Harvard Business Review

NOVEMBER 25, 2013

Just 36 percent of CMOs, for example, have quantitatively proven the short-term impact of marketing spend, according to the 2013 CMO Survey (and for demonstrating long-term impact, that figure drops to 32 percent). Help CFOs focus on the long term. Why is this so challenging?

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

OCTOBER 3, 2011

Creating Shareholder Value. Critics imply that managing for shareholder value is all about maximizing the short-term stock price. Companies that manage for shareholder value, the thinking goes, do whatever it takes to engineer an ever-higher market price. In the very long haul, earnings and cash flow converge.

Short-term 12

Short-term Long-term Price CEO 12

Harvard Business Review

FEBRUARY 7, 2011

In both places, we know the instability will worsen macroeconomic performance in the short term. If that is the case, and the faster growth generates higher profits for them over the long term, that might well compensate for any short-term losses from the disruption. Tunisia and Egypt are cases in point.

NPV 13

NPV Short-term Discount Politics 13

Harvard Business Review

DECEMBER 22, 2010

From where I sit as an economist, it's still all about the economy and the long-term impact of the problems laid bare by the Great Recession. Consider, for example, that the estimated net present value of obligations under the Social Security system is approximately $8 trillion.

GDP 15

GDP Net Present Value Crisis Cost 15

Harvard Business Review

NOVEMBER 19, 2015

This can be quantified by analyzing the extent to which the share prices of S&P 500 firms are driven by a firm’s present value of future growth options (PVGO) rather than cash flow from current operations. Investors now value the future growth options of these firms relatively less—by a staggering $1 trillion.

Company 8

Company Succession Maturity Long-term 8

Harvard Business Review

OCTOBER 15, 2012

As innovators engage with the market through the MVP, they learn valuable information to help them refine the product-market fit and better understand and further build for the value proposition. Net Present Value ). This iterative approach is consistent with "real options" (vs. Strategy #5: Don't worry about competing agendas.

Innovation 8

Innovation Execution Net Present Value Open-book 8

Harvard Business Review

MARCH 10, 2011

To make sure they're comparing apples to apples, they discount those future cash flows to arrive at their net present value. However, the practitioner using the 1-year Treasury may also be using the higher Ibbotson long-term market risk premium, while the others use a more recent lower valued risk premium.

CAPM 14

CAPM Cost Discounted Cash Flow Cost of Capital 14

Harvard Business Review

FEBRUARY 24, 2011

But why compare apples (book value) to oranges (share price and dividends)? Buffett explains that book value is the best proxy for "intrinsic value," the net present value of all estimated future cash flows. Consider that since 1965, Berkshire's book value grew 434,057% and the S&P index grew only 5,430%.

Letter 15

Letter P&L Net Present Value Insurance 15

Harvard Business Review

MARCH 31, 2017

But having a grasp of terms like EBITDA and net present value are important no matter where you sit on the org chart. The Refresher: Net Present Value. Do: Enroll in an online or community college class to learn about basic financial concepts and terms. How can you boost your financial acumen? Related Video.

Finance 8

Finance Skills EBITDA Net Present Value 8

Harvard Business Review

SEPTEMBER 27, 2012

Rail accounted for only 20% of long-haul shipments in Brazil, compared with 80% in most countries. Any proposal, the rules said, should: remove obstacles to growing revenues, minimize up-front expenditure, provide benefits immediately (rather than paying off in the long term), and. reuse existing resources.

Strategy 8

Strategy Proposal Guidelines Net Present Value 8

Harvard Business Review

MAY 1, 2017

Today, the average cost of equity capital sits at close to half that: just 8% for the roughly 1600 companies comprising the Value Line Index. So, in real terms, debt financing is essentially free. In these circumstances, strategies that generate faster growth create more value for most companies than those that improve profit margins.

ROE 14

ROE Long-term GDP Six Sigma 14

Harvard Business Review

APRIL 27, 2017

” Laying out their data, they find that long-term oriented companies create more financial value and more jobs. I agree with their vision of a future in which more companies focus on the long term and become more productive for the world (their findings accord with my own work on the dangers of short-termism ).

Hedge 9

Hedge Short-term Long-term NPV 9

Harvard Business Review

APRIL 2, 2014

In the long-version explanation of the prizes published by the Nobel committee last fall, Campbell was cited more often than anybody else, apart from the three winners. You know, the future value of money, the present value of money — money today is worth more than in the future because you can invest it and get interest.

CAPM 8

CAPM Discount Price Finance 8

Strategy Driven

SEPTEMBER 9, 2011

Many conventional metrics we use to estimate value are based on faulty assumptions. Net present value [NPV] is a case in point. Companies have long struggled to generate sustained profitable growth – and few have succeeded. If it is positive, it’s thumbs up, if it’s negative, it’s thumbs down.

Innovation 50

Innovation NPV Business Model Constraint 50