The Real Power of Real Options
While option-pricing models are a superior valuation tool – the purpose to which the theory is generally put – real options can provide a systematic framework that will also serve as a strategic tool, and that it is in this strategic application that the real power of real options lies.
It is just such a framework that this article seeks to provide. We begin by … [ Read more ]
Content: Article | Authors: Keith Leslie, Max P. Michaels | Source: McKinsey Quarterly | Subject: Finance
Keith J. Leslie, Max P. Michaels
The option valuation recognizes the value of learning. This is important, because strategic decisions are rarely one-time events, particularly in investment-intensive industrial sectors. NPV, which does not properly recognize the value of learning more before a full commitment is made, is for that reason often inadequate. In fact, its inadequacy can be stated in the precise terms of the real-options model. Of the six variables … [ Read more ]
Content: Quotation | Authors: Keith Leslie, Max P. Michaels | Source: McKinsey Quarterly | Subjects: Finance, Management
Managing Your Organization by the Evidence
An organization is much more likely to improve its current performance and underlying health by using a combination of complementary practices rather than any one of them alone, according to new McKinsey research.
Content: Article | Authors: Bill Schaninger, Keith Leslie, Mark A. Loch | Source: McKinsey Quarterly | Subject: Management
Building the Healthy Corporation
The emphasis on quarterly earnings at the expense of longer-term corporate health sometimes reaches absurd extremes: in one survey, executives said they would scale back investments in R&D and marketing to meet their quarterly forecasts–even if these cuts would hurt the long-term prospects of their companies. Since the capital markets value both immediate and sustained performance, companies should embrace a portfolio of initiatives over three … [ Read more ]
Content: Article | Authors: Keith Leslie, Lenny T. Mendonca, Richard Dobbs | Sources: CFO Publishing, McKinsey Quarterly | Subjects: Finance, Management
Teamwork at the Top
Increasingly, the top team is essential to the success of the enterprise. Research shows that merely bringing in a new chief executive officer to reshape an organization has mixed results. In reality, long-term success depends on the whole leadership team, for it has a broader and deeper reach into the organization than the CEO does and its performance has a multiplier effect-a poorly performing team … [ Read more ]
Content: Article | Authors: Colin Price, Erika Herb, Keith Leslie | Source: McKinsey Quarterly | Subjects: Management, Organizational Behavior
Three Dimensions of Top Team Performance
When Reorganization Works
Even a corporate revamping inspired by state-of-the-art design principles won’t succeed if not driven by a powerful, well-timed business idea adapted to social realities.
Content: Article | Authors: Emily Lawson, Jonathan D. Day, Keith Leslie | Source: McKinsey Quarterly | Subjects: Change Management, Organizational Behavior
Sizing power
The power companies’ urge to merge probably makes them weaker, not stronger.
Content: Case Study | Authors: Keith Leslie, Tera Allas | Source: McKinsey Quarterly | Subject: Industry Specific | Industry: Utilities