“Say: Do” Ratio- A Reliable Metric to Assess Management of Businesses

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“I will call you on the weekend.”

“Let’s have lunch sometime.”

“I will follow up tomorrow”.

“I am really busy at the moment but would definitely check the mail in the evening and revert”.

We often make these statements all day long to people around us. Do we really check later if we actually perform those tasks as said?

Let’s be honest. Most often, we don’t.

Business Managers are also people. So, they are prone to the same behavioural bias. They say a lot of things too for which they do not back up with actual performance.

Hence, as an investor, you have to be careful and not take everything the management says at face value.

But there is a metric which can help you take an informed view of the management.

And that is: “Say: Do” Ratio.

The “Say: Do” ratio is a ratio that rates a person’s reliability by comparing what he says he’ll do to what he actually does.

In an ideal world, you would want this ratio to be 1. However, knowing how we are, it is too much to ask for. A reliable person, though, shall always have a “Say: Do” ratio close to 1.

All organizations aspire to have a “Say: Do” ratio of 1. But there are always some barriers which make their task difficult.

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Top 4 Barriers which stop managements from getting to Say: Do Ratio of 1:

  1. Lack of focus on the priorities and commitments
  2. Lack of alignment in tasks, processes, and activities.
  3. The tendency to overpromise& under-deliver
  4. No tracking of unmet commitments
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Reliable management, on the other hand, would practice the following things to get to a Say: Do Ratio of 1:

  1. Ensure timely & regular communication
  2. Practice a strong work ethics
  3. Track progress and failures
  4. Celebrate success

Most successful managements are conservative in nature. And when you make a list of the most conservative managements among listed companies in India, Infosys (under Mr. Narayanan Murthy) would probably feature in the list.  Mr. Murthy had a tried and tested tenet for meeting analysts’ expectations in the quarterly result conference calls.

And the tenet was: “Under-Promising & Over-Delivering.”

It is a practical way of managing the expectations of analysts and investors. It also leads to a positive surprise element when the management delivers more than what it commits. Today, however, most managements believe in providing higher guidance and then failing to deliver.

There can be a negative effect of the defensive strategy of Mr. Murthy as well.  As you keep giving such guidance to shareholders, you may settle for a lower number yourself as management. And when this becomes a culture, it derails your growth path as a company.

So management/promoters should not say that they will achieve fewer goals and try to impress shareholders by achieving more than that. Rather, a good “Say: Do” ratio for management means it carefully identifies the important tasks and goals. Commits to them. And then shows the results.

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The above process would lead to a “Say: Do” Ratio of 1 eventually.

You might be thinking, when management is announcing some long term plans, how do we know today whether the “Say: Do” ratio for them would be 1 or not? Because in those plans, the results would come out a few years later. So, the challenge is to take a bet on the company and its management today.

A useful hack I follow in my evaluation process of a company’s management is this:

I will go four-to-five years back. Check what the management was saying at that time regarding their plans for the next two to three years. And then match the management’s statements with the actual performance. If I get a reasonable assurance that management achieved what they said five years ago, it means they are walking the talk. Not otherwise.

There are many examples of management’s over-commitment and under-delivery. On the other hand, there are very few examples where management delivered what they said. And that too within the stipulated time period.

TCS, the Indian IT giant, could be an exception.

In 2001, TCS came out with vision which read as follows:

Global Top 10 by 2010 (by Headcount, Revenue, Net Profit & Market Cap).

Many thought of this vision to be audacious and impossible.

With focused attention to details and superior execution, TCS managed to achieve this feat in 2009 itself.

That’s a “Say: Do” Ratio of 1 for you.

There is no fool-proof process to get an accurate “Say: Do” ratio for all managements. But, having the above construct in your mind when you are analyzing the management gives you more clarity on how they execute their plan. Thus, you are in a position to make informed decisions about the future prospects of the company.


And, as a conservative investor, when you listen to commentary from a business manager/promoter, remembering Aesop’s wise words is a good idea:

After all is said and done, more is said than done.

So, always check the “Say: Do” ratio.

Happy Investing!

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Ankit Kanodia

Ankit Kanodia

Ankit is an MBA from Xavier Institute of Management, Bhubaneswar (XIMB) with 8 years experience of researching and investing in the stock market of India. He is a partner, investment advisor, and co-founder of Smart Sync Services.
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