A New Way To Think Quotes

“Shareholders have a residual claim on a firm’s assets and earnings, meaning they get what’s left after all other claimants—employees and their pension funds, suppliers, tax-collecting governments, debt holders, and preferred shareholders (if any exist)—are paid. The value of their shares, therefore, is the discounted value of all future cash flows minus those payments. Since the future is unknowable, potential shareholders must estimate what that cash flow will be; their collective expectations about the future determine the stock price. Any shareholders who expect that the discounted value of future equity earnings of the company will be less than the current price will sell their stock. Any potential shareholders who expect that the discounted future value will exceed the current price will buy stock. This means that shareholder value has almost nothing to do with the present. Indeed, present earnings tend to be a small fraction of the value of common shares. Over the past decade, the average yearly price-earnings multiple for the S&P 500 has been 22x, meaning that current earnings represent less than 5 percent of stock prices.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“In strategy, what counts is what would have to be true—not what is true. To put it in scientific terms, developing a winning strategy involves the creation and testing of novel cause-effect hypotheses and the identification of what must be different about the world for those hypotheses to work.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“Peter Drucker had it right when he said that the primary purpose of a business is to acquire and keep customers.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“I find that most teams consider three to five possibilities in depth. On one aspect of this question, I am adamant: the team must produce more than one possibility. Otherwise, it never really started the strategy-making process because it didn’t see itself as facing a choice. Analyzing a single possibility is not conducive to producing optimal action—or, in fact, any action at all.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“We push teams to specify in detail the advantage they aim to achieve or leverage, the scope across which the advantage applies, and the activities throughout the value chain that would deliver the intended advantage across the targeted scope. Otherwise, it is impossible to unpack the logic underlying a possibility and to subject the possibility to subsequent tests.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“possibility is essentially a happy story that describes how a firm might succeed. Each story lays out where the company plays in its market and how it wins there. It should have internally consistent logic, but it need not be proved at this point. As long as we can imagine that it could be valid, it makes the cut. Characterizing possibilities as stories that do not require proof helps people discuss what might be viable but does not yet exist. It is much easier to tell a story about why a possibility could make sense than to provide data on the odds that it will succeed. A”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“Constructing strategic possibilities, especially ones that are genuinely new, is the ultimate creative act in business. No one in the rest of the beauty industry would have imagined P&G’s completely reinventing Olay and boldly going head-to-head against leading prestige brands. To generate such creative options, you need a clear idea of what constitutes a possibility. You also need an imaginative yet grounded team and a robust process for managing debate.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“Having recognized that a choice needs to be made, you can now turn to the full range of possibilities you should consider. These might be versions of the options already identified.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“To break through the impasse, you have to change the way you think about making a successful strategy: In strategy, what counts is what would have to be true—not what is true. To put it in scientific terms, developing a winning strategy involves the creation and testing of novel cause-effect hypotheses and the identification of what must be different about the world for those hypotheses to work. And a structured development of novel hypotheses is as much a scientific process as the structured analysis of data. In”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“Design for habit As we’ve seen, the best outcome is that your offering becomes the object of an automatic response. So, design for that—don’t leave the outcome entirely to chance. We’ve seen how Facebook profits from its attention to consistent, habit-forming design,”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“A Complement to Choice I don’t claim that consumer choice is never conscious, or that the quality of a value proposition is irrelevant. To the contrary: people have to have a reason to buy a product in the first place. And sometimes a new technology or a new regulation enables a company to demand consideration of a product—by radically lowering the price, offering new features, or providing a wholly new solution to a customer need. Robust where-to-play and how-to-win choices, therefore, are still essential to strategy. Without a value proposition superior to those of competitors that are attempting to appeal to the same customers, a company has nothing to build on.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“Processing fluency is itself the product of repeated experience, and it increases exponentially with the number of times we have the experience. Perceiving and identifying an object is improved by prior exposure to that object. As an object is presented repeatedly, the neurons that code features not essential for recognizing the object dampen their responses and the neural network becomes more selective and efficient at object identification. Repeated stimuli have lower perceptual-identification thresholds, require less attention to be noticed, and are faster and more accurately named or read. What’s more, consumers tend to prefer them to new stimuli.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“This insight prompted Lafley to switch the bonus metric from TSR to something called operating TSR, which is based on a combination of three real operating performance measures—sales growth, profit margin improvement, and increase in capital efficiency. His belief was that if P&G satisfied its customers, operating TSR would increase, and the stock price would take care of itself over the long term. Moreover, operating TSR is a number that P&G’s business unit presidents can truly influence, unlike the market-based TSR number.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“G’s statement of purpose, values, and principles, which was written in 1986, describes a hierarchy that is strikingly similar to J&J’s: We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“Consider Johnson & Johnson. It has the corporate world’s single most eloquent statement of purpose—its “credo,” which hasn’t changed since J&J’s legendary chair Robert Wood Johnson created it in 1943. Here it is, in abbreviated form: We believe our first responsibility is to the doctors, nurses, and patients, to mothers and fathers and all others who use our products and services.… We are responsible to our employees, the men and women who work with us throughout the world.… We are responsible to the communities in which we live and work and to the world community as well.… Our final responsibility is to our stockholders.… When we operate according to these principles, the stockholders should realize a fair return. The credo bluntly spells out the pecking order: customers come first, and shareholders last. However, J&J has confidence that when customer satisfaction is at the top of the list, shareholders will do just fine.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“This is why the goal of shareholder value maximization and the compensation approach that goes with it are bad for shareholders. The very executives who must achieve the goal realize that they can’t. Talented executives can grow market share and sales, increase margins, and use capital more efficiently, but no matter how good they are, they can’t increase shareholder value if expectations get out of line with reality. The harder a CEO is pushed to increase shareholder value, the more the CEO will be tempted to make moves that actually hurt the shareholders.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“American pragmatist philosopher Charles Sanders Peirce’s observation that no new idea in the history of the world has been proven in advance analytically, which means that if you insist on rigorous proof of the merits of an idea during its development, you will kill it if it is truly a breakthrough idea, because there will be no proof of its breakthrough characteristics in advance. If you are going to screen innovation projects, therefore, a better model is one that has you assess them on the strength of their logic—the theory of why the idea is a good one—not on the strength of the existing data. Then, as you get further into each project that passes the logic test, you need to look for ways to create data that enables you to test and adjust—or perhaps kill—the idea as you develop it.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness

“It’s extremely difficult—and socially risky—to question an established model that many people believe and to start building a new model from scratch.”
― Roger L. Martin, A New Way to Think: Your Guide to Superior Management Effectiveness