Costing

Few, if any, articles on finance that have appeared in HBR have enjoyed the influence of the 1962 article reprinted here as a “Classic.” Gordon Donaldson’s analysis of how many companies haphazardly established their debt capacity, and his careful explanation of what he considered a better way, seemed to strike a chord among corporate administrative […]

Companies doing business in the developing world have to contend with the staggering human and financial costs of HIV infection—and most would agree that conventional approaches to controlling the epidemic aren’t working. In our experience in the labor-intensive mining industries of Russia, South Africa, and Botswana, we’ve seen infection rates among workers exceeding 90% in […]

Saving money can be a creative act.

Revenue is one of the most misunderstood, mismanaged, and neglected measures in business. Consequently, many executives still rely on gut feel, rather than on hard data, to make revenue decisions—often destroying value in the process. We’ve seen this happen in the dozens of companies we’ve studied. Consider the short shrift revenue gets on accounting reports, […]

Do we really need to switch to replacement-cost accounting to understand how companies have performed?

The American health care industry is sick. Its huge fraction of our GNP—one out of every eight dollars—is double that of Japan and at least 50% higher than that of other developed countries. Because it is growing at rates 50% higher than the GNP, the industry’s cost hampers control of our disastrous trade deficit. Even […]

Leaders can approach this challenging time with flexibility, transparency, and compassion.

E-liability accounting has helped a Singapore-based tire manufacturer and a German cement producer reduce their emissions.

Lessons from a study of 5,700 global businesses.

It has been conventional wisdom that, whatever its troubling side effects, the aggressive use of financial leverage pays off in higher company values. Two decades of finance-based research, which the authors summarize here, qualify that wisdom substantially. Corporate and personal tax rates, which of course vary from situation to situation, significantly affect the attractiveness of […]

One perspective on U.S. health care spending.

When you strip away the fancy jargon, a successful business fundamentally makes more money than it spends. While managers can pull any number of levers...

Companies often sell off businesses when times are hard. Smart CEOs approach divestiture more strategically.

When advising project teams frustrated by their seeming inability to deliver promised innovation or creativity to key customers, one provocative recommendation almost always produces positive results: Cut whatever’s left of the budget by 15%. Innovate with that. The immediate reaction(s) are revelatory: People are shocked. Their disbelief palpable. Are you crazy? We need more money, […]

The Defense Department is due to report to Congress that in Afghanistan, U.S. troops continue to be outnumbered by private contractors. The contractors are described as performing auxiliary duties so that military personnel can focus on core tasks. Sound familiar? How many companies do you know that have outsourced “non-core” activities to focus on its […]

No company can totally avoid the impact of increasing costs. And most managers have learned to adjust to the effect inflation has on current operating costs. But few have factored it into their competitive strategies. And most managers, particularly those in capital-intensive industries, have not paid enough attention to the way increasing capital requirements affect […]

A first look at the economic data.

University of Utah Health developed a tool to do it.

Last time he was running for President, the time before this time, Mitt Romney gave an interview to the Wall Street Journal that ran under the title, “Consultant in Chief.” Romney had of course been a consultant at Bain & Co. before becoming head of Bain Capital, before becoming head of Massachusetts (as in governor […]

Decision-making inside companies has changed - and maybe not for the better.