After all, would you set out on a major journey with no real idea of your destination? How to Set a Goal First consider what you want to achieve, and then commit to it.
Podcast transcript Simon London: Where this pressure comes from is a matter of hot debate. But what we do know for sure is that building a business for the long term is a tough management challenge.
They are among the coauthors of a new book titled, Go Long: The meat of the book is a series of case studies and conversations that lay out the very practical steps taken by some leading CEOs to resist short-term pressures and set their organizations on a path to long-term success.
Rodney, Mike, thanks very much for being here today. Happy to be here. You can find newspaper articles from the s, and even earlier, talking about the perils of short-termism, the rise of short-termism, and so on.
Eighty-seven percent of executives and directors in our surveys feel the most performance pressure over a two-year time horizon rather than a longer time horizon. Certainly more companies, more directors, and more investors are feeling the pressure for short-termism than they have in the recent past.
Want to subscribe to the McKinsey Podcast? And dividends and buybacks matter because? But the idea that you would give all your current cash back to shareholders rather than investing in the long term obviously creates some doubts. To what extent is this about public markets?
David Rubenstein points out in the introduction to the book that the number of US—listed companies has halved, I think he says, over the last 20 years. There are certainly more companies appear to be retreating from public markets.
Is this a public-market phenomenon? The reality is if you use a discounted-cash-flow method, 70 to 90 percent of the value of most companies is beyond a three-year time horizon.
Most investors realize that. The other reality is that if you look at who owns stocks in the US75 percent is still owned by what we would classify as long-term investors exhibit. That is why we wrote the book, Go Long. One of the things that jumps out at me in the case studies in the book is that the CEOs had to buy themselves the strategic flexibility to invest for the long term by sometimes doing some quite painful things in the short term.
For example, Ford [in ] was a turnaround situation. But he did it with growth in mind. There was a long-term objective behind it. To pick up on that, our method of thinking about how to transcend this seeming problem—of a lot of pressures for short term but companies want to build for the long term—is to go to people who have managed to get the short and the long.
Remember, this is even before the financial crisis took everybody down.
So, he set forward a strategy to solve the immediate challenge: In the short term, the company did take some significant losses, but all wrapped around a strategy for recovering and getting through whatever might lie ahead. What I think is interesting when you compare and contrast the different stories that we covered in the book is there were some dramatic turnaround stories.
The Ford story may be the most dramatic. But he also had to find cash to make it happen. He made some very tough decisions.Membership Dashboard. Members get a snapshot view of new Long Now content with easy access to all their member benefits.
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Growth strategy refers to that business plan you need to have in place. Unless you have both of these issues covered, long-term growth will be impossible.
Unless you have both of these issues covered, long-term growth will be impossible.