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Adapt Your Strategy to Higher Interest Rates

Harvard Business Review

While many executives and investors were thrown by last year’s interest rate increases, the cost of capital needn’t be a threat. Companies that integrate the cost of capital into their strategy and planning reap real benefits. When something is cheap, people waste it.

EPS 17
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CEOs Don’t Care Enough About Capital Allocation

Harvard Business Review

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

Harvard Business Review

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. Even if executives try to prioritize it, innovation often gets crowded out by more “urgent” short-term pressures. It’s not.

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We Can’t Study Short-Termism Without the Right Metrics

Harvard Business Review

While a laudable effort in principle, measuring a company’s tendency to make myopic operating and investing decisions is fiendishly complex. But the other indicators probably pick up legitimate differences in how companies in the sample operate, as opposed to whether they are myopic. Compensation structure.

EPS 8
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How to Quantify Sustainability’s Impact on Your Bottom Line

Harvard Business Review

We thus wanted to figure out a way to help executives quantify the financial benefits of reducing their firm’s greenhouse gas (GHG) emissions. For slaughterhouses and retailers (Brazilian operations), we also projected positive benefits: $20 million to $120 million (0.01% to 0.1% of revenues).

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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. A second new McKinsey study delves into the question of what executives are doing about their strategic shortfall, and concludes that most are not doing enough. Execute decisively. Lucky for him!

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What’s Driving Superstar Companies, Industries, and Cities

Harvard Business Review

To analyze the superstar dynamics of firms, our metric was economic profit, a measure of a firm’s profit above and beyond opportunity cost. (To To do this, we take the firm’s returns, deduct the cost of capital, and multiply by the firm’s total invested capital.)