Eyes on the future:
As Google turns into Alphabet, as Facebook bets in new platforms and as corporates form accelerators, we have to learn to assess these companies in a different way.
While assessing the future prospect of Coca Cola requires a similar skill set as assessing Berkshire’s Fruit of the Loom, assessing self-driving cars requires a different skill set from assessing Google’s search engine. If you compare Berkshire’s portfolio with Google X’s aim of developing “science fiction-sounding solutions”, then soda suddenly may not be too far away from underwear.
On the one hand, we need to get more comfortable with assessing businesses that invest today’s profits into future revenues. As these companies leave their comfort zone, we have to do the same when we want to understand them. And it will also require us to focus on different and more forward looking metrics as Mark Suster’s article at Both Sides of the Table exemplifies. He goes into much depth about the tension between generating profits today and investing in growth.
On the other hand, quoted companies will have to think about making the life of the media and of investors easier, as Google / Alphabet just did. The conglomerate incubators need to find both organization forms as well as communication strategies that reflect the diverging risk profiles of their businesses.
This article was part of our free series Business Thinking 3.0