Because wealth creation stems from the efficient use of scarce resources in satisfying customer needs, the corporate goal of maximizing shareholder value requires that management skillfully weigh the economic trade-offs among the competing interests of stakeholders.

Irrespective of the industries in which firms operate, it is increasingly recognized that knowledge is essential for superior performance. Key top-management skills now include (a) providing a vision, (b) focusing on total-system efficiency, (c) promoting an innovative environment, (d) guiding and fostering adaptability and (e) creating a continuous-learning organization.

A corporate vision is a core purpose that inspires and guides persons within the firm to want to do those things that ultimately make the firm financially successful. When shareholder value is viewed and communicated in terms of CFROIs and sustainable growth, the connection between non-financial drivers and corporate performance is more apparent.

Managing by accounting value drivers carries a high risk of misdirection. Accounting data should be used to improve the efficiency of a total system centered on business processes tied to customer satisfaction and employee satisfaction. The causal direction is from sound processes to successful results.

Firms have failed largely because management did not recognize that the foundation assumptions of the business no longer fit reality. Firms ' structures and processes need to actively promote feedback so that innovation in response to an ever-emerging future occurs continuously. The stock market is a valuable source of feedback concerning managements' assumptions about the future, and the model by which...