Many people do not typically think of metrics and accounting as roadblocks to innovation, yet you call these out as potential problem areas. Why?
Many conventional metrics we use to estimate value are based on faulty assumptions. Net present value [NPV] is a case in point. The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital.
Given that money today is always worth more than money in the future, you are trying to establish what the future value of the investment will be in terms of that money’s value today. If it is positive, it’s thumbs up, if it’s negative, it’s thumbs down.
One problem is that NPV calculations tend to compare today with some future state. What they should be used for is to compare today with two different future states: one in which we do nothing and one in which we do something. Doing otherwise biases the business against innovation because what you are projecting may look unattractive relative to your business today.
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Rita McGrath, a Professor at Columbia Business School in New York, is one of the world’s leading experts on strategy in highly uncertain and volatile environments. She works with both Global 1,000 icons and smaller, but fast-growing organizations. Some current clients include F-Secure, Nokia, Microsoft, (and its CEO Summit), AXA Equitable, General Electric, Novartis, PPG Industries, the Stena Group and the World Economic Forum. She is a popular speaker and consults to senior leadership teams. In 2009, she was inducted as a Fellow of the Strategic Management Society, an honor accorded to those who have had a significant impact on the field. To read Rita’s complete biography, click here.
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In Beyond Performance, Scott Keller and Colin Price reveal that achieving organizational excellence is a combination of performance – the delivery of financial results – and health – the ability to perform year after year. Both are shown to be measurable and achieved through the five frames of:
Aspire: Where do we want to go?
Assess: How ready are we to go there?
Architect: What do we need to do to get there?
Act: How do we manage the journey?
Advance: How do we keep moving forward?
The findings presented in Beyond Performance are founded on extensive research and empirical data. This underlying evidence gives Beyond Performance a level of credibility few other business books have been able to achieve.
Benefits of Using this Reference
StrategyDriven Contributors like Beyond Performance because it provides a method for achieving organizational excellence that is founded on the real-world performance of top companies. Additionally, Beyond Performance provides insights to the role of organization leaders in fostering ongoing performance excellence.
The analysis behind the actionable performance enhancement method is presented in such a manner that it gives the reader a clear understanding of how excellence might be similarly fostered within his/her organization. Use of organizational characteristic models and definition tables further enhances this clarity. Enough detail is provided so that the reader can create performance metrics to measure for the existence of enabling organizational characteristics and performance improvement when the journey for excellence is undertaken.
Beyond Performance‘s method for achieving organizational excellence is well aligned with that recommended by StrategyDriven; making it a StrategyDriven recommended read.
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The StrategyDriven family is proud to introduce Jeff Kortes as our newest contributing author!
Jeff Kortes is the President of Human Asset Management LLC, a human resources consulting firm which specializes in executive search, retention, engagement and front line leadership training. He is a ‘no nonsense,’ action oriented strategist that helps organizations acquire talent, engage and retain people as well as training the heart of their organizations… their front-line leadership using his Execution Focused Leadership® series.
In addition to running his executive search firm, he is a skilled facilitator, trainer, and professional speaker who energizes participants. Jeff has 25 years experience in human resources in both public and private sector organizations. He obtained this experience while functioning in construction, manufacturing, municipal government, and high tech environments.
Jeff is a regular blogger on retention, recruitment, and leadership and has also written and published the book No Nonsense Retention: Painless Strategies To Retain Your Best People. No Nonsense Retention is a hard hitting yet easy to read primer on how to develop and implement a strategic retention process in any department or organization. The book is based on real life experiences and research of organizations that successfully retain their talent.
Speaking Engagements
Jeff is a regular speaker to associations and companies about retention, recruitment, and leadership. His programs include:
No Nonsense Retention… Painless Strategies to Retain Your Best People
Slug Proof Your Team… No Nonsense Strategies to develop a High Performance Organization
Anyone Can Recruit… But can you sell the Organization?
Executives and managers are rightfully concerned about the costs and potential returns associated with the investments before them. Subsequently, business planners painstakingly research, analyze, and calculate the financials associated with each initiative to be considered and present these and the associated risks to business leaders. To enable comparison, risks are also presented in monetary terms. The analysis is then aggregated in a cost-return matrix and a recommendation developed based on the organization’s available investment capital for those initiatives exceeding the business’s return on investment threshold. Technically, these recommendations appear very sound; realistically, they can be absolutely wrong for the organization.
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The graph below (see Figure 1) may seem boring, but it is the very reason I wake up excited every morning. (Clearly, I live a very exciting life.) It is also the basis of the research underlying this book. This is a scatter-plot diagram. Each dot represents an individual, and each axis represents some variable.
This particular diagram could be plotting anything: weight in relation to height, sleep in relation to energy, happiness in relation to success, and so on. If we got this data back as researchers, we would be thrilled because very clearly there is a trend going on here, and that means that we can get published, which in the academic world is all that really matters. The fact that there is one weird red dot – what we call an outlier – up above the curve is no problem. It’s no problem because we can just delete it. We can delete it because it’s clearly a measurement error – and we know that it’s an error because it’s screwing up our data.
