Minority-Owned Private-Equity Firms Drive Higher Rates of Return

Women on Business

NEWS AND INSIGHTS UPDATE: A study by the National Association of Investment Companies (NAIC) found that the funds managed by its member firms (79% of which are owned by minorities and 69% of which have women or minorities in at least half of the investment roles) had a median net internal rate of return of 15% from 1998-2011. rate of return for the U.S.

A Refresher on Internal Rate of Return

Harvard Business Review

Any time you propose a capital expenditure, you can be sure senior leaders will want to know what the return on investment (ROI) is. There are a variety of methods you can use to calculate ROI — net present value , payback, breakeven — and internal rate of return , or IRR. What is internal rate of return? The IRR is the rate at which the project breaks even. We get 4% more return on this project,’” says Knight.


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Seven Ways Leaders Impact Training’s Return on Investment

Kevin Eikenberry

People often talk increasing the return on investment for training, and generally, most people point to others to be responsible for that return, or measure that return. The reality is that there are three groups and one other factor that have significant impact on that rate of return, and they work together like the four [.].

101 Things I Learned in Business School

Leading Blog

B USINESS is not a discipline, but an endeavor made up of disciplines such as accounting, communications, economics, finance, leadership, management, marketing, operations, psychology, sociology, and strategy. Lesson: A profitable company may be chronically short of cash.

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How to Diversify Your Happiness

Next Level Blog

If you’ve spent any time thinking about your retirement account or other investments you may have, you’re probably familiar with the concept of asset diversification. The idea is to not over-invest in one particular company or class of investments but to balance your portfolio across different types of assets. As a simple example, it makes sense for many people to invest in both stocks and bonds since when one of the two is up the other is often down.

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Questions to Answer Before Investing in a Start-Up

Strategy Driven

The idea of being an early investor in a new company and watching it grow into something extraordinary is inspiring. Diversification is the process of spreading out assets among different investments, such that one lousy investment does not ruin your entire portfolio.

Put a Little Air in the Balloon

Great Leadership By Dan

I heard the following simple but powerful little lesson from a Fortune 500 executive last week: As a leader, if you want to create a culture of innovation, you need to create an environment where all employees feel encouraged to bring new ideas forward. Imagine that new idea as a balloon, about half full of air. Instead of pulling out our pins in the form of “yeah buts”, we add air to the idea in the form of “yes, ands”, and “what ifs”?

Cut through the noise to communicate


On top of that, their day will be spent talking on the phone or Skype, using instant messaging all day, being interrupted for “urgent” matters, and attending meetings. Unfortunately much of it is just noise. I’m willing to bet that 70% to 80% of the communication that’s going on in our workplaces (maybe even yours) is irrelevant, annoying, cover the butt-ish, or just plan blah-blah-blah. . How many email messages do you get in a day?

Self-awareness (plus action) Translates to the Bottom-line

Great Leadership By Dan

This post was recently published in SmartBlog on Leadership : According to a new study by the Korn-Ferry Institute, “knowing thyself” isn’t just a nice-to-to; self-awareness flows directly to a firm’s bottom-line I’ve been sharing this information with my network and it’s generating a lot of interest. A blind spot is defined as a skill that the professional counted among his or her strengths, when coworkers cited that same skill as one of the professional’s weaknesses.

7 Tips How Investing Can Help You Secure a Better Future

Strategy Driven

Investing a large chunk of wealth in high-risk assets without investing in an insurance policy that provides adequate coverage is unwise. They don’t knock on the door; they just happen one day out of the blue. A common mistake people make is thinking of insurance as an investment.

Promote Healthy Behaviors

Eric Jacobson

According to the American Heart Association , research shows that employers that spend on health promotion and chronic disease prevention programs achieve a rate of return on investment ranging from $3 to $15 for each dollar invested with savings realized within 12 to 18 months. Organize teams of employees to participate in local runs and walk-a-thons for charity.

How to Invest and Make Money Daily: 9 Key Ideas & Strategies

Strategy Driven

You will discover: The principles of smart and effective investing. The best practices of investing today. They will help you form the productive habits of a successful investor. Early investment is better because of the so-called snowball effect.

