This week’s podcast is about the external view and the importance of base rates. Berkshire-invested Kroger supermarkets is a good example of a company that can really be viewed externally.
You can listen to this podcast here or at iTunes and Google Podcasts.
Here is my new book:
- Moats and Marathons (Part 1): How to Build and Measure Competitive Advantage in Digital Businesses Kindle Edition
Common metrics for base rates:
- Sales growth
- Gross profitability (gross profits / assets)
- Operating leverage. Change in operating profits relative to change in sales.
- Operating profit margin
- Earnings growth
Here is the McKinsey Power Law for economic profits
Here is the McKinsey book Beyond the Hockey Stick.
Here is the Hairy Back graphic from McKinsey
- What Ant Financial Tells Us About the Future of Square. Plus, Why The External View Is So Hard in Digital. (Jeff’s Asia Tech Class – Podcast 61)
From the Concept Library, concepts for this article are:
- External vs. Internal View
- Regression to the Mean (average / base rates, rate of regression)
From the Company Library, companies for this article are:
Photo by Peter Bond on Unsplash
I write, speak and consult about how to win (and not lose) in digital strategy and transformation.
I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.
My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.
Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.