This article was co-authored with Claus Hirzmann of Strategic Finance “Never test the depth of the river with both feet.” Ironically, this is the very behavior that plagues many of the innovations that ended up in Rita’s “flops file.” From Disney’s Star Wars Hotel
The above "real options" concept is really educational and practical. I studied the NPV and the decision tree logic during my MBA days, but the twist the existing NPV methodology by real options is providing adaptability and practical approach to investment.
One comment, the probability and the decision tree diagram is really smaller, can you enlarge it and share it the comments section.
Interesting concept and great article. However, the example is for a "simple" Software project. From your initial three examples for a failure, the Software based one is the easiest, for me, to approach with your suggestion. How do you do it with a massive brick and mortar project? (such as the hotel)
Yes, we'll have to get better graphics - we are working on the more detailed case study to go together with this.
So sad that the graphs are unreadable :-(
Hi Lenfle! Thank you for the heads up -- just updated the graphs so let me know if you are still having issues.
The above "real options" concept is really educational and practical. I studied the NPV and the decision tree logic during my MBA days, but the twist the existing NPV methodology by real options is providing adaptability and practical approach to investment.
One comment, the probability and the decision tree diagram is really smaller, can you enlarge it and share it the comments section.
Interesting concept and great article. However, the example is for a "simple" Software project. From your initial three examples for a failure, the Software based one is the easiest, for me, to approach with your suggestion. How do you do it with a massive brick and mortar project? (such as the hotel)
Read Bent Flyvjberg's work on mega-projects. His latest book is "How Big Things Get Done" and you'll immediately see the correlations.