How to Stop Short-term Thinking at America’s Companies

The author of this article starts out stating:

“… a growing group of business leaders is worried that companies are too concerned with short-term profits, focused only on making money for shareholders… Too many CEOs play the quarterly game and manage their businesses accordingly, … But many of the world’s challenges can not be addressed with a quarterly mindset.”

There is ample evidence that this is true and that it is to the detriment of long-term business viability. But Companyies and their CEOs who go against the ‘demands’ of shareholders often get punished with lower stock prices and the threat of activist investors.

There are some CEOs and investors who are, however, pushing back against this mindset. Larry Fink of Blackrock has spoken out in favor of a long-term view. Paul Polman of Unilever and Jeff Bezos of Amazon are two CEOs who have not only talked about this but run their companies accordingly. These influencers believe that

“Ultimately, the purpose of a company is to serve society, and in doing so shareholders will equally benefit over time,”

Hopefully this attitude and mindset will become more pervasive over time – especially on Wall Street. A move in this direction would help alleviate one of the most pervasive issues companies have when they attempt to pursue transformational innovations – the pushback from, and tension with, current businesses that are making money today.

Original Article »


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