Money—bonuses, stock options, and salaries—drives short-term decisions. Quelch and Kenny note that managers have set aside long-range planning and ignored the weakening of brand loyalty in favor of appeasing the financial community’s demand for short-term results. But the authors fail to highlight that management directly benefits from incentive plans based on short-term goals. “Worry about achieving this quarter’s goals this quarter, and worry about next quarter’s goals next quarter” is the dominant sentiment expressed in many management meetings. Managers who view their tenure nearsightedly see line extensions as their opportunity for immediate personal financial gain.
Power, of course, makes managers feel more in control. Manufacturers feel that the “increasingly powerful retailers” (as Quelch and Kenny put it) are to blame for their low margins and shifting market shares. Yet these symptoms are just another consequence of avoiding long-range brand issues. Quelch and Kenny need to identify the power struggle that is being waged today between manufacturers and retailers.