The 20th century company does not manage business reality! The business reality is defined by two entities:

– Results: the specific economic products of the entire business

– Performance solutions: the invested capital specifically used to produce specific results.

The company must organize and manage results and performance solutions to organize and manage business reality.

The failure of the 20th century company to organize and manage business reality creates unsolvable management, business and performance problems. The 20th century company defines both the performance solutions used and the results produced as performance. This faulty definition prevents the management of business reality. So instead we come up with various other methods like overlays in the business and manage entities like departments, jobs, positions, functions, and processes.

We continue to superimpose new methods and write thousands of books, but we have never solved the top 10 business management problems of the 20th century.

1. Reorganizations: We have never organized the business. Instead, we organize people, positions, power, and politics and superimpose rigid artificial organizational structures on the business. The business must adapt to the organization. Business change makes it harder to adapt, until there is a major upheaval called a reorganization. Then we devise another arbitrary organization and repeat the cycle.

2. Accounting and financial management: Historically, the company needed to protect cash and, therefore, establish financial and accounting accrual and cash management. Accounting and financial management retains this legacy and consequently avoids modern records management and comprehensive capital management. Post financial records on costs, prevention of value and integral value of capital. Financial management focuses on easy-to-manage cash and financial investments and avoids managing high-value capital that is “managed” or labeled “intangible assets.”

3. Investment analysis and capital development: The company cannot detail and plan the benefits of capital development investments and cannot manage the development of benefits and return on investments. Investment returns are artificial estimates that cannot be managed. There is no management responsibility for the use of developed performance solutions to ensure return.

4. Administration: The administration performs functions, instead of producing results, and prevents adequate capital management. The company invests in capital that ends up being managed rather than managed for beneficial use, continuous improvement, and high return on investment.

5. Performance management: Performance is defined to include not only performance actions, but also the results produced. This means that performance and the results produced are mixed as key performance indicators and in the various performance management methods employed. This definition of performance prevents the 20th century company from managing business reality.

6. Business complexity: each new method, redesigned process, implemented system, chart of accounts, etc. it is a business overlay and adds to the complexity of the business. The controlled entities are managed preventing the understanding of the business reality. New results and performance are added, but not managed as a company whole, to be improved or removed when not needed.

7. Information technology: Information systems and solutions are managed as technology. Information technology covers strategy management, planning, business application, technology, and architecture. This avoids an integrated business strategy and integrated business capital and support. Diverse capital requires many skills to manage, which creates the CIO problem. Applications are managed as technology rather than business solutions, and business change ends in technical accumulation.

8. Change management: We need change management because we mismanage change. We do not manage the business, human and managerial capital that will be changed and used for profit. Change occurs through disruptive projects, rather than routine. Change management services address symptoms and do not solve fundamental problems.

9. Corporate Governance: We try to solve corporate governance problems from the government side by strengthening accounting, auditing and compliance reporting issues. This is useless. The problem can only be eliminated from the corporate side, organizing and managing the business reality.

10. Alignment: Many methods have been developed and many books have been written on alignment of strategy with business, information systems with business process, outsourced processes and internal processes, tangible assets and intangible assets, and so on. This is also useless. We cannot align solutions with solutions. We can only align solutions with your input and output results.

These and other intractable management issues are discussed in detail at www.businesschangeforum.com. These problems can never be solved by superimposing more artificial methods of the 20th century or reading books on how to improve the company of the 20th century. All the methods of the 20th century are now obsolete.

The company must be redefined as a 21st century company that is organized to use performance capital to produce value in results. Results and performance management (R-pM) provides the means to build the 21st century company and leave behind all the management problems of the 20th century.