Economic Profit

the market-value lever


Economic Profit Explained

[secret] Lean Centric Design (LCD) encapsulates the start, middle and longterm viability of a productivity transformation build. Focus on driving Economic Profit strategy providing longevity and ever increasing value.


Shareholder Value

Economic Profit is the performance function that delivers shareholder value. The shareholder-base will realise the pragmatic return on their invested capital and stoke the burning platform of LCD strategy [Lean Centric Design will do this]


Return On Invested Capital

ROIC=Profit After Tax/Invested Capital: In other words, focus on driving cost and invested capital down and revenue generation up. [Lean Six Sigma 2.0 will do this]


Weighted Average Cost of Capital 

The WACC is basically a hurdle rate for expected returns based on a company’s debt structure and the market conditions.


The Growth Lie Burning Platform!

Companies with high growth and negative Economic Profit are actually destroying value and are not viewed favorably in the marketplace. [Lean Centric Design will counter this]

Driving Prioritization of Focus

Accelerating Value Creation

Focus on Economic Profit improvement will accelerate market value but we do not downplay the importance of revenue growth as it is a driver of ROIC coupled with decreasing invested capital and decreasing cost. Revenue growth provides benefits on both trajectories.

Building in Economic Profit analytical hierarchy levers will influence prioritization of projects and track the financial benefits across portfolios, time and distance with enterprise wide metrics.

[Lean Six Sigma DMAIC, Design for Innovation and Complexity Rationale will do this]

Lean Centric Design Architecture
Executive level accountability
operational cost reduction only focus
Green/Black Belt training only
Hiring in sniper-cell 'belt' assets

Kirtland Leadership Pty Ltd
Head Office
InteGlobal Associates
Suite F, Level 1 Octagon
110 George St PARRAMATTA, NSW Australia


Freephone: 1300 204 489
Local number: +61 2 9615 9734
FAX: +61 2 8088 6227