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Efficiency of Capital Markets

The theory is based on the efficient market hypothesis (EMH), formulated by Eugene Fama in 1970 which states that all pertinent information regarding the stock market or a specific stock is readily available to everyone. Advocates of this theory believe that investors cannot outperform the market and that stock prices change randomly and independently of one another. Due to this, say the followers, there is no way that investors can predict the outcome of a stock. Continue reading “Efficiency of Capital Markets”

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Knowledge Management

Knowledge Management is usually thought of as getting the right information to the right people at the right time, but a more complete definition of KM is “a means for an organization to continually retain, improve, and acquire knowledge over the years.” While the idea seems straightforward enough to implement, it is actually under attack from different directions making it easier said than done. Continue reading “Knowledge Management”

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How I Use the Balanced Scorecard

I start with specifying the organization’s mission. In a for-profit organization, the mission is logically to make money for its investors (I will discuss about non-profits later). After specifying the mission, I then choose a strategy(1).

After the mission and strategy have been identified, I start defining the balanced scorecard (BSC). Note that it is important to always tie the BSC with the strategy because, after all, the former will be used as a measure of the latter’s success. I like to use the following guide questions for each step: (Mission) Where do we want to go? (Strategy) How do we get there? (BSC) How do we know we’re getting there? (2)

The order I follow in building the BSC is to start with the financial perspective and end with learning and growth. For each perspective, I answer the following questions:

  • Financial: What must we achieve financially so that we add value to our investors?
  • Customer: What should we achieve with our customers in order for us to achieve our financial goals?(3)
  • Internal Processes: What internal processes should we be good at so that we will achieve our customer and financial goals?(4)
  • Learning and Growth: What must we achieve in terms of learning and growth so that we will achieve our goals?(5)

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Project Selection

Organizations may choose to employ a formal project selection method wherein projects are thoroughly evaluated and approved. One possible selection method is composed of two approaches: Top-down and bottom-up.

The top-down approach, which I also call proactive project planning, is when a Corporate Planning Committee (CPC) convenes before the start of another period and evaluates all the possible projects that an organization may undertake. Those projects deemed most likely to yield significant benefits for the organization—given available resources—are selected for subsequent development activities. It is therefore a prerequisite for the company to understand where it is, what its vision is, and how it plans to make the transition to its desired state. Note that the top-down approach tends to happen within the strategic planning activity of the organization.

The second approach known as the bottom-up approach, or what I call the reactive project planning approach is a process that identifies and defines projects based on solving business problems or taking advantage of business opportunities as soon as they arise. Using this approach can be cheaper and faster and has the advantage of identifying urgent organizational problems.

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Defining Technopreneurship

Entrepreneurship In his book titled “Innovation and Entrepreneurship”, Peter F. Drucker describes an entrepreneur as not just someone who starts his own, new and small business: You can be a corporate employee and still be entrepreneurial. He further states that not every new small business is entrepreneurial because entrepreneurship is the practice of consistently converting … Continue reading Defining Technopreneurship