Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘HBR’

The Orthodoxy of New Finance

Posted by hkarner - 19. Juni 2014

Clayton M. Christensen, Harvard Business Review June 2014.Christensen1

Clayton M. Christensen is the Kim B. Clark Professor of Business Administration at Harvard Business School. He is currently vaued as the “World’s most influential business thinker”. Derek van Bever, a senior lecturer at HBS, is the director of the Forum for Growth and Innovation and was a member of the founding executive team of the advisory firm CEB.

Why do companies invest primarily in efficiency innovations, which eliminate jobs, rather than market-creating innovations, which generate them? A big part of the answer lies in an unexamined economic assumption. The assumption—which has risen almost to the level of a religion—is that corporate performance should be focused on, and measured by, how efficiently capital is used. This belief has an extraordinary impact on how both investors and managers assess opportunities. And it’s at the root of what we call the capitalist’s dilemma.

Let’s back up to see where this assumption came from. A fundamental tenet of economics is that some of the inputs required to make a product or service are abundant and cheap—like sand. We don’t need to account for such inputs and can waste them, if need be. Others are scarce and costly and must be husbanded carefully. Historically, capital was scarce and costly. So investors and managers alike were taught to maximize the revenue and profit per dollar of capital deployed.

While it’s still true that scarce resources need to be managed closely, it’s no longer true that capital is scarce. A recent Bain & Company analysis captures this point nicely, concluding that we have entered a new environment of “capital superabundance.” Bain estimates that total financial assets are today almost 10 times the value of the global output of all goods and services, and that the development of financial sectors in emerging economies will cause global capital to grow another 50% by 2020. We are awash in capital. Den Rest des Beitrags lesen »

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A Bretton Woods for the 21st Century

Posted by hkarner - 28. März 2014

by Don Tapscott, Harvard Business Review, March 2014Tapscott

If you are the leader of a large organization (or only of yourself) who cares about improving the world, here’s a question you should consider: How will you participate in the global solution networks that are increasingly managing to address the world’s problems?

A global solution network is a group of independent parties that have coalesced around a global problem or task they all perceive as important but that none can handle on its own. They become a network when they begin communicating about and coordinating their activities to make progress, rather than working unilaterally and competitively (as, for example, an industry does in a market economy).

Cooperative efforts to solve shared problems have of course arisen in the past. In business the great examples have been standards networks. But the world’s biggest social and economic ills have been addressed by gatherings of nation-states. The model for global cooperation was forged after World War II, when representatives of 44 countries met at Bretton Woods, New Hampshire; the work they did there led to the International Monetary Fund, the World Bank, the United Nations, the G8, the World Trade Organization, and more.

Once state-based institutions like these had taken hold, it became hard to imagine other ways to address territory-spanning social challenges—the human problems that, in the words of Kofi Annan, the former UN secretary-general, “do not come permanently attached to national passports.” But over time it has also become clear that these institutions aren’t equal to the task. Progress on many fronts is stalled.

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Focusing Capital on the Long Term

Posted by hkarner - 2. Februar 2014

by Dominic Barton(McKinsey & Co) and Mark Wiseman (Canadian Pension System), HBR 01-02/2014

Since the 2008 financial crisis and the onset of the Great Recession, a growing chorus of voices has urged the United States and other economies to move away from their focus on “quarterly capitalism” and toward a true long-term mind-set. This topic is routinely on the meeting agendas of the OECD, the World Economic Forum, the G30, and other international bodies. A host of solutions have been offered—from “shared value” to“sustainable capitalism” —that spell out in detail the societal benefits of such a shift in the way corporate executives lead and invest. Yet despite this proliferation of thoughtful frameworks, the shadow of short-termism has continued to advance—and the situation may actually be getting worse. As a result, companies are less able to invest and build value for the long term, undermining broad economic growth and lowering returns on investment for savers.

