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Why Some Digital Companies Should Delay Profitability for as Long as They Can

Harvard Business Review

When most of the great companies of the industrial era were founded, even the most brilliant economists believed deeply in the law of diminishing marginal returns. The law of diminishing marginal returns held firm throughout the industrial era. He speculated that some industries actually demonstrated increasing returns.

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Is Your Business Biased Against Innovation?

Strategy Driven

Many conventional metrics we use to estimate value are based on faulty assumptions. Net present value [NPV] is a case in point. Tools for each challenge are presented, backed by examples from companies – from small firms to global giants – that have successfully put these methods into practice.

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Match Your Innovation Process to the Results You Want

Harvard Business Review

It tends to be short-term, uses familiar (traditional) metrics and development systems like Stage Gate. When forced to present familiar metrics for truly out-of-the-box "beginning" ideas, work teams develop what our friend Jay Paap calls "Imaginary Numbers." So let's talk about incremental. The risks-rewards are relatively low.

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Why You Should Crowd-Source Your Toughest Investment Decisions

Harvard Business Review

Most companies – including the movie studios in Hollywood – over-rely on basic tools like discounted cash flow and net present value. But if you’re on unfamiliar ground – if you’re in a fast-changing industry, launching a new product, or shifting to a new business model – they can be downright dangerous.

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How CMOs Can Get CFOs on Their Side

Harvard Business Review

Only when they began to really analyze their marketing costs did the company realize that it was spending three times the industry benchmark on coupons and 50 percent more on research. CFOs are more interested in capital investment estimates, net present values, and a clear outline of the trade-offs of any investment.

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Still Many Ways to Skin a Capital Cost

Harvard Business Review

To make sure they're comparing apples to apples, they discount those future cash flows to arrive at their net present value. Schulze, and Michael H. McNulty et al. knew that firms were making heavy use of the capital asset pricing model (CAPM) to size up growth opportunities, but that the model was only as good as its inputs.

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What Xerox PARC Learned About Executing on Open Innovation

Harvard Business Review

Companies knew how to engage a design firm, license IP, and form joint ventures, but few knew how to truly co-develop innovations with external partners, such as PARC. PARC has since learned many more lessons — and is now an industry leader — in how to turn open innovation into a repeatable business model.