Capital Management: Knowing Where Value is Created and Destroyed
When so many firms are desperate to cut costs and improve cash flows it seems obvious that they should be careful about how they allocate their capital. But few leaders know from their accounting systems which business segments add value and which don’t. This leads to huge amounts of wasted capital and value destruction across the organization. In this paper we examine how better organization design and information systems can help leaders to improve their capital management and support those business segments that warrant more capital and curtail or even terminate those that don’t.