The Blue Line Imperative: What Managing for Value Really Means

by Kevin Kaiser

A groundbreaking guide to making profitable business decisions Do you wonder why your value initiatives aren't providing the payoff you'd hoped for? Could it be because you've been thinking about value all wrong? According to the authors of this groundbreaking guide, there's a very good chance that you have. Using examples from leading companies worldwide, they explain why every decision a company makes either creates value or detracts from it, and why, if they hope to survive and thrive in today's increasingly competitive global marketplace, company leaders must make value-creation the centrepiece of every business decision. Authors Kaiser and Young have dubbed this approach "Blue-Line Management," (BLM), and in this entertaining, highly accessible book, they delineate BLM principles and practices and show you how to implement them in your company.Explains why the failure to properly define and assess value often makes it difficult for the people who manage businesses to effect long-term success Offers guidelines for making the satisfaction of customer needs and wants--i.e. value creation--the driver of all business activities The authors are respected academics at INSEAD, the world's largest and most respected graduate business school, with campuses in Europe, Asia and the Middle East

Genres: Business

320 pages, Kindle Edition

First published January 1, 2013

Reviews

[scordatura · Rating 4 out of 5]

The Blue Line Imperative's central argument is that companies that do not manage for value creation will go bust eventually, and in the long run, only companies that manage for value creation (i.e. the blue line) will remain. The book belongs with strong philosophical underpinnings, deriving the concept of value from simple and observable principles (value = happiness, and thus a business creates value if it (1) provides happiness (2) at a reasonable cost to the customer (3) at a competitive rate of return). Kaiser then argues that the function of capital markets is to allocate capital to the enterprises that create value in our lives, and to think of investing as "moving energy through time".

The definition of value is then made more rigorous, defined as "The Expected Future Free Cash Flows Discounted at The Opportunity Cost of Capital", with a careful treatment of each component of this definition. Kaiser then takes care to point out common ways in which value is destroyed, including by pursuing growth when the rate of return doesn't justify it, managing for KPIs and share price rather than the underlying value drivers, organizations that reward bad decision-making with good outcomes rather than the opposite, a lack of trust within an organization, and an inability to properly measure and analyze the business.

The argument is clear, convincing, well-grounded, well-developed, and insightful. The analogies and examples are useful (especially the basketball analogy of how stat-padding hurts the team).

My only criticism is that some of the implications of the arguments might not be as anticipated. For instance, suppose you promoted managers that made good decisions ex-ante when the outcome ex-post was poor (as Kaiser prescribes). The problem is that an ex-ante "good" decision might be a result of creating a poor or dishonest estimate of Future Free Cash Flows and presenting that to upper management. Also, within the organization, especially from lower levels up, observing a manager with a poor performance track getting promoted (no matter how "brilliant" the ex-ante analysis is) is, in my opinion, likely to sow dissent or unhappiness. Kaiser also describes visionary leaders as bad, because they may be so committed to their vision that they destroy value in the process. While the warning is fair, there are numerous examples in history of visionary leaders that see what creates value over the long-term (e.g. Apple's Steve Jobs/Tim Cook).

[هبه الشملان · Rating 3 out of 5]

الكتاب يقدّم طرحًا فكريًا جيدًا حول معنى “خلق القيمة” وكيف يجب أن تكون الإدارة موجّهة نحو القيمة طويلة الأمد لا الأرباح القصيرة. الفكرة في جوهرها ثورية ومُلهِمة، لكن عند قراءتها بعين تنفيذية، ظهرت لي مجموعة من الملاحظات التي تكشف نقاط كانت مبدعة ونقاط لا أراها متزنة/واقعية من وجهة نظري وخبرتي المتواضعة-جدًا-. الكتب من هذا القبيل تستهويني بحكم صراعي الدائم في إظهار او تبرير او برهنة مخرجات قطاعات البحث والتطوير.

أول ما يلفت الانتباه هو محاولته فصل “القيمة” عن “الربح” وإعادة تعريف الغاية الإدارية من الصفر. لكن الواقع العملي أعقد بكثير حقيقةً لأن السوق لا يكافئ النوايا بل التقييم. الشركة التي تخلق قيمة ولا تُترجمها إلى قصة استثمارية واضحة، تخسر تمويلها قبل أن يلحق السعر بالقيمة. الكتاب اعجبتني دعوته لعدم مطاردة السعر، لكنه يتجاهل تمامًا أن رأس المال قصير الصبر، وأن التواصل المالي الذكي جزء من بقاء القيمة على قيد الحياة، وهذا شيء يهز كيان المنظومات.

