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.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s