For most organizations, funding levels across business lines and initiatives don’t meaningfully change from year to year. Business conditions, however, are constantly changing. Companies today face an impending earnings recession, disruptive competitors, and fundamental shifts in customer and consumer behavior.
Why Executives Should Start Acting Like Activist Investors
To stay competitive, companies need to be able to shift how they allocate capital in response to changing business conditions.
August 17, 2022
HBR Staff/Unsplash/Pexels
Summary.
Business conditions are constantly changing, yet most organizations’ capital allocation is suspiciously similar from year to year. Incremental improvements to the investment prioritization process aren’t enough, the authors argue. What leaders need to do is adopt the behaviors of successful activist investors and private equity firms, and apply them to the internal management of funding and resources. This means following three strategies: 1) Maintaining a relentless focus on the differentiators that drive long-term value creation; 2) Creating more nimble investment allocation practices; and 3) Forcing trade-offs in operating resources.
New!
HBR Learning
Budgeting Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Budgeting. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Tips, tools, and info for handling the budgeting process.
Learn More & See All Courses
New!
HBR Learning
HBR Learning
Budgeting Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Budgeting. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Tips, tools, and info for handling the budgeting process.