US business rediscovers long-term planning

A new movement is emerging in the US to counter short-termism with a more sensible long-term approach. It is driven by the need to please shareholders with quarterly earnings: Google alone has had the guts to challenge its shareholders, asking them to show 'fortitude' while it pursues higher risk strategies.

by Harvard Business Review, February 2006
Last Updated: 23 Jul 2013

In the 1950s, a group of 21 Japanese businessmen decided to adopt the mantra of quality recommended by W Edwards Deming and made sure this became the staple of corporate thinking for years to come. The fact that a group of influential players chose to do this and committed their energies to the task meant that a momentum for change was set in place.

The same thing is happening with regard to long-termism. In 2004, 20 companies with a collective market cap of almost $1,000 billion met and agreed to make changes. The movement grew further when three of the original 20 - GE, IBM and PepsiCo - began evangelising with other like-minded companies.

They identified four areas in which they could start to experiment: compensation and benefits; making time every year to study their company's long-term needs; the use of metrics for long-term health checks; and finally, starting to describe issues such as the talent base, management systems and the management model in their normal communications with investors.

Large companies have started to experiment in this way, suggesting that a change might really happen. 

Source: A critical mass for the long term
Judith Samuelson, executive director, The Business and Society Program of the Aspen Institute
Harvard Business Review, February 2006

Review by Morice Mendoza 

Harvard Business Review, February 2006 recommends

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