Corporate leaders, politicians, and the general public have all been accused of short-termism.
Corporate leaders, politicians and the general public have all been accused of short-termism: taking actions with a quick payoff rather than investing for the long-term.
“Seemingly every year, experts publish a report that criticizes decision makers for [not considering] the long term,” write the authors of NBS’s new report, Long Term Thinking in A Short-term World. The report will be published in early 2015.
In the NBS report, authors David Souder, Greg Reilly and Rebecca Ranucci offer something past reports haven’t. The authors investigate the benefits of both short-term and long-term action, and identify when each is appropriate.
“Rather than declare a long-term or short-term focus good or bad, we focus on how well a particular decision fits a given situation,” they explain.
They find that action geared to short-term impact is most appropriate in a situation of rapid change or crisis. For example: when BP faced an oil spill in the Gulf of Mexico, it had to immediately clean up the spill and compensate communities.
But even in a volatile environment, long-term investments are needed to preserve value post-crisis. BP also needed to invest in deeper changes to its safety culture and community relationships. Those changes can require a bigger investment and be more difficult to measure — but they’re vital for sustained success.
NBS’s executive report provides step-by-step guidance to assessing your company’s current situation, choosing relevant actions and executing those actions.
Implementing long-term thinking in organizations is challenging, the researchers explain. Both human nature and organizational incentives keep managers focused on quick paybacks. The report identifies new tools and approaches — like different measurement strategies — that can help overcome those tendencies.
It can be easy to feel overwhelmed by the pressures against long-term action. The authors encourage managers to clarify their company’s current position, and then focus on changes they can make as individuals.
“It is very easy to describe short-term actions with words that sound long-term oriented,” notes Souder. “If your corporate culture doesn’t value long-term thinking as much as you’d like, it’s good to start by asking whether your actions match the words.”
Souder, Reilly and Ranucci base their insights on review of the best articles, reports and books by academics, industry, government and NGOs. A guidance committee representing NBS’s Leadership Council advised their work.
“The guidance committee helped keep us oriented to the specific challenges they face on a daily basis,” said Reilly.