In a survey by Liquid Agency (formerly Neutron) and Stanford University, 1500 business leaders were asked to rank their top ten biggest problems. Their number-one problem? “Balancing long-term goals with short-term demands.” In large corporations, the phrase “short-term demands” is code for “shareholder demands.”
The solution to this conundrum is sustainable earnings. A CEO who can deliver solid shareholder returns quarter after quarter can afford the luxury of pursuing a long-term vision.
When you ask any CEO what keeps him or her up at night, the answer is usually shareholder value. And when you ask what drives shareholder value, the answer is usually earnings growth. But what drives earnings growth? Innovation, of course! Okay, but what drives innovation? Working backwards, the engine for non-stop innovation is company culture. It takes a culture of innovation to turn innovation into a core competency, so that successful new businesses, products, and services, are more than a matter of chance. But what drives culture? The answer here is company vision.
Without a bold, beguiling vision, there’s no rallying point for culture.
These links represent a drivetrain for organic growth. If you want sustainable earnings at the back end, you need to invest in the links at the front end—vision, culture, and innovation. These are the investments that can generate profits year after year, not just quarter after quarter.