Is business too busy solving today’s problems to think about tomorrow?

We frame all our decisions in time and depending on the time horizon we choose, it influences how we evaluate any given situation and, ultimately, the decisions we make. More often than not, this manifests itself in a tendency to constantly be solving today’s problems rather than taking a longer-term view.

In recent years the spotlight has been firmly focused on the impact of short-termism for large listed companies, including the likes of Barclays. But, little attention has been paid to the impact of short-termism for the wider businesses community — companies which are subject to just as many short-term pressures as their listed peers.

Jack Welch, the former CEO of General Electric once said:

Anybody can manage short. Anybody can manage long. Balancing those two things is what management is” [1].

It’s a thought-provoking notion that in order to be successful you have to find the perfect balance between the here and now and the tomorrow. But, more than a decade after Jack Welch shared his musings on what good management looks like are British businesses managing to balance the scales, or are we all still too short-term in our thinking?

Barclays Short termism infographicIt’s an interesting question and one which Barclays wanted to try and answer with the help of nearly 500 British businesses.

According to our research[2] eight out of ten businesses claim short-termism is still a significant barrier to growth and acts as a disincentive for them to think and plan for the future.

What’s encouraging to see from our research is that businesses are aware that short-termism is affecting them; they admit it’s a problem. This is the crucial first step in being able to overcome it and find the balance between being able to react to the here and now, whilst not giving up on longer-term objectives.

The UK economy is the main cause of short-term pressure for a third of businesses but, two thirds also suggest that short-termism is also a significant barrier to the growth of the economy creating something of a catch-22.

When asked which areas were most affected by short-termism, nearly 70% of businesses said investment. A further 62% said recruitment but, interestingly, among larger companies, research and development (R&D) was seen to be the biggest loser to short-termism.

This in itself has significant long-term implications for UK plc. A lack of R&D has the potential to damage British competitiveness, which six out of ten businesses say is already being adversely affected by short-termism.

But how do we, as business leaders, overcome this most natural of human tendencies to solve today’s problems at the expense of longer-term goals and aspirations? Unfortunately, the answer is not simple. It never is. But, if businesses can build a short pause into their decision making and take a moment to look up to the far horizon, then we will slowly begin to find Jack Welch’s elusive balance.

 

If you’d like to find out more about the Barclays research, click to read the full report or the watch a video of Greg B Davies discussing the key findings.

https://www.barclayscorporate.com/insight-and-research/research-and-reports/short-termism.html

[1] http://www.businessweek.com/1998/23/b3581001.htm

[2] The survey was conducted by Critical Research on behalf of Barclays. 478 privately-owned companies were interviewed between 4th-29th September, 2015. To ensure that overall findings were representative of private sector UK businesses results were re-weighted to the Government ONS ‘Count of Active Enterprises for 2013’ by region and size


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