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Shareholder Value as a function of quality and process time
on June 27, 2002
This book aims at calculating shareholder value improvements as a function of quality improvements and process lead time improvements. The basic idea is absolutely right, however, the framework presented in the book is quite shallow, as it seems to target a wider audience, and therefore annoys those in search of truly scientific solutions.
My sceptical rating is based on the following observations:
(1) Mr Georges framework for Shareholder Value-Calculation is grossly simplified and often faulty.
Example: EVA is NOT equal to (ROIC - WACC) as Mr George says, but EVA = Invested Capital * (ROIC - WACC)
Anybody with a real understanding of EVA will rip this book apart
(2) Mr Georges idea, that process time minimization and quality improvements are complementary goals, which one must solve simultaneously, is not new. The Boston Consulting Group did present the same idea in a much better book (STALK 'Competing on time' 1990) about 12 years ago. BCG based their ideas on a system dynamics model (experience curves). Mr George adds six sigma, but fails to capture the analytical insights one can study in 'Competing on Time'.
(3) The book does contain some valuable 'hands-on-lessons', but they get lost in the otherwise wordy,shallow book
(4) This book is written in a colloquial, flowery sales-person style, which annoys the educated reader. It switches from shallow facts to anecdotes, quotations from gurus, and value judgements. The few valuable hands-on-lessons often get lost in a swamp of marketing-speak.
SUMMARY: This is a 'consulting-fad-article-blown-up-into-a-business-book'-Textbook.In comparison with other popular business books it is still acceptable, but hardly deserves the label scientific.