Strategy Driven

JULY 13, 2011

Supplementing profits with ROIC and revenue growth is a step in the right direction to ensure that the profits a business earns are actually creating value, not simply over-consuming capital that another company could better deploy. However, profits, ROIC, and revenue growth are backward looking.

ROIC 62

ROIC Balanced Scorecard Metrics McKinsey 62

Harvard Business Review

DECEMBER 8, 2011

I just finished a two-year project looking at Michael Porter's most important insights for managers. Connecting the dots between his classic frameworks ( the five forces , for example) and his latest thinking (the five tests of strategy) gave me a new understanding of the most common mistakes that can derail a company's strategy.

Strategy 15

Strategy Porter ROIC Competitive Advantage 15

Harvard Business Review

DECEMBER 15, 2015

When formulating a strategy, markets and segments are important categories to consider. To borrow a telecom industry metaphor, a deal with a customer is the “last mile” in connecting any strategy with business development efforts and marketplace results. Management first evaluated who were, and who were not, good customers.

Strategy 8

Strategy Team Discount ROIC 8

Harvard Business Review

APRIL 16, 2015

The results can be impressive: if your firm’s return on invested capital is 8% and you have an 8% cost of capital, a 1% improvement in ROIC will increase firm value by 19%. There are just two ways to increase ROIC: improve operating profit (by increasing revenues or cutting costs) or invest capital more wisely.

CEO 8

CEO ROIC Cost of Capital Merton 8

Harvard Business Review

FEBRUARY 7, 2011

Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). If you follow that group over time, you would see their ROICs revert back toward the cost of capital. Mauboussin is chief investment strategist at Legg Mason Capital Management and an adjunct professor at Columbia Business School.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

MAY 28, 2018

Nikon, the legendary Japanese camera maker, provides a textbook study in how smart managers can work with strategic investors to transform a struggling business. It also called for streamlining headquarters and cutting executive management’s compensation. The number of directors and officers would be reduced.

Company 8

Company ROIC CFO Restructuring 8