Sad state of affairs for DXC Management. How Sad, how pathetic. How big of a problem is a short-term business mentality? A significant one. The problem is masked because the US economy still ranks as the world’s largest, and among the most productive.
But with short-term pressures on the rise, our future growth and productivity are threatened, with important implications for wages, standards of living, and our general well-being. When firms focus on the short term, those firms steer profits to shareholders immediately instead of spending money to improve productivity, the greatest driver of economic growth for both companies and our economy.
They spend less on research and development for the next great products and services, less on capital spending to improve manufacturing efficiency, less on employee training, and less on environmental and community stewardship. It’s fair to say that a short-term perspective has the potential to undermine the traditional growth engines of the American economy, and bankrupt our future.
Short-termism damages effective management and jeopardizes business by compromising long-term value generation, from cost-cutting through reductions in purchasing newer technologies, under-investing in marketing, slower job creation and hiring practices and even reductions in tactical mergers and acquisitions.
What’s more, companies suffer a lack of long-term outlook, resulting in poorer investment within companies as they view longer investments as risky.
Consequently, building long-term market share has fallen secondary to maintaining short-term share prices.