Specific Problems with Organization and Management Methods

Business Change that does not change or benefit the Business

Conventional methods implement the costs of change and prevent benefits. Organize the business to benefit from change..

By: Harry Greene

Many of us have participated in business change projects. I am sure that we share many experiences with the difficulties in gaining successful business change. We have read about many cases of problems and disasters.

Something must be wrong. Why after all this experience and the many stories of unsuccessful business change, do we continue to have problems? Have management consultants with their business change and system implementation methodologies provided the answer? Are the conventional methods we use adequate for business change management?

The real problems are fundamental in the way we organize the business. Conventional methods introduce unsolvable problems, so that no business change method or consultant methodology can work properly.

"Business change" is not change to the business, but to structures laid over the business

The problems start with the fatal error of 20th century management; the organization structure. Instead of organizing the business, we organize units, functions, and positions into a contrived organization structure. Since the business is not organized, the business cannot be managed. Additional management structures for strategy, processes, systems, accounts, performance management, etc are laid over the business. The business changes continually, while the organization and management structures are rigid creating pressure for "business change" to align new structures closer to the actual business.

The business must be defined, organized, and managed in order to change the business

If the business is not organized the business cannot be changed. Therefore, we need to define, organize, and manage the business first, in order to manage change to the business. The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. In order to organize the business three components of the business must be organized. Investments in the business must be organized as capital solutions that can produce specific results. There must be one complete data set that includes all capital solutions invested and utilized in the business. The economic outputs of the business must be organized as a set of results. Results can be produced at any level of the business. A chain of results to fill a customer order produces the higher-level order fulfilled result. Results at all levels must be organized as another data set. The third component of the business is performance domains that are defined by a result produced and a capital solution utilized. as a third data set. Business performance manages the utilization of every solution to capture the cost and effectiveness in producing a volume of the result and the value-added by the result.

Business change management is a major problem in the 20th century enterprise

Since the business is not organized or managed, business change remains a mystery in today's enterprise. We continue to have significant problems with business change due to several factors, such as:

  • We change structures laid over the business rather than the actual business
  • The actual business changes daily in any change to a result produced or capital solutions utilized, but the changes are unknown and unreported, since results and capital solutions are not managed as data sets
  • Each change moves the business further out of "alignment" with rigid overlaid structures until the pressure builds to change overlaid structures to align closer to the actual business and repeat the cycle
  • We continue to employ ineffective methods for business change. No one has ever put forward a good method
  • We do what everyone else is doing, to implement the same problems as everyone else
  • We employ conventional 20th century wisdom, which automatically introduces bad decisions
  • Our enterprise is not structured to plan and manage benefits, support new solutions in operation, or ensure good performance from the solution

Let us go through business change step by step to see what normally happens in a common business change project. Take the example of an enterprise information system implementation.

We start out with the wrong business change management objective

What was the objective of business change? Likely, there is a nominal objective like increasing revenue results, reducing performance costs, or improving customer service results. What is the basis of this objective? Precisely how is the new solution to be used to produce benefits that add up to the nominal objectives and provide the return? This rarely is defined.

If the nominal objective is just words, what is the implementation team trying to do. Often they will say their objective is performance improvement. Should that be the objective? Conventional wisdom says yes, but how do you feel when someone tells you, you need to improve your performance or that consultants are coming in to improve our performance?

The common objective that everyone understands is system implementation

But, in the end, even performance improvement proves hard to define, so the objective comes down to something that every one involved can understand: "system implementation".

Is system implementation the proper objective? Conventional wisdom says it is, but I think most of us recognize that it is not. But, none of us is sure of what the objective should be.

Certainly, when consultants get involved, the objective is system implementation. They likely proposed a methodology that they can employ to lay the new system over the business. The system is defined and implemented as one monolithic "asset", without sub-defining the capital solutions within the system that are utilized separately to produce results and all the additional capital solutions needed to support and utilize the system properly.

We employ business change consultant services to follow an implementation project methodology

So, if consultants were involved, who ended up managing the day to day implementation; the enterprise project manager or the consultant project manager? Likely it was up to the consultants because that is conventional wisdom and the enterprise does not have the capability or experience with business change, and the enterprise does not know the management consultant methodology.

So, who was appointed enterprise project manager? Was it a manager involved in increasing revenues or improving customer service? Or, was it the administrative manager supporting the solution?

