Harvard Business Review

MARCH 28, 2014

The theory of disruption explains why incumbent businesses – with high fixed cost infrastructures and embedded beliefs about what the market wants – fail to adopt business models that lower the cost of their services and drive product accessibility to entirely new sets of users. VR is insular.

Disruptive Innovation 8

Disruptive Innovation Automotive Software Fixed Costs 8

Harvard Business Review

MAY 21, 2015

The costly and complex operations of transporting energy have made utilities natural monopolies, while regulatory barriers and the high fixed costs of building and maintaining regional electrical grid infrastructure have also kept much competition at bay.

Energy 8

Energy Transportation Software Price 8

Harvard Business Review

MAY 28, 2018

Yet investors can be a powerful strategic resource, providing not only capital but also less-biased insight into the threats and opportunities that a company encounters. Nikon, the legendary Japanese camera maker, provides a textbook study in how smart managers can work with strategic investors to transform a struggling business.

Company 8

Company ROIC CFO Restructuring 8

Harvard Business Review

JULY 27, 2017

At the time, BMW had no dedicated, company-spanning unit to leverage the creative power of startups. And the fixed cost from “touchpoint-to-pilot” are immense. Gimmy’s task was clear but highly demanding: to reimagine the way BMW innovates.

Venture Capitalist 8

Venture Capitalist Meyer Innovation Fixed Costs 8

Harvard Business Review

APRIL 6, 2016

For example, the global energy player ENGIE and its local partners apply it in the independent power production business in the Middle East. Distributed power generation is a well-known example. But on the other hand, in order to safeguard the company’s future competitiveness, CEOs may have no other choice than to invest now.

Co-Opetition 8

Co-Opetition Operations Cost Technology 8

Harvard Business Review

MAY 13, 2016

What if the sector had one coordinated force doing its advocacy, its media, its communications, its legal defense, and its grassroots organizing, and this was all connected to a merged effort to take the best practices of the evaluators and combine them into one powerful new information engine for the public?

Budgeting 8

Budgeting NGO Diversity Fixed Costs 8

Harvard Business Review

JUNE 25, 2013

Power laws with spiky heads and very long tails progressively crowd out the familiar bell curves that made life seem predictable. Witness the grassroots political movements that are increasingly shaking up "stable" political regimes around the world.

Drucker 9

Drucker Disruptive Innovation Uncertainty Globalization 9

Harvard Business Review

OCTOBER 6, 2014

Hard discounters aim for twice the volume with the same fixed costs so they can make the same returns at half the gross margin. But Tesco, with the biggest purchasing power, the best experience of private label, and strongest track record of strategic innovation, is hurting more than most.

Retail 11

Retail Merchandising Discount Price 11

Harvard Business Review

APRIL 5, 2017

However, firms can efficiently increase margin growth without much revenue growth by managing to squeeze out their fixed costs to service the same level of output. What if concentrated market power of a few companies in an industry has made these companies more profitable than usual? Are all share repurchases myopic?

EPS 8

EPS Metrics Depreciation Short-term 8

Harvard Business Review

MARCH 18, 2013

We didn't want to burden the organization with fixed costs. Almost everything had to be free, and the few things we paid for had to be scalable so that the unit costs would eventually approach zero. First, we would use a white label social networking service called Ning to power our sites.

Budgeting 9

Budgeting Software Entrepreneur Fixed Costs 9

Harvard Business Review

DECEMBER 25, 2013

However, a cumulative line graph can visually highlight the widening nature of the gap in a powerful way. Further, sales variation can get widened much more when it comes to financial variation because of fixed costs. It is not uncommon for a 5% drop in revenue to result in a 30% drop in profitability.

Business Intelligence 8

Business Intelligence Information Technology Uncertainty Fixed Costs 8

Harvard Business Review

NOVEMBER 18, 2013

Historically, larger scale has offered hospital systems a number of advantages, including increased referral volumes, better access to capital, stronger pricing power, and classic cost economies. For instance, larger scale has enabled many hospital systems to lower their per-patient operating costs significantly.

Health Care 8

Health Care System Cost Price 8

Ask Atma

MAY 5, 2012

What I didn’t understand then, was that the beauty and power of a business model is not that it is just a boiled down summary of a business plan, but rather a way to change my psychological approach to building a business. 4) Costs – what is your cost per sale/customer? Pro-rated fixed costs. Variable costs.

Business Model 93

Business Model Ries Agility Entrepreneur 93

Harvard Business Review

DECEMBER 10, 2012

The first suggests strength: "power, effectiveness." Combining the two suggests that the party which borrows has the leverage — they have the power and advantage over others. However, there are two conditions necessary for financial leverage to actually become power.

