Use one Structure for Organization, Operations, Development, and Management: the Business

Different structures are contrived for organization, management, operations, development, and other needs

Since the beginning of business, there has been a need for structures. People need to know their role in the business, so we have an organization structure. Management needs to plan the business, so we have maps and corporate plans. Work needs to be done, so we have process structures. Accountants need to record transactions, so we have account structures. Administration needs to administer employees and assets so we have functional structures. Each information system is built on another structure. Management needs to track what is happening, so we have performance management structures, like dashboards and scorecards.

In my career, I contrived many organization, process, system, accounting, and reporting structures for many enterprises. I always encountered the problem in trying to make the structures agree with each other and other existing structures to consistently describe the enterprise and the business. This was very difficult with 20^th century management. Each structure defines its own set of information entities; the organization is departments, functions, and positions; the process is activities, stations, and checkpoints, systems are inputs, entities, and outputs, accounts are centers, objects, and codes; etc.

Even as I tried to make the structures consistent, I still ended up with business complexity and information complexity in the differing and inconsistently-defined information entities used to describe the enterprise across existing and new structures. The problem is compounded, since each enterprise uses a different set of structures and definitions, which prevents business collaboration and common business solutions.

Many are looking for one structure to simplify the business, enable collaboration and common solutions, and report consistently

The problem with the wide variety of organization and management structures has been apparent for some time. Many have recognized the need for one organization and management structure to simplify operations, consistently define business information, enable collaboration, apply common solutions, and eliminate problems inherent in the conflicting structures. Despite these efforts, the “holy grail” of one integrated structure, that can be utilized to organize and manage the complete business in any industry through a minimum of consistently-defined information entities, has proved elusive.

In the end, we contrive new structures for needs like value chains, outsourcing alignment, and quality control. We try to get around the problem through structures to integrate other structures like data reconciliation, added levels of enterprise information management, IT architectures, etc. More structures and systems add more business and information complexity, excessive IT overheads, and spiraling costs.

Only one structure can organize and manage the business, the business itself

The needed structure has existed all along, but it has never been used to organize and manage the business. That structure is the business!

I define the real enterprise business as “the utilization of capital of worth in performance to incur costs and produce value in results”. The only way to organize and manage the business is to organize and manage the three components of the business:

• Results: The economic outputs that create the value that must be produced for business success
• Capital: The performance solutions of worth invested in the business to be utilized or consumed by the business
• Performance: The utilization of a specific performance solution to incur costs to produce a specific result

The enterprise business structure is like a large spreadsheet with the results produced by the business organized in the columns across the top and the capital that produces results organized as performance solutions in the rows down the left. 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.

In my work, I tried to organize capital as specific tangible and intangible solutions, define inputs to and outputs from the business as results, and manage the utilization of capital in performance to produce results. But, there was invariably resistance to defining capital and results as managed sets. Performance was defined to mix some capital as separate items like assets and employees, the utilization of known capital, and some output results produced as separate items such as products, sales, and revenues. So known results and performance solutions were organized and managed piecemeal within the area of the business improved. But, the work showed the importance of managing the actual business in the complete set of human and other capital invested in the business, the complete set of results planned to be acquired as inputs and to be produced by the business, and the complete utilization of specific capital as solutions to produce specific results in actual performance of the business. If the business is managed, work can be focused on capital worth and returns, result value and quality, and performance cost-effectiveness and value-added, rather than the time consuming and ineffective management of random and conflicting performance defined by various structures laid over the business.

Result-performance Management (R-pM) organizes the business structure to utilize specific capital as performance solutions to produce specific results for the current and planned strategic business. The current and strategic business structures replace all overlaid structures for transparent management of the business. The business structures are used for all organization, planning, direction, control, reporting, operations, development, collaboration, good governance, packaged solutions, and any other need.

The 20^th century enterprise has never organized and managed the business

Results to be produced by the business to create value, capital investments made in the business to provide worth, and the real performance of the business to utilize specific capital to incur costs and produce specific results has never been organized or managed in 20^th century management. If the business is not organized and managed the value created, costs incurred by the business performance, the value added over costs across the business to produce profits, enterprise capital and total worth developed, and the return on specific capital investments can never be managed and known.

Enterprises continue to commit the fatal error of laying an organization structure over the business, instead of organizing the business. Once an organization structure is implemented, the business cannot be organized or managed. The enterprise must be managed by additional inconsistently-defined management structures that are also laid over the business. The solution to unsolvable 20^th century management problems, the actual business, lies buried under overlaid structures.

Use Result-performance Management (R-pM) to organize the business for 21st century management

The only way forward is to use R-pM to organize your enterprise business for 21^st century management, and shed all of the overlaid structures that cause the unsolvable problems you face. Visit Result-performance-Management.com to learn more about organizing your business with R-pM, and download the R-pM Toolkit, your 21^st Century Management Manual.