Return on Strategy: How Would You Define It?

The world of finance is filled with return measurements from simple ROI or ROE to more complex EVA or CFROI however they all focus on the very tangible numbers, the financials that can be derived from the financial statements of a company, a business case for a specific project, a factory or a market. But how about measuring the return on your strategy?

In simplest terms it could be defined as the weighted return of the all the initiatives in your strategy.

So why introduce another return measurement in a world that has so many already? Simply put, because management needs a tool to make the intangible tangible. Provide the link between what you say you want to do as a company and how your bottom-line comes out specifically for those actions. Usually when a company prepares a new strategy it already has many activities on-going and the success criteria for the strategy is to improve the overall bottom-line.

Instead you want to be able to identify how successful you were with the specific initiatives, if the initiatives cannibalized on existing business (like JC Penney and their smaller in-store stores: http://blogs.hbr.org/cs/2013/06/memo_to_jc_penny_execution_is_not.html) and in general how successful you are in formulating strategies and translating them into actions.

It should also provide you with the means to investigate why you were successful doing some initiatives why failing at others instead of just seeing the company delivering on the overall strategy and the general return promised to investors.

Please share your thoughts on whether this would be completely unnecessary as it already covered by existing performance management tools or in fact it would provide a new insight into whether or not a company can deliver on its strategy?