Knowledge is the only instrument of production that is not subject to diminishing returns.
John Maurice Clark1
What makes the value-based cost management system (VCMS) different from traditional accounting models is that it allows for the fact that value grows within an organization. Traditional accounting only supports linear transformations in the accounting equation—add, subtract, multiply, and divide. There is no room for value creation in this equation, not unless it adheres to very strict mathematical rules of development. In developing a VCMS, the focus turns to those actions a company performs that create profitable growth. In addition, a VCMS is strategic in nature—current information is used to create a ...
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