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The Value Mindset: Returning to the First Principles of Capitalist Enterprise

ISBN: 978-1-118-16091-6
452 pages
September 2011
The Value Mindset: Returning to the First Principles of Capitalist Enterprise (1118160916) cover image
A groundbreaking book on building long-term wealth for stakeholders
As creator of the Wealth Added Index (WAI), Stern Stewart's Erik Stern has become a beacon for creating shareholder value within the current storm of corporate malfeasance and poor performance. The Value Mindset shows readers how to develop this way of thinking by blending individual manager incentives with the proper corporate structure and the willingness to pursue value discipline over the long term. Filled with practical concepts that have proved themselves in the real world, this book shows readers how they can transform a company into an organization that can deliver value and returns to its shareholders. The Value Mindset helps readers develop this mindset-as well as implement it-by detailing the metrics that are necessary for any manager to measure and monitor value creation within the firm.
Erik Stern (London, UK) is a Senior Vice President at Stern Stewart & Co., based in London. He has designed and implemented programs for companies in several industries in the United States and Europe. Mike Hutchinson (London, UK) is a Vice President at Stern Stewart & Co., based in London. He worked previously for the BBC and the Consumers' Association.
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Preface.

Acknowledgments.

Introduction.

PART ONE: VALUE MINDSET.

1. A Revolution in Value.

2. The Efficiency of the Market.

3. Other People’s Money.

4. Corporate Governance in Crisis.

5. Back to Basics.

6. Introduction to Incentives.

7. Growing Value.

8. Focus on Value.

9. The Mindset of Success.

PART TWO: STRATEGIC RECONFIGURATION—UNLEASHING HIDDEN VALUE.

10. Configuring Companies.

11. Changing Organizational Architecture.

12. Strategic Reconfiguration in Theory.

13. Strategic Reconfiguration in Practice.

14. The Growth of Content.

15. The Benefits of Strategic Reconfiguration.

PART THREE: FINANCIAL ARCHITECTURE—CHALLENGING EXISTING THINKING.

16. Paying for Size.

17. Acquisitions.

18. Outcomes as Real Options.

19. Divestments.

20. Initial Public Offerings.

21. Financing Issues.

PART FOUR: MOTIVATING MANAGERS AND EMPLOYEES TO DELIVER VALUE.

22. Awarding Decision Rights.

23. Fixed Pay and Incentives.

24. Balancing Incentives.

25. Do Options Encourage Value Creation?

26. The Value of Variable Pay.

27. Franchising as a Value Mindset.

28. Share Options.

29. Motivating All Employees to Create Value.

30. The Benefits of Variable Pay.

PART FIVE: TAKING STRATEGIC RECONFIGURATION FURTHER—THE PUBLIC SECTOR.

31. The State We’re In.

32. How Did the State Grow So Large?

33. Let Us Build Up a Decent World.

34. Reconfiguring Global Relations I.

35. Reconfiguring the State.

36. Reconfiguring Global Relations II.

PART SIX: CONCLUSION.

37. Opportunity for All.

38. A Final Word.

Appendix Miscellaneous Industries.

Index.

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ERIK STERN is managing director of European operations and a senior vice president at Stern Stewart & Co., based in London. He has designed and implemented EVA® programs for companies in industries throughout the United States and Europe. Erik coauthored the EVAluation report on cascading EVA to shop-floor employees, The Capitalist Manifesto, and has written for a range of publications, including the Financial Times and Sunday Times in the UK, Berlingske Tidende in Denmark, El Mundo in Spain, and The Marker in Israel. Erik has appeared on TV, including Sky Business News and Bloomberg. He has an MBA from the University of Chicago and a BA from Brown University.

MIKE HUTCHINSON is a professional writer who worked previously as vice president, marketing, for Stern Stewart & Co. in Europe, as well as for the BBC and Consumers’ Association. He has written for a range of publications throughout Europe and the UK, including the Financial Times, Sunday Times, and the Mirror, and has appeared on TV. He has an MA from Trinity College, Cambridge.

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“…this thought-provoking book is a worthy addition to the bookshelf.” (Financial Director, July 2004)

“…has much to say that is sensible and profound.” (Financial Times, 27th May 2004)

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