I’ve read at least 3 blogs recently castigating the (now) dominant business practice of discounting the long term future in favor our short term gains.
I couldn’t agree more, our world is littered with examples of it
The 2008 financial meltdown stemmed directly from rampant short-termism, as bankers did deals and packaged up bundles of securitized mortgages that many of them knew full well weren’t very sound in the long term
There is greed, some of it institutional…. feathering the nests of the employees instead of creating long term value that sustains both the institution and the economy
Chuck Prince, CEO of Citibank, in a now infamous quote said, “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”
Haircuts could not go much lower. Now simple greed took over. The banks turned to outright purchases of securities, morphing their role as lenders into investors.
There is systemic – shorttermism the share market – hello in what world would quarterly earnings drive a culture of long term value…And in what world would investors seriously expect a share to continue to rise… its irrational,illogical and unrealistic. Yet many expect it. There are a few like Amazon who seem to have educated their investors that occasionally they will miss the numbers when they choose to invest in the future of that company, but there are very few examples like this now. What investors need to realise is the consequences of this incessant demand. The Companies they invest in continue to bow to the weight of the market expectations, Instead of continuing to focusing the companies resources on dealing with the impending market change, they choose do prop up the share price for another year…
Many will suffer the same fate as previous companies who have failed to prepare for the expected from Blockbuster to Kodak. But before the normal round of excuses begin, the inevitable rush to safety of executives behind the “innovator’s dilemma” and claims of unexpected changes, let me blunt.Those companies failed because their executives failed..
There is a lack of morals – people knew the derivatives they were creating were toxic, there are companies out there trading off the welfare of communities against the higher profits and choosing profits … no one blew the whistle. As lambasted as Apple was over the foxconn incidents, at least they had a system and code in place… do you seriously think that all the other corporations aren’t worse? Really? There are countless examples of this happening… its never stated, but it is definitely a ‘soft’ benefit of offshoring / outsourcing.
What happens when the short term profiteering creates a planet you can’t inhabit? Take a close look at the smog in Beijing… it doesn’t appear that far away does it?. But thats ok right, because that’s Beijing? Really? You don’t get that we share the same planet?? Heard of or felt climate change?
We can’t accept that our communities can be flooded every couple of years,…We can’t accept that’s how life has to be lived.
So how long will you fall into line? Think that profiteering is preferred over building long term business practices that support your companies long term viability at the very least don’t destroy our world, and perhaps even better it. Think about what you are about to do today, Monday. Is it about hitting this years targets, or is it a longer term initiative that means the company and community will be thriving in 5 years time.