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  Profitable growth by Olivier Tabatoni Creating value for shareholders is the corporate dogma and no executive can dodge it. To meet shareholders’ expectations firms should devise strategies which generate returns above their Cost of Capital, Excess Return, and Growth. This is what is called Profitable Growth.

Though, executives face an uncomfortable situation where they have to pursue simultaneously two goals which are antagonistic; Profitable Growth is an oxymoron, a contradiction in itself.

The only way out of the Profitable Growth Paradox is through Innovation, the capacity to find a new market space where competition is milder. Without Innovation firms will see their Business model eroding and the dream of Profitable Growth vanishing.

To rejuvenate their business model firms should build a portfolio of Explorations, new initiatives testing the validity of a new business model. We have argued that the added-value of such initiatives is often under rated because NPV-minded managers ignore the importance of Strategic flexibility. Based on the Real Options approach, we have developed a model, the KAVRB model, to help managers change their mindset making radical moves less dangerous for the organisation.
 
     
Profitable growth by Olivier Tabatoni