The Champions: Setting the standard for shareholder value creation.
Part 2 of our segmentation series explores Champions, the companies that consistently outpace the rest, and what they have in common.
In my previous post, I introduced PivotXY’s segmentation framework, identifying four company profiles: Champions, Agile Transformers, Chasers, and Idlers. These categories reveal how companies manage the levers of shareholder value – Economic Profit (earnings above the cost of capital) and Invested Capital. Champions excel at creating a self-reinforcing cycle of growth and shareholder value. (Find the other posts here: Post 1, Post 3, Post 4, Post 5 and Post 6)
A case study in corporate strategy excellence
Consider a peer set of 24 companies centered on Conagra Brands (CAG), drawn from their filings and equity research. Among these, Campbell Soup (CPB), J.M. Smucker (SJM) and Taiwan Semiconductor Manufacturing (TSM) stand out as Champions. Notably, companies often include cross-industry players in their comparisons – TSM, for example, is part of Conagra’s own benchmarking. Over six years, these Champions consistently outperformed both the peer average and CAG across key metrics. (See image below.)
Their performance reveals a consistent story: Champions harness increasing economic profit and invested capital, resulting in higher Total Shareholder Return (TSR). (Note: TSR is not an input to the segmentation).
Sustaining Champion-level performance requires overcoming unique challenges:
- Disciplined investment: Champions allocate capital where it drives the most impact, focusing on returns above the cost of capital.
- Preparedness for growth: Champions nurture a portfolio of growth opportunities to maintain continuous profit expansion.
- Managing complexity: Scaling operations without diluting strategic focus is critical.
- Dynamic portfolio management: Champions optimize their portfolios, doubling down on winners and cutting underperformers.
In our next post, we’ll explore Agile Transformers – companies that reinvent themselves to ignite growth and performance. Stay tuned as we delve deeper into what it takes to lead in today’s competitive landscape.
Can your company join the ranks of Champions?
At PivotXY, our tools help companies understand what separates Champions from the rest. With our Competitive Benchmarking module, you can pinpoint the levers that drive shareholder value, identify performance gaps, and chart a path to scalable success.
Ready to elevate your strategy and unlock your full potential? Contact us for a live demo or a free tailored performance report.
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