article thumbnail

A Refresher on Internal Rate of Return

Harvard Business Review

There are a variety of methods you can use to calculate ROI — net present value , payback, breakeven — and internal rate of return , or IRR. The IRR is the rate at which the project breaks even. If the IRR is higher, it’s a worthwhile investment. IRR doesn’t give you real dollars. Further Reading.

article thumbnail

Walmart Broadens ROI for Green Power

Harvard Business Review

It also recognizes that, in the meantime, operational managers will gain valuable experience and knowledge about how to optimize the new power systems. We worship internal rates of return (IRR) to our detriment. The company can also reap the immediate variable cost benefits of free power.

ROI 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

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

Harvard Business Review

“Importantly, this will be a much simpler, much less complex company of leading brands that’s easier to manage and operate.” ” Choosing to lead and manage in accord with that empirical insight has enormous organizational and operation repercussions. ” Does the leaner, meaner, and refocused Lafley 2.0

Brand 8
article thumbnail

Three Headwinds for Facebook's IPO

Harvard Business Review

Over the past couple of years, I've become close with a handful of web product managers. For every 10 investments, a good firm may have one defining investment, returning hundreds of percent in IRR. Each of them confirms that what Facebook provides is incredibly valuable in building websites. Venture investors look for home runs.

IPO 13
article thumbnail

Two Forces Moving Business Closer to Climate Action

Harvard Business Review

and an IRR of 27% for those companies with the most aggressive, science-based goals and actions on climate. Even those hippies over at asset manager Lazard calculate that the cost of solar PV technologies has dropped nearly 80% in five years.

IRR 8
article thumbnail

What If Companies Managed People as Carefully as They Manage Money?

Harvard Business Review

Today’s executives spend a lot of time managing the balance sheet, despite the fact that it doesn’t represent their company’s scarcest resource. Financial capital is abundant but carefully managed; human capital is scarce but not carefully managed. How can we manage human capital better? Measure it.

article thumbnail

Connecting To Happiness: A Single Model For Leadership Excellence

Terry Starbucker

You can imagine this specific application of the model wouldn’t work for certain other constituencies – like investors or executive management, for example ( I often did imagine the reception I’d get if I drew a smiley face in the boardroom, but alas, I never tried it ). But the model itself still works for them too.

IRR 295