How 8 Successful CEOs Allocated Capital to Build Durable Businesses

Think of CEOs who have made strong rates of return for investors and built durable businesses. What strategies do you associate with their success?studied eight CEOs who outperformed the market and their peers. The group included big names, like Warren Buffet and Katharine Graham, but also other leaders who are virtually unknown today. One example is Henry Singleton, an MIT-educated electrical engineer who led Teledyne Technologies from 1960 to 1986.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week., case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. Think of the CEOs who made the strongest rates of return for investors and built the most durable businesses.

WILLIAM THORNDIKE: Yeah. Well, Henry Singleton was the genesis for this whole project. I work in the private equity industry, and every other year we host a conference for our CEOs. About 10 years ago, I raised my hand and said I would do one of the talks at that conference. I decided to focus on Henry Singleton, who I’d heard a little bit about. Henry Singleton had a very unusual background for a CEO. He was a MIT trained mathematician and engineer, he got a Ph.D.

SARAH GREEN: OK. Now what were some of those actions that these different iconoclastic CEOs had in common? WILLIAM THORNDIKE: That’s a good question. I would say if you look at the general pattern stock repurchases today, that pattern I think is unlikely to produce compelling long term returns. So in the typical case today, a company that’s pursuing repurchases will get an authorization from its board for a certain amount of capital that it can then use to repurchase stock. It will then proceed to purchase stock in even amounts over a quarterly period of time, or maybe a semiannual period of time.

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