A recent study by McKinsey: "The elusive goal of corporate outperformance" highlights the characteristics of the best performers among the global multinationals.
It appears that the top nine performers of a 20,000 firms database have experienced both revenue growth and performance. They strongly prefer organic growth over massive acquisitions to reach this good performance. It doesn't mean they didn't make acquisitions but these were more selective and were not involved in acquisitions boulimia. No acquisition or divestiture had a value exceeding 30% of the total market capitalization in the year before the deal.
The top performers had higher market-to-book ratio than their competitors. Their M/B ratios were 25% higher than firms that excel either by revenue growth or profitability. A key element is the leverage of intangible assets such as copyrights, trade secrets, strong brands, portfolio of strategic innovative competencies. Another key element was the country of origin of the firm and its industry.
Information and communications industries are famous for leveraging intangible assets such as collective intelligence, innovation competencies in order to reach superior revenue growth and profitability. They are also known for exhibiting strong networks effects while the first three leaders of the industries create most of the value of certain sectors.
Louis Rhéaume
Infocom Intelligence
www.infocomintelligence.com
A blog on the convergence of info-communications industries: communications, computing, electronics, entertainment, publications and education. Strategic, technological and financial analysis. English and French blog. Cette chronique traite de l’évolution des industries de l’information et des communications et couvre des aspects stratégiques, technologiques et financiers, comme l’économie du savoir et de l’innovation. L’auteur est Associé principal de Infocom Intelligence.
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