The main source of the problem, we believe, is the continuing pressure on public companies from financial markets to maximize short-term results. And although some executives have managed to ignore this pressure, it’s unrealistic to expect corporate leaders to do so over time without stronger support from investors themselves. A crucial breakthrough would occur if the major players in the market, particularly the big asset owners, joined the fight—something we believe is in the best interests of their constituents. In this article we lay out some practical approaches that large institutional investors can take to do this—many of which are already being applied by a handful of major asset owners. Den Rest des Beitrags lesen »

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Our Mania for Measuring (and Remeasuring) Well-Being

Posted by hkarner - 9. September 2013

by Jeffrey Gedmin, Harvard Business Review September 2013

Nobel Prize–winning economist Joseph E. Stiglitz found himself stumped. Last February, speaking by video link to the Scottish Parliament’s economy committee, Stiglitz was asked by a lawmaker what he thought of the Legatum Prosperity Index. “Uh, I’m not sure I know the detail,” replied the baffled Columbia University professor. “There are a lot of indices out there.”

Indeed. While I might have wished that Joe Stiglitz knew particularly about that one (I’m the president of the Legatum Institute, which publishes the Prosperity Index—and he knows about it now!), it’s a fact that recent years have brought an avalanche of indices for measuring the relative strengths of nations and their progress (or decline) over time. This is important work not only for economists who care about development but also for executives who head up globalizing firms. As someone who has spent an inordinate amount of time studying these indices and the methodologies behind their conflicting rankings, I offer four things to keep in mind.

First and most fundamental, all of them proceed from the belief that simply measuring economic output offers too little insight into how to boost economic competitiveness—let alone citizens’ well-being. Den Rest des Beitrags lesen »

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Is the Business of America Still Business?

Posted by hkarner - 4. Juni 2013

by Niall Ferguson, June Harvard Business ReviewFerguson

It was his only one-liner. In January 1925 President Calvin Coolidge—nicknamed “Silent Cal” for his taciturnity—declared, “The chief business of the American people is business.” Is that still true? When I moved from the United Kingdom to the United States, I certainly assumed so.

Yet evidence to the contrary is accumulating. In 2012 Michael Porter and Jan Rivkin showed that graduates of Harvard Business School overwhelmingly favor foreign over U.S. locations for new investment. They asked HBS alumni about 607 decisions in which they’d been involved on whether or not to offshore operations. The U.S. retained the business in only 16% of those cases. Asked why they favored foreign locations, the respondents listed the areas in which they saw America falling behind the rest of the world. The top 10 included effectiveness of the political system, simplicity of the tax code, regulation, efficiency of the legal framework, and flexibility in hiring and firing. Den Rest des Beitrags lesen »

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Shell Scenarios 2013

Posted by hkarner - 10. Mai 2013

Shell ist seit 50 Jahren führend in der “SZENARIO PLANUNG”. Anbei ihr Szenario 2013 (aus der Mai Harvard Business Review)

Shell Scenarios 2013

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Why “Fair Value” Is the Rule

Posted by hkarner - 21. März 2013

by Karthik Ramanna, Harvard Business Review March 2013

 For the past two decades, fair value accounting—the practice of measuring assets and liabilities at estimates of their current valuehas been on the ascent. This marks a major departure from the centuries-old tradition of keeping books at historical cost. It also has implications across the world of business, because the accounting basis—whether fair value or historical cost—affects investment choices and management decisions, with consequences for aggregate economic activity.

The argument for fair value accounting is that it makes accounting information more relevant. However, historical cost accounting is considered more conservative and reliable. Fair value accounting was blamed for some dubious practices in the period leading up to the Wall Street crash of 1929, and was virtually banned by the U.S. Securities and Exchange Commission from the 1930s through the 1970s. The 2008 financial crisis brought it under fire again. Some scholars and practitioners have connected its proliferation in accounting-based performance metrics to the actions of bankers and other managers during the run-up to the crisis. Specifically, as asset prices rose through 2008, the fair value gains on certain securitized assets held by financial institutions were recognized as net income, and thus sometimes used to calculate executive bonuses. And after asset prices began falling, many financial executives blamed fair value markdowns for accelerating the decline.

