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TFAL 2 PARAGRAPHS




Companies Increase Financial Returns
by 40%

 

 

(Summary)

 

The London School of Economics and McKinsey & Co. have reported the following on their joint study* of 100 companies chosen at random.  (This study has since been expanded to 4,000 companies.) 

 

The study focused on just three elements of the operating dynamic. In brief, it reported:

         "A 25% improvement was correlated with an increase in financial returns of 42%*

         Comparable to increasing the workforce by 25 percent

         Comparable to going from 10 manufacturing plants to 17

         Comparable to that of raising capital investment by 70%

         Correlated with a 5% increase in return on capital employed**

         High performing companies get the same benefits as low performers

         . .

 

Additional studies of more than 4,000 companies have affirmed these findings. 

This is heartening news for any ambitious managing officer, or any director who wonders where the company is heading.  What is even more encouraging is that improvements to the operating dynamic, if done properly, cost a lot less than strategic, tactical, operational, procedural, or system changes.  And bring greater results.  

 

 


* McKinsey  paper:   http://www.mckinseyquarterly.com/When_IT_lifts_productivity_1477_abstract

 (may require registration)

 

** Check note 5 at end of paper. 

 

  

 

 



 


What the LSE/McKinsey study did not explain why it works or HOW  to do it. 

We have been doing this work since 1980.

No one else can.