Growth or ROIC or Both ?

Often SME companies are caught in the 'growth freeze' zone. For example, a 500 head count company will struggle to hit the next big target of 1000 people. They have to sustain as well grow as well create value for customers as well produce profits for the stakeholders. Big ask!! When you find time, read what Bin Jiang and Timothy Koller of Mckinsey got to say on growth pangs.


Here is the summary of the Mckinsey Article :

'Value-minded executives know that although growth is good, returns on invested capital (ROIC) can be an equally—or still more—important indicator of value creation.1 Yet even executives at the best companies often wrestle with strategic decisions in order to reach the right balance between growth and returns. We repeatedly come across executives whose companies earn high returns on capital but who are unwilling to let those returns decline to encourage faster growth. Conversely, we see executives at companies with low returns working to promote growth instead of improving their ROIC.'

~ Satish Chathanath
Call : 9884011654
Mail : csadhy@yahoo.co.in