Performance managers within the business capital-management unit possess business knowledge and analysis capabilities, so they focus on tailoring the business organization, business processes, and data solutions to produce specific results and to integrate with other performance solutions. Performance managers in the human capital-management unit have people management and development skills, which they use to ensure that qualified personnel are available, that the special human capabilities required by each business process have been developed and deployed, and that the knowledge solutions needed to utilize other performance solutions to produce results are created and delivered. Performance managers in the facility capital-management unit have expertise in financial facilities, working space, networks, architectures, and reusable equipment; in managing the supply line of money, supplies, energy, and other consumables; and in providing record solutions from comprehensive financial, statistical, and document records. In some cases, facility supply management may also procure input results for production. Finally, performance managers in the management capital-management unit have the research and management-analysis capabilities to maintain result strategies and plans in the strategic business structure; provide the competitive and tactical policies and directives needed; evaluate results and assess performance; and provide business, competitive, market, and industry intelligence solutions for results at all levels. Performance managers must understand the capacities and capabilities of their solutions; the development and operational costs required to price those solutions equitably; the result value they create; the portion of result value attributable to each solution, which indicates the solution's worth; the result requirements and other factors that indicate the solution's effectiveness; and the solution uncertainty that informs decisions about contingencies and backup solutions.

The deployment of a performance solution to produce a result creates a performance record in the business structure for the domain (the cell, if you think of exhibit 2's grid in spreadsheet terms). The domain thus defined is under the responsibility of both a result manager and a performance manager. The result manager focuses on producing results utilizing the performance solutions he has access to. The result manager contacts the appropriate performance manager whenever there is a problem with a deployed solution or when a new result requires a new or improved performance solution. For example, a result manager with a problem in network capacity or reliability in producing specific results will work with the facility equipment performance manager to ensure that the network can adequately produce the results. Likewise, performance managers work with result managers to optimize the utilization of their solutions and to understand requirements for new solutions. They must keep abreast of developments in the management of their type of capital to take advantage of potential performance improvements and cost reductions.

Result-performance Management Creates Strategic Value

For a company managing by R-pM, the business structure represented by exhibit 2 is also the structure used for collection of business data and management reporting. In a report based on exhibit 2's grid, every domain represents the intersection of one performance solution with one result. When the result in the column utilizes the solution in the row, the domain presents data on the cost and effectiveness of the performance solution in generating the result. Column totals sum result metrics like value, volume, total performance costs, quality determinants, symptoms of problems, etc. Row totals sum performance indicators like solution cost, utilization, effectiveness, and problems encountered. In the 21st-century organization, results and performance are managed day by day, result by result, to optimize performance solutions' production of results. Result managers concentrate on the results; call on the performance manager to deliver new, effective solutions; and work with performance managers to optimize results.

Exhibit 5, below, shows a sample report that an R-pM company might produce for the “order fulfilled” result. The report shows the results in the order fulfilled value-quality chain, and the performance solutions utilized by each result, on a particular date. (Note that in this report, performance solutions are organized by capital class to indicate how they combine to provide the basic capital for a business unit, whereas in the business structure in exhibit 2, performance solutions are organized by capital category to illustrate how capital-management units are structured to provide business units with professional support.) The report includes a cost for each domain in which the column's result utilizes the row's performance solution; it captures this data through a variety of methods, including direct capture for personnel and supplies, allocations for processes, and per-result amortization for intelligence and knowledge. Total costs are captured across the rows for each solution and down the columns for each result. Performance effectiveness data is captured in each domain where result quality is managed. Quality can be assured by managing the inspected-order result. The value of each result in the chain is agreed upon by management. For example, the value of the inspected-order result in exhibit 5 is based on defects found. If, over time, no defects are found, this result's value added is negative; the result should be discontinued, and performance effectiveness should be managed and reported, result by result, in the chain. Each result is also defined based on a result volume metric that counts the number of results produced. The volume metric can relate to the nature of the result (e.g., order or invoice), to the effort involved in producing the result (e.g., line items in the order filled end result), or to outcomes of the result (such as defects found in inspections).

Goals can be set for various result metrics, particularly result volume. The report's result totals show the overall cost, value, volume, and value added for the “order fulfilled” set result. These numbers roll up into the “sold product or service” key result. The report can also be used to calculate performance solution totals for the “order fulfilled” result by solution type, capital class, and capital category. This is but one example of the wide variety of reports available with R-pM. It provides more meaning as result and performance managers gain experience, because they can add more result metrics and performance indicators; track relationships between results; and report various other totals and comparisons by time period, individual result, individual solution, etc. R-pM ensures that operational and management reports are consistent with the actual business.

Under R-pM, results are managed by professionals who focus on utilizing solutions effectively to produce high-value, and high-quality, results. Performance is managed to provide effective solutions at a reasonable cost. All unproductive work related to overlaid structures is eliminated, and productive work utilizing performance solutions to produce results is organized and managed as part of the business. This enables the enterprise to minimize its use of capital, maximize result value added, and optimize performance for each result along a value-quality chain. But this is possible only after R-pM separates results from performance and organizes the business for 21st-century management.

Harry Greene is the president of Result-performance Management Ltd. He has more than 40 years' experience consulting in information system and business process design and utilization.