Harvard Business Review

NOVEMBER 4, 2014

Despite its recent successes, we believe this approach is limited. 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.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

NOVEMBER 4, 2014

Despite its recent successes, we believe this approach is limited. 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.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

JUNE 27, 2012

real revenue and profit growth and earning their cost of capital has steadily declined. American Express, AB InBev , Larsen & Toubro, Hankook Tire, Toyota, Olam — all are companies that found a way to replicate their success again and again. In the past decade, the percentage of companies achieving even 5.5%

Creativity 14

Creativity Long-term Kotter Cost of Capital 14

Harvard Business Review

AUGUST 27, 2015

Companies in the top one-fifth of profitability earn, in aggregate, about 70 times more economic profit (accounting profit less cost of capital) than those in the middle three-fifths combined, according to McKinsey’s database of 3,000 large, publicly listed, nonfinancial U.S. Consider what’s happening among corporations.

ROIC 8

ROIC McKinsey GDP Company 8

Harvard Business Review

OCTOBER 10, 2017

It’s hard to imagine that a success rate that low would be tolerated in any other business function. For any business to succeed over the long term, it must earn a return that exceeds its cost of capital. That’s why successful innovators prepare for irrelevance long in advance. That’s quite a mismatch.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

NOVEMBER 20, 2013

Some successful reallocators enter and exit businesses entirely. But many more make less dramatic changes, shifting resources, year after year, to build up the best part of their business, and simultaneously pruning their less successful lines. Managers appear to be most at risk of doing too little, not too much.

Strategy 8

Strategy McKinsey Strategic Planning Cost of Capital 8

Terry Starbucker

AUGUST 29, 2010

And change it did, because the new CEO had a vision that went beyond product, and costs, and overhead, and costs of capital. Can a passion for change translate to nuts and bolts success? It was about passion. And about people who have it. That company is Apple. Not to mention that $240 share price. Ask Steve Jobs.

Technology 282

Technology Price Video Cost of Capital 282

Harvard Business Review

FEBRUARY 7, 2011

When we enjoy a good outcome due to luck, we are naturally inclined to chalk up our success to skill. For example, believers assert that a streak of successful shots in basketball occurs because a player who has made her most recent shot is more likely to make her next shot (she has a hot hand). The first reason is psychological.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

MARCH 28, 2016

For much of the 20th century, success depended on a company’s ability to hire, train, and retain ever-larger numbers of employees. In today’s knowledge economy, success depends instead on finding, empowering, and retaining the most talented people. Investment: From Other People’s Money to Captive Capital.

Long-term 8

Long-term Short-term Reputation Incentives 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. Understanding Capital Markets. This requires difficult trade-offs.

Short-term 12

Short-term Long-term Price CEO 12

Harvard Business Review

APRIL 26, 2017

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. And our analysis suggests there are strategies that they can use to compete successfully online.

Banking 12

Banking Stage-Gate Credit Scoring Competitive Advantage 12

Harvard Business Review

MAY 24, 2017

Invest human capital just like you invest financial capital. For financial capital, the business world has developed concepts such as the opportunity cost of capital, which is reflected in a company’s weighted average cost of capital.

Human Capital 15

Human Capital Management Company ROCE 15

Harvard Business Review

MAY 25, 2018

First off, overall deal success rates have continued to improve. Bain research also shows that the success rate of unconventional deals has improved, far more than is usually believed. The most successful will develop clear joint goals and an entrepreneurially enabled management style that focuses more on outcomes than on control.

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Harvard Business Review

FEBRUARY 7, 2017

We also know that most executives feel the balance between short-term accountability and long-term success has fallen out of whack; 65% say the short-term pressure they face has increased in the past five years. and historic lows in new capital investment. In this case its capital charge is $800 times 8%, or $64.

Long-term 8

Long-term EPS Short-term Management 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. Such a system would make managerial choices as clear-cut and straightforward as pursuing shareholder value maximization.

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. For instance, intelligent failures can add more value than predictable successes, and low-cost experimentation trumps analysis. Net present value [NPV] is a case in point.

Innovation 50

Innovation NPV Business Model Constraint 50