We are Challengers. We are Contrarian. We are Curious.
You may not see what we see. You may not like what we find. Indeed, you may not initially agree with our recommendations but our curiosity will deliver a frank and honest assessment of business performance and what needs to be done.
Our passion and belief in value-creation often puts us at odds with the established narrative. We know that adopting a value-based philosophy delivers increasing shareholder value. There are plenty of examples to prove the point. And there are too many examples of companies which have ignored shareholder value in the pursuit of revenue or have embraced the ideology of ‘earnings-based measures’ to their ultimate detriment.
Our findings are often challenged – the reaction via some of the world’s media regarding our work in sport is a good benchmark in this regard. It is an entirely expected response from a world that is generally measuring business performance incorrectly.
We use the economic profit metric as the basis of our value assessment. As a financial performance measure, the transparency it demands gives no quarter. It is the most prescient measure for business performance. This is the building block of your future success.
Creating Shareholder Value
The path to value creation starts with facing the uncomfortable truth. Company leaders can be misinformed. Relying solely on an accounting profit perspective upon which to influence strategic decisions runs the risk of making the wrong decisions for the business. You cannot manage what you cannot see. As part of an economic profit-based assessment we will uncover the areas of value creation and value destruction within the business.
The usual range of reactions we get when delivering an intial economic profit-based assessment to Chief Executives, Boards of Directors and major shareholders show certain parallels to the stages of grief described by the Kubler-Ross model – Denial, Anger, Bargaining, Depression, Acceptance.
Denial and Anger
We invariably face denial in that the identifying metric –economic profit -is often labelled as ‘unsuitable’, ‘inappropriate’ or just ‘plain wrong’. Indeed, ‘This cannot be right’ or ‘I don’t believe your findings’ tend to be some of the more common reactions. Anger comes in many forms but it tends to arise when we go beyond the 'established' measurement norms in order to identify the value dynamics within the business.
We sometimes see this emotion in play as senior management grapple with our analysis and question the findings by trading alternative scenarios as a form of performance justification.
Not so much the 'blues' but an acknowledgement of the 'reds' in the economic profit performance profile. The scale and magnitude of the problem begins to dawn.
It is a challenge to transition to a value-based philosophy. But the potential rewards for shareholders and stakeholders can be substantial. We work with the business to design and implement appropriate value-creating strategies. But we don't just leave it there. We also equip the business with the relevant skills to maintain and develop further value-creating capabilities so that it becomes a self-reliant, value-driven enterprise.