Harvard Business Review

APRIL 5, 2017

While a laudable effort in principle, measuring a company’s tendency to make myopic operating and investing decisions is fiendishly complex. But the other indicators probably pick up legitimate differences in how companies in the sample operate, as opposed to whether they are myopic. What would better measures be?

EPS 9

EPS Metrics Depreciation Short-term 9

Harvard Business Review

MAY 24, 2017

When Caesars Entertainment, a gaming company, reorganized operations in 2011, the senior team not only developed a database on the performance and the potential of the company’s top 2,000 managers but also analyzed the ability of the top 150 to take on new and different jobs. Invest human capital just like you invest financial capital.

Human Capital 15

Human Capital Management Company ROCE 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

APRIL 16, 2012

To enhance financial flexibility, companies have been retaining unprecedented amounts of cash on their balance sheets, calling it "strategic" cash to distinguish it from the "operating" cash that is needed to run the business. How Should You Approach Strategic Cash?

Company 15

Company Cost of Capital Finance Long-term 15

Harvard Business Review

SEPTEMBER 13, 2017

For slaughterhouses and retailers (Brazilian operations), we also projected positive benefits: $20 million to $120 million (0.01% to 0.1% These values can be estimated credibly and cost-effectively, and we set about applying them to the Brazilian beef sector. of revenues) and $13 million to $62 million (0.01% to 0.7% of revenues).

Supply Chain 8

Supply Chain Net Present Value Retail Cost of Capital 8

Harvard Business Review

MAY 25, 2018

Tencent has expanded its partnership with JD.com step by step, beginning with an equity investment, moving into data sharing for better customer insight, and then making joint investments totaling more than $6 billion in e-tailer Vipshop and mall operator Wanda Commercial.

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Harvard Business Review

APRIL 23, 2015

The basic principles are: If you want to earn above the cost of capital (if you want to create value), you must get a higher return on your efforts than the average competitor. To get a higher return than the average competitor, you must have an advantage or you must compete in an unusually attractive sector. Competition Strategy'

Strategy 8

Strategy Porter Price Cost of Capital 8

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 Trends 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

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 13

Industry Company GDP Bottom-up 13

Harvard Business Review

APRIL 9, 2015

Income statements almost always include an allowance for depreciation of capital assets. That statement records cash generated by a company’s operations and cash spent on those operations; cash spent on capital assets (and cash generated by the sale of capital assets); and cash received from, or paid to, lenders and shareholders.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

NOVEMBER 7, 2012

Rappaport showed that, in setting a price, the market offers a clear signal that can inform operational and financial decisions. Think of this step as determining where the bar is set for a high jumper; you simply want to understand what the market anticipates.

Price 8

Price Analysis Cost of Capital Disruptive Innovation 8

Harvard Business Review

SEPTEMBER 26, 2016

The oil refinery illustrates the general point that the way you create an environment in which those operating it can make coherent decisions is to choose a variable to optimize and set minimums (and maximums if you wish) for all the other relevant variables. This works regardless of which variable you choose to maximize.

Objective 8

Objective Cost of Capital Bottom-up Environment 8

Harvard Business Review

SEPTEMBER 4, 2017

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. It’s not money that’s in short supply; it’s good growth ideas.

Human Capital 15

Human Capital Kaizen Agility Energy 15

Harvard Business Review

JULY 31, 2017

Based on our recent worldwide survey of 2,000 incumbent companies across all major industries and countries, we estimate that the average return on incumbent digital initiatives is below 10% — barely above the cost of capital.

Strategy 8

Strategy ROI Technology Cost of Capital 8

Harvard Business Review

APRIL 26, 2017

Banks’ cost of capital is typically 50 basis points or less. These low-cost and reliable sources of funds are from taxpayer-insured deposits and the Federal Reserve’s discount window. This amounts to putting a toe in the water, while keeping current operations relatively separate and pristine.

Banking 12

Banking Stage-Gate Credit Scoring Competitive Advantage 12

Harvard Business Review

MARCH 31, 2015

While consumers are rightfully worried that their personal information may be compromised, shareholders and companies’ management have a wider set of concerns, including loss of intellectual property, operational disruption, decreased customer trust, tarnished brand, and loss of investor commitment.

Price 8

Price Long-term Banking Short-term 8

Harvard Business Review

JUNE 27, 2012

real revenue and profit growth and earning their cost of capital has steadily declined. Stock markets might seem capricious, but in the long term, shareholder returns closely track operational performance. "We Only 9% of companies achieved even a modest level of sustained and profitable growth. Compete for the long term.

Creativity 15

Creativity Long-term Kotter Cost of Capital 15

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.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

NOVEMBER 20, 2013

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. Whatever the degree of change required at your company, make it. Returns to shareholders of reallocating firms are strong.

Strategy 8

Strategy McKinsey Strategic Planning Cost of Capital 8

Harvard Business Review

FEBRUARY 7, 2011

We will define skill as "the ability to use one's knowledge effectively and readily in execution or performance" and luck as "events or circumstances that operate for or against an individual." Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). The first is to define the terms.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

OCTOBER 3, 2011

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.)

Short-term 14

Short-term Long-term Price CEO 14

Harvard Business Review

MARCH 28, 2016

As a result, family equity can come at a very low cost of capital, where businesses can meet the annual needs of their shareholders without having to worry about paying back the principal. ” There is often a personal connection between the family and the communities in which it operates; reputations matter to families.

Long-term 8

Long-term Short-term Reputation Incentives 8

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 9

Price Energy Politics Marketing 9

Harvard Business Review

NOVEMBER 25, 2013

Creating transparency into its operations is the starting point for marketing to help CFOs understand where and how value is being gained or lost, which makes budgeting discussions much more productive. Bringing everyone into line is essential, but not necessarily easy or quick.

CFO 8

CFO Short-term Long-term Benchmarking 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. In this case its capital charge is $800 times 8%, or $64.

Long-term 8

Long-term EPS Short-term Management 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. Net present value [NPV] is a case in point.

Innovation 50

Innovation NPV Business Model Constraint 50

Harvard Business Review

MARCH 1, 2017

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. If the world of venture capital can change radically in one year, what else can we transform?

Finance 8

Finance IPO Banking Venture Capitalist 8