Short Term Focus in Business

It is part of American culture to view the world through a short term lens.  The US is a primary shaper of business practices, it is, therefore, natural that the business world has taken this as the natural right answer.

Do we hit our monthly forecast?  Did we hit our quarterly forecast?  Note:  Forecasts of something as complicated as the financials of a business are by their nature always wrong the moment they are documented.

Bureaucracy causes the demise of businesses.  As Dr. Ichak Adizes pointed out, a business is in decline the moment it becomes harder to sell something inside the business (an investment that will have a three year payback) then it is to sell something outside the business (to the marketplace).  

Things like budgets and forecasts are the hardening arteries (bureaucracy) of a business headed to or in decline.  They move the eyes of the organization toward the short term and off the truly important.

I was listening to a business podcast and they were discussing the incredible year that Zoom had.  It had succeeded by every possible measure.  The best year in their history…  record profits, record revenue and they had exceeded their forecasts.  What was the topic of conversation?  If they don’t do something dramatic, they are in huge trouble, because they could not keep up this level of growth.  That is everything that is wrong in business in a nutshell.  No celebration…  just move on to the next unreasonable, short-term expectation.

Resilience and long term success are simply not the primary focus.  At a round table discussion that I facilitated, I asked the business leader participants; “Will the pandemic bring about the resurgence of resilience as a business necessity?”  Their overwhelming response, “No!”  And… they were right.  

Caution, bootstrapping and building for the future are still not in fashion in boardrooms.

Fruitful investments, long term success, the difficult, but necessary, transformations are left undone.  Shareholders make their money, and employees and customers get left in the wake.

How do we overcome it?  I am not certain.  However, the answer has something to do with the courage of wise leaders.  In the deepest architecture of capitalism was the belief that an owner wanted to create something lasting and this is a perversion of that idea.

Just my opinion.  What do you think?  Let me know in the comments.

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#BadIncentives #ShortTermBias #ShortSighted @Adizes #Investments #LongTerm

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