Are Oil Companies Myopic?

In my earlier blog, I pondered if Oil Companies are myopic. I recently read an article titled Innvovation Killers by Clayton M. Christensen et al in HBR. The authors write how financial tools like NPV, DCF etc destroy the capacity to do new things.

The argument is using these traditional financial tools how confidently can we judge an innvoation that requires considerable investments. One of the arguments they make is towards the focus or emphasis on Earnings per share (EPS). They highlight that current Prinicipal - Agency relationship of companies encourage for ever increasing EPS which is nothing but myopic focus on profits at the expense of long term value creation.

This , in my belief, is what is happening with the Oil industry.