Operationally, the problem is that, as noted earlier, while value-based management provides a criterion for strategies to be selected and evaluated, it does not say how these strategies can be constructed. Before a strategy can be put forward for SVA, a method for identifying the need for strategic change must exist. Then there must be a process of constructing strategic options that have prospects of creating competitive advantage and enabling the business to generate cash flows that exceed costs including the cost of capital. If these two prior processes are not well understood SVA can easily become over-focused on downsizing – getting rid of non-performing.
