Hi!

Long-term performance deterioration

In our new book, The Power of Pull, we summarize the metrics that we developed for the Shift Index – the first attempt to quantify the longer-term trends that have been re-shaping the business landscape over the past four decades.  Of the 25 metrics in the Shift Index, one metric in particular stands out: return on assets for all public companies in the US.  Since 1965, return on assets has collapsed by 75% - it has been a sustained and substantial erosion in performance.  There is no evidence of any flattening of this trend, much less turning it around.

What does this mean?  It provides strong evidence that any “recovery” is merely a short-term relaxation of pressure and that there will be no “back to normal”. We often hear executives talk about the Red Queen effect where they feel they are running faster and faster to stay in the same place.  The actual situation is far worse: we are running faster and faster and falling farther and farther behind. There is absolutely no reason to believe that the long-term performance erosion will not continue.