The Stress Test Every Business Needs

15Will your strategic goals ensure your company reaches its full potential?

Bill Achtmeyer and John Trustman

Throughout this book, strategy has been an ever-present and close partner of the Capital Agenda, but it hasn’t had to work very hard. With the exception of our discussion of integrating strategy, finance, and operations (Chapter 10) and our deep dive into business strategy in a digital world (Chapter 12), we generally took for granted that a company’s strategy was well-defined, value-creating, and properly connected with the rest of the enterprise. In reality, your Capital Agenda needs some heavy lifting from your strategy to fully answer questions like these:

• Portfolio optimization. Which of our businesses should we continue to own? Which should we divest? What gaps do we need to fill through building, buying, or partnering?
• Capital allocation. How much should we invest organically in each of our businesses? What can we afford to pay for acquisitions?
• Valuation. Which of these alternatives do investors favor? What strategic moves could increase our intrinsic value and market value, and reduce the gap between them?

Neither your Capital Agenda nor your strategy can be determined independently of the other. In Chapter 1 we defined the Capital Agenda as a comprehensive approach to managing capital, executing transactions, and applying practical corporate finance tools to strategic and operational decisions. Capital can’t be allocated properly and the right transactions ...