Manage and Deliver Knowledge as part of the Business

This article was published in Inside Knowledge Magazine, Volume 11 Issue 7, April 2008

By Harry Greene

Current 20th century management does not manage the business creating unsolvable problems

Twentieth century management still used in the 21st century manages the enterprise as a corporation, association, and so on, but does not organize or manage the enterprise business. Instead a rigid enterprise organization structure is laid over the business, preventing the business -- the activity of providing goods and services -- from being managed. Additional management structures are laid over the business for strategy, accounts, processes, systems, administration, and other needs.

The rigid overlaid structures conflict with the actual changing business itself, creating unsolvable problems in reorganization, change management, alignment, complexity, information accuracy, solution utilization, value and cost management, capital and worth management, and on and on. Twentieth century management administers traditional assets, but does not manage the capital utilized by the business.

With modern technology, intangible assets, intellectual capital, and human knowledge contribute a significant part of enterprise capital worth. But, we continue to administer traditional assets and employees, rather than managing the performance of all human and other capital.

One hundred years ago, 20th century management evolved without information technology (IT) to manage information on the actual business, so simple organization and management structures were devised to manage the enterprise and control cash. As IT evolved, overlaid structures were computerized, rather than using IT to organize and manage the business, leading to the complex process and system structures laid over the business today.

Thousands of new structures have been devised and books have been written to solve 20th century management problems. For example, activity-based-costing, performance management scorecards, knowledge management subjects, etc are laid over the business to solve intellectual capital management problems. Yet today, the unsolvable problems remain, since they can never be solved by new or improved structures laid over the business.

R-pM is a new breakthrough to manage the actual business

Result-performance Management (R-pM) is a new breakthrough to organize the business for 21st Century Management and leave 20th century management problems behind. The business of every enterprise – in the activity of providing goods and services -- utilizes specific capital as performance solutions in business activity to produce economic output in specific goods, services, and other business results. Therefore, the business of every enterprise is defined by only three components:

  • Results --the specific economic outputs of value that must be produced by the full scope of the business
  • Capital -- the specific invested capital available as performance solutions to produce specific results
  • Performance – the deployment and utilization of a specific solution to produce a specific result

R-pM manages all the results produced by the business. Results include material received, products, orders, completed services, maintained capital, completed projects, etc. Any output, good or bad, produced by business performance is a result. Final results are the goods and service results utilized as input results to the customer enterprise or personal business. Quality and value are attributes of the result.

Business results relate to each other by the use of the same capital and by adding value and costs to a higher-level result to form distinct result sets. Results in the set that produce a final customer result form natural value-quality chains. Each result is under the responsibility of deployed business organization unit and responsible manager and measured in result metrics such as volume, value, total cost, quality, actual against goals, and so on.

R-pM manages all capital, including intellectual capital in human capabilities and knowledge, as specific performance solutions. Any technique, aid, equipment, infrastructure, human time and capabilities, supplies, information, plan, etc used to produce a result is a performance solution. Performance solutions incur costs to create value and must be effective to produce result quality. Result value-added is the result value less the total costs of all solutions utilized.

Intellectual capital is the unique intellectual content in any performance solution that is utilized to produce results of higher value-added and quality and thereby increases the worth of the solution. Business processes and systems are redefined as result value-quality chains to report and manage the performance solutions utilized to produce each result. Business results and performance solutions are managed in one integrated business structure that is like a spreadsheet with results structured in columns across the top and performance solutions structured in rows down the left.

The business is organized when specific performance solutions are deployed to cells to produce specific results. The business is managed by capturing data on the capacity, cost, and effectiveness of solutions utilized to produce a volume, value, and quality of results, in each cell and as result and performance solution totals.

Managers no longer manage overlaid structures using information that does not report the actual business. Twentieth century management structures needed are incorporated in the one business structure and other structures are removed. The business is managed by result managers, who utilize performance solutions to produce results and achieve goals, performance managers who provide qualified performance solutions that meet expectations, and by senior management who manage operation and development results by time period to create strategic result value.

One integrated business structure is used for all management organization, planning, directing, reporting, and control.

R-pM organizes capital as performance solutions

R-pM organizes all capital as performance solutions to meet two capital management needs:

  1. Capital is categorized the capabilities needed to support operation, development, and utilization
  2. Capital is classified by how it is utilized to produce results to be integrated and utilized properly

Categorizing capital enables capital to be professionally supported in operations and development. Classifying capital enables capital to be integrated and utilized together to produce actual results.

R-pM organizes all capital by the professional human capabilities required to manage utilization, improvement, development, and worth in four categories:

  • Business capital is organization, process, and data that requires business knowledge and analysis capability
  • Human capital is personnel, capabilities, and knowledge that requires human handling and development capabilities
  • Facility capital is equipment, supply, and records that requires specific expertise and administrative ability
  • Management capital is strategy, tactics, and intelligence that requires management judgment and research capability

Organization of capital by category enables all capital to be supported and managed. Within each category, capital is sub-organized by three classes to be integrated and utilized properly

  • Readiness capital needed to produce the first result in a set of results in a business organization integrates organization, personnel, equipment, and strategy
  • Production capital utilized only when producing a specific result integrates the process, capabilities, supply, and tactics
  • Information capital to inform and document the business integrates data, knowledge, records, and intelligence

Integration by class enables all capital to be utilized effectively to produce specific results.

Knowledge is organized as human information capital

Knowledge is human information capital utilized by the business. Since today’s business is not organized, knowledge can not be directly applied to the business, so knowledge is organized by subject, topic, industry, product, function, unit, or other heading.

There is no framework for the development of knowledge, delivery of knowledge where needed, and utilization of knowledge as human information capital to produce results.

In our personal business, we naturally organize the capital we have as performance solutions that we utilize to produce results. We use knowledge capital to develop our human capabilities in the knowledge that we remember. We also have knowledge capital that we read to produce our personal business results.

We use knowledge of the city to produce an arrived at destination result. If we do not have the knowledge as a capability, we access knowledge in a map. We use our knowledge to prepare our dinner result. If knowledge is needed, we read a cookbook. If we buy and implement a new equipment solution, we read operating instructions to utilize the equipment to produce results. As we access and use knowledge, we learn so that we have the knowledge as part of our capability solutions. In some cases, it is not worthwhile to retain the knowledge as a capability solution so we keep the knowledge in a book, written reference, computer help, internet access, and other media.

In our enterprise business, we should employ knowledge as solutions to assist us to utilize other solutions and to produce specific results; not only in the way we personally do things, but also in the way the enterprise does things. In order for us to use knowledge naturally in the business, the enterprise must organize the business in the capital utilized as performance solutions and the results to be produced by the business. Knowledge must be organized as human capital for development and management and organized as information capital for utilization in the business

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