Behind every major resource-allocation decision a company makes lies some calculation of what that move is worth. Whether the decision is to launch a new product, enter a strategic partnership, invest in R&D, or build a new facility, how a company estimates value is a critical determinant of how it allocates resources. And the allocation of resources, in turn, is a key driver of a company’s overall performance.
A version of this article appeared in the May–June 1997 issue of Harvard Business Review.
