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Enron Mail |
John makes a good point about Bain
One of their senior partner recently wrote an article in the italian largest financial newspaper where he provides (subjective) arguments that none of the most recently developed methodologies can be used for valuing hith tech firms Moreover (and surprisingly) he concludes by saying that "...the value of an high tech firm is like the beauty at the lover's eyes"!!! Alberto < Date: Thu, 27 Apr 2000 20:55:36 -0400 < From: "John Mccormack" <jmccormack@sternstewart.com< < To: <gordonsick@mac.com<, <faizs@texaco.com< < Cc: <114463.3226@compuserve.com<, <vince.j.kaminski@enron.com<, < <jes9@mail.duke.edu<, <tomcopeland@monitor.com<, < <atriantis@rhsmith.umd.edu<, <lgc@roce-inc.com<, < <alberto.micalizzi@sda.uni-bocconi.it<, <jmatheson@sdg.com<, < <martha_amram@sdg.com<, <lenos@ucy.ac.cy<, < <adam.borison@us.pwcglobal.com<, <gardner.walkup@us.pwcglobal.com<, < <timothy.luehrman@us.pwcglobal.com< < Subject: Re: Real Options - A Management fad? Economist Article < I agree with Gordon. There are a couple other things to keep in mind. Bain is a "strategy" firm with a very limited capacity to provide seriously quantitative analysis. I doubt that they would have b< < <<< "Gordon Sick" <gordonsick@mac.com< 04/26/00 10:55PM <<< < Soussan, < The article is interesting but I have to wonder how serious the Bain < study is. Most of the graphs of adoption rates look pretty flat to me, so I < doubt that the results have much statistical significance. They had lots of < management systems to ponder and only reported the most dramatic changes, < and the changes aren't dramatic. < Moreover, real options differs from the other management systems in one < very important respect: it is built upon an intellectually sound model that < is designed to add value to corporations. The others are based more upon pop < culture and don't have an intellectual basis. < Of course, academic integrity doesn't necessarily gain mind share or < market share for real options. There is an important network effect and the < large number of quality people working in the field has the effect of < enhancing the mind share for real options. I think we are headed in the < right direction--there is enormous interest in seminars and for consulting < work. We'd all want more, but the trend is unmistakably in favour of real < options. < Thus, I'd love to see the actual Bain study. I tried to log onto their < site, but needed a password that I don't have. < Thanks for sending it. < --cheers, Gordon < ------------------ < Gordon Sick, Professor of Finance < Faculty of Management, Scurfield Hall 150 < University of Calgary < 2500 University Drive NW < Calgary, Alberta, Canada T2N 1N4 < sick@ucalgary.ca < Tel: +1 (403) 220-7165, Fax: +1 (403) 284-7903 (Calgary) < Preferred fax: +1 (425) 732-1248 (US) < < Other activities: < Book Review Editor Journal of Finance < < Course on Managing Not-for-Profit Organizations < http://www.ucalgary.ca/~sick/cobra < < < ---------- < <From: "Faiz, Soussan" <faizs@texaco.com< < <To: "'114463.3226@compuserve.com'" <114463.3226@compuserve.com<, < "'adam.borison@us.pwcglobal.com'" <adam.borison@us.pwcglobal.com<, < "'alberto.micalizzi@sda.uni-bocconi.it'" < <alberto.micalizzi@sda.uni-bocconi.it<, "'atriantis@rhsmith.umd.edu'" < <atriantis@rhsmith.umd.edu<, "'gardner.walkup@us.pwcglobal.com'" < <gardner.walkup@us.pwcglobal.com<, "'gordonsick@mac.com'" < <gordonsick@mac.com<, "'jes9@mail.duke.edu'" <jes9@mail.duke.edu<, < "'jmatheson@sdg.com'" <jmatheson@sdg.com<, "'jmccormack@sternstewart.com'" < <jmccormack@sternstewart.com<, "'lenos@ucy.ac.cy'" <lenos@ucy.ac.cy<, < "'lgc@roce-inc.com'" <lgc@roce-inc.com<, "'martha_amram@sdg.com'" < <martha_amram@sdg.com<, "'timothy.luehrman@us.pwcglobal.com'" < <timothy.luehrman@us.pwcglobal.com<, "'TomCopeland@monitor.com'" < <TomCopeland@monitor.com<, "'Vince.J.Kaminski@enron.com'" < <Vince.J.Kaminski@enron.com< < <Subject: Real Options - A Management fad? < <Date: Tue, Apr 25, 2000, 12:59 PM < < < < < Not sure whether you've come across the attached article in the latest < < Economist?! < < < < <<Fading_Fads.pdf<< < < If the stated survey claim is true (and BTW I don't agree with their < < definition of "real options analysis"), the "message" doesn't seem to be < < getting across. I personally don't think that ROA is a fad. However, as < < Tim Luehrman has stated, we have a major "language" and "practical < < application" issue. < < < < I certainly encourage rectifying the "hopeless" message of this article by < < proposing a "counter-point" article in The Economist. In my view, ROA isn't < < everything, however, it provides a powerful nucleus for the creation, < < protection, and delivery of value (Navigant - thanks for your focal chart!). < < We should also learn from the lessons of the other so-called "management < < fads"!! < < < < Soussan Faiz < < Texaco Inc. < < (914) 253-4187 < < < < < < < < < < < <
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