Treating Investors Like Customers

Recent financial scandals have created a crisis in the relations between public companies and their investors. Companies need to find ways to restore their credibility and reconnect with their investor base. Paradoxically, most good companies already have the right analytical tools at hand. Seen from the perspective of the financial markets, a company’s ultimate product is its equity. So, companies need to start applying to … [ Read more ]

Thinking Differently About Dividends

Many senior executives view dividends as a low priority on the strategic agenda. They’re wrong. The unique set of circumstances that made dividends unfashionable during the long bull market of the 1980s and 1990s is fast disappearing. In the current economic environment, dividends are an especially important lever for generating above-average shareholder returns. Revisiting a company’s dividend policy can also greatly improve the strategy debate … [ Read more ]

Economic Value Added

What gets measured gets done for better or worse. Too many companies chase growth in earnings per share, only to find themselves employing too much capital at too low a rate of return and thereby eroding shareholder value. Economic Value Added(1) offers a beguiling solution: an easy-to-understand measure that recognizes improvements in earnings only to the extent that they exceed the cost of the capital … [ Read more ]

When Culture Undermines Vision

Vision creates intent. Culture determines action. Often the two are out of sync. When they are, culture can actually undermine vision and prevent a company from achieving essential business goals.

The Next Frontier: Building an Integrated Strategy for Value Creation

In today’s stock-market environment, companies need to take advantage of the full range of levers available to generate shareholder value. In particular, they must identify and manage the key tradeoffs across the three chief components of a comprehensive value-creation strategy: improving fundamental value, exploiting differences in industry valuation multiples, and setting priorities for the use of free cash flow. The report, the sixth in BCG’s … [ Read more ]