Volatile, Uncertain, Complex and Ambiguous (VUCA) Business

Coaching Tip

New research from DDI and The Conference Board, titled The Global Leadership Forecast (GLF) 2014 | 2015, Ready-Now Leaders: Meeting Tomorrow’s Business Challenges , examines the relationship between leadership practices and financial performance in this environment and identifies the seven specific leadership best practices most unique to organizations in the top 20 percent of financial performance. . Those in the bottom 20 percent counted only 19 percent of their leaders as women.

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A Refresher on Payback Method

Harvard Business

There are a variety of ways to calculate a return on investment (ROI) — net present value , internal rate of return , breakeven — but the simplest is payback period. I talked with Joe Knight, author of the HBR TOOLS: Return on Investment and cofounder and owner of www.business-literacy.com , to learn more about how to understand and use this particular ROI method. This is the major limitation of the payback method.

Some Thoughts on Investing from My Recent Interview

Curious Cat

In the first few years of this blog I posted occasionally, but still much more than the last few years, on investing and economics. I was recently interviewed about investing strategies and thoughts and decided to share that with the readers of this blog. The stocks in the portfolio for the entire period are: Google, Amazon, Toyota, Intel, Pfizer… We got out of the “Too Big to Fail” crisis, but have not addressed the core problems – and likely have made them much worse.

Will Wall Street Be Able to Earn the Trust of Younger Investors?

Harvard Business

First, they created a combination of breakthrough product innovation and breakthrough business model innovation— the definition of category creation. Higher-fee, actively managed funds lost $500 billion in assets since 2015, with much of it flowing to much lower cost passive funds (e.g. But total net inflows of money into all mutual funds and exchange traded funds is at its lowest levels since 2014. Image Source/Getty Images.

The Case for Stock Buybacks

Harvard Business

If paying excessive CEO salaries is the most maligned use of corporate funds, stock buybacks may well take second place. It boosts prices in the short run, but the real way to boost the value of a corporation is to invest in the future, and they are not doing that.” ” The UK Government is launching an inquiry into buybacks , due to concerns that they “may be crowding out the allocation of surplus capital to productive investment.”

Most Industries Are Nowhere Close to Realizing the Potential of Analytics

Harvard Business

Back in 2011, the McKinsey Global Institute published a report on the transformational potential of big data—and it would take a supercomputer to process all of the articles that have appeared since then urging companies to get on board before some digital disruptor renders them obsolete. And yet for all the hype, most industries have still not come close to realizing the full potential of data and analytics.

An Experiment in India Shows How Much Companies Have to Gain by Investing in Their Employees

Harvard Business

It may seem that the employers of such low-wage workers — who focus mainly on keeping costs down in order to survive in a relentlessly competitive industry — would have no incentive to provide such training or resources for personal development. We measured the impacts of soft skills training on workplace outcomes such as retention, productivity, and salary, using the firm’s administrative data along with changes in knowledge, behaviors, and personality traits of workers.

The Comprehensive Case for Investing More VC Money in Women-Led Startups

Harvard Business

Only 8% of venture capital (VC) firms in the U.S. But what much of the VC world might not realize, is that female-led firms may have a higher rate of return on average than male-led firms. According to First Round Capital’s review of their own holdings, female founders’ companies out-performed their male peers’ by 63% in terms of creating value for investors. of VC funding in 2015 went to firms founded by women of color.

Can Impact Investing Avoid the Failures of Microfinance?

Harvard Business

The impact investment industry is growing rapidly, a fact that many of us in the field celebrate. Morgan projected up to $1T in investment would be deployed this decade — which would make impact investing twice the size of official development aid to the world’s less develop countries (as defined by the United Nations) , presuming historic levels of aid stayed constant since 2010. Erik Dreyer/Getty Images.

Americans Haven’t Saved Enough for Retirement. What Are We Going to Do About It?

Harvard Business

One of the first big issues he highlighted was retirement : “Many [individuals across the world] don’t have the financial capacity, the resources, or the tools to save effectively; those who are invested are too often over-allocated to cash. For millions, the prospect of a secure retirement is slipping further and further away — especially among workers with less education, whose job security is increasingly tenuous. of every paycheck to the GRA until they retire.

