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What is the Market Telling You About Your Strategy?
Running a publicly held company is like managing a team in professional sports: owners and fans want a winner. Despite the conflicting messages the equity markets often send managers, the best measure of whether a company is on track to meet investors' expectations is still its total return to shareholders, which, so to speak, is how investors keep score. The authors show managers how to improve their understanding of the market's view of performance and how, by comparing the market's judgment with their own, they can identify the major strategic challenges they face in sustaining shareholder returns.
The take-away: A shortfall in quarterly performance—even a tiny shortfall—is like a rat on a ship: investors assume that there is more to come. By carefully analyzing the market's performance expectations, managers can understand what the market is telling them about their strategy.
Articles provided by The McKinsey Quarterly
© 1992-2003 McKinsey & Company, Inc
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