From: Linda (joelinda1@home.com)
Date: Sun Jun 04 2000 - 18:30:45 PDT
[What I find most interesting is that ALLIANCES was found to be the top factor in driving corporate value in e-commerce firms.
EYEBALLS and STICKINESS were rated lower. And Adam, at least CMGI made the list :)
--Linda]
http://www.forbes.com/asap/00/0529/212b.htm
The most valuable companies in the economy
By Michael S. Malone
The April 3 issue of Forbes ASAP presented a collection of metrics that measured, for the first time, the worth of
corporate intangible assets. As we noted at the time, these intangibles, often known as the "intellectual capital"
of companies, have become far more important to corporations than the tangible assets measured by traditional
financial accounting. This new Value Creation Index is the result of a yearlong joint venture of this magazine, the
Ernst & Young Center for Business Innovation, and the Wharton School's Research Program on Value Creation in
Organizations.
We also promised to apply those metrics to leading companies in key industry sectors to show their real value
and, in the process, conduct the first true intellectual capital audits. Below are the winners. We began by
choosing three vitally important industrial sectors. First up is durable manufacturing because it traditionally
contains the most powerful companies in the economy, as well as the largest employers.
HERE'S WHAT OUR RESEARCH FOUND DRIVES CORPORATE VALUE IN DURABLE MANUFACTURING (IN RANK
ORDER):
1. INNOVATION
2. ABILITY TO ATTRACT TALENTED EMPLOYEES
3. ALLIANCES
4. QUALITY OF MAJOR PROCESSES, PRODUCTS, OR SERVICES
5. ENVIRONMENTAL PERFORMANCE
6. BRAND INVESTMENT
7. TECHNOLOGY
8. CUSTOMER SATISFACTION
(For further explanation, see the April 3, 2000, issue of Forbes ASAP or Forbes.com).
WE FOUND THESE COMPANIES WERE THE TOP VALUE-CREATING U.S. FIRMS IN DURABLE MANUFACTURING
(IN RANK ORDER):
1. INTEL
2. HEWLETT-PACKARD
3. SUN MICROSYSTEMS
4. LUCENT
5. CISCO SYSTEMS
6. EMC CORPORATION
7. COMPAQ
8. MOTOROLA
9. FORD
10. CORNING
It's probably no surprise that Intel is No. 1. Almost 20 years ago, then-columnist Ben Rosen declared Intel the
most important company on the planet. Company chairman Andy Grove was named Time's Man of the Year, and,
for much of the late '90s, Intel was, if measured by market capitalization, Silicon Valley's most valuable company.
Nor should it be too surprising that the company that recently garnered the top market cap spot, Cisco Systems,
is No. 5 on our list. More interesting is the fact that three-quarters of the list is composed of technology
companies-suggesting that the changes wrought by the digital revolution are now nearly complete.
Still, there are some eye-openers. Venerable HP, Silicon Valley's oldest company, at No. 2? Lucent at No. 4?
Motorola at No. 8? Apparently giants, even old tech giants, can learn to dance. Also intriguing is troubled Compaq
at No. 7, while competitors Dell and Gateway don't even make the list. This suggests a resilience in the Houston
PC maker that a smart new exec might use to put the firm back on top.
Now for the real shocker. Look at No. 9. An old megacorp from another era. Why Ford among automakers? A clue
came within days after we completed the audit: Ford announced that it was giving a PC to every one of its
employees. This is a company that understands the value of tech.
Next, nondurable manufacturing. We were curious about this vast and lucrative sector precisely because it has
not (until recently, as we shall see) been distorted by the presence of technology companies.
HERE'S WHAT OUR RESEARCH FOUND DRIVES CORPORATE VALUE IN NONDURABLE MANUFACTURING (IN
RANK ORDER):
1. INNOVATION
2. EMPLOYEE MANAGEMENT
3. QUALITY OF MAJOR PROCESSES, PRODUCTS, OR SERVICES
4. ENVIRONMENTAL PERFORMANCE
5. ALLIANCES
6. BRAND INVESTMENT
7. TECHNOLOGY
8. CUSTOMER SATISFACTION
WE FOUND THESE COMPANIES WERE THE TOP VALUE-CREATING U.S. FIRMS IN NONDURABLE
MANUFACTURING (IN RANK ORDER):
1. PROCTER & GAMBLE
2. MERCK
3. COCA-COLA
4. JOHNSON & JOHNSON
5. PFIZER
6. BRISTOL-MYERS SQUIBB
7. 3M
8. DUPONT
9. TIME WARNER
10. ELI LILLY
Here the results are not as surprising, perhaps. After all, this list is basically the standard Hall of Fame of U.S.
nondurable manufacturers. No shocking gate-crashers here. You might have picked this list off the top of your
head.
But notice something interesting: The list is almost too perfect. It's as if you sat down and made a list of all the
major markets in this sector, then listed the leading player in each. Only in big pharmaceuticals do you see
multiple entries on this list-and that by itself may say something about the unique segmentation characteristics
of that particular industry.
Ultimately, this list may be typical of how a mature industry sector graduates a few companies to the head of the
class. The one dominant player in each market holds its position through its deep understanding of how to create
and hold value in its business.
Finally, the sector the majority of Forbes ASAP readers are probably most curious about: e-commerce.
HERE'S WHAT OUR RESEARCH FOUND DRIVES CORPORATE VALUE IN E-COMMERCE FIRMS (IN RANK
ORDER):
1. ALLIANCES
2. INNOVATION
3. EYEBALLS (USAGE TRAFFIC)
4. BRAND INVESTMENT
5. STICKINESS (MINUTES SPENT ON WEB SITE)
WE FOUND THESE COMPANIES WERE THE TOP VALUE-CREATING U.S. FIRMS IN E-COMMERCE (IN RANK
ORDER):
1. AMERICA ONLINE
2. YAHOO
3. LYCOS
4. NETWORK ASSOCIATES
5. EBAY
6. AMAZON
7. REALNETWORKS
8. EARTHLINK
9. E-TRADE
10. CMGI
AOL is poised even higher now since the Time Warner purchase. Yahoo sits comfortably at No. 2, underscoring
the importance of eyeballs and alliances (links). Meanwhile, the premier sticky sites-Amazon, eBay, and
E-Trade-still make the list, but they take lower positions.
What does this mean for your own investment plans? The Value Creation Index is designed to be a snapshot of
where companies are at the moment in their ability to convert their intangible assets into market value. The fact
they've identified these factors as central to their businesses suggests a very high level of management
competence and a dynamic corporate culture. And those assets are not likely to be lost anytime soon.
This archive was generated by hypermail 2b29 : Sun Jun 04 2000 - 18:28:48 PDT