![]() ![]() ![]() In contrast to his boss, he would say, “Give me a superior growth rate and ROI will take care of itself.” The opposing views produced a persistent tension at the top of Company A, a tension that was resolved only when the new CEO took over. Without a growth rate that matched or exceeded that of the industry, Company A’s market share would not only decline but so would its potential to maximize ROI. Success depended more critically on market share.įor this manager, the corporate growth rate was equal to, if not more important than, ROI as the focus of corporate strategy. As he rose through the ranks of line management, he saw a number of the company’s principal product lines gradually mature and their markets develop the traits of a commodity high sales volume, low costs, and declining profit margins now characterized a sustainable competitive position. One level down, the manager destined to be the CEO’s successor had a different vision of the business. The CEO’s leadership was strongly supported by the board and applauded by the financial community. The company’s profits more than satisfied required funds for investment, and Company A accumulated substantial financial reserves. “Give me technological leadership and the promise of a superior ROI, and growth will take care of itself.”įor much of his tenure, he was apparently right. “I don’t care about sales growth,” he would say. His was a simple standard of excellence: return on investment. ![]() He saw Company A as an unchallenged leader in technology and product innovation. During the 1960s and early 1970s, its CEO knew exactly what the corporate and financial goals should be, and held onto them with unswerving commitment. Consider the way that two numbers-return on investment and rate of sales growth-came to symbolize opposing views of the corporate strategy and environment in Company A.Ĭompany A has been a leader in its field for several decades and remains highly regarded by the financial and investment community as profitable, reliable, and conservative. In practice, they are deeply rooted in the CEO’s values and political philosophy, and they draw persuasive power from the depth of that conviction.ĭespite this power, and because a company’s financial goals are so visible and tangible, they often become the focal point for tension and dispute at the higher levels of the organization. In theory, these goals are imposed by shareholders through stock market responses to company performance. One of the primary responsibilities of the CEO of any major corporation is to articulate the company’s financial goals as a tangible focus for its business mission and strategy. ![]()
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