The Rise of FinTech in Supply Chains

Harvard Business

A new type of services company could transform global supply chains: Financial technology companies that act as intermediaries in facilitating transactions between a company and its suppliers. They enable both the buyer and supplier to improve their working capital by making it possible for the former to extend its payables and at the same time accelerate payment to the latter. the supplier gets $9,959 of the $10,000). Operations in a Connected World.

What If Companies Managed People as Carefully as They Manage Money?

Harvard Business

Today’s executives spend a lot of time managing the balance sheet, despite the fact that it doesn’t represent their company’s scarcest resource. Financial capital is relatively abundant and cheap. According to Bain’s Macro Trends Group, the global supply of capital stands at nearly 10 times global GDP. In contrast, today’s scarcest resource is your human capital, as measured by the time, talent and energy of your workforce.

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The Real Reasons Companies Are So Focused on the Short Term

Harvard Business

Quarterly profits have only increased 5% since 2012 , but investors’ valuations of those profits (as measured by earnings per share) has increased 59% over the same period. 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. Instead of hiring outside CEOs, hire insiders—or at least CEOs with domain expertise.

What’s Driving Superstar Companies, Industries, and Cities

Harvard Business

The debate about superstar firms and superstar effects has been intensifying, partly in response to the rapid growth of global US tech companies. We define superstar to mean a firm, sector, or city that has a substantially greater share of income than peers and is pulling away from those peers over time. We analyzed nearly 6,000 of the world’s largest public and private firms with annual revenues above $1 billion. counties, which account for 90% of GDP in that sector.

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4 Ways Leaders Can Get More from Their Company’s Innovation Efforts

Harvard Business

A recent McKinsey report found that while 84% of corporate executives think innovation is key to achieving growth objectives, only 6% are satisfied with the innovation performance of their firm. Another pervasive reason is that senior executives are trained as operators, not innovators. And there’s a fundamental conflict between innovation and optimizing an existing operation. To close the gap, we need to treat innovation differently than we do normal operations.

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The Case for Investing More in People

Harvard Business

“A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise output per worker.” ” There is a virtuous cycle between productivity and people: Higher levels of productivity allow society to reinvest in human capital (most obviously, though not exclusively, via higher wages), and smart investments result in higher labor productivity. Productivity in most developed economies has been anemic.

Finally, Proof That Managing for the Long Term Pays Off

Harvard Business

New research, led by a team from McKinsey Global Institute in cooperation with FCLT Global , found that companies that operate with a true long-term mindset have consistently outperformed their industry peers since 2001 across almost every financial measure that matters. Among the firms we identified as focused on the long term, average revenue and earnings growth were 47% and 36% higher, respectively, by 2014, and market capitalization grew faster as well.

How Banks Can Compete Against an Army of Fintech Startups

Harvard Business

Banking for small and medium-sized enterprises (SMEs) has been astonishingly unaffected by the rise of the Internet. The marketing, underwriting, and servicing of SME loans have largely taken a backseat. Other sectors of retail lending have not fared much better. Recent analysis by Bain and SAP found that only 7% of bank credit products could be handled digitally from end to end. The problem is that about 60% of small businesses want loans below $100,000.

How Blockchain Is Changing Finance

Harvard Business

Our global financial system moves trillions of dollars a day and serves billions of people. But the system is rife with problems, adding cost through fees and delays, creating friction through redundant and onerous paperwork, and opening up opportunities for fraud and crime. It’s no small wonder that regulatory costs continue to climb and remain a top concern for bankers. This all adds cost, with consumers ultimately bearing the burden.

CEOs Don’t Care Enough About Capital Allocation

Harvard Business Review

In his 1987 letter to investors, Warren Buffet made the following observation: “the heads of many companies are not skilled in capital allocation, and … it is not surprising because most bosses rise to the top because they have excelled in an area such as marketing, production, engineering, administration or, sometimes, institutional politics.” This failure to even mention return on capital seems perverse.

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The Comprehensive Business Case for Sustainability

Harvard Business

Today’s executives are dealing with a complex and unprecedented brew of social, environmental, market, and technological trends. Yet executives are often reluctant to place sustainability core to their company’s business strategy in the mistaken belief that the costs outweigh the benefits. Hoping to alleviate their concerns, this article also provides concrete examples of how sustainability benefits the bottom line.

What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

PE firms typically buy controlling shares of private or public firms, often funded by debt, with the hope of later taking them public or selling them to another company in order to turn a profit. In a survey of 79 PE firms managing more than $750 billion in capital, we provide granular information on PE managers’ practices and how firms’ strategies relate to the characteristics of their founders.

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Get the Strategy You Need — Now

Harvard Business Review

Two uncomfortable strategic truths face the vast majority of executives and companies – and probably you, too. Though both statements may sound extreme, they are the clear implication of new McKinsey research on how companies create value and allocate resources. The widespread absence of a powerful strategy is clear from our recent study of 3,000 of the world’s largest companies, which finds that just 20 percent in that group create 90 percent of its total economic profit.

Why Europe's Carbon Woes Matter to the Whole World

Harvard Business Review

And it''s all because of a failure of political will in Europe to override the market''s built-in lack of flexibility and fix the imbalance between supply and demand. Because of the economic slowdown, industrial activity has dropped more than 20% in certain sectors of the Continent''s economy, and most industrial companies are using much less energy than they were a few years ago.

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. In our experience, companies that adopt this marketing analytics approach can unlock 10–20 percent of their marketing budget to either reinvest in marketing or return to the bottom line.

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Is Your Business Biased Against Innovation?

Strategy Driven

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. Yet for the small handful of companies that have managed to drive growth consistently – even through tough times – the payoff is great.

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