The authors offer a new metric for assessing a company's potential for growth that CEO's and leadership teams can actively manage.
The Imagination Premium metric reflects the value of a company's equity, beyond what can be readily explained by its ability to throw off cash.
For a CEO, TIP provides support for an argument that investments in future growth are well warranted.
A negative TIP signals that investors will not even pay for the capitalized value of current cash flow and this usually leads to activist investors, hostile acquisition threats and C-suite turnover.
The article shows executives how to drive the premium investors will pay for corporate growth initiatives. One of the first things strategists can do to manage their company's TIP is a portfolio analysis that looks at how uncertain each current investment is, and whether the whole portfolio is one growth investors will reward with an increased TIP.