الطرح الأخلاقي في الكتاب جميل، لكنه مثالي -اكثر من الازم- من كونه عملي. الحديث عن “القرارات الأخلاقية التي تصنع القيمة” يحتاج ترجمة إلى لغة المخاطر والعائد، لا لغة المثالية او الفضيلة. ارى من يدرج هذه الأخلاق في جداول المخاطر ويقيس أثرها على السمعة والتسعير وجذب المواهب اكثر اتزاننا من فكرة المؤلفان.

أما فكرة “الخطين” فهي استعارة رائعة لكنها تبقى رمزية. الأزرق، كما يصوّره المؤلفان، غير قابل للقياس، وبالتالي غير قابل للمساءلة. في الإدارة الواقعية، أي شيء لا يُقاس يُستَغل. وهذا اكثر ما أعاني منه، الموازنة في تبنيها وتحويلها إلى فرضيات قابلة للاختبار (معالم تعلم، حدود خسارة، ونقاط توقف واضحة) قبل أن يتحول المشروع الأزرق إلى أحلام وردية فقط.

الكتاب يتحدث كثيرًا عن الثقافة القيمية، لكنه يتجاهل أساسها الفعلي: البُنى، التفويض، والحوافز. الثقافة لا تسبق الأنظمة بل تنتج عنها. مؤمنة بأنه ما لم تُعد هندسة حقوق القرار وأنظمة الحوافز، ستبقى “ثقافة الخط الأزرق” شعارًا جيد النية يُدار بأدوات الخط الأحمر.

احد التعليقات التي ذُكرت لي ان الكتاب يفتقر لأمثلة الشركات الأميركية الكبرى وركّزوا على صناديق استثمار وشركات ناشئة. اتوقع شخصيًا ان هذا الاختيار يجعل الفكرة أوضح فكريًا وهو إطار فكري ليس عملي بطبيعة الحال؛ ولكن لعل ما أعاني منه على الأقل والتحدي هو تطبيق فلسفة “الأزرق” داخل أنظمة الحوكمة الثقيلة والضغوط الربع سنوية لشركات مدرجة.

هل الكتاب يقدّم تفكيرًا للمؤسسين أكثر من كونه مرجعًا للرؤساء التنفيذيين في الأسواق المنظمة؟ لا أعلم حقيقةً، ولكنه جيد بلا شك لقادة قطاع الاستراتيجيات بأي منظومة.

كتاب ذا منظور جيد، لا ضرر من قراءته جيد يضاف للقائمة، من يبحث عن أدوات الكتاب غير مناسب.

نقطة أخيرة أتمنى طرحها على المؤلفين، كيف نحافظ على قيمة في عالم رأسمالي لا يمنحنا الوقت الكافي؟

[David · Rating 5 out of 5]

This book came as a gift from my current boss and definitively is a different perspective to understand how ideas works and how your customer are important; also the management for the team defined by Key learning indicators instead of KPI, the search of the last one deviates the current goal for the organization and make silos inside the company.

[Rama Rao · Rating 4 out of 5]

On creating value for a business organization

This book offers a unique perspective on what value means for a customer and the business that offers a product or service. Value creation from the point of a customer is based on happiness that results from using a product or a service. The businesses were created to bring that happiness to their customers by delivering products and services. For this logic to balance; happiness must reside on both the sides of the equation. Customers get the services/products they desired, and the businesses delivered them to customers with sufficient ground work on their part so that they continue to offer that service and products, and also get good returns on their investments so that they can stay afloat. This is an ideal equation where both sides are kept happy. The principal goal is to allocate economic energy to pursuits where the expected returns will compensate for the opportunity cost of using that energy. According to the author, doing so leads to survival for the business, and not doing so will lead to death. The author calls the former line of thinking as blue line imperative and the latter is called red line thinking. The blue line thinking expects the manager to think up, down and across the organization.

There are three pillars of blue line imperative; fairness, trust and learning, which helps a business to survive and be successful in the long run. Some companies like Google and AT&T emphasize blue line imperative in their goal statements; Google's mission underscores value for the customer and fairness to all. Similar goal is used by AT&T which emphasizes offering the best customer experience and satisfaction. This is an interesting book which uses economics/finance concepts to illustrate some key points. Highly recommended to anyone interested in economics/finance/accounting or management.

[Marcus Chew · Rating 4 out of 5]

An Interesting conceptual way of explaining value creation. Love the NBA examples to explain results don't always means creating value.