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. Benefit from change through R-pM.

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.

We need to organize and manage the business first, with Result-performance Management (R-pM), in order to manage change to the business. Review the R-pM community download "How to Manage Business Change" to take the mystery out of your next business change.

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

Business change remains a mystery in today's enterprise, so we continue to have significant problems with business change. This is due to several factors, such as:

  • We change structures overlaid on the business rather than the actual business
  • 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 resource planning system implementation, for such modules as a financial management or general ledger, accounts payable or receivable, fixed assets, purchasing, inventory control, human resource administration, sales management, etc.

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 revenues, reducing costs, or improving customer service. 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 solution 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: "solution implementation".

Is solution 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 solution implementation. They likely proposed a methodology that they can employ to convert the business over to the new solution. The solution is defined and implemented as one monolithic "asset", without sub-defining the capital within the solution that is utilized separately and all the additional capital needed to support and utilize the solution 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 the 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 business conversion, 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?
  • Was the old solution completely removed, or is it still operated to handle the exceptions?
  • Is the application system solution integrated with the business process, or operated separately as part of the IT enterprise application architecture
  • Is the new solution utilized to increase revenues, reduce costs, or improve customer service? Does anyone understand how to use the new solution to do more than what was done before?
  • Were responsibilities established to ensure that the new solution is utilized to produce benefits?
  • Were capabilities established to support and improve the various capital mixed together in the solution?
  • Was a method established to track and measure the return on the investment in the new solution?
  • How many old performance problems were implemented as part of the new solution? What is the cost of change now?
  • Are the users, who face the customer, enthusiastic about the new solution?

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.

R-pM takes the mystery out of business change by organizing and managing the business

This problem of how to implement business change is eliminated by Result-performance Management (R-pM). R-pM structures enterprise results and performance solutions in one integrated business structure to organize the business and enable result-performance development. Business change changes the actual business in the performance solutions utilized and the results produced. The benefits of the investment come from result development; the costs of investment come from performance development. 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.

Result-performance Development manages the costs of performance 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 performance development. Determine added result value-added benefits and return by organizing the business for 21st Century Management with Result-performance Management (R-pM). The R-pM Toolkit, you 21st Century Management Manual, shows you how.