Harvard Business Review

FEBRUARY 1, 2018

As we approach earnings season, investors should listen carefully to what CEOs plan to do with the money. At a recent investor conference, one of us heard a CEO proudly state that the new law would have no effect at all on how his company views investments. The cost of capital is at historic lows, averaging below 6% for most large U.S.

Supply Chain 9

Supply Chain CEO Discount Retail 9

Harvard Business Review

DECEMBER 13, 2017

Some argue that profits are stagnant because of short-termism—that decades of focusing on current profits over long-run innovativeness has resulted, now, in companies that are hollowed out. Most attempts to combat short-termism are flawed because they focus on changing CEO behavior through some combination of pleading and incentives.

Short-term 8

Short-term Decentralization Company Trends 8

Harvard Business Review

SEPTEMBER 8, 2014

The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. In my experience, most CEOs, CFOs, and other C-suite executives involved in strategy formulation know these finance basics. It may seem that sales has little impact on the fourth value-creation lever, the firm’s cost of capital.

Debt to Equity Ratio 10

Debt to Equity Ratio Cost of Capital Strategy Incentives 10

Harvard Business Review

JUNE 27, 2012

We have been studying companies that seem to be able to endure and adapt for longer periods of time, and have come to the conclusion that the extinction of once-great innovators is less often caused by technological or market evolution, and more often by self-inflicted wounds and slow cycles of decision and adaptation.

Creativity 14

Creativity Long-term Kotter Cost of Capital 14

Harvard Business Review

APRIL 26, 2017

As JPMorgan Chase’s CEO, Jamie Dimon, warned in a June 2015 letter to the bank’s shareholders, “Silicon Valley is coming.” Banks’ cost of capital is typically 50 basis points or less. Sometimes David can triumph over Goliath. ” Can banks out-compete the disruptors?

Banking 11

Banking Stage-Gate Credit Scoring Competitive Advantage 11

Strategy Driven

SEPTEMBER 9, 2011

Many people do not typically think of metrics and accounting as roadblocks to innovation, yet you call these out as potential problem areas. The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital. Net present value [NPV] is a case in point.

Innovation 50

Innovation NPV Business Model Constraint 50