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There is a critical need for companies to return to taking the long view. Somehow, many of us seem to have forgotten that the purpose of a business entity is to act in the best long-term interests of its customers, employees and seriously committed investors. Overreacting to short-term issues is counterproductive and wasteful, even though securities analysts, short-term traders and other special interests may temporarily applaud.

Back in the days when Japan began setting a world example for quality manufacturing and successful business growth, there was much talk in the United States about following its lead in keeping ones eye on the horizon, taking the long view, and not being unduly distracted by temporary superficial situations. Many managers took this concept seriously and adjusted their sights to achieve longer-term success, eschewing short-term, feel-good efforts which would make little significant contribution in the long run. But not all of their bosses endorsed this approach; some were more interested in short-term fluff which would make them look successful or which would generate favorable publicity.

Top executives of publicly owned companies, reacting to fears that the price of their stock might decline, have been tempted to cut corners or impose short-term fixes in place of more viable long-term solutions. Financial executives and CEOs of such companies as Enron and WorldCom cooked the books to give the impression that their companies were healthy when they were not. While some of this illegal activity was caused by their desire for personal financial gain, much of it resulted from simple hubris and their need to look successful and competent to the outside world. Short-term solutions led to more short-term solutions and finally, when these executives had painted themselves into a corner, to unethical and criminal acts.

Executives in closely held companies like Koch Industries have proved that taking the long view really works. Relieved of the necessity of catering to the daily demands of Wall Street and supported by an owner-CEO who wants sustainable growth, Koch managers are able to make long-term decisions without fear. In addition, innovative ideas for profitable future growth are considered, even though short-term benefits might be slight.

The financial reporting burdens of the Sarbanes-Oxley Act have had at least one beneficial (and unexpected) effect: More publicly owned companies are going private. The executives of these companies are now relieved of the necessity of looking over their shoulder at company value in the short-term stock market; they are able to concentrate on making the business grow long range. What many of these companies give up in ease of raising capital, they will more than make up in added operating flexibility in todays complex business environment.

A hopeful footnote: Managers who work in companies which take the long view might be able to escape the time-consuming imposition of each new crop of the latest, but largely unproven, management trends. It is amazing how many unqualified consultants came out of the woodwork during the hey-day of guru-pushed fads like TQM (Total Quality Management), Business Process Reengineering, Activity-based Costing, Zero-based Budgeting and the like. Such fads are no substitute for plain old common sense, and common sense is an integral part of taking the long view from here.

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