Investments in 20th century management caused today’s unsolvable problems
Over the years, enterprises have invested massive amounts in enterprise organization and management structures that are now laid over the business. Every organization study, business process re-engineered, enterprise information system implemented, chart of accounts designed, costing centers and activities defined, administrative function installed, human resource jobs or scales described, and other business performance and management improvements implemented added to structures laid over the business and contribute to today’s unsolvable 20th century management problems.
Enterprises are still making dead-end investments today
Enterprises are still designing and implementing 20th century management structures that are laid over the business instead of organizing and managing the actual business. Each structure describes the enterprise using different terminology. The more structures that are laid over the business, the more difficult the enterprise is to manage and the greater the business and information complexity problems. The maze of structures also create the need of additional investments in IT data reconciliation and enterprise information management systems, IT architectures, IT-business alignment methods, contrived value chains, etc. Each investment is a dead-end that will never solve unsolvable business problems and likely will never provide a positive return to the business.
Additional 20th century management investments compound unsolvable problems
The enterprise today has no way to relate new investments to the actual business or to analyze and plan the actual return on the investment from utilization of the capital acquired and implemented in the business. Investments are shots in the dark in the hope of making the enterprise easier to manage and operate and providing some estimated return. Each future 20th century management investment will be more funds wasted on another dead-end that just compounds unsolvable problems. The only way forward is to use R-pM to organize the actual business for 21st Century Management and leave all overlaid structures behind.
R-pM is the only way to analyze, justify, plan, and manage investments
R-pM organizes the actual business defined as “the utilization of capital of worth in performance to incur costs and produce value in results”. R-pM organizes the three components of the business: capital invested in the business as performance solutions, output results accomplished by the business, and performance of the business in the utilization of specific performance solutions to produce specific results. All new investments are in capital to be utilized by the business in performance to produce value in results. Even physical investments like a building or plant must be utilized to create result value or provide income results. The return on investment comes from the attributable result value-added by the investment over the payback period. The benefit of the investment and the potential and actual result value added can only be determined when the business is managed with R-pM.
Investments in R-pM to organize the business are relatively small
Organization of the business with R-pM does not require a large investment per se. R-pM defines and organizes existing capital as performance solutions. Existing information systems normally can be utilized to manage defined results, performance solutions, and performance. Existing information systems and business processes are integrated and organized as business process solutions to produce each specific result. R-pM organizes results produced along result chains and across the business. R-pM organizes the business by creating performance records to set the rules for utilizing a performance solution to produce a result within one business structure. Once the business is organized, the business can be managed in operations and development. Any business change to add or close a result or change a performance solution is updated to the business structure.
R-pM limits future investments to capital needed to produce results
Once the business is organized, the business is managed directly and all overlaid structures are discontinued as replaced by R-pM. Any new investments are to acquire or develop a specific item of capital as a performance solution to produce a result or set of results. The result value with and without the investment can be projected to provide the added result value-added that justifies the investment. Development and implementation costs are captured against the performance solution to establish an assumed capital worth and the unamortized balance. The investment is implemented to produce new or improved results and the development costs are amortized against the result and the result value-added is measured to add to the return on investment. All future investments are minimized to capital actual required and utilized by the business to provide a positive measured return on investment in the value added to results that utilize the capital.
R-pM implementation and utilization is guided by The R-pM Toolkit
The R-pM Toolkit, your 21st Century Management Manual, provides the explanations and procedures to organize and manage the business with R-pM. The Toolkit is updated regularly with R-pM advances and new 21st Century Management conventions, definitions, and standards. Subscribe to the R-pM Toolkit today at result-performance-management.com.
