume of results produced. The value-added for all results in the chain add up to the value-added of the final result from the chain. The result is best produced by the partner that provides the highest value-added and quality. The chain can be re-linked to add or remove results and to produce results by a different partner to achieve the highest shared value-added.

Organize the business to enable business collaboration, business integration, and business consolidations

Business collaboration and integration and result outsourcing are no longer problems. Results, capital solution investments, and performance is managed among businesses the same as within a business. This simplifies business collaboration, integration, and consolidation. Business data is captured and management information is reported by any flexible general ledger or information management system.

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 20^th 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 21^st century management conventions, definitions, and standards. Management consultants who base 21^st 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 at result-performance-management.com.

The Solution to the Economic Crisis is explained in free downloads

Three free white papers explain the dead-end 20^th 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 20^th 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.