Harvard Business Review

FEBRUARY 24, 2011

Imagine if managements, boards, and investors adopted them: we could restart our economy, energize our business school curricula and create prosperity for our children and grandchildren. But why compare apples (book value) to oranges (share price and dividends)? In all but seven of these 45 years, Berkshire beat the S&P.

Letter 15

Letter P&L Net Present Value Insurance 15

Harvard Business Review

AUGUST 21, 2015

Setting the right price for your product or service is hard. Most customers in most markets are sensitive to the price of a product or service, and the assumption is that more people will buy the product or service if it’s cheaper and less will buy it if it’s more expensive.

Price 8

Price Debt to Equity Ratio Marketing Metrics 8

Harvard Business Review

MARCH 29, 2018

A second, more radical solution is to create budgets and authority for a service line or integrated practice unit (IPU) that manages a patient’s entire treatment for a high-volume medical condition. The IPU is an essential component of the value-based care model advocated by Harvard Business School’s Michael Porter.

Budgeting 8

Budgeting System Innovation Payback Period 8

Harvard Business Review

OCTOBER 15, 2012

By encouraging innovators to define and demonstrate their concepts concretely, the options approach provides both parties in an open innovation partnership with enough information to assess value, determine additional product development requirements, and reach a mutually beneficial agreement, efficiently. Net Present Value ).

Innovation 8

Innovation Execution Net Present Value Open-book 8

Harvard Business Review

JUNE 22, 2015

“It’s one of the more popular ways that managers calculate marketing ROI,” says Avery, pointing out that other common ones include calculating the investment payback period, calculating an internal rate of return, and using net present value analysis. BEQ = 200 units.

Payback Period 8

Payback Period Fixed Costs Analysis Price 8

Harvard Business Review

APRIL 9, 2015

Analyzing ROI isn’t always as simple as it sounds and there’s one mistake that many managers make: confusing cash and profit. You might also find that your accounts receivable (A/R) — what customers owe you for services rendered or products delivered — rises by $1 million. Evaluate the investment.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

NOVEMBER 25, 2013

CFOs are more interested in capital investment estimates, net present values, and a clear outline of the trade-offs of any investment. CMOs can use advanced analytics and judgment to manage the trade-off between short-term spending to boost sales and longer-term brand building to support the health of the company.

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

DECEMBER 2, 2013

I can’t imagine, recalling my days at Rio Tinto, the managers of a copper mine measuring and proudly reporting how much dirt was moved, how deep the hole was, and how many trucks they had procured – while staying mum about how much copper was produced. To a business person, think how absurd this would seem.

Trends 8

Trends Development Net Present Value NGO 8

Harvard Business Review

FEBRUARY 7, 2011

With political upheaval roiling the streets of Cairo, the first concern of top management in many multinationals is to get their employees and their families out of Egypt safely. Anyone who has had to make the argument for an investment knows the basic tool involved: a Net Present Value (NPV) calculation.

NPV 13

NPV Short-term Discount Politics 13

Harvard Business Review

MAY 1, 2017

In these circumstances, strategies that generate faster growth create more value for most companies than those that improve profit margins. The Refresher: Net Present Value. Bain recently completed research on workforce productivity. The best companies in our research are 40% more productive than the rest.

ROE 14

ROE Long-term GDP Six Sigma 14

Harvard Business Review

APRIL 27, 2017

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 ). The Refresher: Net Present Value. Critics of this idea argue that it would simply ensconce bad management.

Hedge 9

Hedge Short-term Long-term NPV 9

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. Yet for the small handful of companies that have managed to drive growth consistently – even through tough times – the payoff is great. How do they do it?

Innovation 50

Innovation NPV Business Model Constraint 50