“How Not to Grow”
In the September 2011 issue of CFO Magazine, Booz & Company Partner Paul Leinwand (North America) said that one of the most effective ways that corporate finance executives may be able to help their companies avoid some common mistakes is by leveraging the very trait for which they are often criticized: saying no. Doing so, however, requires the ability to say no in a manner that is nuanced and informed, and is based on a detailed knowledge of the overall business, as opposed to financial analyses alone, he added. “Pointing to a metric like NPV (net present value) is fine, but what’s often missing is a more focused understanding of what is required” to achieve projected returns, said Leinwand, co-author of the book, The Essential Advantage: How to Win with a Capabilities-Driven Strategy, with Booz & Company Senior Partner Cesare Mainardi. “The need to grow is so intense right now that companies are chasing opportunities that, in retrospect, don’t look like great ideas.”