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Only the CEO Can Make the Big Bets

Harvard Business Review

But instead of trusting our "educated gut" and making the bet, we used traditional market research to ask customers in those segments what they thought about the idea right now! And using net-present-value estimates for "beginning" ideas is nuts. Skating to where the puck is now is not being customer-driven.

CEO 14
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How to Choose the Ideas Your Company Should Invest In

Harvard Business Review

Can we get to the market without any technological miracles? After exploration, there are lots of ways to plan, but at the very least a good plan details the target customer, crucial stakeholders, the essence of the idea, key economics, the commercialization path, proposed operations, the team, financial requirements, and the action plan.

Company 16
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Warren Buffett's 2010 Shareholder Letter: What to Expect

Harvard Business Review

But why compare apples (book value) to oranges (share price and dividends)? Buffett explains that book value is the best proxy for "intrinsic value," the net present value of all estimated future cash flows. Consider that since 1965, Berkshire's book value grew 434,057% and the S&P index grew only 5,430%.

Letter 15
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Will You Be Writing Off Your Investment in Egypt?

Harvard Business Review

For decades multinational corporations have poured hundreds of billions of dollars of foreign investments into emerging markets , sometimes preferring the investment climate of "stable" authoritarian regimes over "messy" democracies. Certainly the money at stake is substantial. Vinod K.

NPV 14
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How CMOs Can Get CFOs on Their Side

Harvard Business Review

Marketing is in the midst of an ROI revolution. The arrival of advanced analytics and plentiful data have allowed marketers to demonstrate return on investment with a degree of precision that’s never been possible before. To date, however, the reality of marketing analytics has fallen short of the promise.

CFO 9
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Why We Need to Update Financial Reporting for the Digital Era

Harvard Business Review

The market caps of just four companies, Apple, Alphabet, Amazon, and Microsoft, now exceed $3 trillion. Their combined assets of $944 billion are an order of magnitude lower than the combined assets of $7,700 billion of the largest 3,177 companies in 1986, when the aggregate market capitalization reached $3 trillion for the first time.

Report 8
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Why Is an App Worth as Much as a Small Oil Field?

Harvard Business Review

While on the surface, the dirty business of fossil fuels is nothing like Silicon Valley, many in the oil business have moved beyond the standard net present value (NPV) model for assessing the merit of investments. Consider the rapid progress Facebook has made on mobile, not only domestically, but in emerging markets.

NPV 11