Costing

You've been ordered to reduce overhead by 10%, 20%, or even (wince) 30%. How do you do it? First, don't expect to reach your target with a single big...

Scott Anthony, president of Innosight and author of The Silver Lining, explains how to innovate when time and money are tight.

Few, if any, articles on finance that have appeared in HBR have enjoyed the influence of the 1962 article reprinted here as a “Classic.” Gordon Donaldson’s analysis of how many companies haphazardly established their debt capacity, and his careful explanation of what he considered a better way, seemed to strike a chord among corporate administrative […]

Too many CEOs are penny-wise and pound-foolish.

The subject of transfer pricing doesn’t normally excite many people, but when your transfer pricing system is less than perfect, life gets interesting. We at Bellcore first got interested in transfer pricing in 1983. That’s the year before AT&T was broken up and Bellcore was being formed as the centralized organization supporting the seven regional […]

Even Jeff Bezos wants to open a physical store.

This article presents the research findings of a leading U.S. corporation, AT&T, on a series of important economic questions and issues, with an interpretation of the material by one of the company’s top executives. The subject is corporate earnings patterns in different industries, investment trends, the relation of profits and investment to GNP, and other […]

Employees are constantly in motion—making sales calls or taking service trips; visiting an international office for a few days or relocating there for a few years; soaring across oceans in the corporate jet or heading across town in the company car. Typically, these activities are administered by an assortment of departments and vendors. But we […]

In recent years, companies have reduced their dependency on traditional accounting systems by developing, activity-based cost management systems. Initially, managers viewed the ABC approach as a more accurate way of calculating product costs. But ABC has emerged as a tremendously useful guide to management action that can translate directly into higher profits. Moreover, the ABC […]

Many companies now recognize that their cost systems are inadequate for today’s powerful competition. Systems designed mainly to value inventory for financial and tax statements are not giving managers the accurate and timely information they need to promote operating efficiencies and measure product costs. In response, they have tried to redesign their present systems, but […]

By now it’s well publicized—if not obvious—that many companies’ cost accounting systems are falling down on the job. They give managers incorrect product costing information, or they inundate managers with irrelevant cost information, or they fail to measure the things that really count. Strategies may be conceptually brilliant, but if they are based on faulty […]

Today’s technology can put adjusted present value into the arsenal of every general manager.

Leading a large, complex organization like the U.S. Navy, which is interdependent with similar entities, calls for a certain approach. You begin with a narrow focus on your organization’s unique strength and role. For the navy, that is presence. U.S. naval forces—sailors and Marines—are constantly mobilized, don’t need an inch of foreign soil, and can […]

Do we really need to switch to replacement-cost accounting to understand how companies have performed?

Appetites for risk should naturally abate after the catastrophic losses we’ve just seen. Will too-rich bailouts prevent that from happening?

Executives spend a lot of time creating and acquiring businesses but rarely devote attention to divesting them. As a result, they often end up selling businesses too late and at too low a price, sacrificing shareholder value.

Companies often sell off businesses when times are hard. Smart CEOs approach divestiture more strategically.

Many companies abandoned activity-based costing because it did not capture the complexity of their operations, took too long to implement, and was too expensive to build and maintain. Here’s a way around those problems.

A practical guide to creating new products without starting from scratch

When you strip away the fancy jargon, a successful business fundamentally makes more money than it spends. While managers can pull any number of levers to accomplish this, the one they most often choose reads: “Reduce Costs!” And perhaps the most common way they cut costs is to eliminate jobs. This is why we are […]