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Subscribe to this list via RSS Blog posts tagged in Short-term thinking

The last two weeks have seen unprecedented social unrest around the world – the democratization of everything is spreading but frankly it’s not a pretty sight.  Just think back on the headlines:

  • China and Japan facing off over disputed ownership of islands in the East China Sea – with demonstrations and violence against Japanese businesses in China as nationalist sentiment rises, compounded by the anniversary of a politically sensitive incident.
  • Demonstrations, violence and deaths across the world from North Africa and the Middle East to Indonesia and Pakistan as Muslims protest over a cheap and nasty film ridiculing Islam, clearly produced by less than a handful of bigots to incite religious turmoil.
  • Ongoing strikes and renewed violence as South African miners demand higher wages and clash with security forces, even as some returned to work.
  • Massive demonstrations in Portugal and Spain against austerity measures as standards of living fall and unemployment soars – plus renewed demonstrations by Catalan separatists.
  • In India, tens of thousands protest against government plans to open the retail trade to foreign investors, as well as rising fuel prices.
  • Russia’s President Vladimir Putin, re-elected this year, targeted by up to 50,000 demonstrators in Moscow, calling for an end to his rule.
  • In Argentina, President Cristina Kirchner’s government facing the largest pot-banging protest ("cacerolazos") since taking office as people protested over corruption scandals, crime and management of the economy.
  • Occupy Wall Street protesters back to mark the anniversary of the movement, although with fewer feet on the street and continued tensions with police.
  • Continuing protests over natural resources in Peru, particularly directed at the mining sector, leaving one more person dead this week.
  • Ongoing protests over the July election of President-elect Enrique Peña Nieto in Mexico, amid accusations of vote-rigging and media collusion, including a cyber-attack this week on government, political and media websites.
  • The threat of renewed protests in the Chinese village of Wukan, as elections have not brought the desired changes in government control nor the return of land sold illegally.  

The list could go on – frustration and anger is boiling in societies around the world over: their own government’s management of economy and society; perceived threats to livelihoods; inequality; religious insults and intolerance; crime and corruption; and natural resource ownership.  It’s a potent cocktail of grievances. The cost to societies in terms of driving divisions and damaging livelihoods and economies is massive. What’s causing the unrest? And what can we do about it?

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The headlines have been full of numbers recently, particularly as we have just passed a milestone where the 7 billionth person has now joined the world’s population (give or take a few million and a few months either way).  So let’s start there in terms of looking at some important numbers that will impact the world in the next decades.

1.  7 billion: The world’s (estimated) population at the end of 2011

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During a recent round of interviews with Chinese CEOs, one executive made the following comment on the difference between business in China and in the west.  “People from the West try to fight a disease by addressing the symptoms, while we in China address the root causes. The latter will take longer, but the solution will last longer.” This perspective says a lot about the approaches to business leadership found in many companies today.  In many firms in the West there is almost an obsession with short-term performance – addressing only the immediate symptoms of challenges facing them – resulting in seeking out short-term answers to often long-term challenges. 

Further support for this view was highlighted in another interview with a former CEO from Fortune top 50 company from the West.  “Businesses don’t spend enough time on ideas or shaping the problem. They go for the quick solution. And they try to break everything down into three-year strategy bytes. But a lot of the changes that businesses need to make to be successful in the future take longer than three years to prepare. It takes time to create new ways of doing things, shift mindsets to be open to them and build the new capabilities that will be required.”

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I recently had the opportunity to interview several Chinese CEOs on their plans and outlooks for the future.   During one interview, a CEO highlighted the difference in thinking between western and Chinese leaders by using a metaphor of Chinese versus Western medicine.  “People from the West try to solve an issue by addressing the symptoms, while we in China address the root causes. The latter will take longer, but the solution will last longer.”   This issue of pursuing short-term treatment of “symptoms” versus long-term treatment of “root causes” highlights a major element of growing global competition, occurring at the levels of individual companies, governments, and even economic systems.

Today it seems that businesses (and governments) can forget—and maybe cannot accept—that global competition does not occur just between those from the same markets or mindsets, but rather competition takes place between companies and governments from around the world.  In this competition, there has been and continues to be a shift in the roles and relative importance of different sets of markets.  In the 1980s and 1990s, the markets (and competitors) at the center of this competition were the Triad (USA, Japan, Europe).  These markets were the primary focus competition, as well as being the origin of leading competitors.  By the 2000s and to an even greater extent by the 2010s, the center of this competitive focus has shifted to the BRIC (Brazil, Russia, India, China).   If you have any doubt about this shift, consider the large number of firms today that focus their activities in the Triad markets on restructuring and cash generation while they focus growth activities in the BRIC.  The reason for this is obvious looking at the differences in economic growth rates between the regions – the roles and positions of the markets have changed.

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Most major challenges that businesses face today require time to address.  It takes time to create a shift of mindset, or to be open to new ways of doing things, or to build new capabilities.  But today we in business try to break everything down into quick strategy bytes and focus on delivering consistent, predictable results.

                                                                (CEO, Global Fortune 500 Firm)

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Business people don’t spend enough time on thinking through the ideas and assumptions that shape a problem.  They go for the solution pretty quickly, and then make it fit a set of pre-existing ideas and facts: ‘This looks a good way of doing something so now can we get on with it.’   Decision making is often just a series of justifications.

                                                                (Former CEO of Global Fortune 100 Firm)

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Tagged in: Short-term thinking
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