Many problems that plagued 20th-century businesses -- and continue to dog companies today -- are by-products of those businesses' lumping of the capital they utilize and the results they produce together as "performance" in their BPM.

The popular 20th-century definition of “business” is “the activity of providing goods and services.” This definition includes two components: the activities of the business, which is to say its utilization of capital in actions executed, and the goods and services provided by the business as output results accomplished. In judging an organization's performance, 20th-century management mixes together these two components of the business.

I propose a 21st-century definition of “business,” in which the distinction is impossible to ignore: Business is the utilization of capital as performance solutions to produce value in the form of results. Performance solutions are the human and other capital utilized at an ongoing level within business activity for the purpose of producing results, and results are the economic outputs of positive or negative value that can be counted and measured in comparison with goals. Organizing and managing performance solutions as one set of components of the business, while organizing the economic output results that those performance solutions produce as a separate set of business components, is key to success in today's world.

The Difference Between Results and Performance

In our personal business, we naturally separate performance solutions utilized from results produced. We intentionally use our time, capabilities, knowledge, space, equipment, plans, supplies, and purchased services as solutions to generate some kind of result, whether the goal is personal pleasure or a specific accomplishment. We know that an ineffective performance solution can decrease result quality, in the way a low-end TV produces a poor-quality picture. We also know that performance uncertainties, such as the timing of a check clearing a bank account, can affect results, such as having money available for spending. As we make decisions about how to spend our free time and our income, we may not consciously weigh the cost of each performance solution and its effectiveness in producing the value and quality of results we desire, but these factors do underlie our decisions. The value of the result must exceed the cost of the performance solutions that produce it in order for us to be happy with the result. The difference between the performance solutions that we utilize to produce a result and the result they produce is easy to see in our personal lives.

In contrast, in enterprise business, results and performance have always been so confused that managers often have trouble telling them apart. Whether something qualifies as a result (a business output that can be counted and measured) or a performance solution (capital that is either continuously utilized or consumed at a given level to produce a certain result) depends on how it is being used by the business in question. An IT system or management policy is a result for the software vendor or consulting firm that develops it. For the company that implements it, however, it becomes a performance solution that produces other results in the ongoing business.

Results must have a value, or we should not incur the cost of producing them. Results have a level of quality. Results must be produced to reach goals; the business expects to achieve a certain volume, value, and quality of results in a certain time frame. They also come with a risk that they will not be produced as planned. Results are interrelated; a product-returned result affects the product-sold result, and a product-sold result must exist before the company can generate a new invoice-produced result. Results share common descriptors and metrics; see exhibit 1, below. Multiple results can be generated using the same capital; for example, many maintenance and repair results may rely on the same human capability and the same tool set. Many interim results may be required to produce a company's final product.