Chris Bradley, Martin Hirt, Sven Smit [Archive.org URL]

We found that your industry’s performance is responsible for almost half of your position on the [economic profit] power curve. Industry impact is so substantial, in fact, that you would be better off as an average company in a great industry than a great company in an average industry. But here is the kicker: mobility on the curve is possible—but rare. The odds of a company moving from the middle quintiles to the top over a ten-year period are just 8 percent. Additionally, we found that 10 variables explain nearly 90 percent of a company’s position on the power curve. They fall into three categories: endowment (what you start with), trends (the headwinds or tailwinds you face), and moves (five strategic actions you take).

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