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Shawn Achor, author of The Happiness Advantage: The Seven Principles of Positive Psychology That Fuel Success and Performance at Work, spent over a decade at Harvard University where he won numerous distinguished teaching awards for his work. He graduated magna cum laude from Harvard and earned a Masters from Harvard Divinity School in Christian and Buddhist ethics. In 2006, he was Head Teaching Fellow for ‘Positive Psychology,’ the most popular course at Harvard at the time. In 2007, Shawn founded Good Think Inc. to share his research with a wider population. When the global economy collapsed in 2008, Shawn was immediately called in as an expert by the world’s largest banks to help restart forward progress. Subsequently, Shawn has spoken in 45 countries to a wide variety of audiences: bankers on Wall Street, students in Dubai, CEOs in Zimbabwe. Shawn’s research on happiness and human potential have received attention from the Harvard Business Review, New York Times, Forbes, CNN, and NPR. To read Shawn Anchor’s full biography, click here.
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Business Programs
Is Your Business Biased Against Innovation?
/in Strategic Planning/by Rita McGrathMany people do not typically think of metrics and accounting as roadblocks to innovation, yet you call these out as potential problem areas. Why?
Many conventional metrics we use to estimate value are based on faulty assumptions. Net present value [NPV] is a case in point. The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital.
Given that money today is always worth more than money in the future, you are trying to establish what the future value of the investment will be in terms of that money’s value today. If it is positive, it’s thumbs up, if it’s negative, it’s thumbs down.
One problem is that NPV calculations tend to compare today with some future state. What they should be used for is to compare today with two different future states: one in which we do nothing and one in which we do something. Doing otherwise biases the business against innovation because what you are projecting may look unattractive relative to your business today.
Hi there! This article is available for free. Login or register as a StrategyDriven Personal Business Advisor Self-Guided Client by:
Subscribing to the Self Guided Program - It's Free!
About the Author
Recommended Resource – Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage
/in Recommended Resources, Tactical Execution/by StrategyDrivenby Scott Keller and Colin Price
About the Reference
In Beyond Performance, Scott Keller and Colin Price reveal that achieving organizational excellence is a combination of performance – the delivery of financial results – and health – the ability to perform year after year. Both are shown to be measurable and achieved through the five frames of:
The findings presented in Beyond Performance are founded on extensive research and empirical data. This underlying evidence gives Beyond Performance a level of credibility few other business books have been able to achieve.
Benefits of Using this Reference
StrategyDriven Contributors like Beyond Performance because it provides a method for achieving organizational excellence that is founded on the real-world performance of top companies. Additionally, Beyond Performance provides insights to the role of organization leaders in fostering ongoing performance excellence.
The analysis behind the actionable performance enhancement method is presented in such a manner that it gives the reader a clear understanding of how excellence might be similarly fostered within his/her organization. Use of organizational characteristic models and definition tables further enhances this clarity. Enough detail is provided so that the reader can create performance metrics to measure for the existence of enabling organizational characteristics and performance improvement when the journey for excellence is undertaken.
Beyond Performance‘s method for achieving organizational excellence is well aligned with that recommended by StrategyDriven; making it a StrategyDriven recommended read.
StrategyDriven Welcomes Jeff Kortes
/in Announcements/by StrategyDrivenJeff Kortes is the President of Human Asset Management LLC, a human resources consulting firm which specializes in executive search, retention, engagement and front line leadership training. He is a ‘no nonsense,’ action oriented strategist that helps organizations acquire talent, engage and retain people as well as training the heart of their organizations… their front-line leadership using his Execution Focused Leadership® series.
In addition to running his executive search firm, he is a skilled facilitator, trainer, and professional speaker who energizes participants. Jeff has 25 years experience in human resources in both public and private sector organizations. He obtained this experience while functioning in construction, manufacturing, municipal government, and high tech environments.
Jeff is a regular blogger on retention, recruitment, and leadership and has also written and published the book No Nonsense Retention: Painless Strategies To Retain Your Best People. No Nonsense Retention is a hard hitting yet easy to read primer on how to develop and implement a strategic retention process in any department or organization. The book is based on real life experiences and research of organizations that successfully retain their talent.
Speaking Engagements
Jeff is a regular speaker to associations and companies about retention, recruitment, and leadership. His programs include:
To learn more about Jeff’s programs, visit his website www.SlugProofYourTeam.com
Follow Jeff on Twitter: twitter.com/nononsenseguy
Alternative Selection Best Practice 4 – Technically Right and Absolutely Wrong
/in Alternative Selection, Premium/by StrategyDrivenHi there! Gain access to this article with a StrategyDriven Insights Library – Total Access subscription or buy access to the article itself.
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Additional Information
StrategyDriven provides many tools to aid you in the identification of your organization’s cultural drivers including:
The Happiness Advantage: Escaping the Cult of the Average
/in Practices for Professionals/by Shawn AchorExcerpt from The Happiness Advantage…
The graph below (see Figure 1) may seem boring, but it is the very reason I wake up excited every morning. (Clearly, I live a very exciting life.) It is also the basis of the research underlying this book. This is a scatter-plot diagram. Each dot represents an individual, and each axis represents some variable.
This particular diagram could be plotting anything: weight in relation to height, sleep in relation to energy, happiness in relation to success, and so on. If we got this data back as researchers, we would be thrilled because very clearly there is a trend going on here, and that means that we can get published, which in the academic world is all that really matters. The fact that there is one weird red dot – what we call an outlier – up above the curve is no problem. It’s no problem because we can just delete it. We can delete it because it’s clearly a measurement error – and we know that it’s an error because it’s screwing up our data.
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Subscribing to the Self Guided Program - It's Free!
About the Author