CHAPTER 1Ensuring Value Creation (Despite Volatility)
Most companies have growth periods and value periods. You grow and then you harvest.1
– Margaret Whelan, Corporate Director of TopBuild and Mattamy Homes
What is value creation in the digital age? It’s a home-building company actively reallocating its capital to the markets with the most need and the least competition. It’s a medical IT company2 developing products that respond to pain points in customers’ daily workflows. It’s a mail-order provider of DVDs adjusting to changing consumer behavior to become a world leader in scripted programming.
Value creation is different from growth. Growth is about short-term returns and capital expansion, with less focus on longer-term consequences. Value creation, by contrast, is a long-term strategy that takes into account how companies invest in innovation and sustainability.
Importantly for corporate boards of directors, value creation today goes beyond immediate decisions on dividends and investment strategies to maintaining a durable and sustainable business model. Think of it as building a strong company as well as a strong stock — a dual mission that’s more challenging than ever in today’s global landscape of technological complexity. And think about it as staying ahead of risks and opportunities. At any moment, a new innovation like blockchain or artificial intelligence, or virtual reality can irrevocably upend business as usual, even for the most entrenched global leader. ...
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