Rethinking Value-Based Management

Rethinking Value-Based Management
ERIC OLSEN
Value-based management theories have fallen short in practice, especially when it comes to investor strategy.
Eric Olsen is a senior vice president and Worldwide Topic Area Leader for Value Management for the Boston Consulting Group. He is based in the firm's Chicago office. For further information, go to www.bcg.com.
n the early 1990s, the business press, securities analysts, and management consultants widely touted value-based management (VBM) as a new tool to help investors assess companies and help executives evaluate business performance and shareholder value. And conceptually, VBM was a great idea. But after a decade of experience both on Wall Street and inside companies, has VBM realized its promise as either an investing tool or a management tool? The answer appears to be mixed. In a recent survey of VBM adopters by professors at INSEAD, respondents' views ranged from high impact to little or even negative impact of VBM on their