Balancing ROIC and growth to build value

Managers focused on growth often pay too little attention to ROIC. Yet trying to maintain growth over the long term almost invariably fails, while ROIC is easier to sustain—and can be even more important in creating value.

Exhibit 1: Which creates greater value—growth or returns?
Exhibit 2: Returns are sustainable, but growth inevitably declines.
Exhibit 3: Patterns at the industry level are similar.
Exhibit 4: Both high and low performers demonstrate significant persistence in performance.
Exhibit 5: In contrast, all companies are very likely to experience substantial declines in their growth.

The Web is the most measurable medium in the history of marketing. Now all that’s left is figuring out how to measure it.

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