Six Disciplines

MARCH 15, 2011

As reported in the Harvard Business Review's Daily Stat , the consulting group Bain's updated global database of Sustained Value Creators found only 12% of companies worldwide managed to grow profits and revenues more than 5.5% over the 10 years ending in 2008 and earn back their cost of capital.

Cost of Capital 101

Cost of Capital McKinsey Globalization Consultative 101

Harvard Business Review

APRIL 5, 2017

The McKinsey Global Institute, in conjunction with FCLT Global, recently released research stating that long-term-oriented companies perform better than those that focus on short-term results. FCLT and McKinsey rely on readily available and machine-readable accounting data to measure myopia.

EPS 8

EPS Metrics Depreciation Short-term 8

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

FEBRUARY 7, 2017

Companies deliver superior results when executives manage for long-term value creation and resist pressure from analysts and investors to focus excessively on meeting Wall Street’s quarterly earnings expectations. This has long seemed intuitively true to us. The returns to society and the overall economy were equally impressive.

Long-term 8

Long-term EPS Short-term Management 8

Harvard Business Review

NOVEMBER 20, 2013

Though both statements may sound extreme, they are the clear implication of new McKinsey research on how companies create value and allocate resources. 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.

Strategy 8

Strategy McKinsey Strategic Planning Cost of Capital 8

Harvard Business Review

OCTOBER 25, 2018

In our recent research at the McKinsey Global Institute, we examined the superstar phenomenon across firms, as well as sectors and cities. 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 Wider dynamics may be at play.

Industry 12

Industry Company GDP Bottom-up 12

Harvard Business Review

OCTOBER 10, 2017

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. For any business to succeed over the long term, it must earn a return that exceeds its cost of capital. That’s quite a mismatch.

Innovation 8

Innovation P&L ROI Long-term 8