Some companies make a practice of separating investments made to grow the
business (e.g., in a new product or line of business) from those made in
established lines of business. This not only allows them to track what
they're spending that is aimed at growing the business, it also enables them
to factor out the impact of "growth investments" on established lines of
business. Thus, even though an investment is an investment and its impact
through load and overhead might be spread over existing lines of business,
senior management has the ability to factor it out so as to get a more
realistic assessment of the existing lines of business - without the burden
of the "growth investments."
I'm looking for articles, probably in financial journals, that talk about
the how's and why's of keeping track of "growth investments" in this manner,
especially any that deal with the mechanics of doing so (e.g., simply
keeping a separate set of spreadsheets that track the growth investments and
factor out their impact on the performance of existing lines of business).
Anyone know of any such articles?
Regards,
Fred Nickols
nickols@att.net
www.nickols.us