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Rolling the Dice and Strategic Insights

Ah… the sounds of a Vegas casino. The people watching.  Cuisine tasting. Beverage sipping. It’s been nearly a decade since I was last in Las Vegas, yet so much remains the same. 

Here to participate in Veeams Cares by Veeam Software on behalf of the WOMEN IN TECH ® Global Movement, I find myself reflecting on how my perspective on this city has changed since my early professional years when I found myself here for work events often. Then it was work hard, play hard and make the red eye a reality with very red eyes. Now it’s more of a soak it in and savor the flavors and people watching. 

It’s likely no surprise that my approach to the tables has evolved as well. Now I manage my risk and reward more diligently, prioritizing the interest my funds earn while staying IN my bank account over their potential return on gambling. However, as a non-gambler, casinos have never represented a means to ‘win big’ financially. They serve as an opportunity for entertainment value.

Being here at the Cosmopolitan brings about another #StratgyIRL reflection on how my approach to the Vegas tables relates to corporate strategy and this week’s Fortune Term Sheet article on Bessemer Venture Partners’ (BVP) Rule of X

Strategic growth is a gamble. It requires investment that takes into account changing market forces, rewards early movers, and highlights the importance of innovation and collaboration. It is also measured not only in financial returns, but in market leadership, customer and brand success, and organizational culture. Similarly, a successful trip to Vegas for me is measured in the value of the entertainment experience, not just in whether I win or lose. 

Anyone familiar with craps or roulette knows the lively way in which they become like team sports. The game is against the house, not each other. Walking away from the game after time spent making new friends, laughing, and cheering almost always leaves me with a smile on my face, even if I’m out some cash. I paid for the engagement value and collaborative potential. This bucks the more conservative mindset that would say a better entertainment investment would be to attend a show or activity for which the value and ticket price are more commensurate and predictable.

Byron Deeter of BVP notes in the Fortune article that “it’s time to move on” from the traditional measuring stick of a company’s valuation (The Rule of 40) in which cash and growth are equal. “He’s rebelling against the Rule of 40 with his own metric, the Rule of X. The key difference between the two is this—the Rule of 40 says that cash flow and growth are equal. But in the current economic environment of high interest rates and corporate cost-cutting, Deeter believes that growth isn’t being prioritized enough.” 

In my view, the Rule of X is akin to my valuation of playing craps. I’m willing to put a value on the entertainment factor that is not as easily quantifiable as a ticket price to a show, for example. Joining the craps table is to me an investment in the upside and likelihood that I can navigate how to have a good time through engaging with others, picking a table that exudes energy, and playing off of the trends of the dice. Similarly, using the Rule of X when looking at a company places greater emphasis on its ability to invest to increase the odds of a better corporate experience (e.g., growth potential). It’s valuing a company’s leadership and strategic decision-making to navigate growth for greater returns than only a cash/growth equilibrium. 

When I think about the companies that are best poised to thrive coming out of economic downturns, it’s those that are willing to bullishly look at multiple factors that contribute to growth. Trends shaping future customer/client needs, infrastructure capacity to flex, talent potential to deliver… all of these factors are more telling of a company’s likelihood to grow than just their cash reserves. This is why strong corporate strategies aren’t only measured in revenue and profit, but also segment leadership; portfolio diversification; and customer, brand, and employee experience. 

If you’re a company executive thinking about how to steer your strategic growth through ambiguity, you of course must be fiscally responsible! However, remember some casino logic. Equally betting on black and red in roulette may keep you in the game, but will never get you ahead. Sticking to historical valuation metrics rather than fostering investment agility may keep you operational, but will likely lead to missed market opportunities. More specifically, it could even lead to withdrawal from market engagement that so often sparks creativity and innovation. 

Strategic growth - like fun in Vegas - requires understanding the game, engaging in the environment, and knowing when to hold ‘em or fold ‘em. Put on your Vegas heels and soak in the experience. Listen, watch, engage, and learn. Focus on where and how you need to invest - your clients, tools, tech, people - and think about disproportionately investing to accentuate your growth pace. 

And as I head to the tables this evening, I’m betting I’ll come out ahead - not because I have an exact measure of cash-to-entertainment enjoyment, but because I’m valuing my collective expenditure of time, energy, and money against the potential return of fun. 

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