Strategic Opportunism
Reaching for value
Strategic opportunism
Stuart E. Jackson
Stuart E. Jackson is Vice President of L.E.K. Consulting, Chicago, IL, USA.
Ralph Waldo Emerson, American philosopher and sage of Concord, is often misquoted on the subject of consistency. What he actually said was:
A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
But is that enough?
Sometimes it is not. All too often, business leaders get trapped in their strategic ruts. They develop elaborate plans for where and how to create value (including plans based on the principles of SMP). But then they fail to adjust those plans in light of compelling opportunities that present themselves. They do not take adequate account of near-term market conditions when deciding when to buy or sell businesses. They write off businesses that have disappointed investors, instead of looking for ways to turn these situations to their own advantage. They worry too much about shareholder reactions to new initiatives instead of doing what is needed to build value. They fail to combine their thoughtful business strategy with a willingness to go against the crowd, buying low and selling high. You could say that, despite all their good intentions and great planning, they fail to behave like capitalists. Not all business investors have these failings. Besides working with many corporate clients, I also work with dozens of private equity firms. With the recent rapid expansion of private equity investing, there has been much speculation about the sustainability of this investment model and the level of returns that can be expected from these firms in future. Even so, private equity firms provide some of the best examples of what I call ‘‘strategic opportunism.’’ Need a good example? How about a company that has been bought and
And then he added one more thought:
With consistency, a great soul has simply nothing to do.
There is wisdom here for business
Strategic opportunism
Stuart E. Jackson
Stuart E. Jackson is Vice President of L.E.K. Consulting, Chicago, IL, USA.
Ralph Waldo Emerson, American philosopher and sage of Concord, is often misquoted on the subject of consistency. What he actually said was:
A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
But is that enough?
Sometimes it is not. All too often, business leaders get trapped in their strategic ruts. They develop elaborate plans for where and how to create value (including plans based on the principles of SMP). But then they fail to adjust those plans in light of compelling opportunities that present themselves. They do not take adequate account of near-term market conditions when deciding when to buy or sell businesses. They write off businesses that have disappointed investors, instead of looking for ways to turn these situations to their own advantage. They worry too much about shareholder reactions to new initiatives instead of doing what is needed to build value. They fail to combine their thoughtful business strategy with a willingness to go against the crowd, buying low and selling high. You could say that, despite all their good intentions and great planning, they fail to behave like capitalists. Not all business investors have these failings. Besides working with many corporate clients, I also work with dozens of private equity firms. With the recent rapid expansion of private equity investing, there has been much speculation about the sustainability of this investment model and the level of returns that can be expected from these firms in future. Even so, private equity firms provide some of the best examples of what I call ‘‘strategic opportunism.’’ Need a good example? How about a company that has been bought and
And then he added one more thought:
With consistency, a great soul has simply nothing to do.
There is wisdom here for business