Six Disciplines

MARCH 25, 2011

Harry Joiner over at Marketing Headhunter , posted his favorite Top 20 quotes from the Daily Drucker , with respect being paid to management thought-leader, Peter Drucker. In military training, the first rule is to instill soldiers with trust in their officers -- because without trust, they won't fight. One can't manage change.

Drucker 136

Drucker Cost of Capital Definition Commitment 136

Harvard Business Review

SEPTEMBER 8, 2014

The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. Hence, the customer-selection criteria of sales managers, and call patterns of sales reps, directly impact the first value-creation lever: which projects the firm invests in. But consider the basics.

Debt to Equity Ratio 10

Debt to Equity Ratio Cost of Capital Strategy Incentives 10

Harvard Business Review

APRIL 16, 2015

Unless your company’s return on capital exceeds its cost of capital, no amount of revenue growth can create value. For the many firms whose cost of capital and return on capital are roughly equal, in fact, the only path to value creation is to increase return on capital.

CEO 8

CEO ROIC Cost of Capital Merton 8

Harvard Business Review

SEPTEMBER 4, 2017

The evidence suggests the former: We could improve productivity if we stopped systematically underinvesting in human capital. Managed by Q, a cleaning and office services company in New York City, decided to pay employees higher wages than the prevailing market rate. The most direct and obvious investment is increased wages.

Human Capital 15

Human Capital Kaizen Agility Energy 15

Harvard Business Review

OCTOBER 10, 2017

Another pervasive reason is that senior executives are trained as operators, not innovators. For any business to succeed over the long term, it must earn a return that exceeds its cost of capital. Even if executives try to prioritize it, innovation often gets crowded out by more “urgent” short-term pressures.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

APRIL 9, 2015

But before anyone writes a check, you need to calculate the return on investment (ROI) by comparing the expected benefits with the costs. Analyzing ROI isn’t always as simple as it sounds and there’s one mistake that many managers make: confusing cash and profit. You just add up all the costs of the investment.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

MARCH 28, 2016

For much of the 20th century, success depended on a company’s ability to hire, train, and retain ever-larger numbers of employees. 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.

Long-term 8

Long-term Short-term Reputation Incentives 8