The votes are in, and a long-term approach to business growth has trounced short-termism!

Really. Wall Street Journal readers cast their ballots Wednesday morning after reading this analysis of Amazon’s decision to lower short-term profitability by making investments in warehouses, technology and tablets that the online retailer expects will improve long-term profitability. more

The folks at the Financial Analysis Lab at Georgia Tech are out with their latest analysis of corporate cash flow. The finding? For the sixth reporting period in a row, corporate cash flow dropped. While that sounds ominous, the drop actually signals a recovering U.S. economy, they say.

The analysis examined about 2,900 non-financial companies with current market caps of at least $50 million. For the twelve-month period ending September 2011, the free cash margin stood at 4.41 percent, down from 4.63 percent for the year ending June 2011. Its most recent high was in March 2010, when free cash margins hit 7.18 percent. (Free cash margin, according to the report, indicates the percent of revenue left for shareholders in the form of free and discretionary cash flow, and tells how many cents shareholders can take home without reducing the company’s ability to generate more.) more

One of the most exciting parts of my work is seeing innovative companies in action. My top five most innovative management teams would have to include energy company Statoil, and their finance organization is certainly one of the key drivers of innovation within the company.

Statoil has not only eliminated budgets but it is in the process of doing away with calendars. more

One of the major issues IT executives face is how to charge their departmental costs back to each part of the business according to their usage. It’s a touchy issue that can be the source of end-user disenchantment with the performance and contribution of the IT organization. Ultimately, charge-back friction can hobble IT’s ability to make necessary investments in new capabilities and become the primary cause of misallocated IT spending. The two risks are related: Unless an IT department can calculate the real costs of the services it provides to specific parts of the business and charge for them accordingly, it is almost impossible for line-of-business department managers to assign priorities to the “keep the lights on” part of the budget, so even low-priority maintenance or upgrade efforts can crowd out all but the most pressing needs. The issue of allocating IT department costs spills over to Finance, which typically handles the allocations in budgeting and profit calculations. As a first step toward establishing an effective means of funding the IT function, I believe the finance department must establish better methods of allocating IT costs. Eventually the proper allocation of IT costs also becomes an issue for senior corporate executives as well because it has a direct impact on how effectively a company uses information technology. more

When practitioners, consultants and academics discuss leading organizational risk management practices, they hone in on people, processes and supporting technology. As major risk management failures in recent years have illustrated, mastering these three dimensions is necessary but not sufficient.

Effective enterprise risk management (ERM) — or any discreet risk management process — hinges on other dimensions as well, including organizational culture, behavior, ethics and change management … all the squishy, human stuff that defies convenient categorization in COSO cubes and other traditional risk management frameworks. more