Solving the Corporate Value Enigma: A System to Unlock Shareholder Value

Front Cover

"Why is it that the average business captures less than 20 percent of its potential? Why is this underperformance so pervasive, and what's keeping these organizations from truly maximizing their shareholder value?

Based on extensive research and featuring case studies, tools, and practical techniques, this practical handbook explains how all strategic decisions must be considered from four closely integrated perspectives: that of the business model, the company's portfolio of holdings, its financial structure, and the efficiency and efficacy of its management and operations. The book presents a step-by-step methodology for implementing a Value Structure System, enabling readers to identify, create, and capture the maximum value of their company by synchronizing the different essential components. Readers will learn how to:

* Use a single value measure throughout all decision making

* Immediately execute their own Value Structure Optimization (VSO) program

* Perform diagnostic exercises quantifying risk, and prepare immediate action plans"

 

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Contents

Corporate Values Enigma
1
The 40 Percent Gap
5
Teddy Roosevelt and the Enigma of Naval Artillery
11
Solving the Enigma
16
Manage Value as a System
17
Measure the System Not the Components
20
Quantify Risk in Developing Strategy
22
Move All Asset Portfolios onto Their Efficient Frontier
23
Alpha Forest Products Revisits Its Financial Measures and Structure
114
The Case for Shareholder Value and Economic Profit Measures
115
The RiskTaking Disconnect
121
Getting a Better Handle on Future Cash Flows
122
Establishing the Appropriate RiskAdjusted Cost of Capital
126
Capital Budgeting and Allocation Revisited
128
Strategic Management of the Balance Sheet
131
Financial Measures and Structure Must Be Aligned with Organization and Operations
134

Design the Organization as the Vision of an Optimized Future State
26
Applying the Rules
28
Starting with Strategy
31
Introducing Alpha Forest Products
32
Alpha Forest Products Asks the Right Strategic Questions
34
The Solution Is in the Room
35
The Solution Is Outside the Room
36
Strategy Is One Component of a Value System
39
Why Is It So Difficult to Align the Four Components of a Value System?
40
Decision Quality Is the Key
43
Strategy Must Be Aligned to Asset Portfolios
47
Strategy Must Be Aligned to Financial Measures and Structure
48
Strategy Must Be Aligned to Organization and Operations
52
Pinpointing and Measuring Value and Risk
56
Alpha Forest Products Looks Beyond the Conventional Wisdom
62
Treating Asset Portfolios as Portfolios
65
Alpha Forest Products Refocuses on Its Asset Portfolios
66
Businesses as Asset Portfolios
67
The Efficient Frontier and Efficient Portfolios
68
Applying the Concept of Efficient Frontier to Asset Portfolios
71
Focusing on the Core Components of Asset Portfolios and Filling the Portfolio Gaps
92
Who Should Manage Asset Portfolios?
94
Asset Portfolios Must Be Aligned with Financial Measures and Structure
97
Asset Portfolios Must Be Aligned with Organization and Operations
98
Using Targeted Divestitures as a Management Tool
99
Five Key Actions for Getting Big Returns in Asset Divestitures
104
Alpha Forest Products Gets on the Efficient Frontier
108
Financial Measures and Structure
113
Alpha Forest Products and Financial Measures
137
Organization and Operations
141
Alpha Forest Products Needs an Organizational and Operations Overhaul
142
Somethings Happening HereWhat It Is Aint Exactly Clear
145
Making It Work
147
Align
148
Define
157
Design
170
Commit
174
Build
176
Alpha Forest Products and Organizational Design
177
The Final Frontier
181
Making Strategic Decisions in the Context of a Network of Decisions
183
Capability Requirements for Pursuing the Final Frontier
186
Pursuing the Final Frontier Requires a Cultural Transformation
190
Alpha Forest Products and the Enigma of Corporate Value
192
Getting Started
195
What Is an Organizations Value System?
196
The ThirtyDay Jump Start
197
Launch the Jump Start
198
Envision the Opportunities
203
Align to the Program
207
Plan the Program
209
Summary
211
Glossary
219
Bibliography
225
Index
233
Copyright

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Common terms and phrases

Popular passages

Page 230 - Smith, The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations.
Page 226 - The 20% Solution: Using Rapid Redesign™ to Create Tomorrow's Organizations Today. New York: John Wiley & Sons, 1995.

About the author (2003)

"Raymond L. Manganelli (New York, NY) is a Senior Managing Director of Strategic Decision Group (SDG) and the author of "The Reengineering Handbook"

Brian W. Hagen (Menlo Park, CA) is the Managing Partner of SDG's Value Delivery Practice.

Bibliographic information