How can investors apply the VQ? Click here to look at how it works for one of the principles -- Experiment Frugally -- which is harnessing happy accidents to create value for customers and partners. But how can you use the VQ to find good investments? Applying the VQ analysis to Goldman Sachs and Wal-Mart yields very different results. I won't bore you with all the details, I'll just highlight the key reasons why Goldman Sachs's VQ is higher than Wal-Mart's.

Goldman Sachs has excelled financially -- its revenues and profits have grown at five year compound annual growth rates (CAGR) of 17.4% and 32.4% to $69.4 billion and $9.4 billion respectively and its stock has risen 37% in the last 12 months -- although it's down 4.6% in the last three months. Goldman is particularly strong in two Value Leadership principles:

• Foster Teamwork. Goldman differs from many banks in that it places a tremendous value on hiring brilliant people who work well in teams. Goldman has developed relationships with Harvard Business School professors where it recruits to get names of students who excel academically without stabbing their peers in the back. By encouraging teamwork, Goldman is able to develop better financial solutions for its customers which contributes to its ability to grow faster. Moreover, it gets more out of all its people rather than just the prima donnas who get all the attention at more star-system-focused competitors; and
• Win Through Multiple Means. Goldman is extremely resourceful and is able to manage conflicts within its business that might prevent less nimble competitors from taking advantage of so many money making opportunities. For example, while it helps raise capital and offers financial advice on mergers for private equity clients, it is also starting its own $19 billion private equity fund. Ultimately, its long-term greedy mantra should enable it to dominate many lucrative markets for decades to come.

Wal-Mart has posted respectable financial performance -- its revenues and profits have grown at five year CAGRs of 11.1% and 13.6% to $248.7 billion and $12.2 billion respectively but its stock has increased a mere 5.9% in the last 12 months. Wal-Mart has lost ground because it's strayed from two Value Leadership principles:

• Value Human Relationships. Under Sam Walton's leadership, Wal-Mart placed a tremendous emphasis on attracting employees who wanted to serve customers and paying them well for improving store profits. Since then, Wal-Mart has changed the way it treats people -- attracting numerous lawsuits from unhappy employees. And based on my frustrating experience trying to get help in a store, that unhappiness shows in the way employees treat customers.
• Experiment Frugally. Wal-Mart used to have an uncanny ability to identify profitable new markets in which it could grow. For example, it expanded from discount retailing to selling drugs and groceries. And it moved from rural locations to urban ones. But its global expansions have had mixed success -- it pulled out of Germany -- and it has generated so much political ill-will that it has had difficulty opening new stores.

As an investor you can profit from Value Leadership because it will help you identify the best corporate citizens and shun the rest. And since most analysts don't look at companies this way, you could get an advantage if you did.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Goldman Sachs or Wal-Mart.