BARTLEY J. MADDEN is an independent researcher. He retired as a managing director of Credit Suisse HOLT after a career in investment research and money management that included the founding of Callard Madden & Associates. His early research was instrumental in the development of the cash-flow return on investment (CFROI) valuation framework. Today, Credit Suisse HOLT delivers the CFROI framework and related global database to money management organizations worldwide. Madden's current work (see www.LearningWhatWorks.com) involves innovative initiatives in public policy and education.

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• Preface and Overview xvI A Firm’s Role in Society1 Overview of the Pragmatic Theory of the Firm 3The Nucleus of the Pragmatic Theory of the Firm 4The Evolution of Thinking about the Theory of the Firm 7Kindred Spirits for the Pragmatic Theory of the Firm 10Innovation and Economic Growth 16The Purpose of the Firm 24The Pragmatic Theory of the Firm 302 Knowledge Building and Firm Performance 33The Knowledge-Building Path to Improved Performance 34The Knowledge-Building Loop 35Human Behavior, Culture, and Firm Performance 44Elegant, Parsimonious, and Reliable Theories 483 Work, Innovation, and Resource Allocation 53Lean Thinking—“No Problem is a Problem” 55The Theory of Constraints 60Ontological/Phenomenological Model 64Innovation 69Resource Allocation 71The Key Constraint in Sustaining a Knowledge-Building Culture 75II The Pragmatic Theory of the Firm Connects Innovation and Valuation4 Life-Cycle Performance and Firm Risk 81The Firm’s Competitive Life Cycle 84A Paranoid Optimist Restructures Nokia 90A Case Study of Innovation—Amazon 93The Life-Cycle Valuation Model 96What Does a Stock Price Say about a Firm’s Future Investments? 99Forward-Looking, Market-Implied Discount Rate 101The Roots of Modern Finance 103Firm Risk Offers a Different Mindset 106Summary of Key Ideas 110A Research Methodology for Advancing the Life-Cycle Framework 111Better Estimates of the investor Discount Rate 1165 Intangible Assets, Brands, and Shareholder Returns 121The New Economy and Connectivity-Enabled BusinessModels 123Empirical Evidence about Intangible Assets 126Brands Impact a Firm’s Market Value 129A Conceptual Roadmap for Handling Intangible Assets 133Integrated Reports, Life-Cycle Reviews, and Intangibles 139Expect More Than Coffee—Starbucks 143Costco Starts by Caring for Its Employees 145Ringing Doorbells and Changing Times—Avon 148Why Did Illumina Outperform the Stock Market 18-Fold from 2004 to 2014? 150The Efficient Market Hypothesis and the Factor Zoo 153Excess Shareholder Returns and Three Levels of Cause-and-Effect Logic 157Useful Ideas for Investors, Managements, and Academic Researchers 164Investors 164Managements 166Academic Researchers 167System Principles and Effective Language 168III Value Creation6 Life-Cycle Position, Adaptability, and Organizational Structure 181Life-Cycle Guideposts 182Focused Execution of an Innovative Business Model—Netflix 183Innovation in the Operating Room—Intuitive Surgical 188Nothing Runs Like a Deere 191Smith Corona and NCR 194The ABCs of Organizational Structure 198Organizational Experimentation at the Haier Group 204Value Creators Drive Dynamism in China 2097 Achieving Progress Through Knowledge Building and Value Creation 213The New Economy and the Pragmatic Theory of the Firm 214Life-Cycle Track Records are a Scorecard and a Learning Tool 222Politics and the Greater Good 224Progress Studies 230About the Author 239Index 241

BARTLEY J. MADDEN is an independent researcher. He retired as a managing director of Credit Suisse HOLT after a career in investment research and money management that included the founding of Callard Madden & Associates. His early research was instrumental in the development of the cash-flow return on investment (CFROI) valuation framework. Today, Credit Suisse HOLT delivers the CFROI framework and related global database to money management organizations worldwide. Madden's current work (see www.LearningWhatWorks.com) involves innovative initiatives in public policy and education.

Select Guide Rating

• Preface and Overview xvI A Firm’s Role in Society1 Overview of the Pragmatic Theory of the Firm 3The Nucleus of the Pragmatic Theory of the Firm 4The Evolution of Thinking about the Theory of the Firm 7Kindred Spirits for the Pragmatic Theory of the Firm 10Innovation and Economic Growth 16The Purpose of the Firm 24The Pragmatic Theory of the Firm 302 Knowledge Building and Firm Performance 33The Knowledge-Building Path to Improved Performance 34The Knowledge-Building Loop 35Human Behavior, Culture, and Firm Performance 44Elegant, Parsimonious, and Reliable Theories 483 Work, Innovation, and Resource Allocation 53Lean Thinking—“No Problem is a Problem” 55The Theory of Constraints 60Ontological/Phenomenological Model 64Innovation 69Resource Allocation 71The Key Constraint in Sustaining a Knowledge-Building Culture 75II The Pragmatic Theory of the Firm Connects Innovation and Valuation4 Life-Cycle Performance and Firm Risk 81The Firm’s Competitive Life Cycle 84A Paranoid Optimist Restructures Nokia 90A Case Study of Innovation—Amazon 93The Life-Cycle Valuation Model 96What Does a Stock Price Say about a Firm’s Future Investments? 99Forward-Looking, Market-Implied Discount Rate 101The Roots of Modern Finance 103Firm Risk Offers a Different Mindset 106Summary of Key Ideas 110A Research Methodology for Advancing the Life-Cycle Framework 111Better Estimates of the investor Discount Rate 1165 Intangible Assets, Brands, and Shareholder Returns 121The New Economy and Connectivity-Enabled BusinessModels 123Empirical Evidence about Intangible Assets 126Brands Impact a Firm’s Market Value 129A Conceptual Roadmap for Handling Intangible Assets 133Integrated Reports, Life-Cycle Reviews, and Intangibles 139Expect More Than Coffee—Starbucks 143Costco Starts by Caring for Its Employees 145Ringing Doorbells and Changing Times—Avon 148Why Did Illumina Outperform the Stock Market 18-Fold from 2004 to 2014? 150The Efficient Market Hypothesis and the Factor Zoo 153Excess Shareholder Returns and Three Levels of Cause-and-Effect Logic 157Useful Ideas for Investors, Managements, and Academic Researchers 164Investors 164Managements 166Academic Researchers 167System Principles and Effective Language 168III Value Creation6 Life-Cycle Position, Adaptability, and Organizational Structure 181Life-Cycle Guideposts 182Focused Execution of an Innovative Business Model—Netflix 183Innovation in the Operating Room—Intuitive Surgical 188Nothing Runs Like a Deere 191Smith Corona and NCR 194The ABCs of Organizational Structure 198Organizational Experimentation at the Haier Group 204Value Creators Drive Dynamism in China 2097 Achieving Progress Through Knowledge Building and Value Creation 213The New Economy and the Pragmatic Theory of the Firm 214Life-Cycle Track Records are a Scorecard and a Learning Tool 222Politics and the Greater Good 224Progress Studies 230About the Author 239Index 241