What causes the greatest loss in shareholder value? Poor strategy.
In a recent survey of 103 enterprise companies across the world, an attempt was made to understand the factors which led to the greatest loss in shareholder value. The results are unambiguous, 81% of the time, strategic blunders were responsible for a significant loss in shareholder value.
In the Booz & co study, the authors analysed four potential reasons for failure; External, Compliance, Operational and Strategic.
Reinforcing the importance of a leadership team developing and executing an effective strategy, poor strategy beat out major accidents and incidents, fraud, legal battles along with natural, political and regulatory external shocks.