The Administration Manager is usually the enterprise implementation project manager

Likely, the administrative manager, such as an IT, accounting, or purchasing manager, was appointed project manager, since that is the conventional wisdom. What was the role of the administrative project manager? It likely boiled down to providing the solution requirements, which is what the consultant wants. The nominal consultant objective is to satisfy user requirements and to do what the customer wants, which conventional wisdom says are proper objectives.

The main information system implementation requirement is often "no change"

So what are the requirements of the administrative project manager? Does the administrative manager know what is needed to improve revenues or customer service? Is the administrative manager interested in really reducing costs, when it means reducing their own staff? Who developed the old solution or gains a technical authority from the old solution? So, chances are the requirements boiled down to one: "no change". The project becomes conversion to a new structure , rather than business change.

Implementation methodology steps rarely implement benefits

So then, the project went through the steps of the methodology. Acquire the solution, set up the solution, train on the solution, implement the solution, accept solution, and operate the solution. But, all these steps just incur costs. Where are the steps for planning and achieving benefit?

During all this, what happened if there was an exception, advanced need, or a problem that was not addressed? These likely were put off to the future or left "up to the users", since the objective is implementation.

Information system implementation is often "completed", while many problems remain

What happens when it comes to acceptance? Well, the main requirement of the administrative project manager was met. And, the manager would look bad if delays or controversies were introduced. So implementation is signed off and the project is complete.

But, what remains?

  • Were advanced or future period features ever implemented?
  • Were the old systems and procedures completely removed, or are some still operated to handle exceptions or unimplemented features?
  • Is the information system system integrated with the business process, or operated separately as part of the IT enterprise application architecture
  • Is the new system utilized to increase revenues, reduce costs, or improve customer service? Does anyone understand how to use the new system to do more than what was done before?
  • Were responsibilities established to ensure that the new system is utilized to produce benefits?
  • Were capabilities established to support and improve the various capital solutions mixed together in the system?
  • Was a method established to track and measure the return on the investment in the new system?
  • How many old performance problems were implemented as part of the new system? What is the cost of change now?
  • Are the users, who face the customer, enthusiastic about the new system?

Many enterprises have had implementations where they implemented the cost of business change and received, at the most, marginal benefit.

Conventional methods can only implement the cost of change, since the business is not managed

Even if the enterprise follows an implementation or conventional business change method the best that it can, it will still be implementing the cost of business change. No conventional 20th century method can enable the methodical development of the benefit of business change, since the business is not organized and managed. Enterprises are not structured to plan, manage, and track the benefits. Until enterprises organize and manage the business through one integrated structure, enterprises will continue to implement the cost of business change.

Take the mystery out of business change by organizing and managing the business

The first step to enable routine business change is to organize and manage the actual business.. Enterprise results, capital solutions, and performance domains are organized in one integrated business structure to organize the business. Once the business is organized and managed, business change is routine. Business change changes the actual business in the capital solutions utilized and the results produced in business performance. New results are added to the business regularly. Each new result requires implementation of the necessary capital solutions to produce the result. Solutions may be closed in one result and implemented to produce another result. Results are closed as completed or discontinued and solutions utilized are implemented to produce other results.

Business change projects are planned only when new capital solution investments are required in order enable performance to produce new or improved results. The means to plan and  manage new investment and business change projects is called result-performance development.

Result-performance Development manages the costs of capital solution development and the benefits of result development

So stop implementing the cost of business change in performance improvement. Implement the benefit of actual business change, through result development, and the related costs through capital development. Capital solutions are acquired or developed as results in investment projects to capture full investment costs by solution. The new solutions are implemented to produce specific business results and increase result value and quality. The solution investment cost is amortized as performance costs charged to results produced as solution worth declines over the solution's useful life. The payback from investments comes from the increase in result value-added (result value less performance costs) compared to the result value-added with no investment, over the payback period. Therefore, the benefits of the investment come from result development and the costs of investment come from capital solution development.

Result-performance Management provides the knowledge and expertise to organize and manage the actual business

The problem of how to organize, manage, and change the business change is eliminated by Result-performance Management (R-pM). R-pM provides the knowledge and expertise to organize and manage the actual business.  Download the R-pM Community Business Management Guide "How to Manage Business Change" to take the mystery out of your next business change. The Business Management Guides are included in the R-pM Business Management Toolkit, which provides the complete procedures and documentation to organize and manage your actual business, plus 21st century management conventions and standards. Subscribe to the Business Management Toolkit  in the R-pM Community Section and the Member Download page. The subscription includes free new Toolkit versions sent to your R-pM Community Member email address.