What Drives Business

 

This document is designed for leaders who are responsible for growing, protecting, and ultimately realizing the full value of their business.

For many organizations, performance is measured through familiar indicators—revenue, profit, and growth. While important, these metrics only tell part of the story. True business value is shaped by a broader set of drivers, including the strength of your operating model, the predictability of your revenue, the resilience of your systems, and the depth of your leadership team. These are the factors that influence how your business is perceived by investors, buyers, and strategic partners—and they are often the difference between a good business and a highly valuable one.

This guide brings those drivers into focus. It outlines the core elements that contribute to business value and explains how they work together to create a company that is not only successful today, but sustainable and transferable in the future. Rather than offering theory, it is structured to help you think practically about your own organization—where value is being created, where it may be at risk, and where there is untapped potential.

Inside, you will find a clear framework for evaluating your business across key dimensions of value. Each section is intended to help you ask better questions, challenge assumptions, and identify the actions that will have the greatest impact over time. Whether your priority is accelerating growth, improving operational performance, preparing for investment, or planning for an eventual exit, the goal is the same: to build a business that is stronger, more scalable, and more valuable.

This document is most effective when used as a working tool rather than a one-time read. We recommend reviewing it with your leadership team and using it to guide structured discussions about priorities, risks, and opportunities. By aligning around the drivers of value, you can move beyond short-term performance and make more deliberate decisions about the future of your business.

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ROE Tree

The ROE Tree is sometimes also referred to as the DuPont Tree, DuPont Method or DuPont Analysis, since it was developed by DuPont all the way back in the 1920s. Not exactly a new idea! But still very useful. There are a lot of variations on the theme: Some versions of the tree have three main branches (operating efficiency, asset efficiency, financial leverage), others use five main branches (see graphic). Similar trees also exist for ROI (Return on investment), Return on Capital Employed, etc.

The tree is an interesting tool to look at different businesses. Some industries such as grocery retailing work with low margins and limited leverage, and therefore ROE is largely driven by high asset turnover. Other industries such as financial services rely more on leverage, etc. DuPont used the tool to evaluate different businesses within the group.

The tree concept is an interesting tool to breaking down a number of different business metrics into their component parts: Increasing revenue is driven by increasing the number of customers and increasing their average spend. Increasing the average spend is driven by more units and/or a higher price. Increasing the price is driven by either a higher list price or lower discounts, etc.