Strategy Driven

JULY 13, 2011

Supplementing profits with ROIC and revenue growth is a step in the right direction to ensure that the profits a business earns are actually creating value, not simply over-consuming capital that another company could better deploy. However, profits, ROIC, and revenue growth are backward looking.

ROIC 62

ROIC Balanced Scorecard Metrics McKinsey 62

Harvard Business Review

MAY 24, 2017

Finding, developing, and retaining this talent is hard — so much so that the business press refers to a “war” for talent. A veritable alphabet soup (ROA, RONA, ROIC, ROCE, IRR, MVA, APV, and the like) exists to measure our financial capital. Time, whether measured by hours in a day or days in a career, is finite.

Human Capital 15

Human Capital Management Company ROCE 15

Harvard Business Review

APRIL 16, 2015

The results can be impressive: if your firm’s return on invested capital is 8% and you have an 8% cost of capital, a 1% improvement in ROIC will increase firm value by 19%. There are just two ways to increase ROIC: improve operating profit (by increasing revenues or cutting costs) or invest capital more wisely.

CEO 8

CEO ROIC Cost of Capital Merton 8

Harvard Business Review

MAY 28, 2018

Directly influenced by investor input, Nikon developed a restructuring plan that would carry a onetime cost of ¥48 billion ($460 million) but generate ¥20 billion ($190 million) in annual savings. It would implement targets linked to shareholder value, including ROE and ROIC.

Company 11

Company ROIC CFO Restructuring 11

Harvard Business Review

DECEMBER 15, 2015

To borrow a telecom industry metaphor, a deal with a customer is the “last mile” in connecting any strategy with business development efforts and marketplace results. Business results were outstanding: EBITDA more than doubled in the first year and ROIC increased almost 300%, with fewer sales people. Only customers buy.

Strategy 8

Strategy Team Discount Price 8