Everyone thinks businesses (and investment portfolios) should be managed for the long term…. until there’s a bad quarter. The pressures of short termism have been widely noted, but now there is some empirical proof that longer term management really does pay off.
A recent McKinsey report, written with FCLT Global and cited in the Harvard Business Review, found that, for the average company managed with a long-term horizon:
I know, I know, your analytical brains are lighting up with questions, and rightly so!
If a company is like a garden, sure, you want some pretty annuals to brighten the current season. But it’s those shade trees that really matter over time.
Here is the summary HBR article and here is the full report from McKinsey.