The virtues of long-term business planning

http://www.ifb.org.uk/
French author and entrepreneur Jean-Louis Servan-Schreiber writes in a new book Trop Vite! (Too Fast, Albin Michel, 2010) that our world has become too short-term. Horizons have shrunk in every aspect of society whether it’s politics, consumer behaviour, or in business as the pace we live at has accelerated. The consequence is that the long-term is pushed into the shadows - we live for today.

Twenty years ago Michael T. Jacobs predicted the shift to short termism in business when he wrote in Short-Term America that the US would not be able to retain leadership if it continued to focus on quarterly results. Since the economic crisis, siren voices around the world have started to denounce short-termism and its negative consequences. Fresh research from the Hudson Center for High Performance concluded that short term business measures taken to meet performance targets fail to produce lasting results.

Servan-Schreiber, also noting the negative impact that the short term pursuit of shareholder value can have on companies sets out some principles for rebuilding a longer-term focus. He advocates progressive human relations policies that reflect the company’s values and provide genuine development opportunities for employees. A commitment to training employees helps them develop their talent, leads to higher levels of motivation and a greater sense of purpose.

Family-owned businesses are often regarded as being able to take the long view and are keenly aware of the importance of handing their firm on to the next generation in a healthy state. They often consider all their stakeholders, not just a selected few, and make employee motivation a priority. Now we are beginning to see non-family firms following this lead, with the best balancing the short term imperatives of performance and survival, with a focus on a long-term vision, and a genuine sense of stewardship that takes into consideration the interest of all stakeholders.