Abstract
Purpose: The authors offer a new metric for assessing a company's potential for growth that CEO's and leadership teams can actively manage. Design/methodology/approach: The Imagination Premium metric reflects the value of a company's equity, beyond what can be readily explained by its ability to throw off cash. Findings: For a CEO, TIP provides support for an argument that investments in future growth are well warranted. Practical/implications: A negative TIP signals that investors will not even pay for the capitalized value of current cash flow and this usually leads to activist investors, hostile acquisition threats and C-suite turnover. Originality/value: The article shows executives how to drive the premium investors will pay for corporate growth initiatives. One of the first things strategists can do to manage their company's TIP is a portfolio analysis that looks at how uncertain each current investment is, and whether the whole portfolio is one growth investors will reward with an increased TIP.
| Original language | English |
|---|---|
| Pages (from-to) | 2-10 |
| Number of pages | 9 |
| Journal | Strategy and Leadership |
| Volume | 49 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2021 |
Bibliographical note
Publisher Copyright:© 2021, Emerald Publishing Limited.
ASJC Scopus Subject Areas
- Strategy and Management