The “Truth” About Growth成长的“真理”.pptVIP

* * THE “TRUTH” ABOUT GROWTH NIRI Senior Roundtable December 10, 2010 Ed Hess Professor of Business Administration Batten Executive-in-Residence Hesse@ www.EDHLTD.com * Be sure to add some comments about areas that you have been working in that relate to investor relations. I think I will be introducing you, but your knowledge of SEC cases, etc. will be helpful to build a bond of direct credibility. (Now I see you address this a little later.) You also want to think about your topic from our point of view, which I know you do. Namely, we run around trying to convince investors and analysts that we have a superior growth outlook compared to our peers. What should we take away from your presentation that would cause us to modify how we approach this mission? THE DNA OF GROWTH * RESEARCH FINDINGS 5 research projects The Organic Growth Index ( “OGI”) The Characteristics of High Organic Growers (“HOGS”) The Challenges of Managing Private Company High Growth The Myths of Growth The Risks of Growth * WHAT DO WE KNOW ? Commonly held beliefs about growth are not supported by research and at best are half-truths There are many ways to create earnings and all earnings are not equal Short-termism dominates the capital markets Stock ownership has been replaced by the “renting” of stock for the short-term * WHAT DO WE KNOW? Consistent linear corporate growth is rare Short-termism drives bad behaviors Executive compensation generally is aligned with short-termism Earnings games are alive and well: GE and Dell settlements with the SEC “Spin” can become fraud: Dell and Citigroup SEC settlements * WHAT DO WE KNOW? Growth and Innovation are complex people dependent processes Growth and innovation are not linear mechanistic processes 6 different research reports conclude that above industry average or average GDP growth occurs in less than 10% of the samples studied * WHAT DO WE KNOW? Consistent above average growth for seven years or more occurs less than 3 % of samples S