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Creating value: An interactive tutorial

In this video presentation, McKinsey partner Tim Koller explores the four guiding principles of corporate finance that all executives can use to home in on value creation when they make strategic decisions.

November 2010 | byTim Koller

If investors and managers should have learned anything from the turbulence both in markets and in the real economy in recent years, it’s that there is no substitute for real value creation. Financial engineering, excessive leverage, the idea during inflated boom times that somehow the old rules of economics no longer apply—these are the misconceptions upon which the value of companies are eroded and entire economies become inefficient. Conversely, real value creation builds stronger companies, economies, and societies.

Executives—and not just those in the corporate-finance function—can make smarter and more courageous strategic decisions if they arm themselves with the tools to understand which actions will create and destroy value within their organizations. In this interactive video, Tim Koller, a partner in McKinsey’s New York office, explains the four principles—or “cornerstones”—of corporate finance that can help executives figure out the value-creating answers to some of the most pressing corporate-finance questions. Koller, a coauthor of the recently published book Value: The Four Cornerstones of Corporate Finance, describes each principle, explains how it works, and draws on real company case studies to illustrate the strategic choices that executives make to create real value.

Video

About the author

Tim Koller is a principal in McKinsey’s New York office. This interactive video draws on material from Value: The Four Cornerstones of Corporate Finance, by Richard Dobbs, Bill Huyett, and Tim Koller (Wiley, October 2010). Koller is also a coauthor of Valuation: Measuring and Managing the Value of Companies, (fifth edition, Wiley, July 2010). To learn more about both books, please visit our information page.

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The material on this page draws on the research and experience of McKinsey consultants and other sources. To learn more about our expertise, please visit the Corporate Finance Practice.