Research shows: long-term focused companies do better
Many businesses don’t take the time to plan far ahead, reacting to forces instead of preparing for them. However, research by KPMG shows that putting a long-term strategy in place can pay dividends, literally. According to Lars Kurznack and Raymond Timmer, “companies that prioritise long-term value creation in their strategy and decision-making processes can deliver better and more stable financial performance than their peers.”
Their figures support this hypothesis: companies that focus on the long term achieved far higher revenue (130% growth versus 77%) than short-term-oriented companies, and nearly double the average earnings growth (8.5% versus 4.6%).
The McKinsey Global Institute found similar results when they measured the economic impact of short-termism. They concluded, “Companies that operate with a true long-term mindset have consistently outperformed their industry peers since 2001 across almost every financial measure that matters.”
The real surprise, though, is what KPMG discovered about short-term results: long-term-focused companies also do better than those focused on the immediate future over the short term!
Now is the time to think ahead
The implications for Australian businesses are clear: the best way to use any extra time we may have on our hands is to imagine future scenarios, plan for them and be prepared to turn that into reality.
That’s why Futures Foundation Chairman Charles Brass hit the nail on the head when he said, “The truth is, you should be doing the same stuff now that you’ve been doing all the way along – identifying the situation you’re in, working out how you arrived here, looking at what you can see of the immediate future, and then examining the various alternatives available to you.”