Open up to investors
McKinsey quarterly urges executives to embrace transparency if they want to help investors make investment decisions – presumably to invest in their firms. There’s a problem though …
This is a great principle, since investors are of course a critical constituency – along with customers and staff – whose loyalty is valuable. And as for any ‘product’ loyalty to a firm more likely if investors know and understand that product. Public companies have been obliged for some time to include in their annual returns a ‘discussion’ about their strategy and prospects [called the Management Discussion and Analysis in the U.S.], so with all this required transparency, how come investors get so misled by simple strategic issues [like the Starbucks’ pushy pricing and over-expansion I've posted on before, or the many, many banks who stupidly over-sold high-risk loans]?
The headline answer is that we still – after half a century of trying – don’t know how to work out the link from strategy to performance, and the academics and consultants are fully aware of this problem. [As you probably know, I think there's a way to do this, even if it's not yet widely known or practised]. Just one part of the problem, for example, is that we know intangible items like staff skills and market reputation ‘matter’, but don’t know how to build these into our analysis – see Invisible Ink previously published in Business Strategy Review, outlining briefly how to make the link from intangible factors to performance – more detail in chapters 9 and 10 of Strategic Management Dynamics [UK link].
About Kim Warren
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Check out what others are saying about this post...We still – after half a century of trying – don’t know how to work out the link from strategy to performance…
The academics and consultants are fully aware of this problem. [As you probably know, I think there's a way to do this, even if it's not yet widely known or practised]. Just one part of the problem, for example, is that we know intangible items like …
[...] these days, however the difficulty in linking or measuring the impact of strategy on performance is highlighted by Kim Warren, who hits the nail on the head by stating that this will not be possible until the [...]
[...] sin embargo la dificultad en unión o medición del impacto de estrategia en la interpretación es destacada por Kim Warren, que golpea el clavo en la cabeza declarando que esto no será posible hasta que la [...]
[...] la difficulté de communiquer ou mesurer l’impact de stratégie sur la performance est accentuée par Kim Warren, qui frappe l’ongle sur la tête en déclarant que ce ne sera pas possible [...]
[...] wird die Schwierigkeit, den Einfluss der Strategie auf der Leistung sich zu verbinden oder zu messen, von Kim Warren hervorgehoben, der den Nagel auf dem Kopf schlägt, indem er feststellt, dass das [...]
[...] или измерении воздействия стратегии на работе выдвинута на первый план Kim Warren, который попадает в точку, заявляя, что это не [...]