Value Creation Insights: A Foundational Understanding of How Firms Build Knowledge and Create Value

About this book

Knowledge building and value creation are opposite sides of the same coin.Value Creation Insights lays out profoundly important yet remarkably simple ideas for surviving and prospering in the modern economy. Experienced investment researcher Bartley J. Madden provides a foundational understanding of how firms build knowledge and create value in a capitalist society. In the process, Madden clarifies the purpose of the firm and explains why, over the long term, some firms succeed while others fail in achieving their purpose.Madden's Pragmatic Theory of the Firm is rooted in systems thinking and clarifies the firm's four-part purpose. The theory demonstrates why a firm's culture of knowledge-building proficiency is the critical determinant of its long-term performance. It also spotlights life-cycle track records for providing an economically sound and intuitive connection between a firm's financial performance and its stock market valuation.The Knowledge-Building Loop is presented as a practical mental model for how new knowledge is created that reinforces cognitive science findings, embraces the role of imagination, and improves problem-solving and decision-making for managers, boards of directors, investors, and those who seek to earn more responsibility in their firms. In addition, Value Creation Insights is a rewarding read for those individuals who are intellectually curious about business firms and, more broadly, capitalism.Significant challenges with high potential for value creation are much easier to tackle with foundational knowledge. This is demonstrated by the challenges of flattening command-and-control pyramid organizational structures and transitioning to the New Economy accounting, which effectively handles intangible assets. Value Creation Insights is both an educational and problem-solving tool that helps those who want to live the life of a value creator.