By: Michael Treacy & Jim Sims
This article is simple in the fact that it calls for managers to look past the numbers that they see on paper, and actually try and understand the balance and income sheets. The article states that every year the revenue bottom line tells a story, and instead most managers read the bottom line as a positive or negative when in fact no matter what the number is there is something to be learned. Through the practical application of back tracking and identifying and analyzing the five sources of growth a company can generate the knowledge to make decisions that should benefit the company.
Through following the revenue stream of Nextel the author points out the main ideas of his article. First is the use of the SRS is, “is an income statement that breaks out revenue by provenance. By tracking the amount of revenue coming from each source, the SRS helps managers take control of their revenue streams, diagnose problems, and spot opportunities for growth. Likewise, effective in evaluating how well an acquisition target might be used to gain market share, reap the spoils in a faster-growing segment, enter an adjacent market, or move into an entirely new line of business. After reading this, it became clear that the key to strategy in this article relied on the use and understanding of the SRS form, which if used correctly could decode the past, confirm the present, and illuminate the future for a company’s growth.
All in all this article was written well in the way that it was easy to understand. However, it seemed as though the entire article was hinged on this SRS which is reasonable but it left a desire for more discussion about what companies could do to grow outside of the SRS.
I. Take command of your growth
a. Tally the top line
b. See the trees for the forest
c. Exploit the power of divisions
d. Build in stretch