Strategy Dynamics Briefing 2: It matters how we get there

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This is the second post in the fortnightly series of Strategy Dynamics Briefings. Despite a wide range of financial measures being available the interests of investors has led to the choice of one specific measure.

What is it?

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As you may know, strategy textbooks are largely devoted to commercial business situations, and as a result, the strategy ...

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Aims – growth, survival …

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I made a strong case in a previous post that strategy research should have been asking how strong firms grow cash flows, not deliver profit ratios. I had two main push-backs – 1. is growth relevant in present conditions? – 2. survival is really all that matters. 

The first is easily dealt with – stronger cash flow ‘growth’ than rivals can of course imply less decline when everyone is going backwards .. would you rather cash-flows fell by ...

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More on growth vs. ROIC

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One challenge I got from the academics on the issue of strategy tools’ usefulness was whether growth is still a relevant question in these recessionary times.

Perhaps my original post to them was not clear enough.  I meant to say that, as I understand it, investors are interested in the present value of future cash-flows – not growth per se. There is no point in simply growing market share or revenues if it does not ultimately improve future cash flows ...

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Why has Amazon.com been so unsuccessful?

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The SMS conference reminds me of a long-standing puzzle. We have known for decades that investors value growth in earnings – because they either get rising dividends or a rising stock price they can sell on. Profitability – return on sales or on assets – is only of interest insofar as it enables future earnings growth. So how come the strategy field is obsessed with ‘explaining’ why some firms are more profitable than others, when investors aren’t interested and management does ...

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