Many companies seeking cost efficiencies target the people who make their strategy decisions better.
It’s an easy decision. These people seem expensive. And the company can operate without them for a while.
“We have plenty of strategic people,” the reasoning goes. “What we need are more junior people to execute our plan.”
These cost actions impair long-term value
But no strategic plan survives contact with a dynamic market. At least not for long.
The “strategic people” who survive chase near-term goals and incentives. Who is left to lead the strategy decisions that create long-term value?
Smart investors aren’t fooled
Your next investors aren’t buying this year’s cash flows and assets. They’re buying the expected value of assets on your roadmap.
And those willing to pay the most are buying your ability to create tomorrow’s roadmap. To track and stay ahead of a dynamic market.
Smart investors pay lower multiples for companies who have impaired their ability to stay ahead of the market. They see through the window dressing.
So why does it keep happening?
Companies sacrifice maturity because it’s harder to measure than their earnings.
How can leaders avoid impairing long-term value creation? How can investors maturity-adjust earnings and avoid overpaying for impaired assets?
By measuring the mature practices that drive the earnings multiple.
Our assessments help leaders and investors measure and improve the mature practices that create enterprise value.