Chapter 4 argues that if we are to get better methods for strategy, it might help to know why the methods we have don’t work – a story that is actually quite simple. First, research asked the wrong question – what determines profitability (return on invested capital or similar), but we know investor value comes from growing cash flow. Research also looked in the wrong places for the answer – first, industry conditions and then weird features of businesses that are meaningless to management. Lastly, ...
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