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. Only three or four out of every ten movies made in America breaks even or earns a profit.

Hospital Budget Systems Are Holding Back Innovation

Harvard Business Review

While this might seem like a radical step for hospitals, it is exactly the transition that occurred 100 years ago in the business world in general when companies shifted from a departmental or functional structure to a decentralized, business-unit structure that that was more aligned with and accountable for its products, services, and customers. Gillian Blease/Getty Images. Nearly 800 digital health startups were funded in 2017, an all-time high.

Why We Need to Update Financial Reporting for the Digital Era

Harvard Business Review

Digital companies, however, consider scientists’ and software workers’ and product development teams’ time to be the company’s most valuable resource. However, many investors seem to have concluded that the most successful companies with tens of billions of dollars of valuation today could never have justified their valuation at the start of their operation based on discounted cash flow. Martin Konopka/EyeEm/Getty Images.

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Can We Quantify the Value of Connected Devices?

Harvard Business Review

In the 1990s, Procter & Gamble’s Product Supply Organization kicked off a major Reliability Engineering program, much like the efficiency initiatives of companies such as Toyota. They institutionalized the use of data collection systems in their manufacturing facilities to understand how products and machines would “behave” and could be optimized. On the cost side, what’s the sourcing cost, the production cost, and the distribution cost?

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The Largest Risk (and Opportunity) Investors Are Ignoring

Harvard Business Review

As Nick Robins from the bank HSBC described to the audience, in a scenario of global peak fossil fuel use by 2020 “implies a 44% reduction in discounted cash flow value of fossil fuel companies” — or in simpler terms, a decline in share price of 40 to 60 percent. The 20% drop in coal demand was driven mainly by the incredible increase in natural gas production due to fracking technology, not from any concern over greenhouse gases.

What Markets Do and Don’t Get About Innovation

Harvard Business Review

Disruption theory reveals four innovation types that could shape an investment thesis: Low-end disruptive – a dramatically cheaper way of producing worse products for customers who are over-served by existing options. New market disruptive – a cheaper, more accessible, and worse-performing product that turns non-consumers into customers. Because products and customers are entirely new, it’s harder for analysts to mistakenly force these innovations into the old paradigm.