Business Change Forum

Organize the Business to Eliminate the Reorganization Problem

bcfc — Tue, 10 Nov 2009 01:43:38 +0000

Reorganization is one of the top 10 problems of 20^th century enterprise management

The enterprise organization structure is the fatal error of 20^th century enterprise management

Why do we have to reorganize every few years? Why not organize just once and reorganize gradually as the business changes?

There are many 20^th century business organization theories and methods. Hundreds of books have been written on how to organize the enterprise, organization development, and organization change. There are many so-called business organization methods and structures, but these structures organize the enterprise and are laid over the business. The structures do not organize the actual business, causing the unsolvable reorganization problem. If the business is not organized the business cannot be managed. Additional management structures must be laid over the business to manage the enterprise. This is why the enterprise organization structure is the fatal error of 20^th century enterprise management.

Organizes the business for one business organization structure used for all business management

The business enterprise is defined commonly as “the activity of providing goods and services“.

Why organize the business?

bcfc — Fri, 06 Nov 2009 01:01:15 +0000

20^th century enterprise management used today does not organize the business

20^th century enterprise management lays a contrived enterprise organization structure over the business, instead of organizing the business. This is the fatal error of 20^th century management. If the business is not organized, the business cannot be managed.

The contrived organization structure follows one of many 20^th century organization theories to organize the enterprise. The business, which we have defined as “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results” is not organized. The rigid organization structure goes out of “alignment” with every new or closed result or change to a capital solution utilized. Eventually there is need for reorganization to contrive a new organization structure that is closer aligned to the actual business, and the cycle is repeated.

The need for reorganization shows that the business is not organized

Some may argue that their business is organized. Ask if they ever reorganize the business, and they will answer yes, of course. Reorganization is needed because the business is not organized.

Account for the Business to Eliminate the Accounting Problem

bcfc — Tue, 03 Nov 2009 01:33:00 +0000

Accounting is part of one of the top 10 problems of 20^th century enterprise management

A chart of accounts is laid over the business, rather than recording the actual business

20^th century management historically has separated cash from other capital to be managed in financial management and to be accrued and recorded through accounting. The need for the separation has decreased due to technology and advanced solutions. Technology has also led to high-worth information and intellectual capital that needs to be accounted for and managed. But the separate focus on cash tends to prevent other capital of worth from being managed professionally. Capital and cash transactions that are recorded are recorded against a contrived chart of accounts, rather than accurately recording the complete financial status of the actual business.

Establish facility records capital to professionally record the actual business

The business organizes all capital, including currently undefined capital and “intangible assets”. The business manages accounts and other records of the business as facility records capital and provides capital solutions from records as information capital. Facility records are the tangible information capital of the enterprise. Facility records go beyond the limitations of accounting to record:

Financial records for the full business cycle, including fundamental business data on performance costs, result value, and capital worth
Non-financial records for statistical, documentation, images, and other records

Business management broadens 20^th century accounting to professional records management to keep records on the actual business and to make records solutions available to produce high-value results.

The Accounting Problem

Accounting does not record the actual business

Due to 20^th century management problem number one, the business is not organized.

What is the strategic business?

bcfc — Fri, 30 Oct 2009 02:37:14 +0000

20^th century enterprise management plans the future enterprise and does not plan the business

20^th century enterprise management used today develops strategies and plans using maps, corporate plans, budgets, etc that are laid over the business. Corporate plans plan the corporation and are unable plan the strategic value to be created by the business and the capital development needed to create strategic value. The business is not planned and strategies and plans become invalid as the business changes. New plans try to bring the enterprise plans in closer alignment with the current and future business.

The business strategy plans the actual future business needed for success

Business management defines the enterprise business as “the utilization of capital of worth in performance to incur costs to produce value in results”. This definition includes the current business that must be conducted every day to utilize capital the enterprise invests in to produce results needed for business success. The definition also includes the future business that must be the objective or the business strategy to produce strategic results utilizing capital that must be available when needed?

