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Minding the Corporate Checkbook: A Manager's Guide for ExecutingSuccessful Business InvestmentsSteven R. Kursh, Ph.D.
"I agree strongly with the author that Return on Investment (ROI) is notby itself a sufficient justification for most of today's businessinvestments, particularly those that involve a large amount of'gut-based' emotional decisions. This book provides a defensible,repeatable, and transferable decision-making process that will help thereader become more effective when spending his company's money."
Michael Hoch, Research Director, Aberdeen Group
"This book does a great job laying out the importance of consideringmore than just the pure 'ROI numbers' of an investment, and forces youto think about the implementation and follow-up needed. It should beread by anyone who has the opportunity or ability to change the waycapital is invested."
Jim Connelly, Regional Vice President of Finance, MariottInternational, Inc.
"Minding the Corporate Checkbook reaffirms the notion that businessvalue is brought about by successful execution and continuedsupervision, and not solely determined by preliminary due diligence. Thescope of this book is applicable to internal corporate endeavors, aswell as a variety of other investments. After reading this book, I findmyself applying these execution and post-investment managementtechniques to a variety of my venture capital deals, as well as betterassessing new investment opportunities through more pragmatic exitstrategy evaluations."
Rudolph J. Morando Jr., Associate, Rex Capital Advisors, LLC
"This is a very lucidly written book that provides a new qualitativeframework for business decision-making.The primary contribution is toprovide a decision-maker with a process that can be used to complementexisting (and often abused) financial-number-driven analysis.The authorhas provided a very helpful and effective resource for practitionersboth managers and consultantsand people who are regularly inundated bynumbers but may not have the time to put these numbers in the context ofa particular capital decision-making process."
Dr. Atreya Chakraborty, Senior Consultant,The Brattle Group
"Through consulting, I have witnessed far too many failedinvestmentsand even worse, failing companies!that could have beenavoided by applying the lessons contained in this book. Anyone can readthis book and apply the tools his type of investment analysis."
Jack Mazur, Senior Financial Consultant, Parson Consulting
"Projects too often fail not because the financial calculations werewrong, but because the execution and subsequent management were notconsidered carefully enough. Steve Kursh's new book makes a uniquecontribution by providing a framework that helps us better deal withboth the execution phase of a project and its ongoing management."
Lal C. Chugh, Ph.D., Professor of Finance, University of Massachusetts
Dr. Steven R. Kursh has written the definitive guide to making betterbusiness investment decisions to help your company grow value. Kursh'sclear guidance and easy-to-use tools will help you to assess both thefinancial ROI and strategic value of any investmentpast, current, orfuture.
Kursh covers every stage of investment decision-making, from aclear-eyed review of your current approach to practical recommendationsfor improvement. You'll learn how to identify and use the mostappropriate metrics and analysis techniques; estimate risk andincorporate it into your plans; manage and track investment portfolios;and much more.
Minding the Corporate Checkbook contains detailed checklists for action,sample business cases, and practical guidance for building effectiveExcel models.The Business Investment Roadmap
A complete methodology for linking strategy with financial analysis thatwill enable you to make successful investments and increase yourcompany's revenues and profitsPractical examples, checklists, and models
Everything you need to put the Roadmap into actioncase examples fromIBM, GE, Eli Lilly, Analog Devices, and other leadersStep #1: Preliminary Analysis
Asses whether investments will deliver long-term growth and valueStep #2: Business Impact Analysis
Clarify your company's primary value driversStep #3: Risk Analysis
Identify and plan/or key investment risksStep #4: Execution Analysis
Who, what, when, why, how: Factors for investment successStep #5: Ongoing Management
Monitor progress and proactively correct problems
1. Investing Successfully for Your Future.
The Challenge We Face. Return on Investment and Finance Metrics Are Not Enough. The Paradox. Visions and Strategies, Finance Metrics, and the Execution Gap. The Execution Gap. The Business Investment Roadmap. A Note of Caution. Who Should Read This Book. What Follows.
Using the Business Investment Roadmap. Preliminary Analysis. Assessment of Business Impact. Risk Analysis. Execution Analysis. Ongoing Management. Will the Business Investment Roadmap Guarantee Success?
Summary. Following the Roadmap. Introducing Fresh Breeze Corporation. Preliminary Analysis of an Investment: Would You Like That Super-Sized? Preliminary Analysis Results.
Silver Bullets and Golden Nuggets. Cash Flow: The Critical Value Driver. Grow Revenue. Operational Levers. Determining the Best Bang for the Buck. Summary. Following the Roadmap.
What Is Risk? Four Ways to Evaluate Risks. Creating a Risk Profile. Risk Mitigation Plans. Summary. Following the Roadmap.
Determining the Who, What, When, Where, Why, and How. Determining Capital Intensity. The Impact of an Investment on Customers. What Is a Customer Worth? Summary. Following the Roadmap.
Cross-Country Road Trip. Monitor Progress Using Time, Cost, and Performance Metrics. Earned Value Analysis: Measuring Performance and Taking Action. Killing Investments: Be Prepared to Stop. Summary. Following the Roadmap.
The Business Investment Roadmap. Preliminary Analysis. Business Impact. Risk Analysis. Execution. Ongoing Management. Building the Bridge Between Strategy and Finance.
Income Statement. Balance Sheet. Statement of Cash Flows. Financial Ratios and Other Ways to Spot Trends. Summary.
I have followed a long, circuitous route to this book, but the value ofthe journey has far exceeded the sum of the steps. Many years ago, as afounder of a software company, I faced the same challenge of mostmanagers: Strategies seem so wonderful in theory, but how do you executethem in real time to grow corporate value? Concepts that I learned ingraduate school and from best-selling business books seemed to make goodsense, but rarely, if ever, could I implement them at my company.
After successfully exiting the company and returning to academia, I hadtime to reevaluate my own experience as a manager. I realized the swaygiven to an idea or set of strategies because of its apparent success atanother company or companies. All too often, unfortunately, these"solutions of the day" take an enormous amount of resources and effort,but usually produce minimal growth in corporate value. It took me awhile to realize it, but strategies are like shoes—few of us easily fillanother person's shoes, regardless of the cliche to the contrary.Companies, like people, are unique, and there is no one right way or setof ways of doing business that always work, even within the sameindustry.
Business is not brain surgery. Most of what we need to do to succeed andto grow value at our companies is not fancy or special. Yet, the key tosuccess in business is in identifying the obvious and in executing itwell. Too many companies and their people, however, devote resources togrand strategies and ideas, instead of focusing on the boring basics ofgetting the job done. Clearly, the bubble years of the late ninetieswere an exemplification of too much talk by management and not enoughaction to grow revenue and profits.
It's my hope that you will find this book to be different from otherbooks that you've consulted. My focus is on the processes that youfollow to evaluate business investments, rather than on your specificstrategies. In the pages that follow, you'll find tools, what I broadlylabel "The Business Investment Roadmap," that enable you to executeyour strategies to grow corporate value by making successfulinvestments. Indeed, I believe firmly that most companies already havein place the resources and people to grow value without the necessity ofmajor transformation efforts or the implementation of complicated newsystems for measuring performance.
In business, there's a tremendous amount of "low-hanging fruit" that'sripe for the picking; before we worry about making strategic changes orgetting involved with what some might call broad-based "happy talk ofsimple solutions," we can grow corporate value by improving ourprocesses to "pick that fruit." It's not hard; the difficult part ishaving the discipline to implement better processes to make thestrategies work to grow corporate value.