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You can pick up the phone and speak to experts on production, technology, operations, markets, and industries for example. Your company has assets to invest that typically demand a lower return that venture capital because they carry a lower cost of capital. How can you be a pirate that operates effectively in the navy?
You can pick up the phone and speak to experts on production, technology, operations, markets, and industries for example. Your company has assets to invest that typically demand a lower return that venture capital because they carry a lower cost of capital. How can you be a pirate that operates effectively in the navy?
My colleagues and I at Bain & Company have been tracking this for forty years, and we have never seen companies losing their leadership positions as quickly as they are today. real revenue and profit growth and earning their cost of capital has steadily declined. A similar pattern hold for airlines. And for telecom.
In The Good Jobs Strategy , Zeynep Ton, a professor at the MIT Sloan School of Management, demonstrates how the best retail companies align their customer value proposition with their operations strategy and their approach to human capital. This includes more autonomy and agility as well as inspirational leadership.
A CEO's job is about resource allocation with a goal of earning a return in excess of the opportunity cost of capital. The challenge is figuring out how to allocate human and financial capital to its best and highest use for the long term. Value drivers include sales growth, operating profit margin, and investment requirements.)
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.
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. She is a popular speaker and consults to senior leadership teams.
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