Harvard Business Review

FEBRUARY 1, 2018

The cost of capital is at historic lows, averaging below 6% for most large U.S. Indeed, for most companies, the value of accelerating growth greatly exceeds the value of returning capital to shareholders. Indeed, for most companies, the value of accelerating growth greatly exceeds the value of returning capital to shareholders.

Supply Chain 13

Supply Chain CEO Discount Retail 13

Harvard Business Review

OCTOBER 15, 2013

At many companies the total cash investment in acquisitions, R&D, and fixed assets has not earned back its cost of capital after adjusting for the time lag in realizing incremental benefits. Today most if not all industries are impacted by digitization—mobile technology, big data, and the like.

P&L 11

P&L Fixed Assets Charan Delegation 11

Harvard Business Review

APRIL 5, 2017

Repaying such profits to shareholders through share repurchases is better than misinvesting that cash to diversify into unrelated businesses in which management has no expertise or overinvesting in projects that may not return cost of capital. As I said earlier, measuring a company’s short-term orientation is incredibly tricky.

EPS 11

EPS Metrics Short-term Depreciation 11

Harvard Business Review

APRIL 26, 2017

banks are going to survive the coming wave in financial technology (fintech), they’ll need to finally take digital transformation seriously. Small businesses are starting to demand banking services that have engaging web and mobile user experiences, on par with the technologies they use in their personal lives.

Banking 15

Banking Credit Scoring Stage-Gate Competitive Advantage 15

Harvard Business Review

SEPTEMBER 4, 2017

This has not only resulted in less investment in human capital but has also delivered lower total shareholder returns despite a period in which the cost of capital (and thus the cost of investing for growth) has been extraordinarily low. 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

Digital technology has been roiling markets and disrupting companies for more than two decades, but despite that lengthy history, incumbents are still struggling to enact and deliver on digital transformations. Sponsored by DXC Technology. Insight Center. Crossing the Digital Divide. How the best companies get up to speed.

Strategy 8

Strategy ROI Technology Cost 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 CEO 8

Harvard Business Review

MAY 14, 2013

This has drastically reduced the incentives for them to invest in or deploy clean-energy technologies or to modernize their energy-infrastructure assets. Share prices for European utilities and industrial companies have fallen too, threatening a wave of credit downgrades and increasing companies'' cost of capital.

Price 11

Price Energy Politics Marketing 11

Harvard Business Review

MAY 25, 2018

Best-in-class players, such as Intel (through technology partnerships) and Tyson (through new-product incubators), have developed the tools to incorporate many different flavors of deal making. Today’s low cost of capital creates a powerful financial incentive to put money to work by investing in a portfolio of ideas and capabilities.

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Harvard Business Review

AUGUST 27, 2015

Companies in the top one-fifth of profitability earn, in aggregate, about 70 times more economic profit (accounting profit less cost of capital) than those in the middle three-fifths combined, according to McKinsey’s database of 3,000 large, publicly listed, nonfinancial U.S. Consider what’s happening among corporations.

ROIC 8

ROIC McKinsey Company GDP 8

Harvard Business Review

OCTOBER 10, 2017

For any business to succeed over the long term, it must earn a return that exceeds its cost of capital. It is through continuously making incremental progress in lowering costs and increasing revenues that firms achieve competitive advantage in their industry. Here are four things leaders can do.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

OCTOBER 11, 2013

With the company’s share price sinking and its cost of capital rising, those deals might have to be put on hold. ExSolv claimed to have a technology for extracting oil from sand. Terranola had been moving forward with A.J.’s s plan to acquire all six of the licensees that made Express machines and pods.

Case Study 8

Case Study Hedge CFO PR 8

Harvard Business Review

OCTOBER 21, 2016

Today’s executives are dealing with a complex and unprecedented brew of social, environmental, market, and technological trends. Yet executives are often reluctant to place sustainability core to their company’s business strategy in the mistaken belief that the costs outweigh the benefits.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

APRIL 2, 2014

That is, potentially amazing technology if you can only figure out how it works. The capital asset pricing model was supposed to allow companies to calculate their cost of capital in a consistent way. Lars is famous for that. But at this point a lot of his work can be translated, and is widely used and understood.

CAPM 10

CAPM Discount Price Finance 10

Harvard Business Review

MARCH 1, 2017

To wit, 45% of financial intermediaries , such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year; the number is 37% for the entire economy, and only 20% and 27% for the professional services and technology sectors, respectively. How technology is transforming transactions.

Finance 8

Finance IPO Banking Venture Capitalist 8