Business value analysis: ‐ coping with unruly uncertainty

Traditional return on investment analysis techniques like discounted cash flow (DCF) and net present value (NPV) fall short of providing adequate decision support in today’s turbulent environment. New techniques, grouped under the concept called “business value analysis” (BVA), show promise. These techniques include intellectual capital, real options valuation, business model dynamics, and synthetic markets. They extend DCF to include intangibles and other factors common to the digital economy. These techniques are just now emerging from research, and they are undergoing further development, refinement, and testing on the way to becoming widespread in practice. It’s unlikely any of these techniques will be a “silver bullet” that makes investments a sure thing, but they can improve business performance and the chances of success.