Harvard Business Review

OCTOBER 25, 2018

To analyze the superstar dynamics of firms, our metric was economic profit, a measure of a firm’s profit above and beyond opportunity cost. (To To do this, we take the firm’s returns, deduct the cost of capital, and multiply by the firm’s total invested capital.)

Industry 15

Industry Company GDP Bottom-up 15

Harvard Business Review

OCTOBER 10, 2017

Another pervasive reason is that senior executives are trained as operators, not innovators. And there’s a fundamental conflict between innovation and optimizing an existing operation. To close the gap, we need to treat innovation differently than we do normal operations. Here are four things leaders can do.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

NOVEMBER 20, 2013

Retool your strategy development process. The process of developing that strategy is critical. Companies run by decisive CEOs rack up more economic profit — what’s left of operating profit after the cost of capital is subtracted – than competitors do. Returns to shareholders of reallocating firms are strong.

Strategy 9

Strategy McKinsey Strategic Planning Cost of Capital 9

Harvard Business Review

MAY 14, 2013

In fact, they''re operating at such a comparatively low level that as things stand now, many of them, including utilities, will be able to emit as much carbon as they want for the next decade without hitting their limits. That means future carbon-credit auctions, which help fund clean-energy initiatives, will yield lower revenue.

Price 11

Price Energy Politics Marketing 11

Harvard Business Review

DECEMBER 13, 2017

Investors punish companies with a short-term orientation by applying higher discount rates to them, which increases the cost of capital for those companies. In contrast, companies with a long-term orientation are rewarded with a lower cost of capital, which allows them to afford more innovation—a virtuous cycle.

Short-term 8

Short-term Decentralization Company CEO 8

Harvard Business Review

MAY 25, 2018

Mr. Rockefeller’s business strategy was to vertically integrate every aspect of the oil business (exploration, development, logistics, marketing) to assure an ongoing competitive advantage. These new organizations are likely to operate quite differently from traditional corporations.

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Harvard Business Review

JUNE 18, 2015

” PE firms typically take three types of value increasing actions — financial engineering, governance engineering, and operational engineering. In operational engineering, PE firms develop industry and operating expertise that they bring to bear to add value to their portfolio companies.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

FEBRUARY 7, 2017

New research, led by a team from McKinsey Global Institute in cooperation with FCLT Global , found that companies that operate with a true long-term mindset have consistently outperformed their industry peers since 2001 across almost every financial measure that matters. It started with developing a proprietary Corporate Horizon Index.

Long-term 8

Long-term EPS Short-term Management 8

Harvard Business Review

NOVEMBER 25, 2013

Without a strong business case built on analytics, marketing too often is seen as a cost rather than an investment, despite marketing’s ability to drive above-market growth. Together with the CFO, the CMO must develop a set of objectives that directly deliver on financial objectives and business goals.

CFO 9

CFO Short-term Long-term Benchmarking 9

Harvard Business Review

OCTOBER 21, 2016

This can disrupt a firm’s ability to operate on schedule and budget. Of the respondents, 72% said that climate change presents risks that could significantly impact their operations, revenue, or expenditures. ” Improving risk management. Since its launch in 2012, Flyknit has reduced 3.5

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

MARCH 1, 2017

Blockchain was originally developed as the technology behind cryptocurrencies like Bitcoin. Most firms cite opportunities to reduce friction and costs. After all, most financial intermediaries themselves rely on a dizzying, complex, and costly array of intermediaries to run their own operations.

Finance 8

Finance IPO Banking Venture Capitalist 8

Strategy Driven

SEPTEMBER 9, 2011

The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital. Companies that will eventually be wrecked by others’ innovations are operating on autopilot. New product development is such a big piece of building new business, or so we are told.

Innovation 50

Innovation NPV Business Model Constraint 50