The crisis of value is for real: Return on assets has declined by 75% since 1965
The video below is a panel discussion on “the new world of work in a web squared world’, introduced by John Hagel.
It contains a very interesting passage, starting just before the four minute break: the return on assets (for publicly listed companies in the U.S.) has declined, by an incredible 75%, since 1975.
This is a good illustration, and confirmation, of the reality of the Crisis of Value that Adam Arvidsson and myself have been talking about.
Details from the original Big Shift report which originated these findings are below.
“The Impact Index measures how well companies are exploiting the foundational changes in the capabilities of the digital infrastructure by creating and sharing knowledge and what impact those changes are having on markets, firms and individuals.
According to Impact Index metrics:
* U.S. firms’ ROA has steadily fallen to almost one-quarter of 1965 levels at the same time that we have seen improvements in labor productivity
* The ROA performance gap between corporate winners and losers has increased over time, with the “winners” barely maintaining previous performance levels while the losers experience rapid performance deterioration — falling from positive returns in 1965 to largely negative ones today
* The “topple rate” at which big companies lose their leadership positions has more than doubled, suggesting the “winners” have increasingly precarious positions.”