How Facebook Uses Empathy to Keep User Data Safe

Harvard Business

The ways those people interact with technology and each other can completely change the effectiveness of your security strategy. So security products and tools must take into account the human context of the problems they’re solving — and that requires empathy. We learned that many Facebook users were unaware of all the security features we offer to add extra protection to their accounts — but once they learned about them, they were eager to use them.

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What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

PE firms typically buy controlling shares of private or public firms, often funded by debt, with the hope of later taking them public or selling them to another company in order to turn a profit. In a survey of 79 PE firms managing more than $750 billion in capital, we provide granular information on PE managers’ practices and how firms’ strategies relate to the characteristics of their founders.

The Reason Air Travel Is Terrible and So Few Airlines Are Profitable

Harvard Business

There is an answer, and it has to do with the dynamics of disruption. One of the most powerful corporate growth mechanisms – and at the heart of disruption theory — is moving upmarket. Instead of getting into a price war or squabbling over a shrinking market, both disruptors and incumbents find new ways to create value. They were very successful and profitable for some time, then stagnated, and today are subsidiaries of other companies.

The Most Common Mistake People Make In Calculating ROI

Harvard Business Review

Your company is ready to make a big purchase — a fleet of cars, a piece of manufacturing equipment, a new computer system. But before anyone writes a check, you need to calculate the return on investment (ROI) by comparing the expected benefits with the costs. This is an important distinction because if you mistake profit for cash in your ROI calculations, you’re likely to show a far better return that you can expect in reality.

Don’t Take Money from VCs Until You’ve Asked 4 Questions

Harvard Business Review

Most entrepreneurs, if they had full visibility into the performance of each VC firm, would choose to partner with a top performer. They are at higher risk of losing investment partners — including, potentially, the one that championed your company — due to unattractive fund economics, such as low levels of carry. Instead of looking at fund returns to judge VCs, many entrepreneurs treat a firm’s brand or logos as a proxy for performance.

Walmart Broadens ROI for Green Power

Harvard Business Review

I've followed the greening of the retail giant fairly closely for years, so I wasn't expecting a lot of new information from Bedore, Walmart's Senior Director of Business Strategy and Sustainability. But amidst a seemingly scripted set of responses on Walmart's supply chain and operational greening efforts, the discussion took an interesting turn. When addressing the company's aspirational goal of using 100% renewable energy, Bedore said two noteworthy things.

Venture Capitalists Get Paid Well to Lose Money

Harvard Business Review

2013 had all the signs of being a comeback year for venture capital. The industry realized its highest returns since the Internet boom. The industry’s persistent inability to outperform public equities is a disappointment to investors, and a very real threat to the sustainability of the VC industry as we know it. The ongoing poor performance of venture capital firms should be an obvious problem for institutional investors. What is the optimum level of VC commit?

Morning Advantage: Can Markets Cure Cancer?

Harvard Business Review

Most of the money tied to cancer research comes from the federal government via the National Institutes of Health, and like many programs facing financial scrutiny, the NIH’s budget is on the verge of being trimmed. One cancer trial costs about $200 million and has fairly low odds of success. But if you do lots of research and conduct many trials at the same time, your odds of success are greater. businesses, fill 16 percent of seats on U.S.

The Comprehensive Business Case for Sustainability

Harvard Business

Today’s executives are dealing with a complex and unprecedented brew of social, environmental, market, and technological trends. Hoping to alleviate their concerns, this article also provides concrete examples of how sustainability benefits the bottom line. Traditional business models aim to create value for shareholders, often at the expense of other stakeholders. Climate change, water scarcity, and poor labor conditions in much of the world increase the risk.

The Fortune 500 Can’t Go Along with a Rollback on Climate Policy

Harvard Business

out of the Paris agreement. It is very possible that global cooperation to fight climate change will collapse as a result of the Trump presidency. And yet by my rough estimate nearly every firm in the Fortune 500 has acknowledged the reality of climate change, as have thousands of other companies. Many have developed programs designed to address it, while simultaneously generating significant returns for shareholders.

American CEOs Should Stop Complaining About Uncertainty

Harvard Business Review

This month, the chief executive officers of America's biggest companies went on a media blitz to decry the uncertainty caused by the fiscal cliff. I departed Washington in the midst of these rumblings to attend a forum of Africa's leading CEOs. Here's a quick sample of the scheduled participants: Aliko Dangote, CEO of Dangote Cement. Mo Ibrahim, founding CEO of Celtel. Issad Ribrab, CEO of Cevital.

