BookWatch: Investing a dollar in each of these companies at their start would be worth millions now

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Investors have learned that the market value of a firm goes beyond tangible earnings. Indeed, reported earnings, cash flow, and profitability have been found to predict about 50% of a firm’s market value.

Accordingly, investors have shown increased interest in intangible value such as strategy, brand, R&D, innovation, risk, and information flow. These intangibles also help predict future firm profitability. A next step for investors is to analyze the predictors and drivers of these intangibles, which shifts to investors recognizing and realizing what leads to financial results as well. 

Seeking lead indicators for tangible and intangible results may come from identifying how organizations operate. Traditionally, the concept of “organization” was a pyramid or hierarchy with an internal focus where clear roles, rules, and routines clarified who does what work when and how. But in today’s fast-changing, technology-enabled work, organizations need to be able to change or they die (think Kodak, Sears, Xerox, Yahoo, Blockbuster, Nokia, and others).

Reinvented organizations succeed because they are able to anticipate customer needs, create investor value, and liberate employees to do their best. 

Reinventing an organization means refocusing the organization to an “outside-in” agenda, being able to respond quickly to rapidly changing external market conditions. Reinvented organizations succeed because they are able to anticipate customer needs, create investor value, and liberate employees to do their best. 

But how does an organization go about reinventing itself? We have studied and crystalized the best elements from some of today’s nimblest and fastest-growing big companies, including AMZN, -0.62%  , Facebook FB, +0.21%  , and Alphabet GOOGL, -0.13%  in the U.S.; Alibaba Group Holding BABA, +1.38%,   Huawei Technologies, and Tencent Holdings in China 700, +1.28%  , and Tencent subsidiary Supercell in Europe.

The result is an integrated model for corporate reinvention. Instead of being organized by divisions where a chain of command allocates resources, the reinvented organization has a platform of resources (money, people, technology, data) that is dedicated to market opportunities. Each market opportunity is assigned an independent team, or cell, where employees anticipate customer requirements and move quickly to respond to them.

Read: Your job increasingly depends on decision-makers having this one crucial skill

Historically, these organizations might be seen as holding companies — with a hub and spokes. But the reinvented organizations we studied connected the independent teams or cells into an ecosystem because these teams could share information and resources about customers, innovation, and agility. This “market-oriented ecosystem” (MOE) is a novel way of designing organizations that are both small (independent cells) and large (ecosystems), and innovative (new insights in a cell) and learning (sharing information across cells).

We also discovered that these MOEs had enormous success both in growth (number of employees) and market value. The table below shows how the iconic organizations we studied have performed since their conception. 

MOE companies studied: 

Year Founded, Employees, Market Value


Year founded

# of employees 

(August 2019)

Market value

 in USD

Aug. 13, 2019





































These are remarkable results. A dollar invested in each of these MOE companies on the day of its founding would be worth millions today. 

Of course, many factors affect these high valuations. It is not possible to determine exactly what is due to the organization that creates confidence in future results (and high price-earnings ratios). But, these organizations have adopted innovative MOE principles and practices that create intangible value in terms of strategy, brand, R&D, innovation, risk, and information flow. These intangibles have helped to generate sustainable financial performance, confidence in future earnings, and, ultimately, market value. 

6 key success factors for investors

We identified six factors investors can examine to determine how well an organization practices MOE principles that might generate future results:

MOE principles that deliver market value


Diagnostic Question

(To what extent does the organization:) 


·       Understand and anticipate the changing contextual and environmental forces shaping its industry?

·       Have a unique point-of-view about future business trends?


·       Have a clear strategy for growth and a pathway for making the strategy happen?

·       Focus less on strategic planning and more on strategic agility? 

·       Focus less on market share and more on market opportunity?


·       Establish key capabilities around customer anticipation, innovation everywhere, and agility within each cell and throughout the ecosystem (beyond the boundary of an organization)?


·       Develop platforms of shared resources (money, people, technology, data) that can be allocated to market opportunities?

·       Create cells (or teams) to target on unique market opportunities?

·       Connect independent teams with each other to share information and resources?


·       Design and deliver processes to institutionalize key capabilities?

·       Culture: Does the organization have the right culture?

·       Performance accountability: Does the organization have clear and positive performance accountability for activities and outcomes?

·       Idea generation: Does the organization constantly seek new ideas through experimentation and continuous improvement?

·       Talent: Does the organization have the right people with the right skills in the right roles with the right commitment?

·       Information: Does the organization have radical transparency and openly share information?

·       Collaboration: Does the organization know how to work together to make the whole more than the parts?

·       Co-create these governance processes with key customers? 


·       Build leaders and leadership that reflect customer expectations (called leadership brand)?

·       Ensure that leaders inspire employees, meet customer promises, and ensure investor confidence? 

Wise, long-term investors recognize that organization matters. In our research, we found that investors allocate about 30% of their decision making on the quality of organization and leadership. MOE principles present the next level of organization thinking to provide the sustainable value inventors seek. When investors can diagnose the extent to which an organization adopts these MOE principles, they have lead insights on intangible and tangible value. 

Arthur Yeung and Dave Ulrich are authors of Reinventing the Organization: How Companies Can Deliver Radically Greater Value in Fast-Changing Markets (Harvard Business Review Press, 2019).

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