As investors come up with their investment shortlists by studying valuations, charts, trends, and pattern, fundamental issues come more prominently into play. The most vital of these are Products, Players, and People.
Products: Studying the current supply and demand of products, and the projected figures ten years down the road, will help reveal the sales growth rate and potential profitability of your picks.
Players: Competition can pose either a fleeting or lingering threat. How they stack up against your target investment in terms of product and people will reveal the weaknesses of your shortlisted picks and the threats to your investment.
People: One of the final criteria in picking a target investment is the people behind it. Who owns the company? Who runs the business? The qualities of leaders and managers obviously have to stand up to stringent scrutiny.
Most prominent CEOs oft mentioned in mainstream media are rational Warren Buffett who owns and runs Berkshire Hathaway, creative Steve Jobs who runs Apple, innovative Manuel V. Pangilinan who runs PLDT, and forward-looking Ramon Ang who runs San Miguel Corp.
It is quite obvious investors look at CEOs as a major selection criteria in investing in such CEO-centric companies. After all, their management, expertise, and leadership play a big factor in the success of these enterprises.
It is essential that the right person run the right business. What benefit are proprietary concepts and maximal systems when there is no one to make use of them, run them, realize them, and monetize them? What benefit is the best engineered, fastest performance car if you get a reckless bus driver to run it? Matchmaking between leaders and businesses is key.
In my book, a CEO must be both a manager with core competence and expertise to run the business to its full potential, and a leader who inspires the troops to move towards a vision. He must be Lean, Mean, and have the Means.
Spending freely is easier than spending wisely. The latter requires discipline while the former does not. Spending wisely on expansion for growth is crucial in keeping pace or even beating competition. But allowing spending to get out of hand will eat into profits and delay expansion plans. A bloated organization that spends recklessly raises a red flag for investors. A LEAN organization that spends wisely is ideal. A leader of honesty, integrity, and frugality runs a tight ship with cost-efficient operations that add to the bottom line.
A CEO must know who his customers are, and should be passionate about them, their needs, and their wants. He must be zealous about his products, and how they satisfy his customers' needs and wants.
He must also care for his troops. If he does, his troops will also care for the organization in their quest for customer satisfaction. Customer satisfaction means stronger demand, and adds to the top line.
A focused, fearless, and passionate CEO who MEANs business will make it grow by keeping his eye on the ball.
Unfortunately, it is not enough for a CEO to be lean and mean to succeed. A CEO must also have the MEANS to get things done and realize his vision. He must be able to walk the talk. He may be honest and passionate, but if he does not have the skills, talent, or stamina to get things done according to plan, everything will be for naught.
Print ed: 05/10