The journey is everything.
For the last 15 or so years of my life, I’ve been realising more and more that everything we do is just a journey, and that we never get to the destination.
And that this is a good thing.
In all areas of our lives, including when we follow the business herd, we tend to target the short term. It’s a very human thing to do. I’m personally very guilty of targeting the incredibly near-term goal of a satisfied gut over the longer-term and more important goal of being someone who is consistently healthy. And I know I’m not alone!
Our challenge is that as we focus more on the short-term, we usually end up undermining the much more important long-term. And this is as true for corporate behaviour as it is for individual human ones. Even when well intentioned.
For sure, at extremes, we get to outright fraud. A drive for continual quarterly earnings growth leads to illegal use of off-balance sheet items and Ponzi schemes. Greed for inflated bonuses this year leads to manipulation of interest rates that impact millions of people for years to come. A desire to maximise yield from an exploitative mineral asset leads to intentionally hiding the evidence of the long-term environmental harm that it does.
Sometimes, it isn’t fraud, but may be just unethical. Such as looking to increase loan yield through higher interest rates charged to those people (and countries) that can’t afford them. Or creating addictive products that are harmful for consumers and society over the long-term, even if they satisfy individual cravings in the short term. Or creating complex financial products to reconstruct loans from people who can’t afford them so we can sell them on to people who can’t understand them. All of these harm us collectively in the long term, even if they benefit some of us in the next quarter or couple of years.
But sometimes it is neither fraudulent nor unethical. Often, it is done in good faith.
As company leaders, we set our management team their quarterly metrics, or KPIs, or OKRs in the hope that they will help achieve a longer-term goal. Or occasionally because we think that as company leaders, that’s what we should do.
But oftentimes company leaders themselves don’t have sufficient clarity over what their organisation’s longer term goal or purpose is. Or they may have that clarity, but the quarterly metrics either don’t lead there with a high probability, or are proxies with a host of unintended consequences. Either way, by measuring our management team on those quarterly metrics, we end up focussing their minds almost exclusively on achieving the metric rather than the (unclear and unarticulated) goal that they’re intended to drive towards.
Occasionally, their focus may be because we’ve even attached their bonus to the metric. But more often than not, it’s actually because they’re good managers who’ve been told that this quarterly metric is what the organisation values, the thing we care about the most.
And so we end up encouraging them to treat the quarterly results as though they’re the goal rather than just markers or proxies along the way. So we achieve a sales target while not building a long term relationship with our customers based on providing them with true value. Or our managers conduct every review they had to conduct this quarter, rather than looking to see how to continuously support the careers of those in their charge.
Most of the calamities facing us, from social inequality to climate collapse to increasing populism and divisiveness, can be directly traced to us as individuals, as companies, and as societies going for the short term individual goal over the long term community one. Sometimes through malevolence, but more often than not, simply because we didn’t look or act beyond the quarter.
My work is to help organisations see the long term, even as we plan for the next 2 weeks or quarter. So as we enter 2020, my New Year wish to all of us all is this…
To each of us as individuals, I wish more kindness. If we think and act through genuine kindness, we will be acting for the long term while also helping community and social cohesion today. Kindness is sadly too lacking in our political and social discourse.
And to each of us as business-folk, and especially those in leadership positions, I wish more long-term thinking. I wish us less of a focus on whether we can maximise quarterly earnings (dare I say stop playing that game at all?), or protect destructive but profitable assets, or flip a company for the most money tomorrow, and more on what impact we wish our companies to have on our grandchildren in 2120.
And I wish us all the health as individuals and as businesses to make all of this happen!