Financial Leverage 14

Financial Leverage Film Finance Class 14

Harvard Business Review

OCTOBER 29, 2015

This makes financial sense in industries with high fixed costs and low variable costs: larger sizes enable the company to charge higher prices that, even if they are just slightly larger, absorb a higher portion of fixed costs, while reducing packaging cost per volume and attracting value-minded consumers.

Fixed Costs 8

Fixed Costs Price Constraint Cost 8

The Horizons Tracker

MARCH 23, 2023

The question is whether this concentration of economic power is good or bad. To understand this, they believe we need to better understand how changes in technology and organization will affect both fixed costs and marginal costs of production, or whether they will facilitate decentralization.

Creativity 127

Creativity Innovation Trends Information Technology 127

Harvard Business Review

MAY 8, 2012

The telecom industry has changed, and the industry dynamics will continue to shift under the pressure from social media and the power of the consumer. Bharti's innovative business model converted fixed costs in capital expenditure to a variable cost based on usage of capacity.

Outsourcing 11

Outsourcing Wireless Telecommunications Core Competence 11

Harvard Business Review

MAY 19, 2015

That gave it a steadier cash flow to cover the costs of its large fixed cost investments, but did not eliminate the unused capacity of plants dedicated to one kind of product. Before, a big conglomerate like GE diversified its risks by mixing pro-cyclical and counter-cyclical businesses.

Engineering 8

Engineering Learning Curve Fixed Costs Competitive Advantage 8

Harvard Business Review

FEBRUARY 6, 2018

While Amazon’s collaboration with Berkshire Hathaway and JP Morgan Chase would obviously leverage the purchasing power of three massive employers and could lead to innovative insurance models, it seems that the bigger opportunity would be in improving how care is delivered to patients.

Health Care 10

Health Care Retail Operations Insurance 10

Harvard Business Review

JULY 20, 2011

A succession of CEOs prior to Rick Wagoner (who fought heroically to overcome the dreadful hand he was dealt) allowed all manner of legacy costs to build up (retiree health, Jobs Bank, etc.) and those largely fixed costs were more painful and debilitating if GM shrank in the U.S. — as it did — than if it grew.

Company 13

Company Franchising Fixed Costs Banking 13

Harvard Business Review

SEPTEMBER 18, 2013

These businesses have powerful disruptive potential because they can provide consulting at a fraction of the cost of traditional models, largely because they do not need to carry expensive fixed costs like recruiting, training, consultant “beach” time, and expensive real estate.

McCallum 9

McCallum Consultative Disruptive Innovation Real Estate 9

Harvard Business Review

AUGUST 31, 2018

By cutting the fixed costs of computing — avoiding the need to hire IT staff, servers, and hardware — even the smallest firm can satisfy large and unexpected computing needs. It also means you don’t need to analyze these data on your own machines, but you can “rent” them on demand.

Technology 9

Technology Agility Fixed Costs Software 9

Harvard Business Review

FEBRUARY 22, 2011

In a supposedly democratizing medium, the power of leading online companies has only become more concentrated. As each of these companies expands its fixed-cost infrastructure, profits grow geometrically because the additional variable cost of adding each new user is near zero. Today's landscape is radically changed.

CPA 15

CPA CPM Advertising Disintermediation 15

Harvard Business Review

MAY 9, 2013

When one person with a wireless connection can be an agency, a media company, or even a manufacturer, traditional advertising organizations have to change their culture, processes, structure, talent policies, resources, and even their business and revenue models in order to embrace the power of open systems being fueled by digital connectivity.

Advertising 9

Advertising Brand Innovation Creativity 9

Harvard Business Review

AUGUST 12, 2015

Placing ads next to content helps websites recover the sizeable fixed costs of creating content. But ad blockers cut off this revenue stream and make it difficult to offset even the running cost of storing and delivering content to visitors.

Advertising 8

Advertising Content Fixed Costs Software 8

Harvard Business Review

MARCH 22, 2013

As more powerful applications for the internet emerge, congestion builds with increased usage, which has the potential to result in diminished margins for providers. Congestion, rather than raw usage, is the key driver of this phenomenon; given that the Internet Service Provider network is largely a fixed-cost asset.

Fixed Costs 15

Fixed Costs Technology Efficiency Innovation 15

Harvard Business Review

MARCH 22, 2013

As more powerful applications for the internet emerge, congestion builds with increased usage, which has the potential to result in diminished margins for providers. Congestion, rather than raw usage, is the key driver of this phenomenon; given that the Internet Service Provider network is largely a fixed-cost asset.

Fixed Costs 8

Fixed Costs Technology Efficiency Innovation 8