Thursday, July 8, 2010

Book Review: "Value Driven Management" by Pohlman & Gardiner

5 Stars (Out of 5)

The following is a book review of "Value Driven Management: How to Create and Maximize Value Over Time for Organizational Success" by Randolph A. Pohlman & Gareth S. Gardiner. The book was first published in 2000 by the American Management Association (AMACOM).

"Value Driven Management" was written for managers at all levels of the organization who want an intellectual and philosophical foundation of how to think about business. Namely, the book focuses on why its every employee's role to create value for eight fundamental stakeholders: external, the overall organization, employees, customers, suppliers, third-parties, owners, and competitors. The book is clearly written, has an excellent bibliography, uses real-world examples to illustrate main points, and is a very quick read (can be read on a short flight).

The authors admit that the book does not offer a simple formula for calculating value, but is intended to "represent a running start toward the successful implementation and use of the principles of Value Driven Management." To do this they offer "Eleven Assumptions of Value Driven Management"; "Eight Value Drivers"; and "Seven Critical Steps to Implementing Value Driven Management."

The book serves well as a foundational piece, but may fall short for those interested in the latest analytical techniques that include quantifying and forecasting value.  Specifically, the framework puts equal importance on all eight value drivers, where many would argue that there are fundamental value drivers (like product value, product cost, and pace of innovation) which are what make a business a business and secondary value drivers (like employees, suppliers, owners, etc.) which can only enter the discussion after the business performs.

In summary, this book is perfect for managers interested in a foundational understanding of value driven management. This book is not for those interested in the latest analytical concepts and tools.

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