Take the Mystery out of Business Change

Business Change is a mystery, because Business Change cannot be managed directly

Why is business change such a mystery? Your company likely has had problems with re-organizations, system implementations, business process management, performance and productivity improvements, and other business changes. Your company may have hired change management consulting services, but still have business change problems.

The problem is found in 20^th century business change methods still used today that plan and manage “business change” by laying structures over the business, without planning or managing the entities that comprise the actual business that changes. Business change cannot be managed, if we do not organize and manage the business entities that change. Business change is a mystery because we do not manage change to the business, but manage change to company structures laid over the business.

The company cannot manage business change, if it does not manage the business

The company is not structured and managed to change as a part of the routine of everybody in the company. Change is the exceptional ad-hoc endeavor. The company organizes and manages the company using only contrived entities that are impacted by change, such as organization units, jobs, functions, business processes, objects, activities, accounts, positions, etc.

So, the company tries to manage business change by managing various company structures and entities that are impacted by change. Any change to 20^th century organization structures, business processes, account structures, information systems, performance management structures, etc, is not change to the business, but change to company structures laid over the business.

Only two entities change in business change

It is important to understand the fundamentals of business decisions and business change. Every business decision is basically what output result should be produced by the business or what human or other capital solution should be acquired, developed, or utilized to produce the result. Every business change is an investment or change regarding results to be produced or a capital solutions to be utilized. So we can see that only two entities change through business charge:

• Capital Solutions: The capital investments in change that must be utilized as specific solutions in order to produce specific results to change the business. The capital invested in solutions must not be lumped together as a fixed asset, project expenditure, or “intangible assets”
• Results: The economic outputs that can be counted or measured in results produced by the capital investments that must provide the return on the change investment. We must identify how value is created from the costs of the capital consumed

Capital is utilized as specific solutions in business performance to produce value in specific results. The only way to plan, execute, measure, and follow up on business change is to identify and manage all the existing and new results from the change, as a set of results. Results include all outputs be it an order, maintained machine, a product, a report, recovered waste, trained staff, a policy, etc. The company also must identify and manage all of the new capital solutions to be developed and existing capital solutions to be improved, as a set of solutions. Capital solutions include people and their capabilities, the process and methods, software and equipment, supplies, management guidance, information sources, and other capital used. Most business change project results are implemented as capital solutions to be utilized to produce the planned business results.

The bottom line is that the company cannot manage business change until it organizes and manages the only two entities that change. The company must organize the business, defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”.

The company needs a new approach to manage business change.

The historic problem with business change is we incrementally improve on the way we organize and manage the company. Business change is one dimensional in company performance improvement. If we are going to solve the problem, we must be willing to understand and define the actual business. The first rule of 21^st Century Management is to “Organize and Manage the Business”.

Result-performance Management (R-pM) organizes and manages the business to take the mystery out of business change. R-pM directly organizes the business by only two entities results and capital solutions, which are organized in the three components of the business:

• Results: The economic outputs that are the volume, value, and quality of the business
• Capital: The investments in capital to provide the business, human, facility, and management capital utilized as specific solutions to produce results. Capital solutions utilized in performance provide the capacity, costs, and effectiveness of the business
• Performance: Specific capital solutions deployed with rules, such as cost per result, and utilized in performance to incur the costs to produce a specific result

The business structure for all or any part of the business is like a spreadsheet with the results produced organized across the columns and the capital solutions that produce results organized down the rows. A cell is a performance domain that records where a specific solution is deployed along the row with rules and exceptions to be utilized in performance to incur costs and produce value in a specific result column. All the solution rows utilized by one result column add up to the full cost of producing the result.

The business organization structure is not a management prerogative or political football. It is business organization capital that must be professionally managed and maintained. Responsibility to produce each result is defined by the result unit deployed as a business organization solution and manager deployed as a human personnel solution.

Result-performance Management can be used for any business change. R-pM enables the company to isolate the problem area as a business structure, to identify the results produced within that area and the existing capital solutions available. Many results should not be produced and new results will be needed. Many capital solutions will be ineffective and new, more effective, solutions will be needed. But, by identifying results and solutions we directly change the entities that change, and can continue to manage results, capital, and performance after the change.

R-pM provides the breakthrough to manage business change

R-pM can be applied to plan and manage any capital development or business change project. R-pM follows a set of principles to take the mystery out of business change:

• Set up a company investment result management capability to manage change and development results
• Hire R-pM consultants, who utilize R-pM and follow the R-pM consulting model, to assist with change
• Plan and manage all business change, development, and operations in three R-pM dimensions: result for each output from the business; performance for each solution utilized to produce one or more results, and management for change over time against goals and expectations
• Identify new results needed and existing results to improve, to meet the change objective
• Describe each existing or new result and evaluate the positive or negative value of change
• Describe new or improved capital solutions needed to produce changed results
• Estimate the cost of acquisition, development, or improvement of each solution, and assess future operating costs
• Determine the total value increase for all results over the expected payback period to justify the investment
• Substantiate the investment through goals accepted by managers responsible to utilize new solutions to increase result value
• Follow new R-pM result-performance development to manage the project and effect change properly
• Capture development costs against solutions to provide assumed capital worth and unamortized balance
• Evaluate progress at close out to ensure solution utilization for result value-added, and acceptance of goals for continued value-added
• Set up measurement of added result value-added to understand the return on investment of each solution

Any company employing these R-pM principles, as a part of the integrated business structure, will be able to execute successful business change,

R-pM Provides the Methods and Support for Successful Business Change

Result-performance Management is employed to isolate the set of results and the set of capital solutions involved in change. The existing organization, with possible modification, can be responsible for new results. Responsibilities for solutions utilized can be established within the existing administrative organizations. R-pM business change management consultants assist to add value to the results of change.

The next time your enterprise faces a business change project, employ R-pM to take the mystery out of business change, to reduce risks, and to plan and manage the benefits of change. Once you see the value of R-pM in managing the organized results and capital solutions, you will want to use R-pM to organize the complete business for the breakthrough competitive advantages of 21^st Century Management.

Join the R-pM Community to learn more about effective business management and change

Learn about Result-performance Management by joining the R-pM Community to download documents explaining R-pM concepts and procedures. “How to Manage Business Change” expands on the principles described in this article to provide a sound understanding of actual business change. “How to Manage Projects in the 21^st Century” explains capital development, business change, and project management using R-pM. The R-pM Toolkit includes these documents and provides comprehensive procedures and updates on R-pM for both business operation and development; plus 21^st Century Management conventions, definitions, and standards.