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stock exchanges has declined by almost 50% from its peak in 1996, despite dramatic increase in aggregate market capitalization. firms gravitate towards digital strategies, firms have less need for elaborate finance, marketing, production, distribution, accounting, and human resource departments. stock exchanges.
As technology continues to change and challenge even the most successful incumbent organizations in every industry, the cost of inertia is growing. Consider the dramatic shift in the types of assets that create market value. Despite the shift to intangibleassets, executives and their strategists are sticking to the status quo.
Manufacturers invest most of their capital into physical assets, while high-tech firms invest in R&D to create new intellectual capital. But all assets are not created equal, especially as the technological landscape changes. There’s no question why legacy organizations are tackling digital transformation now.
Break up a strategic function in response to underperformance in the wake of severe market disruptions? What would the capital markets look like today if a similar tack had been taken when the CFO role was ripe for transformation? Now compare that to the context and condition of today’s CHRO role.
The shutdown will be completed by early 2014, bringing to a close a dramatic story of rise and fall at the hands of disruptive technological innovation, or what we have called “ big bang disruption.” As recently as 2002, the company had a market value of $5 billion. The Blockbuster-Netflix skirmish is a case in point.
There’s a demand for this type of information, and thus product and market opportunities, but in an information services marketplace where people want everything for nothing, it is not easy to monetize information products. The ultimate goal is to treat information as a tangible flow rather than an intangibleasset stuck on the balance sheet.
In the 2016 book The End of Accounting , NYU Stern Professor Baruch Lev claimed that over the last 100 years or so, financial reports have become less useful in capital market decisions. In a previous HBR article , we argued that, in contrast to physical assets that depreciate with use, intangibleassets might enhance with use.
New workers embarking on their careers are finding that their education is incomplete in many areas essential to our technology-driven lives today. While all of these are contributing factors, the major factor, in our view, is the deflationary effect of technology, which our measurement systems fail to account for.
Small startup firms are already developing proprietary technologies — such as machine vision, deep learning, and other innovations —– that could help large investors evaluate opportunities and risks with far greater accuracy and efficiency than was previously possible. But right now that’s not happening.
“How long does it take for her to interact with a market that isn’t nearly monopolized?” have grown more concentrated in the past 20 years, meaning that the biggest firms in the industry are capturing a greater share of the market than they used to. What’s Driving Industry Concentration.
And equipment must be maintained in a world that is becoming virtual and augmented by technology (VR and AR). In some cases, these assets are preventing companies from adapting, and weighing them down. that companies own compared to other assets. For example, Health Technology had an average multiple of 5.1,
Today, however, by exploiting new digital technologies, firms like Apple, Lending Club, and AirBnB have made customer co-creation of value central to their business models and in doing so now rank among the world’s most innovative and valuable firms. for the right incentives and shared value.
With interest rates at historic lows, market volatility, political uncertainty, the European crisis, severe commodity price fluctuations, and other unpredictable market conditions, corporate brands and executives have been understandably inclined to sit on the sidelines. But history shows that cash cannot sit idle indefinitely.
Most of them focus on digitalization specifically and on communications technology, though some attention continues to be paid to transportation infrastructure (e.g., For more than 150 years now, new technologies have been touted as making the world one. Parag Khanna’s Connectography ).
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