Short or long term thinking?
It's a battle royal on many fronts and now is the time to step back and take a breath
In my former life I spent many happy hours poring over 10-Ks, 10-Qs, SEC filings related to acquisitions and other publicly available financial reports.
It was a good mental exercise to remind myself how far financial reporting has become removed from the realities with which I was brought up. It also made good sport on occasion, especially when I came across nuggets that set off alarm bells, like when CA kept moving the revert goalposts, or when Enron’s Byzantine structure made meaningful analysis of their results all but impossible or the time when I discovered that the CEO of SuccessFactors couldn’t count the number of customer he had on the books.
In the run up to my retirement I’d become increasingly jaded with the obvious short-termism that dominates quarterly reporting with the incessant emphasis on growth as the only number that mattered to CEOs/CFOs attempting to keep their share price on an ever upward trajectory. Towards the end I could almost cut and paste my favourite rants about the use of non-GAAP measures from story to story.
I get why companies push the ever rosy picture and, the extent to which some are prepared to go in order to keep markets happy. Nowadays, it is rare to hear a CEO talk long term yet the kinds of problem the world faces are exactly those which require the use of a much longer lens than the quarterly earnings cycle.
Climate change is the obvious example where the truly catastrophic impacts of human activity on the world’s climate won’t be felt for generations, even as today we see wild fire burning n western US states, permafrost melting in Russia and a frightening retreat of the Greenland icecaps. Based on what I’ve read and heard, we are several generations away from catastrophe on a global scale. As an older person you might think it doesn’t matter to me. I’ve got news for anyone reading this - we’ve welcomed babies into our family this year. They WILL be affected in ways I can’t possibly imagine so yes, I care a great deal.
In much the same way, I care about the UK healthcare system that our government is trying to Band-Aid using a politically adjudged ‘levy’ to pay for much needed services and social care. I’m no supporter of the current UK government. But while I give the country’s leadership credit for at least trying to start addressing problems that have been known about for 30-40 years, there is no obvious strategic intent that could bind the country together. Instead, I see leaders with an eye on the next election and the construction of a narrative that buys them five more years in power after 2024.
In tech talks, I see incessant, and repetitive blether about the virtue of shiny new toys in the shape of AI/AR/VR and the ‘meta verse’ (puhleeeease - no). Yet I’ve heard crickets from the major software vendors when it comes to constructive help for the British FU’d supply chain problems arising out of Brexit, as compounded by COVID-19, especially those related to increased paperwork for trading with the EU. It’s a point I raised on LinkedIn last weekend to which I got a set of public and private replies that can be summarized as: ‘That's a good point but you’re right, no-one’s talking about it.’ They damn well should be!
I got one reply from a vendor CEO who talked about the lack of standards inhibiting such moves. I say that if our collective governments are sufficiently enamored of technology then they should have people capable of talking sense on this most urgent and obvious of problems. Regardless of the political rhetoric around the lack of lorry drivers, or rotting food crops, this is a set of long-term problem. Business recognises the dangers yet seems powerless to persuade governments to act in what is clearly in everyone’s best interests. Instead, government casts the many problems as ‘temporary’ yet without providing any concrete examples of how those same problems will work themselves out. It’s the political equivalent of short-term thinking.
Call me naive if you want but technology companies DO have the means to automate paperwork. It was the false promise of ERP back in the 1990’s, a time when many companies digitized existing processes without much thought about the true nature of automation. Now comes the perfect storm of circumstances that prefaces a reckoning.
It’s about time governments of all stripes started to listen to those who do understand these issues and act. Anything else is like playing a lousy hand of poker with a big smile on your face when facing off against a world champion. We all know how that ends.