Tackling short-term business thinking (Earnspiration Report Issue 11)

TescoThe City is a cruel and demanding mistress, constantly expecting growth and profit from the businesses trading on the London Stock Exchange.

And whilst CEOs are rewarded well, life at the top must be stressful.  If the quarterly results are not up to scratch, then the share price drops.  Let this happen a couple of times and you could soon find yourself out of a job, just like Tesco’s former CEO Philip Clarke, who stepped down from the board in July.

This focus on short-term profits means CEOs must focus on plastering over the cracks, rather than investing to fix the foundations – which is ultimately harmful to the long-term success of the business; so it is interesting to read Anthony Hilton’s recent column on the new Tesco boss Dave Lewis.

Unlike Philip Clarke or Sir Terry Leahy before him, Lewis has not spent his whole career at Tesco, but has been brought in from Unilever whose current leader Paul Polman has taken an alternative approach to short-term fixes.

Polman advocates the development of leaders who can think for the long-term; who can develop a vision and bring staff, shareholders and customers along with them on that journey.

To prove his commitment, he has stopped full reporting on a quarterly basis and will not provide short-term investment guidance to stockmarket analysts – a brave move that saw the Unilever share price drop by 8%.

Personally I feel Polman should be much admired for this.  Not only does he enable his business to focus on the long-term, he is also freeing up the management team from the onerous task of reporting to stakeholders and allowing them to get on with their primary goal – making money.

Perhaps other businesses will follow this move and perhaps Tesco under Dave Lewis will be one of the first to follow.  The impact of such a move could be momentous, as it would set the trend for other big corporations to invest more for sustainable growth in the long-term, whilst ignoring the fickle needs of the City.

Top links and resources

Every week I scour the web for new interesting and inspiring articles and videos.  Here is the latest selection:

Career

Choosing between making money and doing what you love

Are more creative resumes the future – SAMPLE

Leadership & management

Steve Wozniak: The profile of an inspirational leader

Entrepreneurs

Case-study: How a scrappy bootstrapped team in the middle of nowhere used Lean Startup to achieve startup success

Top five startup tips from Spanx billionaire Sara Blakely

Personal branding & online profile / platform

Your Author Empire – Pick a niche and publish for profit with Steve Scott

Personal brand awareness – hitting the bulls eye!

Personal development

George Orwell on writing, how to counter the mindless momentum of language, and the four questions a great writer must ask herself

Business skills

The art of evangelism

How to get more done

Strategy

From the pits to profit at the McLaren F1 team

Apple Pay will be much more important than the iPhone 6

Marketing & media

Inside Baidu’s plan to beat Google by taking search out of the text era

Why online reviews are almost as good as actual referrals

Wealth

If greed is good, why is insider trading bad?

Be humble, become wealthy

Property

Buy-to-let gurus reveal their formula for making millions

Millionaire property moguls buy British arm of Sotheby’s estate agency to cash in on London’s cachet as home for super rich

The village stocks

How the City still keeps hold of the Establishment

The ‘Key to a Fortune’ pyramid scheme queens who conned 10,000 out of their savings

Books to read

10 must-read inspiring biographies of business leaders

 

Image from: StockCarPete

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