Extend your time horizon

Transcript of Chapter 10

At the root of most business problems is a time horizon that is too short.

I once left a financial review meeting, and our president asked me what I thought of it. I said it was OK, but it reminded me of my first job as a freshly-minted chemical engineer… watching over an extruder on the midnight shift. Of course, I had to explain that.

If the product quality coming out of the exit die was bad, did I stand there and exhort it to do better? I did not: I checked what was going into the feed hopper.

Our financial review seemed intelligent, as we discussed prices, revenue and margins, but you know what? All of that was pre-determined by the new products we had fed into the machine years earlier.

Yes, yes, I know… you have to take care of the short-term so they’ll keep you around for the long term. But at some point you need to ask, “Do I want my career to be a spectator sport… or a participant sport?”

Some business leaders are worse than spectators. As they work to upgrade today’s results, they degrade the feed of new products needed for the future. Because their travel bans, cost cutting, hiring freezes, re-organizations, and layoffs are precisely what you would do if you wanted to put the brakes on market-facing innovation and future growth.

So is there any evidence that a longer time horizon works better? Research reported in the Harvard Business Review showed—on average—companies exhibiting long-term behavior had… 47% higher revenue… 36% higher earnings… 58% higher market caps… and 132% higher job creation.

So my advice? Spend more time at the feed hopper. Become obsessed about your business’s ability to understand and meet customer needs.

Someone defined the future as “the time we’ll wish we had done what we’re not doing now.” Feed your hopper with great new products, for a future of highly satisfying financial reviews.