article thumbnail

What Happens When Features Are Dropped To Make a Launch Date?

The Idolbuster

When the original product was scoped, it was designed to meet a set of unmet customer needs, and she created a healthy revenue forecast to justify the expense of development. Sabina explained that she felt “pressured to show there is value in doing the project, a positive NPV. There was equal pressure from myself and others.”.

NPV 36
article thumbnail

Rethinking Valuation So You Don't Miss a Good Deal

Harvard Business Review

To do this, we combine two separate frameworks: the first is the Three Horizon strategic model developed by McKinsey. The higher level of uncertainty associated with H2 and H3 necessitates an updated valuation methodology that takes into account more than the net present value (NPV) of the target.

NPV 14
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Will You Be Writing Off Your Investment in Egypt?

Harvard Business Review

Anyone who has had to make the argument for an investment knows the basic tool involved: a Net Present Value (NPV) calculation. The overall value of a foreign investment is equal to the NPV of the expected stream of profits for the life of the investment.

NPV 13
article thumbnail

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

Harvard Business Review

For years, AWS has invested in driving developer and company adoption of its platform by driving down prices and introducing low cost features to make developer’s lives easier. That ecosystem investment reinforces the value proposition and drives more developer adoption. Consider a business like Amazon Web Services.

article thumbnail

Old Buildings Are U.S. Cities’ Biggest Sustainability Challenge

Harvard Business Review

Today large commercial buildings address only two percent per year of the NPV-positive investments in efficiency that are available to them. This is especially true in the commercial buildings market, specifically large commercial buildings, where well over 75 percent of existing buildings will still be in use in fifteen years’ time.

NPV 8
article thumbnail

Life's Long Cruise? Planning for a Second "Me" Career

Harvard Business Review

Even modest continued earnings dramatically change the NPV calculation. Most gloom and doom commentaries about future economic trends in developed nations are based on the assumption that people will choose to spend the last 30 years of their lives on a long cruise — consuming resources, while making no productive contribution.

Career 11
article thumbnail

Lafley’s P&G Brand Cull and the 80/20 Rule

Harvard Business Review

Declaring he’d cull up to 100 brands — many of which he’d acquired and developed — P&G CEO A.G. Lafley launches a “game changer” profoundly different than what he championed in his eponymous 2008 bestseller. P&G is cutting its global brand portfolio by more than half.

Brand 8