What Type of Senior Executive are You?

WHAT TYPE OF SENIOR EXECUTIVE ARE YOU?

 

With their inward-looking approach, leadership and board members at Flour may damage long-run performance unless the goal is to explore strategic options. A better way forward for Flour should start with customer value and its drivers to focus the company’s strategy. Customers, after all, are the main sources of cash flow for any company.  Cost cutting as a strategy is neither desirable nor likely to be successful.

 

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The M&A Dogma in the Oil and Gas Industry

THE M&A DOGMA IN THE OIL AND GAS INDUSTRY

 

With their inward-looking approach, leadership and board members at Flour may damage long-run performance unless the goal is to explore strategic options. A better way forward for Flour should start with customer value and its drivers to focus the company’s strategy. Customers, after all, are the main sources of cash flow for any company.  Cost cutting as a strategy is neither desirable nor likely to be successful.

 

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Fluor’s Restructuring Misses the Mark

FLUOR’S RESTRUCTURING MISSES THE MARK

 

With their inward-looking approach, leadership and board members at Flour may damage long-run performance unless the goal is to explore strategic options. A better way forward for Flour should start with customer value and its drivers to focus the company’s strategy. Customers, after all, are the main sources of cash flow for any company.  Cost cutting as a strategy is neither desirable nor likely to be successful.

 

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Power-Up PPI

COLLABORATIVE FOR CUBES™ BREAKS DOWN PRICE ELASTICITY.

To remain profitable, companies must have pricing power. They must have the ability to raise prices while maintaining relatively stable unit sales. And at the 100,000-foot level, where CEOs are looking to examine the financial outcomes of their actions, B2B companies struggle to increase pricing power.

The concept of pricing power is associated with price elasticity, or price sensitivity. The more price-sensitive a consumer, the more negatively the consumer will react to an increase. Companies with higher relative pricing power find customers react less negatively to a price increase. Thus, they are able to maintain stable unit sales when they enact an increase.

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Multiplier Customers

COLLABORATIVE FOR CUBES™ HELPS TARGET PROFITABLE NEW CLIENTS.

All customers are not the same. Some generate only one-time business. Others can help grow a firm organically through repur- chasing, recommending the business to peers, inviting bids on new business, and offering positive word-of mouth. Customers who engage in these behaviors are “multiplier customers”: they help firms multiply their business growth.

Multiplier customers who offer peer recommendations and repeat business are especially critical for industrial business-to-business (B2B) companies that offer specialized products and solutions to meet complex customer needs and for whom the cost of customer acquisition can be high. Without multiplier customers, B2B companies see increased customer acquisition costs, may have lower sales per customer, and fail to deliver the desired financial results.

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The EBITDA Conundrum

COLLABORATIVE FOR CUBES™ RESEARCH OFFERS WAY OUT.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a powerful metric used to evaluate the profitability of a business. Because of its nuanced approach to earnings, it is a different metric from cash flow.

At the 100,000-foot level, many boards and CEOs of business-to- business (B2B) companies rely on EBITDA as the key to evaluat- ing the current and near-term health of their companies. Efforts to manage EBITDA typically focus on production factors that fall within the realm of finance and operations. Indeed, managing a firm’s operational expenditures is seen as key to managing EBITDA.

While managing EBITDA via operating expenses can be effective, the focus of such an approach is strictly inward-looking. Over time, the focus becomes cost cutting, efficiency, and lean production. Research shows companies focusing on efficiency succeed at delivering higher long-term value to shareholders, but surprisingly, a 2005 study showed companies that combine an efficiency focus with a customer focus deliver even higher long-term value to shareholders — up to 1.5 times higher.

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