Simultaneously pursuing high growth and higher profit margins is inherently contradictory
Richard Rumelt · Good Strategy, Bad Strategy | Richard Rumelt · Jan 21, 2024 · at 13:23
Richard Rumelt criticizes CEOs who claim they will increase growth and profit margins at the same time without acknowledging the trade-offs.
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“Growth and profit are, they battle each other. Let's say we define profit as return on equity. Well, if you're going to increase growth and increase return on equity, how do you do that? Because you're basically going to invest less to get your return on equity. Or you're going to grow and get your profit margin up. Well, how are you going to do that? You get your profit margin up and grow faster. These are, this is baby talk, but CEO after CEO will stand up and say, well, we're going to grow and we're going to get a profit.”
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