Strategic decision making and CEO mindsets
I classify 4 mindsets in business. ROCI mindset that focuses on returns based on cash flows (real returns in the real world). Cost & margin mindset based on trading (since only trading/transaction businesses assets are inventory and margin is the return). EBITDA mindset that focuses only on numbers at the operating level leaving business returns to another function in the organization). The valuation mindset (driven by the e-commerce / digital industry) where business is assessed on a value which some investor is prepared to pay (or pays). For the past 15 odd years, since US interest rates were low, too much capital was (and is) chasing companies that are loss-making at an operational level (with no hope of profits or returns for a long, long time) assuming that some of them will become Amazon clones. Easy to say that CEOs can adapt to the mindset based on need. It doesn’t really happen. Capital efficiency and cash flow quad are where CEOs need to be.
All business programs and business management courses particularly senior management executive education programs on strategy development and execution must factor the behavioral aspects of strategic choice-making.