| There is an important distinction between time-periods and instants in time. A previous briefing emphasised that ‘performance depends on resources’, but if performance is reported over a period and resources are reported at points in time, we risk comparing apples with oranges! | |
| Most of what companies report about their performance concerns how well they have done during a certain period, the latest month or a financial year for example – how high their sales rate has been, how much profit they have generated and so on. Many companies, however, also track and report how much of certain things they have got at a point in time, such as the number of customers they have. Some even declare such numbers publicly at the end of each reporting period, such as subscribers for cable TV or cellphone companies.We need to be careful about this distinction… Continue reading » | |
Nov 172010
| Analysis needs to find explanations for why revenue has followed the path that it has and why the individual cost items have developed as they have. | |
| The previous briefing set out why we need a rigorous causal explanation for what drives profit or other performance outcomes. This analysis does not usually depart from normal practice, at least when it concerns profits, except for the addition of time charts for the revenue and cost items. Continue reading » | |
| When is theory powerful? | |
| Whether they like it or not, decision makers use theory all the time, even if it is only their own private beliefs about why things happen and the likely impact of their decisions. Theory does not need to be complex – it is simply an explanation for what causes what, and how – without which there can be little confidence in the likely effect of any strategy we develop or decisions we might take. Continue reading » | |
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This is the third post in the fortnightly series of Strategy Dynamics Briefings.
Continue reading »
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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? (If you would like to receive the series from the beginning in your email inbox, please register on www.strategydynamics.com and subscribe to Briefings in “MyAccount”) Continue reading » |
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This is the first post in the series of Strategy Dynamics Briefings. Join me, as I introduce and explain ideas behind Strategy Dynamics in these fortnightly blog posts. (If you would like to receive this series from the beginning in your email inbox, please register on www.strategydynamics.com and subscribe to Briefings in “MyAccount”)
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Jul 132010
I’ve posted before on how often firms over-expand and over-extend themselves*. Growth through Focus in strategy+business warns of the same danger, and explains how “companies should follow a seven-step strategy for achieving more with less”.
*Search in this blog for ‘expand’ and ‘extension’ for some posts on this issue.
Apr 222010
Equity Analysts: Still Too Bullish in McKQ makes depressing, if unsurprising reading. Analysts continue a decades-long tendency to forecast nearly double the profit growth that actually follows, and go most wrong when they most need to get it right – when boom times falter. CEOs get beaten over the head with these forecasts, and mess up business in their efforts to hit stupid targets, so this is of more than academic interest. It is interesting to note, then, Continue reading »
Mintzberg’s keynote role at a conference on the MBA is a worry, but his latest foray into strategy is too serious to let pass. In Management by Reflection in S+B he continues his age-old mantra that teaching MBAs to work stuff out is pointless if not dangerous. He once sneeringly noted that MBA really stands for ‘Master in Business Analysis’. Well, he got his wish Continue reading »
Apr 032010
No surprise I suppose that many companies took the shock of the down-turn to focus on cost-cutting. In What worked in cost cutting—and what’s next? McKinsey’s report of a global survey offers mixed news – yes, plenty of costs were cut, but executives worry about sustaining those cuts and about continuing risks from the sluggish economy. What we don’t know – and probably never will – is the consequences. How many, for example, cut too much, in the wrong areas, and badly damaged their ability to deliver future growth? Some good tips though: Continue reading »
