Lou Gerstner

I think that private-equity activity tends to come at the end of the corporate cycle, when a company is already in trouble, has been mismanaged, or is an orphan in need of new leadership. So private equity is another outside agent that comes in when management has failed to do what it needs to do.

Ian Davis

The causes of business demise—of a failure to endure—are well documented at a general level. They include failure to address changes in market demand or competition effectively; human failings such as hubris, exhaustion, or loss of ambition; loss of operational competitiveness; and above all an inability to deal with new, often disruptive, technological innovations. And sometimes, of course, external factors outside a company’s control, such … [ Read more ]

Paul Leinwand, Cesare Mainardi

The identity of a successful company aligns three basic elements: a value proposition (how this company distinguishes itself from others in delivering value to customers); a system of distinctive capabilities that enable the company to deliver on this value proposition; and a chosen portfolio of products and services that all make use of those capabilities.

Warren Buffett

Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return.

Marc Goedhart, Tim Koller, David Wessels

Creating shareholder value is not the same as maximizing short-term profits—and companies that confuse the two often put both shareholder value and stakeholder interests at risk. Indeed, a system focused on creating shareholder value from business isn’t the problem; short-termism is.

Marc Goedhart, Tim Koller, David Wessels

The guiding principle of business value creation is a refreshingly simple construct: companies that grow and earn a return on capital that exceeds their cost of capital create value.

Clay Shirky

Abundance breaks more things than scarcity. Society’s really good at managing scarcity. If something is really valuable but hard to do, we develop a profession and we have all these pricing models. Once something becomes so cheap that it’s not worth metering anymore, that’s when real social change happens.

Paul Freel

A business is a repeatable process that makes money. Everything else is a hobby.

Hugo Sarrazin and Johnson Sikes

Success in the software industry has long been influenced, and often driven, by the ecosystem of developers, plug-ins, software-development kits and application-programming interfaces (APIs), and add-ons that drive added value and increase stickiness for products. Similarly, companies in other industries need to think expansively and include upstream suppliers as well as downstream vendors or consumers, and focus on how each part of the value chain … [ Read more ]

Clayton Christensen

A good theory is really a fundamental statement of causality, and it ought to be as applicable to a business unit as it is to a nation, or vice versa.

Warren Buffet

Both our operating and investment experience cause us to conclude that “turn-arounds” seldom turn, and that the same energies and talent are much better employed in a good business purchased at a fair price than in a poor business purchased at a bargain price.

Warren Buffet

In many businesses particularly those that have high asset/profit ratios—inflation causes some or all of the reported earnings to become ersatz. The ersatz portion—let’s call these earnings “restricted”—cannot, if the business is to retain its economic position, be distributed as dividends. Were these earnings to be paid out, the business would lose ground in one or more of the following areas: Its ability to maintain … [ Read more ]

Warren Buffet

Should you find yourself in a chronically-leaking boat, energy devoted
to changing vessels is likely to be more productive than energy devoted to patching leaks.

Warren Buffet

We react with great caution to suggestions that our poor businesses can be restored to satisfactory profitability by major capital expenditures. (The projections will be dazzling and the advocates sincere, but, in the end, major additional investment in a terrible industry usually is about as rewarding as struggling in quicksand.)

Jeff Bezos

There are two ways to build a successful company. One is to work very, very hard to convince customers to pay high margins. The other is to work very, very hard to be able to afford to offer customers low margins. They both work.

David Packard

Profit is not the proper end and aim of management. It is what makes all the proper ends and aims possible.

Frederick W. Gluck, Stephen P. Kaufman, and A. Steven Walleck

A minor but pervasive frustration that seems to be unique to management as a profession is the rapid obsolescence of its jargon. As soon as a new management concept emerges, it becomes popularized as a buzzword, generalized, overused, and misused until its underlying substance has been blunted past recognition.

David Packard

People, materials, facilities, money, and time are the resources available to us for conducting our business. By applying our skills, we turn these resources into useful products and services. If we do a good job, customers pay us more for our products than the sum of our costs in producing and distributing them. This difference, our profit, represents the value we add to the resources … [ Read more ]

Konosuke Matsushita

Failures in business are caused by self-centeredness, lack of righteousness, ignorance of the sacred mission of business, treating business as a short-sighted profit-making endeavor, and clinging to outmoded practices.

Thomas Davenport

All big ideas share at least one of three business objectives: improved efficiency, greater effectiveness, or innovations in products or processes. In a way, it’s an exhaustive set of possibilities. You do things right, you do the right thing, or you do something new.