Harvard Business Review

APRIL 26, 2017

And our analysis suggests there are strategies that they can use to compete successfully online. Banks’ cost of capital is typically 50 basis points or less. These low-cost and reliable sources of funds are from taxpayer-insured deposits and the Federal Reserve’s discount window. Eastern Bank).

Banking 11

Banking Stage-Gate Credit Scoring Competitive Advantage 11

Harvard Business Review

FEBRUARY 2, 2012

Today, only 9% of businesses in the world have achieved even a modest level of sustained, profitable growth over the past decade on average (5.5%, earning cost of capital) and that is declining — even though virtually all the businesses aspire to something like this or more.

Competitive Advantage 15

Competitive Advantage Porter Goleman Emotional Intelligence 15

Harvard Business Review

OCTOBER 15, 2013

While the obvious decisions that CEOs need to get right involve strategy and competitive advantage, too many executives delegate away three critical decisions that they need to own: decisions about goals, resource allocation, and people. CEOs face countless decisions. That outcome reflects the wrong allocation and/or ineffective execution.

P&L 8

P&L Fixed Assets Charan Delegation 8

Harvard Business Review

SEPTEMBER 4, 2017

In The Good Jobs Strategy , Zeynep Ton, a professor at the MIT Sloan School of Management, demonstrates how the best retail companies align their customer value proposition with their operations strategy and their approach to human capital. It’s not money that’s in short supply; it’s good growth ideas.

Human Capital 15

Human Capital Kaizen Agility Energy 15

Harvard Business Review

JUNE 27, 2012

Or, as happens all too often, they can pursue complex strategies that beget complex organizations and complex processes until they grind to a halt like a Rube Goldberg machine. real revenue and profit growth and earning their cost of capital has steadily declined. They can focus and simplify their organizations.

Creativity 14

Creativity Long-term Kotter Cost of Capital 14

Harvard Business Review

OCTOBER 10, 2017

While the execution of a conventional strategy lends itself to linear progress and clear benchmarks, innovation often proceeds by S-curves , moving at a slow crawl until it explodes at an exponential rate. For any business to succeed over the long term, it must earn a return that exceeds its cost of capital.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

APRIL 5, 2017

Repaying such profits to shareholders through share repurchases is better than misinvesting that cash to diversify into unrelated businesses in which management has no expertise or overinvesting in projects that may not return cost of capital. As I said earlier, measuring a company’s short-term orientation is incredibly tricky.

EPS 8

EPS Metrics Depreciation Short-term 8

Harvard Business Review

FEBRUARY 1, 2018

The cost of capital is at historic lows, averaging below 6% for most large U.S. Indeed, for most companies, the value of accelerating growth greatly exceeds the value of returning capital to shareholders. The intrinsic value of a company with growing cash flows doubles every time the discount rate is cut in half.

Supply Chain 9

Supply Chain CEO Discount Retail 9

Harvard Business Review

JUNE 18, 2015

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. Rather, they rely on internal rates of return and multiples of invested capital.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

NOVEMBER 4, 2014

Divestment can theoretically address this market failure by limiting investment by the fossil fuel industry by depressing company valuations and thereby increasing the cost of capital. For many companies, most of the capital expenditures are financed from internal cash flows and bank financing.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

NOVEMBER 4, 2014

Divestment can theoretically address this market failure by limiting investment by the fossil fuel industry by depressing company valuations and thereby increasing the cost of capital. For many companies, most of the capital expenditures are financed from internal cash flows and bank financing.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

OCTOBER 3, 2011

A CEO's job is about resource allocation with a goal of earning a return in excess of the opportunity cost of capital. The challenge is figuring out how to allocate human and financial capital to its best and highest use for the long term. They may have effectively run a large division or devised a winning marketing strategy.

Short-term 12

Short-term Long-term Price CEO 12

Harvard Business Review

MARCH 28, 2016

For most of the last century, companies confronted oceans of opportunities, which meant that winning strategies revolved primarily around size. Public companies had a clear advantage in the scale economy; they are especially suited to raising capital. But firms today are no longer looking out at endless opportunities.

Long-term 8

Long-term Short-term Reputation Incentives 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. (Or, Your real “strategy” is the collection of investments made via this ad hoc process.

Debt to Equity Ratio 10

Debt to Equity Ratio Cost of Capital Strategy Incentives 10

Harvard Business Review

OCTOBER 21, 2016

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. Managing risks therefore requires making investment decisions today for longer-term capacity building and developing adaptive strategies.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

FEBRUARY 7, 2011

Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). If you follow that group over time, you would see their ROICs revert back toward the cost of capital. As important, the rate of reversion to the mean is a function of the relative contribution of luck.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

NOVEMBER 25, 2013

CMOs must demonstrate and track marketing’s impact by focusing on key performance indicators (KPIs) that are important for shareholder value such as strong cash flow, cost of capital, return on capital, and operating margin. Shareholders don’t care about fans or followers unless those numbers can be tied to profit.

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

OCTOBER 11, 2013

The business model centers on the old razor blade strategy: Sell the machine at just above cost and make high margins on the system’s consumable element – patented plastic pods. With the company’s share price sinking and its cost of capital rising, those deals might have to be put on hold.

Case Study 8

Case Study CFO Hedge PR 8

Harvard Business Review

DECEMBER 13, 2017

Investors punish companies with a short-term orientation by applying higher discount rates to them, which increases the cost of capital for those companies. In contrast, companies with a long-term orientation are rewarded with a lower cost of capital, which allows them to afford more innovation—a virtuous cycle.

Short-term 8

Short-term Decentralization Company Trends 8

Harvard Business Review

FEBRUARY 7, 2017

To help provide a better factual base for this debate, MGI, working with McKinsey colleagues from our Strategy & Corporate Finance practice as well as the team at FCLT Global, began last fall to devise a way to systemically measure short-termism and long-termism at the company level. for all other companies.

Long-term 8

Long-term EPS Short-term Management 8

Harvard Business Review

MAY 25, 2018

Mr. Rockefeller’s business strategy was to vertically integrate every aspect of the oil business (exploration, development, logistics, marketing) to assure an ongoing competitive advantage. Sponsored by Accenture Strategy. James Brey/Getty Images. From 1870 to 1911, John D. Insight Center. Competing in the Future.

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Harvard Business Review

SEPTEMBER 26, 2016

My minimums would be: treating employees well, having a positive impact on the environment, living within the spirit (not just the letter) of the relevant laws, and earning a return above the cost of capital. My friend Vineet Nayar argues that putting employees first is the best strategy – and he may be right.

Objective 8

Objective Cost of Capital Bottom-up Environment 8

Strategy Driven

SEPTEMBER 9, 2011

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. They explain that capitalizing on uncertain opportunities requires a starkly different mindset than when pursuing strategy in your core business. Copyright 2011. About the Author.

Innovation 50

Innovation NPV Business Model Constraint 50

Harvard Business Review

MARCH 1, 2017

The New York–based venture capital firm Union Square Ventures (USV) broadened its investment strategy so that it could buy ICOs directly. Menlo Park venture capital firm Andreessen Horowitz joined USV in investing in Polychain Capital , a hedge fund that only buys tokens. Incumbents are taking notice.

Finance 8

Finance IPO Banking Venture Capitalist 8