A New Paradigm for Managing Shareholder Value

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Accenture Institute for High Performance Business Exhibit 7: Dollar and Percentage Value of NASDAQ Companies in the S&P 500 (1982-2003) $ million 3,000,000 25% Percent 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Source: AssetEconomics, Inc. 0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Total Market Value of NASDAQ Co’s. % of Total S&P 500 Market Value Exhibit 8: Comparing the Number of NASDAQ and NYSE Companies in the S&P 500 (1982-2003) # of NASDAQ companies in S&P 500 80 70 60 50 40 30 20 10 0 1982 Source: AssetEconomics, Inc. 12 | July 2004 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1995 1996 NASDAQ NYSE 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 500 480 460 440 420 400 380 20% 15% 10% 5% 0% # of NYSE companies in S&P 500
Exhibit 9: Types of Business Models: Value Chains, Shops and Networks Key Capabilities Result Best Way to Price Source of New Value Key Question Value Chain (Production) Chains must master all the key aspects of making products, moving them through distribution channels and marketing them to customers The ultimate result of the chain process is the product It is essential for chains to understand their true costs and to make sure that how they price products realistically reflects these costs Chains generate new value by optimizing the cost, time and quality of processes For chains the key question is how: (for example) To find customers for products? To make the process more efficient? To make the chain more responsive to changes in supply or demand? Value Shop (Problem Solving) Shops must be good at matching and mobilizing the right mix of resources (people, financial, knowledge) needed to solve a specific problem The ultimate measure of the success of the shop process is the outcome that results from implementing a solution Customers of shops pay for solutions to their problems and are typically prepared to pay based on the value of the solution and expertise received rather than the cost Shops generate new value by capturing and exploiting knowledge about problems and their solutions For shops the key question is what: (for example) Is the problem/opportunity and how can it be solved or exploited? Resources are needed and how can they be mobilized? Knowledge of the problem or opportunity do we have? A New Paradigm for Managing Shareholder Value Value Network (Mediation) Networks must excel at monitoring customer behaviors, clustering customers together, mediating exchanges between them and multiplying these exchanges by finding and exploiting new connections The end result generated by value networks are value-creating connections between customers The rights of usage or connection between customers is the best way for value networks to price their services Networks generate new value by identifying new clusters of customers or customer usage patterns that enable them to multiply exchanges between customers For networks the key question is who: (for example) Do we need to bring into the network (or kick out)? Are the good users of the network? Can we sell excess capacity to? Source: Chains, Shops and Networks: The Role of IS in New Models of Value Creation, Foundation Strategic Innovation report, Computer Sciences Corporation, 1998. Exhibit 10: Basis for Competitive Advantage by Business Model Resource Form Monetary Physical Relational Organizational Human Source: AssetEconomics, Inc. Primary Business Model Value Chain Primary basis for competitive advantage Primary basis for competitive advantage Secondary basis for competitive advantage Secondary basis for competitive advantage Value Shop Secondary basis for competitive advantage Secondary basis for competitive advantage Primary basis for competitive advantage Value Network Secondary basis for competitive advantage Primary basis for competitive advantage Primary basis for competitive advantage July 2004 | 13
Page 1 and 2: A New Paradigm for Managing Shareho
Page 3 and 4: Introduction If anything has change
Page 5 and 6: managing current operations, is oft
Page 7 and 8: Exhibit 3: The Growth of Unexplaine
Page 9 and 10: value it provides exposes it to whi
Page 11: New business models rely on intelle
Page 15 and 16: The case of eBay We have argued tha
Page 17 and 18: value logics are often the highest
Page 19 and 20: Exhibit 14: The Future Value Manage
Page 21 and 22: Conclusions High-performance busine
Page 23 and 24: About the Authors John J. Ballow Jo

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