Abstract
PurposeThe authors offer a new metric for assessing a company's potential for growth that CEO's and leadership teams can actively manage.Design/methodology/approachThe Imagination Premium metric reflects the value of a company's equity, beyond what can be readily explained by its ability to throw off cash.FindingsFor a CEO, TIP provides support for an argument that investments in future growth are well warranted.Practical/implicationsA negative TIP signals that investors will not even pay for the capitalized value of current cash flow and this usually leads to activist investors, hostile acquisition threats and C-suite turnover.Originality/valueThe article shows executives how to drive the premium investors will pay for corporate growth initiatives. One of the first things strategists can do to manage their company's TIP is a portfolio analysis that looks at how uncertain each current investment is, and whether the whole portfolio is one growth investors will reward with an increased TIP.
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