The management strategy plans the business at the strategic horizon

The strategic business is “the utilization of capital of worth in performance to incur costs to produce value in results at the strategic horizon”. The strategic business is described as management strategy capital. The business strategy, strategic business structure, and business plans to execute the strategy are management strategy solutions.<

Manage all Capital as Part of the Business to Eliminate the Financial Management Problem

bcfc — Tue, 27 Oct 2009 00:07:41 +0000

Financial Management is one of the top 10 problems of 20^th century management

Financial Management manages money separate from other tangible assets

The early 20^th century enterprise was concerned about managing and protecting cash. Financial management fundamentals were established to manage actual and accrued cash from the point received until the point that it is invested or spent. Financial management problems such as unknown capital worth, unknown costs, unknown value creation, and unknown return on capital investments have never been solved by traditional financial management. Financial management tends to be equated with capital management. This allows non-financial capital to be administered, rather than managed, or to be labeled as “intangible assets” and not accounted for or managed. Today, financial capital is managed largely by computers. Non-financial capital and intangible assets are an increasing percentage of enterprise worth and must be managed properly.

Financial capital must be managed with other tangible facility capital to create value in results

Financial capital must be managed as part of the business and not administered separate form the business. 21st business management utilizes financial management capabilities to manage all tangible facility assets. Financial assets and facilities are a sub-set of reusable facility equipment capital, cash is a sub-set of consumable facility supply capital, and accounts are sub-set of facility records capital.

All facility capital requires similar application of expertise to operate and maintain, to supply, and to record. In a managed business, all facility capital is supported for operation and development and for utilization to produce value in results.

The business also integrates financial parts of other results that have been separated out. Management strategy capital includes financial strategies as an integral part of management strategy solutions. Investment management results manage shareholder funds for investment, capital development, and shareholder value results.

The Financial Management Problem

20^th century financial management gives us intangible assets, unknown costs, unknown value, and unknown worth

Now, as we go into the 21^st century, there is a growing need to go beyond financial management fundamentals and change the way enterprise capital is managed:

What is business performance?

bcfc — Fri, 23 Oct 2009 00:15:24 +0000

Business performance utilizes capital available to the business to produce business results

Business management 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”. Every business in the world invests in capital, in order to have the capital needed to produce output results. Every business in the world must produce specific economic output results in order to be successful. Business performance is the actual utilization of capital to produce results.

20^th century business performance includes both actions executed and results accomplished

The 20^th century definition of performance used in business today includes both the actions executed and results accomplished. This definition causes many 20^th century management problems and prevents actual business definition and management. Business performance management, capital development, business processes, management reporting, key performance indicators, etc mix both performance and results produced together as performance. This causes problems today in actually distinguishing and separating results produced from the performance executed. Sales performance includes the both utilization of human salesmanship capability in actions executed and the volume and value of sales accomplished.

21^st century business management separates results from performance to manage the performance producing a result

Actual business performance does not include things accomplished or business results.

Value New Results needed to Eliminate the Investment Analysis Problem

bcfc — Tue, 20 Oct 2009 01:18:10 +0000

Investment Analysis is one of the top 10 problems of 20^th century enterprise management

20^th century investment analysis cannot plan the actual return on investments

How does your company analyze strategic investments in capital development? Does your company perform a cost-benefit analysis? Are all the specific investments needed for business success planned? Are the costs of the investment analyzed, itemized, and scheduled? Are the benefits of the investment analyzed, itemized, and scheduled? Is the value to be added to the business planned and set up as goals to menage the return on investment?

For the most part, 20^th century investment management cannot itemize the costs or benefits of investment, particularly investments in management improvement and business change. Costs are project expenditures rather than investments in specifically-identified capital items. Benefits are usually estimates of increases in revenues or reductions in costs.

Identify and value results needed to justify investments and set result goals to manage the return on all investments

21^st century business management manages the economic outputs of the business as specific results and manages the invested capital utilized to produce results as specific capital solutions.

