Value Precedes Activity

The most dangerous and worst CEO... is the one who succeeds in achieving goals that shouldn't have been goals in the first place.

A company may celebrate rising revenues, expanding market share, and an increasing customer count, while in reality... it is moving away from creating value.

Success in the wrong goal... is not success. It is merely a more elegant failure.

This is the mistake many CEOs fall into; they confuse what they measure with what actually creates value. They rejoice in revenue growth, boast about expansion, and announce new developments, but the question they fail to ask is: Have we created real value for the shareholders?



Quality of thinking says something entirely different: Value precedes activity. Any activity that does not create value... is simply disguised resource consumption.

This is why you can predict a CEO's failure before his company's results even show—not through what he succeeds in increasing, but through what he chooses to measure.

If he celebrates revenues... but does not ask about cash flows; celebrates growth... but does not ask about Return on Invested Capital (ROIC); celebrates expansion... but does not ask about the Economic Value Added, know that he may be leading the company away from its ultimate purpose.

The most dangerous and worst CEO... is the one who succeeds in achieving goals that shouldn't have been goals in the first place.

Always remember

Quality of thinking precedes quality of results.

Mohammed Bin Saleh

Interested in Management & Finance