The enterprise today is managed by laying structures over the business
20th century management, used today manages the enterprise by laying rigid organization, plan, process, function, account, activity, system, human resource, IT architectures, and other structures over the business. The changing business and rigid overlaid structures conflict, creating unsolvable problems with reorganizations, alignment, capital development, unknown costs and value, unknown capital worth and returns, intangible assets, planning, corporate governance, "business change", "change management", rampant IT overheads, business collaboration, and on and on. 20th century management is a dead-end. These problems arise from the failure to organize and manage the enterprise business and can never be solved by laying new or improved structures over the business.
The only solution is Result-performance Management (R-pM), a new breakthrough to organize the business for 21st Century Management, to eliminate unsolvable 20th century management problems.
R-pM organizes and manages the business for the 21st century enterprise
R-pM defines the business as "investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results". R-pM provides the guidance and procedures to organize the business and compete as a 21st century enterprise.
R-pM organizes the three components that comprise the business in one business structure:
- Results: Economic outputs of value produced across the breadth of the business
- Capital: Solutions of worth categorized to be professionally supported and managed and classified to be utilized to produce specific results
- Performance: Utilization of specific capital solutions to incur costs and produce value in results
Results and capital solutions are distinguished by actual performance. If an entity is a distinct output that can be identified and counted, it is a result. If it is a later input to be transformed through further performance, it is an input result to produce another output result. If an entity is utilized or consumed to produce results on an on-going basis, it is a capital solution. A result produced in one session of performance can be implemented as a capital solution in another session of performance. A company policy is a result from the performance of the human personnel, who wrote and approved the policy. The policy is then implemented as a management tactics solution to be utilized in performance to produce other results.
There are no more contrived entities like departments, functions, objects, processes, positions, etc. to confuse the business. Any entity employed to define an organization unit or a responsibility must be defined precisely by the results to be produced and the capital solutions to be utilized.
Results are defined and related to include all outputs needed across the enterprise
Results are defined at different levels and broken-down or consolidated as needed. A defined result can be related to results that are organized above it, results that its costs or other metrics contribute to, results that allocate part of a metric to it, results that come after it in a chain leading to a valuable final result and the result that controls the chain, other results that depend on its production, and other results it impacts.
Once result relationships are defined results can be structured to show organization, value chains, metric recording and summaries, dependency, and impact relationships.
Capital is organized as solutions to apply professional operation and utilization support
All capital utilized by the enterprise to produce results is identified and recorded, including capital stashed in organization units, and capital labeled as "intangible assets". Capital is analyzed and categorized by the main professional capabilities needed to manage enterprise capital:
- Business knowledge and analysis capability
- Human handing and development capability
- Facility operation and maintenance expertise
- Management judgment and research capability
The four capital categories enable capital to be supported in development, operation, and performance.
Capital solutions are classified by the way they must be integrated to produce specific results
Categorized solutions are then classified within category in the capital structure in one of three classes by the actual utilization to produce results.
- Readiness capital that is put in place to produce the first result in a result unit in business organization, human personnel, facility equipment, and management strategy
- Production capital that is directly utilized or consumed when actually producing a result in the business process, human capability, facility supply, and management tactics
- Information capital that provides information needed or documents results produced in business data, human knowledge, facility records, and management intelligence
This defines the specific capital solutions available to the business to produce results.
All performance solutions are one of twelve types to be properly supported and utilized
Organizing four categories into three classes separates capital into 12 solution types. All enterprise capital belongs to one of the following solution types.
- Business organization, process, and data solutions
- Human personnel, capability, and knowledge solutions
- Facility equipment, supply, and records solutions
- Management strategy, tactics, and intelligence solutions
Once capital is categorized and classified as a solution type, it can be organized and documented as specific solutions that can be utilized in performance to produce specific results. Capital is split out from conventional groupings that prevent professional capital management. For example, IT application systems, analysis and data are integrated with other business capital like the process. IT service architecture operation is integrated with other facility equipment capital like voice networks. Conventional financial management is but a small part of facility capital, and is blended in to enable comprehensive facility capital management. Financial investments are facility equipment, cash is facility supply, and financial and statistical accounts are facility records. All capital is managed for worth, utilization, and the value of results produced. Managerial accounting is management intelligence.
Business structures are defined by deploying solutions to produce specific results
Business structures can then be defined by deploying specific performance solutions to the specific results that they must produce. At this time the business organization can be populated by deploying human personnel and capability solutions to results that they have the capability to manage and produce.
R-pM plans, measure, and reports results and performance by time periods to the strategic horizon
Once business structures are defined the enterprise defines a strategic business structure to show strategic results to be produced at the strategic horizon and the capital development needed to produce strategic results. Result goals are planned by period to show value to be created to reach the strategic structure. This provides the tool to manage and govern the business to carry out the strategy. Results produced and capital solutions developed are reported each specific time period against recurring and milestone result goals to manage development and strategic value creation.
R-pM manages the business by managing results, performance, and management plans over time
The business structure relates performance solutions utilized to results produced. Management strategies and plans define result goals and performance expectations period by period, plus performance solution development to produce new and improved future results.
Once the business is organized human, facility, and management solutions are integrated with the business solution to produce results. The steps described organize the actual business to be managed by R-pM in 21st Century Management. The Business is organized through a program of education, experimentation, obstacle removal, implementation, and follow-up. The biggest work load is the change in thinking and view of the business required for all in the enterprise to actually learn, define, and work with the capital utilized in performance and the results produced. Once the enterprise has defined and understands its own business, using R-pM for 21st Century Management is easy.
R-pM manages the enterprise in three dimensions; Result-performance Management
R-pM manages every part of the enterprise in operation and development in three dimensions for 21st Century Management.
- Result: Manage enterprise economic output in each result (R) for all capital solutions utilized to know total costs, to create value to reach revenue goals, and to add value-added to profits
- Performance: Manage the cost and utilization of each capital solution (CS) in performance to produce results to control costs to reach profit margin goals
- Management: Manage operation and development by month (Mth) or other time period to reach return on investment and strategic result value goals in the strategic business structure at Mth..n.
Result managers focus on results. Performance managers focus on their specific solutions to support result managers. Investment managers, top management and the board manage results and performance over time. This simplifies and clarifies enterprise for strategic measurement and good corporate governance.
The 21st century enterprise manages results and performance over time to create strategic value
The objective of implementing and utilizing R-pM is to build a strong and successful 21st century enterprise. The three dimensions of management enable the enterprise to eliminate traditional 20th century problems and gain significant competitive advantage as through 21st Century Management. Learn more about R-pM and download The R-pM Toolkit for the guidance needed at result-performance-management.com.
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