Future-Proof Your Company

Future-Proof Your Company

Use these four steps to make the case to integrate long-term thinking into decision-making.
NBS February 23, 2016

Make the Case for Long-Term Thinking

Long-term thinking is catching on. On 26 November 2010, Unilever announced that it would begin to release its earnings figures semiannually, not quarterly. Two years later, the share price was 35% higher than its pre-announcement level.

Although short-termism is coming under scrutiny these days, acting long term remains difficult.

Here, NBS outlines how to address the barriers to long-term thinking. Practitioners at all levels and across all industries can use these steps to make the case to integrate long-term thinking into decision-making. 

1. Address the Desire for Sure Returns

Managers discount the value of projected costs and benefits on long-term projects because the future is uncertain. To build the business case, try alternative approaches. Most importantly: 

When we were considering renewable energy, we sat down with a leading provider in this space, Bullfrog Power. This partnership has helped us create healthier environments in the communities that we live and work in, and has contributed to LoyaltyOne being recognized as a leading green employer.

Jeremiah Brenner, Manager, Corporate Responsibility, LoyaltyOne

2. Address Organizational Incentives

Company structures often push people toward short-term action. Advocate for:

Our top management’s stock incentive program requires their shares be subject to a holding period of four years. I think this helps encourage and reward long-term thinking by creating personal accountability

Carles Navarro, President, BASF Canada Inc.

3. Address Human Nature

People, including managers, naturally focus on the short term. But companies can act to reinforce longterm perspectives. 

A hundred decisions are made every day, and people make them based on their gut according to the culture. 

Richard Chartrand, Executive Director, Electronics & Energy Business Group, 3M Canada

4. Address Investor Pressure

Investors often receive the blame for short-term pressures. However, companies can work with investors and other stakeholders to change the time horizon.

Tools for Valuing the Long Term

This post is an excerpt from the NBS report, "Long-Term Thinking in a Short-Term World," based on research by Dr. David Souder, Dr. Greg Reilly, and Dr. Rebecca Ranucci. 
Barton, H., Brown, D., Cound, J., Marsh, P., & Willey, K. 1992. Does top management add value to investment decisions? Long Range Planning, 25(5): 43–58.

Bansal, P., & DesJardine, M.R. 2014. Business sustainability: It is about time. Strategic Organization, 12(1): 70-78.
Executive Report

This report provides a three-step process to balance short and long-term actions, cases, common obstacles to long-term action, and ways to overcome them.