Business Network Methodology
5 Star Business Network

5 Star Business Network Methodology

We started with a universe of nearly 1,200 companies and tracked their performance over five years – from 2007 to 2012. The rationale behind that is simple – most of your strategic decisions today will yield results only in three to five years’ time. Moreover, some of the variables, such as Advanced Product Phasing, measure performance over a period of time covering several product life cycles.

As time went by, nearly 20% of the companies were dropped from our database – due to mergers, acquisitions, change of ownership, or similar reasons. Out of the remaining companies, businesses such as utilities, insurance and finance companies work in a highly regulated market environments; as such, we found their data to be useless for comparison purposes. Without an inside peek into the internal workings of these companies – financial proxies would simply not be enough to approximate the five key variables of interest.

For the rest of the companies, we used profit margins as the proxy for $eed-to-$tore Efficiency, five-year profit margin growth as the proxy for Transaction Optimisation Profitability, inverse of PE ratio (Ratio of Market Value to Profits, or market price as a multiple of profits) as a proxy for Fire-Aim-Ready Innovation, Growth in inverse of PE ratio as a proxy for Advanced Product Phasing, and change in annual ranking over five years as a proxy for Results-focused Outsourcing and Modularisation.

For the rest of the companies, we used profit margins as the proxy for $eed-to-$tore Efficiency, five-year profit margin growth as the proxy for Transaction Optimisation Profitability, inverse of PE ratio (Ratio of Market Value to Profits, or market price as a multiple of profits) as a proxy for Fire-Aim-Ready Innovation, Growth in inverse of PE ratio as a proxy for Advanced Product Phasing, and change in annual ranking over five years as a proxy for Results-focused Outsourcing and Modularisation.

Frequently, readers of books such as this find it hard to relate to companies used as case examples for various concepts. This is an understandable sentiment. What if your industry or geography is not represented in the case examples used throughout this book?

However, that does not mean the concepts in the book are not applicable to your company or situation. Chances are there are other companies – both in your industry, and in your region – that can be used as benchmarks and examples. Moreover, we have strived to transcend cross-sector differences to bring you the most rounded view.

However, that does not mean the concepts in the book are not applicable to your company or situation. Chances are there are other companies – both in your industry, and in your region – that can be used as benchmarks and examples. Moreover, we have strived to transcend cross-sector differences to bring you the most rounded view.

This book is available here:

5 Star Business Network – Available on Amazon.com