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Sounding ‘ponds, rivers, and rapids’ in corporate strategy

More isn’t always better. Companies that move between 10 and 30 percent of their business mix—considered “rivers” in a recent McKinsey analysis—outperformed stagnant players (ponds) with refresh rates below 10 percent and high rates (rapids) over 30 percent. The river players saw average excess total returns to shareholders of 5.2 percent, far surpassing the ponds (1.2 percent) and rapids (–1.4 percent).

Companies that regularly refresh their portfolios tend to outperform those that don't.
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To read the article, see “Agile business portfolio management,” October 1, 2021.