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Cracking the Value Code

Cracking the Value Code

Richard Boulton, Barry Libert, Steve Samek

ISBN: 978-0-471-49735-6

Dec 2000

248 pages

Select type: Hardcover

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Description

Based on a three year study of 10,000 companies worldwide by Arthur Andersen,

'Cracking the value code' presents revolutionary new findings that redefine how

companies create wealth in the New Economy. Investigating the forces behind

the New Economy and the reasons for success stories like Scharles Schwab, the

Gap and Dell, versus slower-growth Industrial AGge gaints, the authors set out

to crack the code for seeing, investing in, and managing "what really matters"

to gain unprecedented results. In the process, they propose a fundamentally

new view on corporate strategy based on assets - tangible and intangible - as

the building blocks of value. Using their new "Value Dynamics Framework", the

authors show how companies can decipher the strategic patterns of future wealth

creation and recommend how to design business models that promote corporate

success.

The New Economy is more than hype and high-flying stocks. Organisations are

creating value in totally different ways, using assets and combinations of

assets heretofore unrecognised. Microsoft has built a $450 billion market

value, more than the combined total of nine giant American corporations;

upstarts like eTrade threaten major brokerage firms and Amazon.com has the

potential to become the first true world retailer. This book looks at how

successful businesses are creating value in the new economy. Based on

extensive research, this book argues that too many firms are looking for value

realisation - that is, value captured in the form of earnings or cash flows.

Value realisation is what underlies both the traditional accounting model and

most of today's management information systems (including EVA). In 'Cracking

the value code', the authors argue that, whilst important, value must first be

created before it can be realised. This book puts value creation - and the new

strategies, processes, measures, and decision-making information needed to

accomplish it - at centre stage.

Based on a new theory called Value Dynamics, the authors articulate four rules

of the New Economy and go on to explain how companies should focus on how all

the assets within their investment portfolio interact, combining and

recombining in infinite ways to create value. The key to a company's success

is in discovering its 'economic DNA'.

Endorsed by Arthur Andersen as crucial to winning in the New Economy, 'Cracking

the value code' offers a complete guide for companies in every industry.

Part One: See what matters.

How are businesses creating value in the New Economy?

Business are their assets - all their assets?

Businesses create value with different business models/

Part Two: Invest in what matters.

Who is creating value with physical assets?

Who is creating value with financial assets?

Who is creating value with employee and supplier assets?

Who is creating value with customer assets?

Who is creating value with organization assets?

Part Three: Manage what matters

Putting it all together

Design your business model for value creation

Master risk

Manage your asset portfolio

Use information to create value

Epilogue

Appendix

Sources and suggested reading.