Blue Line Imperative

KEVIN KAISER is Professor of Management Practice at INSEAD and Director of INSEAD's Transition to General Management program as well as Director of the ABN Amro Managing for Value Research Fund at INSEAD. In addition to directing and teaching in many corporate client programs for INSEAD, he also teaches in numerous institutes and programs for private clients throughout Europe, Africa, the Middle East, and Asia. He was formerly Visiting Adjunct Professor of Finance at the Kellogg School of Management, Northwestern University, where he had previously earned his PhD in Finance. He was a member of the Corporate Finance and Strategy Practice of McKinsey & Company, where he led a variety of studies addressing value creation and corporate strategy. S. DAVID YOUNG is Professor of Accounting & Control at INSEAD, where he teaches in the MBA program and in a broad range of executive courses. He has served as an advisor to companies in the U.S., Europe and Asia on various aspects of value-based management and is also a frequent advisor on analyzing financial accounts. David holds a PhD from the University of Virginia and is also a Certified Public Accountant and Chartered Financial Analyst. He is the author of a wide variety of articles in academic and professional journals, and is the co-author of many books, including EVA and Value-based Management: A Practical Guide to Implementation (2001), Profits You Can Trust: Spotting Surviving Accounting Landmines (2003), Attracting Investors: A Marketing Approach to Finding Funds for Your Business (Wiley, 2004), and Corporate Financial Reporting and Analysis (Wiley, 2013).

• Preface ixAcknowledgments xiiiChapter 1 What is Value? 1Chapter 2 The Global Capital Market 23Chapter 3 The Opportunity Cost of Capital 45Chapter 4 The Expected Future Free Cash Flows 71Chapter 5 Blue Line Management 93Chapter 6 Shifting to Blue 115Chapter 7 The Hazard of Growth 135Chapter 8 Creating a Blue Line Culture 159Chapter 9 Trust and Hierarchy in Blue Line Management 195Chapter 10 Value and Decision-Making 219Chapter 11 Getting Net Present Value Right 233Chapter 12 Becoming a Blue Line Manager 269Appendix Blue Line Questions 289Index 297

"You'd think this book is a heavy read from finance buffs but they break down value so every business owner can measure exactly what value means to them...." (Talk Business, October 2013) "The authors offer excellent guideposts for how to move toward 'blue line' decision-making and how to detect the encroachment of 'red line' behaviours." (December 2013)