There’s an interesting article out in Forbes that contains a couple of fascinating ideas well worth digging into. The first thing is their argument that Steve Jobs was able to eliminate Innovator’s Dilemma at Apple by getting rid of the profit motive. The same article also mentions a fascinating study by Deloitte called “The Shift Index” that has determined:
U.S. companies’ return on assets (ROA) have progressively dropped 75 percent from their 1965 level despite rising labor productivity. Even the highest-performing companies are struggling to maintain their ROA rates and increasingly losing market leadership positions. Some of the 2010 findings include:
- Less than a quarter of the U.S. workforce is passionate about their current work. Worker passion is a key requirement for effectively responding to the ongoing, disruptive changes in the business environment.
- Performance continues to decline. Whether measured through return on assets (ROA), return on invested capital (ROIC) or return on equity (ROE), the long-term downward trend holds true. We discuss this in the context of several macro-trends –transition to a service economy, M&A activity, outsourcing, and growth of intangible assets.
- The economic downturn, in particular the lack of access to capital, decreased consumer spending and the resulting business bankruptcies, has had an impact on some of the indicators. However, we believe these are short-term effects and that the long-term trends will resume.