Enterprise: List of Defined Terms

ENTERPRISE:

LIST OF DEFINED TERMS AND CONCEPTS

1. A New Taxonomy for Management -
In order to govern and manage an entity, we must know what it is, both in whole and in parts. There is considerable confusion about what the entity is, such as, a corporation, business, firm or company. These confusing and overlapping terms are used to describe organized human activity, but they are not describing identical activity. Therefore, we see a need for a new taxonomy to classify these terms and to put them in their appropriate place. Our definition of the Enterprise does so.

2. Unity of Labor -
The theory of the Unity of Labor is the collective decision of individuals to organize themselves to satisfy their mutual self-interest and, thereby, to accomplish the common good. Unity of Labor postulates that individuals knowingly commit to the greater good of the Enterprise, both in pursuit of and in spite of their own best self-interests. They are willing to sacrifice themselves and their self-interest for what they perceive to be the greater common good, sometimes in total disregard for their own self-interest.

The Unity of Labor is the basic theory for management. It is the basis for all management theory and practice, because the purpose of Management is to organize human activity to accomplish tasks. The Unity of Labor is the underlying principle which guides management just as the Division of Labor is the underlying principle which guides production.

3. The Enterprise Definition, Purpose and Function -
The Enterprise is a systematic and industrious labor—an undertaking that combines risk and effort to yield rewards unachievable by an individual acting alone. It is a living, breathing entity - a living tool, designed to harness human potential energy through organizational structure.

The purpose for any Enterprise undertaken in good faith is to satisfy the customer at a profit to the shareholder. The function of the Enterprise is to mitigate the conflicts between self interest and the common good in order to accomplish certain goals and objectives. The Enterprise is the mitigating agent between self interest and the common good.

4. Enterprise Structure -
The Enterprise is a trinity of Form, Function and Forces, each having six Elements which are all in a dynamic state. These components interact organically and consensually based on the contractual will of the individual members of the Enterprise. The Enterprise is an organic entity composed of human beings who act in their own self-interest and who are willing to sublimate their self-interest to that of the group, like bees in a hive.

STRUCTURE OF THE ENTERPRISE -

FORM

1. Shareholders

2. Corporation

3. Company

4. Business

5. Product

6. Customers

FUNCTION

1. Governance & Strategy

2. Accounting, Control & Funding

3. Human Relations

4. Business Processes

5. Information Technology

6. Culture of the Firm

FORCES

1. Market Regulators

2. Financial Markets

3. Technology Markets

4. Vendor Markets

5. Product Markets & Competition

6. Public Perception

5. Enterprise Method -
The Enterprise Method® is a framework for analysis of the Enterprise by managers, financial analysts, creditors, rating agencies and vendors. It is a system for managing the Enterprise as a whole entity so that all the elements are integrated and work together to achieve common goals.

6. Enterprise - 3 Dimensional -
The Enterprise Method® is based on the idea that it is important to see the Enterprise as a three-dimensional entity existing and interacting with a surrounding environment. To aid in visualizing an Enterprise, we liken an Enterprise to the structure of an atom. This analogy may seem a bit unusual for a large Enterprise to be compared to something as small as an atom, but the parallels make it quite useful.

Organic molecules are based on carbon. The Atomic Model is an illustrative tool to see the Enterprise as a three-dimensional entity; the similarity to the structure of carbon is lagniappe. Living beings are described as organisms that can grow, change, respond and reproduce. The Enterprise is an organic entity that has all of these attributes. The carbon atom is the basic building block for all organic activity and so too is the Enterprise, small and large, the basic building block for all organized human activity.

7. Environment of the Enterprise -
As an organic entity, the Enterprise cannot exist in a vacuum. The Environment of the Enterprise is competition and markets, which are necessary for its very existence and survival. The Enterprise exists in a dynamic state with other Enterprises, both in competition and in cooperation. The nature of this dynamic relationship is Force on Force, just as two bodies exist in space and are attracted to each other through gravitational forces. This Force on Force relationship can be competitive when the Enterprises compete for the same customers, scarce resources and market share. It can be cooperative when the relationship is one between a buyer and seller or between a vendor and the Enterprise itself. Market regulators control these forces through rules and regulations that determine the conduct of both competition and cooperation.

8. Force on Force -
The Forces that surround the Enterprise, like gravitational forces, are the market Forces of the competitive world in which it exists. The Enterprise lives in these markets and relates to all other Enterprises through these markets, just like fish in water, a body in space or a buyer and seller in their market. Enterprise relates to other Enterprises Force on Force, positive on negative, buyer on seller.

Force on Force determines all Enterprise interactions and relationships.

9. Management Organization -
Management Organization implies the organic nature of the Enterprise and describes how it operates. Enterprise Structure is the architecture of the organization, while Management Structure is how the people are organized to manage the Enterprise and to fully employ all its resources. There are many different types of Management Organization and they differ with each type of Enterprise.

10. Value Helix -
The Enterprise Value Helix is an iterative process that continues in perpetuity. In other words, it is ongoing. Through a process of self-renewal, the Enterprise can live forever as long as it meets a customer’s need at a profit to the shareholders.

11. Point of Impact -
Management must delegate decision making down into and throughout the Enterprise to the Point of Impact, i.e. where the responsible individual will have both the authority and responsibility to make the appropriate decisions to implement the Enterprise Plan and/or the Business Plan. In business, the Point of Impact is servicing the customer or, in the case of military combat, contact with the enemy.

Allocation of resources can be delegated throughout the organization to the point of impact where the managers must make operational decisions and allocate resources to implement those decisions.

12. New Theory of the Firm - The Organic Tool -
The Enterprise is a living tool, created to harness human potential energy through organizational structure and used to satisfy customers at a profit to shareholders. In this way it is an organizational tool used to harness the power and potential energy of multiple people in an efficient manner towards a common end.

Because of its complexity and dynamism, the most fitting comparison for an Enterprise may be to a living thing, a “super-organism”. We thus seen an Enterprise as a living, breathing, organic entity—the next step of life beyond the individual. Viewing the Enterprise as an organic entity, we see clearly that it is something that can grow, change, respond and reproduce.

13. Governance Syllogism -
There is a causal relationship between governance and the results of the Enterprise which can best be seen in the Governance Syllogism:

THE GOVERNANCE SYLLOGISM:

• Unity of Labor determines principles
• Principles determine culture
• Culture determines standards
• Standards determine behavior (practices and procedures)
• Behavior determines results
• Results are customer satisfaction at a profit to the shareholders
• Results determine wealth

The Governance Syllogism shows the causal relationship between unity and the creation of wealth. This is the procedure which the governance of the Enterprise must employ in order to satisfy customers and create shareholder wealth.

14. Wealth -
Wealth is the sum total of all the output and profit of the Enterprise over time. Wealth is the cumulative effort and product of the Enterprise.

15. Wealth Syllogism -
In a slight variation on the Governance Syllogism, the following shows how wealth is created in each and every Enterprise.

WEALTH SYLLOGISM

• Directors and Managers determine Goals and Objectives.
• Goals and Objectives determine Strategy.
• Strategy determines Structure.
• Structure determines Behavior.
• Behavior determines Results.
• Results determine Wealth or Poverty.

Reference: "The Wealth of Enterprises: A New Foundation for Economics and Management" by William T. Nolan
www.thewealthofenterprises.com
Published by AuthorHouse
www.authorhouse.com

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