Nick Sleep's concept of the "robustness ratio," introduced in his 2005 Nomad Partnership letter, offers a profound lens for assessing a company's competitive advantage.
Hi, thanks for the article. Coincidentally I thought about it, inspired by the TIP podcast on Nick and Zak's adventures in capitalism
In the section of 'Understanding the Robustness Ratio' I believe is an error: you write: 'A higher ratio indicates that a company is providing more value to its customers relative to what it keeps for itself'. This seems to be add odds with the formula preceeding the sentence - as the denominator grows when value is provided to customers, it lowers the ratio, doesn't it?
Hi! You are absolutely right. The formula should read "Robustness Ratio = Customer Value Proposition (Savings or Benefits) / $ Retained for Shareholders". Then the next sentence also makes sense.
Hi, thanks for the article. Coincidentally I thought about it, inspired by the TIP podcast on Nick and Zak's adventures in capitalism
In the section of 'Understanding the Robustness Ratio' I believe is an error: you write: 'A higher ratio indicates that a company is providing more value to its customers relative to what it keeps for itself'. This seems to be add odds with the formula preceeding the sentence - as the denominator grows when value is provided to customers, it lowers the ratio, doesn't it?
Hi! You are absolutely right. The formula should read "Robustness Ratio = Customer Value Proposition (Savings or Benefits) / $ Retained for Shareholders". Then the next sentence also makes sense.
Thanks for highlighting this mistake.
You are welcome, thanks for fixing.
Another (minor) mix-up is at the end of the Wise section:
"Such a low ratio underscores Wise's substantial value delivery to customers, solidifying its competitive advantage in the financial sector. "
I assume you meant "Such a high ratio".