I had the pleasure of facilitating a great Business Leadership workshop for an organization adapting to a new strategy after a major merger of two equally sized enterprises. The workshop focuses on lifting up and developing business acumen and business leadership skills.

We spent some really good time introducing and discussing strategic frameworks and how to choose the right value proposition to offer customers.

After that discussion, we turned our attention to the execution of the strategy. As I have shared for many years, at Advantexe we define business leadership as the execution of your strategy through people. In discussing and learning about execution, one of the best ways to explore what works is to discuss and understand what doesn’t work. As part of an exercise, I asked participants working in teams of 5 (we had teams) to discuss and list out their top reasons why they feel strategy execution doesn’t work in their organization.

When Advantexe develops our customized simulation-centric Business Acumen training programs, we typically will include a few metrics or key performance indicators (KPIs) that our clients want us to focus on and teach to. The most common metrics we are asked for include Gross Margin, EBIT, EBITDA, and Total Shareholder Return (TSR).

This week, one of our clients asked us to lift up and teach our Business Acumen training participants about the Price-earnings (P/E) ratio. The reason behind this request is that their CEO is extremely upset that the Wall Street analysts covering his stock are saying the stock wasn’t valued as highly as it should be, and that the P/E ratio was too low.

The P/E ratio is a fundamental tool in financial analysis used to evaluate a company's stock price relative to its earnings. If ever there was a time for a business acumen blog and P/E ratio this, is it!

Here are five key aspects of the P/E ratio that are crucial to understand:

Earlier this week I wrote a Business Acumen oriented blog called,“How do you Grow KPIs in a Declining Market,” and one of the five recommendations is to diversify the product portfolio and adapt it to the needs of the current market. In that suggestion, I posed the hypothesis that one of the ways you do that is to prioritize the “value” brands (lower price) and deprioritize (for the short term) the premiere brands until there is an economic recovery.

Obviously, that is not going to be the solution for every industry and every company because it does impinge on one of the most sacred pillars of business strategy and that is to choose one value proposition (either product leadership, customer intimacy, or low price) and stick with it. In our business acumen programs that utilize business simulations to build skills, learners are typically “rewarded” with strong performance for taking this path regardless of which value proposition they choose.

The last month of the 3^rd quarter is here and for many business leaders, the 4^th quarter is going to be crunch time. As part of our Business Acumen skill development work, Advantexe conducts 1-hour training sessions called, “Decoding the Earnings Calls” for many of our clients, and after completing the 2^nd quarter calls I can safely share there is a very clear message coming from many large organizations that every business leaders should be aware of: “The headwinds are getting stronger, and we better have the skills to take the right actions to grow our KPI’s in a declining market.”

Much of our Business Acumen training work over the next six months is going to focus on coming back to the basics. I am happy to share some of our content fresh from the classroom that describes the 5 things organizations and leaders can do to grow KPIs in a declining

Summer 2024 is over and it’s the time of year when the whimsical days of sun, fun, and relaxation turn into the harsh realities of finishing Q3 and Q4 with a major strong push. We have one last weekend, so I have prepared this blog with a focus on the things business leaders should be preparing for as we come back from the Labor Day weekend and get ready to achieve the goals and objectives that will take us across the finish line.

The Big Picture

Things are only going to get more complex. Business leaders must continue to build their business acumen and business leadership skills every day. Business leaders today must navigate a complex and rapidly changing environment. Everything changed during the pandemic, and we have started to find an equilibrium in the “new normal.” However, based on the work we are doing and seeing from our clients I want to share three significant business issues business leaders should be preparing for during this home stretch.