McGrth: Thinking about Asset Debt

We are in the resource usage seciton of Rita Gunther McGrath’s book “The End of Competitive Advantage”. In general terms she argues that management should think of resources in terms of functionality and phased obsolescence  in stead of face value.

One key concept that enables this is to calculate “asset debt”. This is the ongoing amount needed per time period to make the asset productive. Keeping this amount in mind and part of the calculation whether to invest further or perhaps abandon a fixed asset helps give a more realistic picture of the costs involved in NOT acting. Saved costs can be invested in more productive uses.


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