There’s no denying the wisdom of Confucius, and this quote especially resonates with me. Perhaps more than anything because my parents were both teachers and stressed the importance of education for all children. And I don’t just mean schooling and the 3-Rs, but learning in general. My mother inspired in me a curiosity about things that has kept me learning and trying new things all my life. I am not a fast learner (as some of my friends can attest to), but I am eager to learn new things and figure out how they can be applied to improve my own well being and the world in general.
But there is a well engrained trend in the world today, probably driven by technology speeding things up to where we expect instant results and immediate gratification. Long term thinking and long-term planning has definitely taken a back seat to short-termism, especially in business.
For most businesses, performance for the Quarter (every 3 months) is about as far ahead as they think. Maximizing quarterly performance drives many executive teams to focus on short-term fixes, cost cutting, product promotions and price cuts to generate revenues and profits before the end of the quarter. And the last quarter of the business year is even more hectic, when travel budgets are routinely frozen, hiring to fill empty positions put on hold, and account managers pressured into collecting outstanding invoices and booking revenue. Some companies even book revenue in the current quarter even though the work will be done at a later date, further perpetuating the quarter by quarter frenzy for revenue and profit growth. Thank you, Wall Street and greedy shareholders!
Much of business today is focused on quarterly reporting and thus much management time and attention goes into maximizing quarterly performance metrics. Business decisions that have a short-term payoff are often at the expense of longer term investment decisions. The simple fact is, profit maximization decisions are usually short-term and decisions around future sustainability are long-term. In the rat race to show ever improving quarterly performance, longer term investments generally loose out.
A Few Leaders Are Becoming More Focused on the Future and Sustainability
“We don’t do three-month reporting any more. We’re not going into the three-month rat-races. We’re not working for our shareholders. We’re working for the consumer, we are focused and the shareholder gets rewarded.” ~Paul Polman, CEO Unilever
Unilever has taken the lead among global businesses in focusing on building a sustainable business for the long-term by investing considerable time, management resources and money into reducing the impact of their products on the environment, using less water and producing less waste in their supply chain, manufacturing and distribution systems. And the CEO, Paul Polman speaks regularly at Davos, the United Nations and business and social conferences about his commitment to not only build a sustainable business model, but to also improve the lives and livelihoods of those people and communities where his products are manufactured and used.
This is not CSR or funding humanitarian projects, but a new and developing business model called Positive Impact, which is defined as: the intentional creation of enduring social and economic value (with an emphasis on the and).
So, to paraphrase Confucius in business terms:
If you want a successful business this year, cut costs. If you want a successful business for 10 years, innovate. If you want a sustainable business for 100 years, invest in creating enduring social and economic value.
And here’s another sage quote from old Confucius:
The best time to plant trees is 10 years ago,
the second best time is now!
Written and Posted by: John R. Childress
Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid
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John also writes thriller novels!