The 20th Century Problem; Failure to Manage the Business

Why CEOs must manage Results and Performance

CEOs struggle with corporate governance, strategy and investment management, and cost and value management because results and performance are not managed.

The corporate Chief Executive Officer (CEO) has particular difficulty because results and performance are not managed.

  • Corporate organization and information reporting overlay contrived structures on the business that prevent direct management of business reality
  • Corporate strategy and industry management objectives do not define results that create future strategic value for on-going measurement and governance
  • Corporate best practices do not report and manage the value of results, human and other performance solutions produce, as a value chain leading to profits
  • Corporations cannot capture and report the cost of human and other performance solutions related to the result produced, to manage value-added
  • Corporate investment management cannot plan and manage the result value-added benefit of capital investments, and can implement only the cost of solutions for estimated benefit
  • Corporations cannot optimize performance, to ensure that all capital is highly utilized and that cost-effective performance produces value-quality results
  • Performance management information reports result symptoms, but no precise responsibility to improve the result and identify and correct performance problems
  • Corporate performance of all capital is not managed professionally to produce results
  • Corporate administrative functions cloud the utilization and management of capital
  • Much capital of worth is not identified or matched with the professional capability to support and manage it
  • Much high-worth corporate capital, classified as "intangible assets", cannot be costed or managed
  • Corporations manage information systems and information as technology, rather than capital, preventing business system and process integration; professional management of business data, human knowledge, facility records, and management intelligence; and integration of information capital to produce results
  • Corporate information systems do not manage the actual business and have become a massive overhead that maintains mostly information that is irrelevant to the actual business
  • Corporate emphasis on financial management and accounting for cash and accruals prompts neglect non-financial capital of greater worth, missing financial records from the dark side of accounting, and incomplete and unmanaged facility records for results and performance outside of accounting limits
  • Lack of corporate investment management capability for business change and capital development makes it difficult to scope and manage change and development
  • Corporate business change means upheavals with consulting and change management support, because the corporation does not change naturally and does not have internal performance change management capabilities
  • Corporate management information does not measure or report business reality; but instead, reports against contrived entities. Financial statements and performance reports do not relate to business specifics. Internal audit sees that rules are followed, rather than ensuring that strategic value is created. Board members have a governance responsibility, without the management information to execute it
  • Management consultants and solution vendors are often required, but there is no frame of reference to work together to add more value to corporate results
  • Corporations try to work with sub-contractors, suppliers, outsourcing partners, and customers in a value chain, but cannot define links in the chain, align chained performance, or define cost and value across the chain

These examples of problems faced by the corporate CEO today show why the CEO must organize the business to manage results and performance.

The CEO and Corporate Investors have the most to gain from R-pM

The CEO is caught in the middle. He has much to gain by using R-pM, but many in the corporation will rationalize the adequacy of familiar methods. The CEO also has the most to lose from competitors moving to R-pM. When corporate investors realize the significant added shareholder value potential of R-pM, there will be additional pressure for change.

R-pM provides the way to solve the problems, faced by the CEO, by organizing and managing the actual business to redirect the complete enterprise to performing to produce results.

The diagram below shows the corporate transition from administration to capital management, from operations to revenue management, and from ad-hoc development projects to investment management. Capital management controls performance costs while improving performance for increased result value to achieve profit margin goals. Revenue management concentrates on revenue generation with performance support to achieve revenue goals. Investment management manages and follows up change over time to achieve return on investment goals.

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Achieving profit margin, revenue, and return on investment goals equates to corporate success. But, this is impossible to do without explicitly managing results and performance by organizing the business for 21st Century Management..

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