Why is Management a key value driver?

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As I have mentioned, there are four pillars to evaluate the future success of ANY company.  These include Management, Capital Reinvestment, Triple Digit Growth and comparison of Industry Growth Standards.  Today, we are discussing the importance of Management.

Importance of Management

“Good ideas are a dime a dozen. Good execution and good management— are rare.” 

We see a lot of great ideas. I mean a lot!  What we don’t see often enough are teams that are capable of executing on those ideas.

The saying, “bet on the jockey and not the horse” means that the management team is often  more important than the founder or entrepreneur with the original great idea. No matter how great any idea is, the ability to execute the idea is even greater.

A mediocre idea has much more potential to succeed with a competent management team that is determined to make it work. The management of a company is responsible for the creation, innovation, direction and rate of growth of all other value drivers. Things like a proven growth strategy, sustainable revenue, improving cash flow, competitive advantage, consumer engagement and experience and financial controls. Everyone of these value drivers depend on good management. More importantly a top-notch management team creates transferable value. That is what we look for when valuing a company.

ROI of Good Management

It’s not cheap…but good management pays for itself time and time again by increasing the value drivers of the company. The management is a key part of the investor success formula. 

Lets face it, there are many success stories of companies that found huge success after the management team had to pivot away from their original idea. This happens for many reasons but what is most important is that the team was able to pivot. 

For example, Instagram was originally a location-based social networking app. Now it’s a well known photo-sharing app that makes up a good portion of many peoples social media lives. The investors in Instagram bet on a team. Management that was able to pivot quickly to take advantage of rapidly shifting market trends. If the management was too committed to the original idea then Instagram would most likely not be here today. 

Solomon’s Picks and Management

Solomon’s Picks dives deep into questions like: 

 “Can management carry out the plan they’ve outlined?”

 “Do they have the skills and experience to execute their plan?” 

 “Do they have the passion, drive and character to execute their plan?

I encourage you to follow Solomon on his investment journey so that you too can become a sound investor.  These key principles have unlocked opportunities that are immeasurable.