Tag Archive for: long term thinking
The chorus to end quarterly corporate reporting recently gained two prominent voices from the financial world. In a recent article in Bloomberg, Jamie Dimon, CEO of JP Morgan Chase, and Warren Buffett, the Chairman of Berkshire-Hathaway, advised companies to do away with their emphasis on quarterly earnings reports, arguing that it motivates misconduct and shifts the focus from sustained growth and stability to immediate profits and performance.
In a society and culture that emphasizes the new and the now what does it mean to manage for the long term? If we want what we want when we want it, businesses that take a multi-year perspective may be misaligned with modern expectations by shareholders to maximize profits, almost immediately.
Today’s businesses have morphed into revenue generators designed to squeeze every ounce of productivity and profit from its people and operations. Many corporate leaders see their role as the facilitator of shareholder enrichment. Coupled with a culture of instant gratification, it is not that shocking to see the reinforcement from the field as to what it means to be a successful enterprise.
However, a new article in Harvard Business Review by authors Joseph Bower and Lynn Paine of Harvard Business School argues that the entire basis for the popularity of shareholder primacy is deeply flawed and that its growing reliance excludes real opportunities for sustained growth and imperils the broader economy.