The New Prime Directive
CEOs are beginning to question the prime directive of creating shareholder value at the expense of other values. They’ve seen the slippery slope: 1) incremental investments don’t produce fast growth, 2) shareholders devalue the stock, 3) the leaders are fired, 4) the new leaders cost-cut their way back to earlier earnings levels, and 5) the company is once again searching for fast growth.
Annunzio admonishes CEOs to “stand up to the investment community and tell them that companies can’t cut their way to sustainable growth.” Instead, “they should differentiate their products and seize opportunities in new markets.”
Recent studies offer ammunition. Companies with 80% of their revenue from innovative products have typically ...
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