When faced with a simple question, "do you prefer to take a long term view or a short term view?", people generally consider "long term" to be superior. The long term feels inherently wholesome, conjuring up associations with wisdom, good planning and nurturing in contrast to images of greed, impatience and knee-jerk decision-making that is often associated with the short term. We tend to like expressions like "short term pain for long term gain". Family businesses are often praised for having a long term perspective, while there is growing disenchantment with the short term approach of some of today's large, listed corporations.
I recently attended a lecture by the Chairman of Nestle, Peter Brabeck-Letmathe. While Nestle is a listed company, it has a 150-year history and is often credited with taking a long term, holistic view in business. Mr Brabeck spoke passionately about Nestle's decision not to list on the New York Stock Exchange because it would have been conditional on submitting quarterly financial reports, which he considers a major cause for instilling short termism in companies.
In general, of course, it is true that the long term is superior to the short term. But in my opinion this should not be taken to the extreme. In any continuum of choices, the extreme ends are seldom optimal and I am usually in favour of taking a balanced approach. This is true in health (observing a balanced diet, for instance), in time management (achieving a healthy work-life balance) and in business aspects such as hiring (in Jebsen & Jessen, for example, we maintain a certain balance in senior management recruitment between hiring from the outside and promoting or laterally moving from within). I also believe a balanced approach is preferable when it comes to choosing between the long term and the short term.
A dogged bias favouring the long term can lead to sub-optimal decisions. If a particular business activity is under-performing for a very long time and all reasonable attempts at improving the situation have been exhausted, it is futile to keep going "because we need to believe in its long term viability". When a particular person is simply unable to fulfill the requirements of his job and has been given ample feedback, coaching and training opportunities, it does neither him, his colleagues or the company any good to simply continue in that job in the hope that things will get better "in the long run".
We owe ourselves, our colleagues and the markets in which we operate a periodic reality check: is our company relevant in the market? are our products needed? are our customers satisfied with our service? am I performing? am I adding value for my colleagues and for the company? Doing such reality checks too often risks applying undue pressure and making ill-informed, short term decisions. But procrastinating on such reality checks under the pretext of "taking a long term view" can be equally damaging.