Financial Management
The Dangers of Too Much Governance
Most people accept that innovating involves risk. If a gene therapy patient dies, regulators stiffen controls, but they don’t make gene therapy impossible. Similarly, the United States must apply balance in addressing business scandals. Corporate governance problems call for safeguards, but not to the point of hobbling risk taking and economic growth. As dangerous as [...]
The Information That Boards Really Need
Recommendations for reforming boards and redefining the role of directors must acknowledge that directors need sufficient information and the means to analyze it in order to monitor board actions. The author urges information be provided as detailed discounted-cash-flow (DCF) valuation models — forcing management to translate its vision into specific numbers that show how shareholder value will be created, and forcing boards to continually monitor and evaluate those numbers in light of ongoing financial performance and stock market valuation.
A Proposal for Social Security
President Bush’s Commission to Strengthen Social Security confirmed what thoughtful analysts have known for years: Without substantial reforms, Social Security will not be able to pay the benefits promised to U.S. citizens — at least not without a substantial increase in Social Security taxes, which, of course, would hinder the ability of U.S. businesses and [...]
Calculated Risk: A Framework for Evaluating Product Development
The product-development process is often seen as an undependable “black box” that rarely produces results that exceed business expectations. With an approach called “net present value, risk-adjusted,” the author offers an operational framework of quantitative tools that can be integrated into existing stage-gate methodologies to create a risk-adjusted NPV that considers the impacts of product portfolio, user needs, and technical and marketing risks.
Beyond the Business Case: New Approaches to IT Investment
A tidal wave of IT-enabled initiatives has elevated the importance of investing strategically. The opportunities seem limitless, but the resources required — capital, IT expertise, management focus and capacity for change — are not. How to choose? The authors recommend a new investment approach based on a framework they developed after studying the e-business initiatives and supporting IT investments of 30 enterprises. The framework encourages simultaneous investment in four kinds of IT initiative: transformation investments, renewal investments, process improvements and experiments.
Revving the Engines of Online Finance
Few industries have more to gain from digital technologies than financial services. After all, finance is a pure bits business, based on the flow of data through billions of transactions.
To date, most digital efforts in banking, insurance and brokerage have been directed at developing an online presence with no clear picture of customer benefits, and [...]
Not All VCs Are Created Equal
Raising capital for new ventures may have suffered a setback when the dot-com bubble burst, but that has not impeded the flow of bright ideas that cry out for funding. A panel of venture-capital experts met at MIT to discuss venture capital today. The panel discussion offers practical insights not only into what entrepreneurs should look for in a VC firm, but also what venture capitalists seek from startups.
Profits and the Internet: Seven Misconceptions
The Internet has created new markets, customers, products and modes of conducting business. The authors explain why seven popular strategies are not the path to profitable growth and provide thoughtful guidelines for avoiding misconceptions and taking a sensible approach to business on the Internet.
Linking Actions to Profits in Strategic Decision Making
The authors have devised a general model that managers can use to link any departmental action to overall corporate profitability. This process forces managers to narrow their strategies to the areas with the highest payoff, shifting attention from a preoccupation with individual performance metrics to an awareness of how those metrics work as a system and how they lead to increased profit and more shareholder value.
Placing Trust at the Center of Your Internet Strategy
As consumers become more savvy about the Internet, the authors contend that that they will insist on doing business with Web companies they trust. The describe how Web trust is built in a three-stage cumulative process, review current trust-building practices for the Web and propose the use of new, software-enabled advisors.