It is 10 p.m. Earnings release is out. Portfolio managers and analysts are eager to discover if the company managed - pun intended - to beat quarterly expectations. Excel analysis and investment implications unfold the next day.
By definition, results are the lagging indicator. It all started with the board / executive meeting a year ago debating the business plan. The group reviewed the company's strategic pillars and stakeholders feedback, re-mapped competition’s efforts and thought the product roadmap over according to the new business landscape.
More importantly, in order to deliver on the plan, executives had to hire for new skills and capabilities. Some teams even had to be created from scratch and plugged to other structures in the organogram - or deliberately not plugged at all. Incentives had to be realigned to the new key business performance indicators according to the business key value drivers (mind OKRs?!). Key teams had to be empowered so the company could deliver on the plan.
It is one world, but two very different different operating systems.
Analysts will ask on the conference call if they should expect SG&A 43bps higher yoy, or it was just an one-off. It was just the expenses related to the new DevOps team. Three earnings releases forward analysts will wonder why sales growth accelerated and if it is recurrent. Then they will plug the new premises on their Excel model.
Instead, they could understand the business roadmap in advance. How the company is organized? What are key people's the main concerns? Are they aligned with the company, or the personal agenda may get in the way? How does the team expect to deliver on the plan given X, Y and Z? They could even help the company, either serving as a sounding board or helping source the new talent required. Thus analysts could have a better grasp on the new growth opportunities and inherent risks.
Investing reaches its best when it is business-like.