678  Investor Communications
to competitors. In our experience, however, a company’s competitors, custom-
ers, and suppliers already know more about any business than its manag-
ers might expect. For example, there’s a cottage industry of photographers 
dedicated to searching for and publicizing new car models that automotive 
manufacturers have not yet formally acknowledged. In addition, a company’s 
competitors will be talking regularly to the company’s customers and suppli-
ers, who won’t hesitate to share information about the company whenever 
that’s in their interest. Therefore, revealing details about yourself is unlikely 
to affect your company as adversely as you might expect. Managers should 
keep that in mind as they assess the competitive costs and benefits of greater 
transparency.
In some situations, companies might even be able to gain an advantage 
over their competitors by being more transparent. Suppose a company has 
developed a new technology, product, or manufacturing process that man-
agement feels sure will give the company a lead over competitors. Further-
more, managers believe competitors will be unable to copy the innovation. 
At a strategic level, disclosing the innovation might discourage competitors 
from even trying to compete, if they believe the company has too great a lead. 
From an investor’s perspective, disclosure of the innovation could increase 
the company’s share price relative to its competitors, thus making it more at-
tractive to potential partners and key employees, as well as reducing the price 
of stock-based acquisitions.
Sophisticated investors build up their view of a company’s overall value 
by summing the values of its discrete businesses. They’re not much concerned 
with aggregate results: these are simply averages, providing little insight into 
how the company’s individual businesses might be positioned for future 
growth and returns on invested capital. At many companies, management 
teams that desire a closer match between their company’s market value and 
their own assessment might achieve this by disclosing more about the perfor-
mances of their individual businesses.
Ideally, companies should provide an income statement for each business 
unit, down to the level of EBITA at least. They should also provide all op-
erating items in the balance sheet—such as property, plant, and equipment 
(PP&E) and working capital—reconciled with the consolidated reported num-
bers. Even companies with a single line of business can improve their disclo-
sures without giving away strategically sensitive information. In the period 
when it was growing quickly and before it was acquired by Amazon in 2017, 
Whole Foods Market, a U.S. natural-foods supermarket chain, provided in-
vestors with its ROIC numbers by age of store, as well as a detailed table 
explaining how it calculated its returns. Such openness gives investors deeper 
insights into the company’s economic life cycle.
Concerning operational data, what to disclose depends on the key value 
drivers of a business or business unit. Ideally, these should be the metrics that 
management uses to make strategic or operational decisions. For example,