Measuring earnings before interest, taxes, depreciation, and amortization (EBIDTA) profits may be the gold standard for assessing traditional companies, but it is not the way digital businesses think.
Measuring earnings before interest, taxes, depreciation, and amortization profits may be the gold standard for assessing traditional companies, but it is not the way digital businesses think. Successful digital disruptors focus on creating long-term value through two distinct levers: customer lifetime value / customer acquisition cost and the end-to-end customer experience.
One of the great myths of the digital world is that you can best measure a company’s success by its earnings before interest, taxes, depreciation, and amortization profits. Although this may be the gold standard for assessing traditional companies, it is not the way digital businesses think. It’s not that digital disruptors don’t make money — they do. But these profits are only part of the picture.Accelerate your career with Harvard ManageMentor®.
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