How to Give a Robot a Job Review

Harvard Business Review

Microsoft’s recent Tay debacle is a perfect example of what happens when you don’t take machine learning “training” seriously enough. “This goes to the heart of intelligent systems design,” asserts Jerry Kaplan, author of Humans Need Not Apply. “The natural extension of longstanding historical progress is ‘automation,’ not a re-creation of the human mind and condition.”

Your Judgment of Risk Is Compromised

Harvard Business Review

A key aspect of risk intelligence is recognizing the limits to your knowledge. People's judgment of risks is deeply compromised by psychological biases. One of the most pervasive of these is a phenomenon called the favourite long-shot bias , first observed by the American Psychologist Richard Griffith in 1949. Since then, numerous studies have found evidence of the bias at racetracks and other sports betting markets all around the world.

Even for Companies, the U.S. Is Split Between Haves and Have-Nots

Harvard Business Review

The worldwide trend of rising economic inequality applies not only to individuals. Companies in the top one-fifth of profitability earn, in aggregate, about 70 times more economic profit (accounting profit less cost of capital) than those in the middle three-fifths combined, according to McKinsey’s database of 3,000 large, publicly listed, nonfinancial U.S. The comparison is imprecise, of course, but nevertheless suggestive. An increasing number of U.S.

Should Companies Retain "Strategic" Cash?

Harvard Business Review

To enhance financial flexibility, companies have been retaining unprecedented amounts of cash on their balance sheets, calling it "strategic" cash to distinguish it from the "operating" cash that is needed to run the business. This raises the question of whether retaining strategic cash makes economic sense and should be viewed as a legitimate corporate finance tool in today's environment. Much of the strategic cash is typically held outside the United States.

The Disruption of Venture Capital

Harvard Business Review

It had been over five years since the Nasdaq peaked in March 2000, and it was becoming apparent that VC firms were having trouble deploying the tens of billions of dollars they raised during the boom years. Graham argued that the proliferation of money combined with the decreasing costs to start a business were making the VC job more difficult, prophesying significant changes for the industry.

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Failure Isn't Enough

Harvard Business Review

The notion that innovation and failure go hand-in-hand has become popular of late. In his soon-to-be published book, Adapt , Tim Harford recounts the story of Mario Capecchi who leveraged safe NIH projects to fund a highly speculative attempt to make specific changes to the DNA of mice. Any rational evaluation at the time (1980) would have put that project in the realm of science fiction. That is, allowing more failure should increase the overall rate of return.

Capitalism’s Future Is Already Here

Harvard Business Review

On September 13, 1970, The New York Times published an article by Milton Friedman castigating any managers of businesses who were “spending someone else’s money for a general social interest” – in other words, requiring customers to pay more, employees to be paid less, or owners to accept smaller profits so that the firm could exhibit some amount of social responsibility beyond the requirements of the law. Very quickly, shareholder value became the gospel of capitalism.

Requiring Companies to Disclose Climate Risks Helps Everyone

Harvard Business

Over 20 years ago, Harvard Business School professor Michael Porter introduced the Porter hypothesis , which posits that environmental regulation can benefit companies by nudging them to explore their current production methods and eliminate costly waste that they have been blissfully unaware of. Nobel laureate Herbert Simon’s model of bounded rationality in decision making explains how this could work.

How the Next Generation Is Approaching Society’s Biggest Problems

Harvard Business Review

First, private citizens, particularly younger people, are choosing different types of career paths. Second, changes in technology have dramatically lowered the cost of experimentation and create unprecedented transparency into problems, solutions, and results. Take the story of Salman Khan and the eponymous Khan Academy. The same is true of everyone on his team. Distributing content over the Internet is also inexpensive, while reaching a potential audience of billions.

Retirement Planning Needs a Better UX

Harvard Business Review

” You might have missed this story — or at least assumed that designing a fiduciary standard is the fraught work of policy makers. The reality, however, is that this issue is deeply connected to how we make decisions on digital displays, which is of crucial importance to investors, businesses, and policy makers. The details of the proposed new rules are sure to raise questions about things like fee disclosures and conflicts of interest.