199319941995=35%199319941995=26%

(ROS)

--+19931994199510%5.06.6

2323352304615302284635142-21626825294310113818576109142

9.9-12.0-5.34.3-2.6-1.023046153010%5.06.65.7%7.67.64%44=85%67%67%= 15%15%1515-X

?

//145362

403040

25

125

240NA

()

/

//

()

(/)

/15-203-5

B2B/

Source:McKinsey analysis358.0

Canary Wharf

Source:McKinsey analysisCanary Wharf

ReichmannsLa Defense40

Reichmanns

JubileeCanary Wharf

Canary WharfCanary Wharf

$325380525210 b.p.13%200%265 b.p.7%120% = 300

//

()

2 1 3 2 1 2 3

/

1. 125342. 3.

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1986BraunOral-B 1984)PapermateLiquid PaperDaisy Plus Wilkinson Sword19871983 19851986Oral Ultra lineAtraAtra Plus (MicroTrac, Good News Plus) (Papermate Flair )Liquid Paper WatermanSTDupontFlex Grip stick 1 2 3 1 2 3 1 2 3 1 2 3 1 2 33

1995Oral-BBraun : Papermate ParkerWaterman80% (Duracell): 1996Duracell22.5(1995)801998(33)Wiltech(1995)()AtraTrac II60(1992)(1993)(1994)(1995)(1995)

Contura()(1993-94)23919861995(Waterman) 1 2 3 1 2 3 1 2 3 1 2 3

()3. /2. 1. /()1. 2. 3. 4. ()5. ()6. 7. 8.

////

/

/

///

CEO

/

1. 2. 3. 4. 5. (ROIC)6. 7.

1. 2. 3. 4. ( )()5. ()6. (ROIC)7. 8.

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//

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2.1.

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3.1. ()

3.2. ()

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200120022003200420052001-2005XXXXX12X%X%X%X%X%X%X%X%X%X%X%X%X%100%=X%3X%X%X%X%X%

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(EBIT)()(FCF)20012002200320042005

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WTO()()

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4. ()//

5.

5

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()

()

10%1000111001 10% 110FV= PV * (1+r)nPV=FV (1+r)nFV = PV = r = FV= PV * (1+r)PV =FV (1+r) n110n100

2,2872272022162322493,729(NPV)20000102030410%11.2.(WACC)=10%3.4.10%210%310%410%510%04

***

1.73117.8

204

6

210X+ 1998 99 2000 01 02 03 *19986**19986Donaldson,Lufkin&Tenrette;Datastream;NPV=184

///

(WACC)

FCFDCFDTV(NPV)=DCFt+DTV99000102030405060708090.950.840.750.670.600.540.480.430.38=2009WACC-1(1+WACC)t+0.5= X X X X X X X X X X99000102030405060708 X0.34

+---NOPLAT**+++++==EBIT*EBIT*+-+==-***=

(WACC)X+X (9.9%+0.95X5%)+X(8.19%)+(1.58%) =() (0.95)(5%)

() +(1- )X =33%BBB-=BBB(7.84%)+(0.64%)+(1.58%)

+ ()(12.03%)==(1-66.7%)(1-33%)X10.19%66.7%+

* =*

()=

++

10

101010

/

=

()()

(1999-2004)* 200520044.35.64.31.81.91.61.92.32.00.20.10.10.10.10.19.07.97.5133.956.033.141.92.7111.7111.756.356.356.356.356.329.529.529.529.529.524.024.024.024.024.01.71.71.71.71.712341234111.7111.7111.74.31.81.67.54.31.81.67.54.31.81.67.5199920002001200220032004

()

20002000

200020002000

+(EBIT)

(EBT)

(Net Profit)EBIT2000

33%5+

=++213.128.511.545.0275.11999200020002000

()

20002001

As we will see later in the document, a company needs many ideas in 3 to build a few businesses in 2. Naturally, with new ideas, the uncertainty is high. Most ideas just wont work. Some companies have determined that it takes 100 ideas to arrive at 1 feasible business. This ratio is quite different than the one most companies anticipate when they consider continuous growth. They think they can use a pipeline of ideas, putting a few more ideas in the front end than they will need at the back end. What we have learned in our research is that this pipeline should, in fact, be a funnel. And a funnel requires a dramatic increase in the idea generation capabilities of most organizations.

Intangibles provide companies with a new way to competethe capital-light way. In the old economy, a capital-heavy approach meant that market access was gained through capital investment. In the global new economy, market access is gained instead through superior value arising from a capital-light, intangible-heavy approach. Rather than owning everything, reliance on alliances and web-based business systems allows for a reduction in the unwise use of financial capital. While a capital-heavy approach generates returns at or below the cost of capital, a capital-light, intangible-heavy approach generates high returns relative to the capital invested. In addition, the capital-heavy approach presents relatively high financial risk, while the intangible-heavy approach presents little financial risk. Finally, a capital-heavy approach is slow and inflexible, while the capital-light method allows for an enormous degree of flexibility with regard to responses.Take Gillette, which has sustained high growth for more than a decade. Its activities across the three s in 1986 and 1995 (see next page), illustrate the importance of continuous idea generation for growth.In 1986, Gillette was actively investing in 3 activities across all divisions. While this exhibit shows no 3 activities at the highest level, top management was likely heavily involved in major level moves such as entering new countries with razors and blades or preparing to acquire Waterman pen.Nine years later, Gillettes s 2 and 3 have almost completely been regenerated to continue fueling growth across all five businesses. Activities such as the Sensor razor development in 1986 (see previous page) have become core 1 businesses. And, Gillette has a new set of ideas for future growth businesses in 2, at both the and the corporate level. This organization has not stood still.Growth ideas were not restricted to new products. Rather, Gillette has sought growth across multiple degrees of freedom. Comparing the 1986 and 1995 three snapshots reveals that Gillette has derived its growth not only from new products, but also from new and existing customers, new geographies, and new arenas.//////

Returns can range from a simple accounting return on equity to complex, cash flow based return on investments.