Business Acumen Programs Dr. E. Ted Prince Founder and CEO

Shareholders Want Leaders Who Achieve Higher Financial Returns More leaders failing financially Financially savvy leaders in short supply

More leaders failing financially

Financially savvy leaders in short supply

High Business Acumen in Leaders Helps Avoid Market Traps Following the crowd Senseless financial trends and fashions “ Exotic” strategies that create and contribute to system risk

Following the crowd

Senseless financial trends and fashions

“ Exotic” strategies that create and contribute to system risk

Under-Performing Leaders Often Attribute Poor Results to External Factors Economy Market Product Customers “ Unrealistic” expectations

Economy

Market

Product

Customers

“ Unrealistic” expectations

But We Don’t Recognize Issue of Managerial Behaviors and Financial Culture…

Conventional Leadership Models Focus on Soft Skills Personality approaches Competencies Lack specific focus on financial impact and performance!

Personality approaches

Competencies

Lack specific focus on financial impact and performance!

Unconscious Financial Drivers Lead to Unintended Financial Results

What is Business Acumen? Behavior that directly results in positive financial outcomes. How can they be measured and improved?

Behavior that directly results in positive financial outcomes.

How can they be measured and improved?

Definition of Business Acumen Behavioral propensity to create capital

Behavioral propensity to create capital

What is its Relationship to Business Literacy? Business Literacy Knowledge of how business works. High business literacy rarely leads to wealth

Business Literacy

Knowledge of how business works.

High business literacy rarely leads to wealth

What is Impact of Business Acumen on Business Outcomes? How does business acumen affect: Product innovation? Product quality? Sales performance? Operations performance? Earnings performance?

How does business acumen affect:

Product innovation?

Product quality?

Sales performance?

Operations performance?

Earnings performance?

What is Impact of Business Acumen on Market Value? How is business acumen related to capital creation? How do financial behaviors relate to market value?

How is business acumen related to capital creation?

How do financial behaviors relate to market value?

What is Impact of Business Acumen on Business Strategy? How is business acumen related to: Phase of evolution of company? Level of maturity of market and product? Competitive performance and dynamics?

How is business acumen related to:

Phase of evolution of company?

Level of maturity of market and product?

Competitive performance and dynamics?

How is Business Acumen Related to Innovation? How to make innovation profitable? How to identify high-leverage innovators?

How to make innovation profitable?

How to identify high-leverage innovators?

Why is Business Acumen Related to Business Transformation? Change that creates capital Capital that sustains transformation

Change that creates capital

Capital that sustains transformation

What is Impact of Business Acumen on Market Value? How is business acumen related to capital creation? How do financial behaviors relate to market value?

How is business acumen related to capital creation?

How do financial behaviors relate to market value?

Our Research Has Been Published

In Financial and Leadership Publications

Our Work is a New Contribution to Behavioral Finance Industry players just becoming aware of implications: HR/leadership development Investment bankers Analysts Private equity June 2008 “ How the Financial Styles of Managers Impact Financial and Valuation Metrics” E. Ted Prince

Industry players just becoming aware of implications:

HR/leadership development

Investment bankers

Analysts

Private equity

EXPLORE NEW WAYS OF OPERATING AS LEADER LEADERSHIP OUTCOME PROFILE Subset of Behaviors Direct / Measurable Impact on Business LEADERSHIP OUTCOME TYPE FINANCIAL SIGNATURE ® COMPANY OUTCOMES WAYS OF OPERATING FINANCIAL BEHAVIOR & DECISION-MAKING VALUATION PROFILE EXECUTIVE OUTCOME ASSESSMENT™ FINANCIAL OUTCOME ASSESSMENT™ CORP FINANCIAL OUTCOME ASSESSMENT™

The Message - A “Nose” for Profit Only a minority has it

Only a minority has it

We All Have Personal Financial Traits Innate calculus Reflected in all our financial decisions Wide variation between individuals

Innate calculus

Reflected in all our financial decisions

Wide variation between individuals

We Have Two Financial Drivers The propensity to add value The propensity to use resources

The propensity to add value

The propensity to use resources

The 9 Financial Signatures Resource Utilization Value-Adding Venture Capitalist Industrialist Conglomerator Profitmaker Consolidator Marketmaker Breakthrough VA Minimal RU Minimal Intensive Current Break Through Breakthrough VA Intensive RU Discounter Current VA Minimal RU Current VA Intensive RU Trader Arbitrageur

We Can Measure Financial Signature Psychometrically

We Can Measure and Predict Valuation Impact Using Financial Statements Measurement VA - % gross margin levels RU - % indirect expense levels Definitions Gross Margin= Sales less COGS Indirect Expenses S&M, R&D, G&A Financial Statements Valuation Prediction

Measurement

VA - % gross margin levels

RU - % indirect expense levels

Definitions

Gross Margin= Sales less COGS

Indirect Expenses

S&M, R&D, G&A

Each Signature Has a Different Market Value Impact Resource Utilization Value-Adding Venture Capitalist Marketmaker Industrialist Discounter Trader Conglomerator Arbitrageur Profitmaker Consolidator ABOVE-MARKET PERFORMANCE BELOW-MARKET PERFORMANCE Minimal Intensive Current Break- Through VALUE-CENTRIC STYLE RESOURCE-CENTRIC STYLE BALANCED STYLE

This Results in 9 Valuation Trajectories RESOURCE UTILIZATION VALUE ADDING MARKETMAKER PROFITMAKER VENTURE CAPITALIST DISCOUNTER TRADER INDUSTRIALIST CONSOLIDATOR ARBITRAGEUR CONGLOMERATOR Minimal Intensive Current Break- Through

Alignment vs. Performance

Their Financial Behavior Can be Changed! Financial Signature is innate It cannot be changed Financial Mission is learned It can be changed

Financial Signature is innate

It cannot be changed

Financial Mission is learned

It can be changed