Value is an impressive word. People talk about value creation, value propositions, customer value, value chains, enterprise value, shareholder value, value-added, strategic value, value management, etc. It sounds like they know more than the rest of us. But, what is the value of all this value?

The fact is that all this talk about value is just talk of little value. Conventional management and accounting methods used today do not define value as part of the business and cannot manage value. The solution is Result-performance Management (R-pM) to organize the actual business and manage value as part of the business. R-pM defines value as an attribute of each output result produced by the business. With R-pM, we can manage results and result value as links in a chain of results from input results received from suppliers to produce final results that provide customer value. We can manage result value and performance costs at each link to know the value-added by the result and total value-added across the chain. We can manage result chains within the business and across business partners for business collaboration.

The problem is that 20th century organization, financial management, financial accounting, and cost accounting contrive management structures that are laid over the business to define an organization chart, asset register, chart of accounts, activity structures, and so on. These structures used today hide the actual business and prevent us from managing actual costs and value. We can chase costs around and use the many definitions to calculate different numbers for value, but we cannot make value valuable to management through real value management and value-added management.

Conventional methods can only contrive value chains, value management, and value propositions through artificial structures laid over the business. Many enterprises have a map or corporate plan to create strategic value that defines some value to be there at end, but they cannot actually build up managed value in the execution of the strategy. Some say they provide a good customer value proposition, which often seems to be sales hype, rather than a substantiated number. Others talk about value chains, without a specific definition of value and the links in the chain. Value-based management seems to be based on many contrived formulas for valuation. We hear of value creation, but nobody seems to know how and where value is created. We see how our many methods of business valuation, all give different numbers. We have confusion between stakeholder value and shareholder value. We hear of value-added. But, what value is added on what value?

So, again, what is the value of all this value? Is it possible to have one basic definition of value that we all can use to manage our enterprises? We need to re-evaluate value first.

Result-performance Management (R-pM) provides the breakthrough for value management. R-pM is actual business organization and management that enables us to manage value. Value is created and costs are incurred in the business. We cannot manage value and costs, if we do not organize and manage the business. R-pM organizes and manages the three components that comprise the enterprise business; the capital invested in the business as specific solutions, the specific utilization of capital solutions in performance, and the economic output result produced from performance. R-pM uses the business structure for all organization and management to replace contrived structures laid over the business.

Where is value created; in our performance or in the results of our performance? Performance produces only costs in the utilization or consumption of a specific capital solution. The value is created in the result produced from the utilization and costs incurred by all solutions that produce the result. Our internal and external customers purchase our results. Even for a service, they purchase the result in the benefit and appreciation of the service as their input result. So, if we are going to understand and manage value, we must understand and manage results.

Results contain business value and must be managed as the links in the chain of results across the complete business. We say we have a strategy to create value. But the components of the strategy that contain value are results. We need to manage results to define each point that value is created across the whole business and plan and manage the strategic value from the bottom up. Value is determined by the monetary amount a business is willing to pay for input results and an internal customer is willing to pay for each result along a chain of results that is established within the amount the external customer is willing to pay for final result from the chain.

Costs are generated by utilizing capital as solutions in performance to produce results. We all know that we incur costs in executing a strategy. The costs come from utilizing and consuming capital. But most capital is not defined as specific solutions that are utilized to produce results for costing, so we have many "unknown costs". Much of our capital is labeled as "intangible assets" and the "tangible assets" are administered rather than managed to control costs and to create value. Conventional accounting and costing methods do not charge costs and expenditures against the value created, but charge contrived entities like center and activity. We must define our capital as specific solutions in order to relate the cost of capital we are consuming to the result value we are creating. Value is then a manageable number that we can use in day-to-day business management. The difference between result value created and the total performance costs creating result value is result value-added. What does positive result value-added tell us? What does negative result value-added tell us?

When we manage value and costs, we can optimize value-added and assess the worth of capital. So, by breaking down the value we are creating in a strategy, we can understand the value of what people produce in carrying out a strategy. We can understand the worth of new capital development embodied in the strategy. We can optimize the cost incurred in creating value against the value created to maximize value-added. Our stakeholders or shareholders can track their portion of that value. Our corporate governance, records management, internal evaluation, and management reporting can track everything the enterprise does to the strategic value being created.

When our business partners also track the value being created in their strategy, we can build a value chain based on a common understanding of value to truly maximize shared value and minimize shared costs.

R-pM enables real value management and value-added management across result value chains as part of any business. R-pM makes value a valuable management metric through basic principles:

1. Organize results produced across the business to identify how and where value is produced, the specific output result produced, the customer who utilizes the result, and other result descriptors and metrics

2. Organize capital utilized and consumed, including "intangible" capital, as specific solutions for management support and utilization and costing in performance against the result produced

3. Organize and manage capital deployed as specific solution to a performance domains with rules needed to produce value and quality in each specific result

4. Relate result value to the final result value perceived by customers and the value perceived in input results from suppliers and contractors

5. Establish the value of each result in a chain on customer willingness to pay within the external customer willingness to pay for the final result

6. Capture actual business data on the performance costs incurred in producing a volume of each result

7. Become familiar with result value-added as a management metric for operations, development, and collaboration

8. Manage value-added to be positive for each result across a chain to eliminate low-value results and minimize performance costs

9. Develop strategies for producing results of value that add up to the strategic value created

10. Manage strategic development to add value to results that return the cost of solutions developed

11. Set up professional financial and non-financial records management covering the full business cycle for all results, capital solutions, and performance to manage value, costs, and value-added

12. Measure and report result value and value added by period and govern strategic result value creation against period goals

The principles enable complete result value management across the business and result value-added management across result value-quality chains. When the business is organized with R-pM, value and value-added become really valuable management metrics used to manage the actual business.

R-pM enables real result value management, performance cost management, and result value-added management. More details are available in the R-pM community download "How to Build Result Value-quality Chains" at result-performance-management.com. Only when we use R-pM to measure result value will our personnel, management, stakeholders, collaborators, and customers understand how valuable we really are.