During the past two decades, corporate scope and priorities were shaped by an abundance of capital. Today the univested capital of private equity funds stands at an all-time staggering high of $3.4 trillion. With such massive liquidity chasing few opportunities, valuations for innovative investments have been high. The prevailing low interest rate environment has only reinforced the focus on growth: With debt so cheap, capital has felt able to afford patience, and the promise of growth, even in the absence of profitability, has been enough to convince investors of the value of a business.
Adjusting Your Strategy in a Tight Market
As investment capital becomes less abundant and debt more expensive, companies need to reevaluate their plans.
June 30, 2022
Summary.
As the business environment adjusts to higher inflation and less abundant capital, companies need to stop prioritizing growth above all else while recognizing that innovation remains essential. They will need better thought-through strategies that pay attention to costs as well as necessary changes to technologies and business models.
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New!
HBR Learning
Strategy Planning and Execution Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Strategy Planning and Execution. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
How to develop a winning strategy—and put it to work.