Manage Results to Eliminate the Development Project Management Problem

bcfc — Tue, 13 Oct 2009 00:10:09 +0000

Capital Development Project Management is one of the top 10 problems of 20^th century enterprise management

20^th century enterprise management cannot plan, manage, or repay capital development projects

Capital development projects for internal management or business improvement today tend to be ad-hoc and conducted separate from the business. We have unsolvable problems in 20^th century capital development project planning, management, and return on the project investment, so we cannot:

Plan and manage operations and development as an integrated continuum that is part of the business
Itemize, plan, and achieve specific benefits from development projects
Clearly and systemically understand what we must be implementing from projects as part of the business for ongoing management and return on investment
Scope the project as part of the enterprise business to define specific results to add or improve and specific capital solutions to acquire, develop, or improve
Plan the output results to be produced from the project in specific capital items to be implemented and utilized by the business
Utilize users and administrative staff in proper roles in the project
Utilize contractors and consultants as solutions in an enterprise-managed project
Document and record the project so that all capital developed is fully documented and that knowledge required for use is created
Manage the capital to be consumed and utilized in the project
Manage the capital development project as a subsidiary business
Record accurate development costs by capital item developed
Implement project results as capital items for direct utilization by the business
Measure the actual return of capital development investments overall and by capital solution utilized

The unsolvable 20^th century enterprise management problems hamper project management, particularly for enterprise internal capital development and management improvement.

Manage results to drive capital development and gain the return in result value created

Business management provides new breakthroughs for planning and managing enterprise capital development and planning and managing the capital development project.

Capital development develops two things:

The capital to be utilized as solutions that incur costs
The results to be produced by the developed capital to provide benefit and return

When we plan and manage a capital development project, we must plan and manage two things:

The results to be produced by project performance
The capital to be consumed and performance solutions to be utilized to perform the project

Business management utilizes Result-performance-Management knowledge and procedures to do both.

What is Capital as part of the Business?

bcfc — Fri, 09 Oct 2009 00:16:57 +0000

What is the business and capital as part of the business?

The business is defined as “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. Every business in the world invests in capital needed, in order to utilize capital in performance, in order to produce output results. The capital must have a worth that justifies the investment costs for acquisition or development and implementation as capital solutions.

Capital is the investments in the business to have the capability to produce results

The only reason to invest in capital is to provide the capability to produce business results. Capital is all the tangible and intangible assets available to be utilized by the business. Capital includes the business organization, processes and systems, humans and their capabilities, facility equipment and supplies, management plans and tactics, and information capital. Capital has a worth in the capability to create result value attributable to the capital over the remaining capital life.

20^th century management fails to organize and manage capital as part of the business

Today, people think of capital as items in an asset register or on the payroll, rather than as items to be managed and utilized as part of the business. Businesses invest in enormous sums of money capital and then fail to identify the specific capital solutions developed, the costs of developing the capital, the worth of the capital as developed, the utilization of the capital to create value, the cost of capital utilization or consumption as capital worth deteriorates, and the value created to return the original investment.

Manage all Capital Investments to Eliminate the Administration Problem

bcfc — Tue, 06 Oct 2009 01:17:30 +0000

Administration is one of the top ten problems of 20^th century management

20^th century enterprise management includes wasteful and counterproductive administrative functions

20^th century administration performs a function involving fixed routine tasks. Responsibility is for the function or the process of administering, rather than producing results. Administration is responsible for managing enterprise capital, but few administrators recognize this responsibility, in effect preventing proper capital management. Much capital is assigned to centers or labeled as “intangible assets”, removing it from professional management. Other capital is loosely administered through functions, instead of being specifically managed to produce benefit and achieve a return on the enterprise investment. The emphasis is on administrative performance rather than capital result management.

The solution is to replace administration with professional capital management

All enterprises invest large sums in the business to acquire or develop capital solutions. All enterprise capital investments must be organized for professional 21^st century business management for operation, support, development, and utilization to produce results. Administration is replaced with capital management. Capital managers must produce capital management results to develop, maintain, and improve the worth of capital to provide specific solutions.