Keep calm and allocate capital: Six process improvements
The most effective resource allocation processes are radically simple.
Content: Article | Authors: Tim Koller, Zuzanna Kraszewska | Source: McKinsey Quarterly | Subject: Finance
Five paths to TSR outperformance
It’s hard for companies to significantly beat long-term market TSR, harder still for the largest corporations, and hardest of all in the face of low growth. But industry endowment needn’t be destiny.
Content: Article | Authors: Pedro Catarino, Rosen Kotsev, Tim Koller, Zane Williams | Source: McKinsey Quarterly | Subjects: Best Practices, Management, Strategy
Which Metrics Really Drive Total Returns to Shareholders?
McKinsey analysis of more than 2,200 large global companies reveals the importance of monitoring both economic-profit growth and revenue growth.
Content: Article | Authors: Peter Stumpner, Tim Koller, Vartika Gupta | Source: McKinsey Quarterly | Subject: Finance
Tim Koller, Dan Lovallo
[A premortem is where] at the start of a project, you imagine that the project went wrong and think about what could have caused that result. You put yourself into the future and, in a non-judgmental way, think of all the things that could derail the project. It creates a safe way for people to discuss their concerns without being perceived as criticizing the project. … [ Read more ]
Content: Quotation | Authors: Dan P. Lovallo, Tim Koller | Source: McKinsey Quarterly | Subjects: Management, Project Management
How Executives Can Help Sustain Value Creation for the Long Term
Companies create more shareholder value when executives and directors concentrate on long-term results. A new report highlights behaviors that allow them to maintain a long-term orientation.
Content: Article | Authors: Ariel Babcock, Kevin Sneader, Sarah Keohane Williamson, Tim Koller, Victoria Potter | Source: McKinsey Quarterly | Subjects: Best Practices, Management
Marc Goedhart, Tim Koller
There are many trade-offs that company managers struggle to make, in which neither a shareholder nor a stakeholder approach offers a clear path forward. This is especially true when it comes to issues affecting people who aren’t immediately involved with the company. These so-called externalities—perhaps most prominently, a company’s carbon emissions affecting parties that otherwise have no direct contact with the company—can be extremely challenging … [ Read more ]
Content: Quotation | Authors: Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subjects: Management, Social Responsibility (ESG)
Five Ways That ESG Creates Value
Getting your environmental, social, and governance (ESG) proposition right links to higher value creation. Here’s why.
Content: Article | Authors: Robin Nuttall, Tim Koller, Witold Henisz | Source: McKinsey Quarterly | Subject: Social Responsibility (ESG)
J. André de Barros Teixeira, Tim Koller, and Dan Lovallo
Multiple studies have indicated the degree to which business leaders are loath to kill projects. One such study developed by IESE Business School Professor Luis Huete found that companies and individuals that have had a track record of success have a harder time killing projects, because they carry with them an ingrained belief that they can turn everything into gold, so long as everyone works … [ Read more ]
Content: Quotation | Authors: Dan P. Lovallo, J. André de Barros Teixeira, Tim Koller | Source: McKinsey Quarterly | Subjects: Management, Organizational Behavior
Admit It, Your Investments Are Stuck in Neutral
New research shows that companies that know how to shift critical resources where and when they’re needed share common traits. Rigor is the first one.
Content: Article | Authors: Massimo Garbuio, Tim Koller, Zane Williams | Source: McKinsey Quarterly | Subjects: Finance, Management
How To Be Objective About Budgets
Addressing anchoring bias can lead to more accurate budget forecasts, better budget conversations, and more dynamic resource reallocation.
Content: Multimedia Content | Authors: Dan P. Lovallo, Sean Brown, Tim Koller | Source: McKinsey Quarterly | Subjects: Finance, Management, Organizational Behavior
How To Take the ‘Outside View’
It may be easier than you think to debias your decisions and make better forecasts by building the “outside view.”
Content: Multimedia Content | Authors: Dan P. Lovallo, Tim Koller | Source: McKinsey Quarterly | Subjects: Decision Making, Management, Organizational Behavior
Should Assessing Financial Similarity Be Part of Your Corporate Portfolio Strategy?
Businesses with different financial profiles can tax managers and put performance at risk. When divesting isn’t an option, here’s how to manage the conflicts.
Content: Article | Authors: Dan P. Lovallo, Tim Koller, Zane Williams | Source: McKinsey Quarterly | Subjects: Finance, Management, Strategy
The Case Against Corporate Short Termism
Despite strong pressures to focus on the short term, it is possible to manage for the long term and reap considerable rewards.
Content: Article | Authors: James Manyika, Sree Ramaswamy, Tim Koller | Source: McKinsey Quarterly | Subjects: Best Practices, Corporate Governance, Management, Strategy
Resisting Managing for the Short Term
Executives don’t have to fall into the trap of short-termism to serve their shareholders, say McKinsey principal Tim Koller and senior expert Marc Goedhart, two of the coauthors of the sixth edition of Valuation: Measuring and Managing the Value of Companies. In this episode of the McKinsey Podcast, Koller and Goedhart talk with McKinsey Publishing editorial director and McKinsey Quarterly editor in chief Allen Webb … [ Read more ]
Content: Multimedia Content | Authors: Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subject: Management
The Six Types of Successful Acquisitions
Companies advance myriad strategies for creating value with acquisitions—but only a handful are likely to do so.
Content: Article | Authors: David Wessels, Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subject: Mergers & Acquisitions
Marc Goedhart, Tim Koller, David Wessels
Our research shows that even if short-term investors cause day-to-day fluctuations in a company’s share price and dominate quarterly earnings calls, longer-term investors are the ones who align market prices with intrinsic value.
Content: Quotation | Authors: David Wessels, Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subjects: Economics, Market/Investment
Marc Goedhart, Tim Koller, David Wessels
As an illustration of how executives get caught up in a short-term EPS focus, consider our experience with companies analyzing a prospective acquisition. The most frequent question managers ask is whether the transaction will dilute EPS over the first year or two. Given the popularity of EPS as a yardstick for company decisions, you might think that a predicted improvement in EPS would be an … [ Read more ]
Content: Quotation | Authors: David Wessels, Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subjects: Management, Mergers & Acquisitions, Strategy
Marc Goedhart, Tim Koller, David Wessels
Creating shareholder value is not the same as maximizing short-term profits—and companies that confuse the two often put both shareholder value and stakeholder interests at risk. Indeed, a system focused on creating shareholder value from business isn’t the problem; short-termism is.
Content: Quotation | Authors: David Wessels, Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subjects: Business Rules, Management, Strategy
Marc Goedhart, Tim Koller, David Wessels
The guiding principle of business value creation is a refreshingly simple construct: companies that grow and earn a return on capital that exceeds their cost of capital create value.
Content: Quotation | Authors: David Wessels, Marc H. Goedhart, Tim Koller | Source: McKinsey Quarterly | Subjects: Business Model, Business Rules, Management, Strategy
How to Choose Between Growth and ROIC
Investors reward high-performing companies that shift their strategic focus prudently, even if that means lower returns or slower growth.
Content: Article | Authors: Bin Jiang, Tim Koller | Source: McKinsey Quarterly | Subjects: Finance, Management