While high return on invested capital is important, companies can go too far by focusing solely on eradicating variance and making their systems hyper-efficient. Jack Welch's statement 'Variance is evil' highlights the danger of prioritizing predictability and safety to the extent that it stifles creativity and innovation. Overly efficient systems can become fragile in times of crisis, as seen during the COVID pandemic with supply chain disruptions. The balance between efficiency and resilience is crucial for sustainable long-term success.
Executives like to talk about innovation, but how do you spot the difference between world changing stuff and corporate theater?
Elliott Parker is the CEO of High Alpha Innovation and author of, “The Illusion of Innovation.” Parker joins Ricky Mulvey for a conversation about:
- The power in being contrarian
- One mega cap that knows how to innovate
- Why ROIC is not a foolproof metric for investors.
Companies discussed: MSFT, IBM, AMZN, NFLX, BRK
Host: Ricky Mulvey
Guest: Elliott Parker
Producers: Mary Long
Engineers: Rick Engdahl
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