Value Creation Index

Knowledge Center

   

Quantifying the link between an organization's non-financial performance and its valuation in the markets. Explanation of Value Creation Index of CGE&Y.

Contents

Premium

What is the Value Creation Index. Description

The Value Creation Index is a tool that was designed to quantify the link between an organization's non-financial performance and its valuation in the markets.

Traditional methods of assessing organizational performance are no longer adequate in today's economy. The price of a stock is less and less determined by earnings or its asset base. Value creation in today's companies is increasingly represented by the intangible drivers like innovation, people, ideas, and brand.

But these non-financial factors for creating value are difficult to quantify. Also they are rarely acknowledged in accounting methods. Finally they are not adequately measured, not adequately managed, and not adequately reported, by organizations.


The Cap Gemini Ernst & Young (CGE&Y) Center for Business Innovation (CBI) created a tool to quantify the link between an organization's non-financial performance, creating value and a firm's valuation in the markets. Their so called "Value Creation Index" not only quantifies the impact of non-financial performance on market value, but also identifies the specific intangibles that drive value for a given industry. Models have been created for a number of industries, including financial services, airlines, pharmaceuticals, telecommunications, and other sectors.


While the crucial non-financial value drivers vary for each industry, the value creation research team has settled upon some critical categories of intangible performance that determine corporate value creation.


Categories of intangible performance that determine corporate value creation

  • Innovation.

  • Customer relations.

  • Management capabilities.

  • Alliances.

  • Technology.

  • Brand value.

  • Employee relations.

  • Environmental and community issues.

As of 2002, the Center for Business Innovation (CBI) was discontinued unfortunately.


Value Creation Index Special Interest Group


Special Interest Group (35 members)


Value Creation Index Forum  

Recent topics

  Quotes on Value Creation. Quotations
Hi, do you know of a remarkable, humorous quote by a famous person or a proverb related to value creation?
Please enter a reaction to share it for ...
     
 

Best Practices - Value Creation Index

Expert Tips - Value Creation Index
 

Value Creation in Cross-Border Mergers and Acquisitions

International M&A, Value Creation
Cross-border M&As are subject to a set of factors that affect the value created by international ...
 
 

Resources - Value Creation Index

Managing Intangible Assets in Higher Education

Intellectual Capital, Higher Education, Higher Education
1. Agenda
2. Growing Importance of Intangible Assets
3. Necessity to Actively Manage IPR
 

Value Framework

Multi-Dimensionality of Value
Achim Seisreiner and Sebastian Traeger argue that a multi-dimensional value framework will help Valu...
 

Beyond Financials

Determinants of value creation
Research by Marcelo J. Rossi DBA concludes that 8 determinants (quality of management, quality of pr...
 
 

News about Value Creation Model


     
 

News about Value Creation Method


     
 

Videos about Value Creation Model


     
 

Videos about Value Creation Method


     
 

Presentations about Value Creation Model


     
 

Presentations about Value Creation Method


     
 

Books about Value Creation Model


     
 

Books about Value Creation Method


     
 

More about Value Creation Model


     
 

More about Value Creation Method


     

Return to Management Hub: Decision-making & Valuation  |  Finance & Investing  |  Human Resources  |  Knowledge & Intangibles  |  Strategy


More Management Methods, Models and Theory

Special Interest Group Leader

You here? Sign up for free


 


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2019 12manage - The Executive Fast Track. V15.0 - Last updated: 18-2-2019. All names ™ of their owners.