Yet both Generally Accepted Accounting Principles in the United States and International Financial Reporting Standards, adopted by nearly 100 countries worldwide, continue to use fair value extensively—for example, in accounts concerning derivatives and hedges, employee stock options, financial assets, and goodwill impairment testing. Den Rest des Beitrags lesen »

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Saving Economics from the Economists

Posted by hkarner - 27. Dezember 2012

by Ronald Coase, Harvard Business Review 12/2012 Coase

Economics as currently presented in textbooks and taught in the classroom does not have much to do with business management, and still less with entrepreneurship. The degree to which economics is isolated from the ordinary business of life is extraordinary and unfortunate.

That was not the case in the past. When modern economics was born, Adam Smith envisioned it as a study of the “nature and causes of the wealth of nations.” His seminal work, The Wealth of Nations, was widely read by businessmen, even though Smith disparaged them quite bluntly for their greed, shortsightedness, and other defects. The book also stirred up and guided debates among politicians on trade and other economic policies. The academic community in those days was small, and economists had to appeal to a broad audience. Even at the turn of the 20th century, Alfred Marshall managed to keep economics as “both a study of wealth and a branch of the study of man.” Economics remained relevant to industrialists. Den Rest des Beitrags lesen »

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How President Obama Should Choose His Leadership Team

Posted by hkarner - 8. November 2012

by Gretchen Gavett  |   1:04 AM November 7, 2012; HBR

Barack Obama is once again the president of the United States. The first thing he should do is pick his leadership team — carefully. “No other action will have a larger impact on his ability to meet the huge, immediate challenges facing the U.S.,” says Claudio Fernández-Aráoz, the author of Great People Decisions. I interviewed Fernández-Aráoz and Harvard Business School professor Nancy Koehn about why the right group of advisers is important for the president and what pitfalls he should look out for when shuffling his cabinet.

But first, he needs to lay out his objectives.

You can’t choose your advisers before you know what they’ll be advising. “What’s the overarching mission over the next four years?,” asks Koehn. “And under that umbrella, what are the three or four most important objectives? We’ve seen too many people pursue too many, or pursue the wrong ones.” Once you’ve made a plan, you can go about picking the right people for it. But it’s worth noting that, neurologically, we may do the opposite.

We’re actually wired to make the wrong people choices.

Our brain is a piece of hardware that hasn’t had any major upgrade over the last 10,000 years,” Fernández-Aráoz explains. “Evolution has favored those of us who choose people familiar and similar to us, with whom we feel comfortable. Similarity, familiarity, and comfort were the right criteria for survival people choices over the millennia. Unfortunately, they are today the exact opposite of what we need to set up great teams with complementary skills and the ability to properly challenge each other.” Den Rest des Beitrags lesen »

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Four Ways to Fix Banks

Posted by hkarner - 4. Juni 2012

aus der Harvard Business Review June 2012

by Sallie Krawcheck

It is tempting to view the financial downturn as a closed chapter whose primary causes have been resolved—perhaps not perfectly, but fairly comprehensively—by the Dodd-Frank Act’s reregulation of the financial services industry. But big banks continue to have a governance problem, which poses significant risks not just to them but potentially to the entire economy during the next downturn.

It is well-known that many banks were nearly wiped out in 2008 by a global financial crisis they helped cause. Since then most of them have been nursed back to health, with lots of help from taxpayers and central bankers. Yet despite the reregulation, they remain complex, opaque institutions in the business of taking enormous risks. Figuring out how to oversee them successfully—to keep their risks in check while allowing them to be profitable and economically productive—is a continuing unmet challenge for boards, regulators, and society as a whole.

Upgrading bank boards is one way to take on the challenge. Since the crisis, boards at major banks have revamped their membership and substantially increased their time commitments. This movement could be taken even further: Robert C. Pozen has suggested (“The Case for Professional Boards,” HBR December 2010) that board membership at a big bank should be a full-time job. Den Rest des Beitrags lesen »

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