The Real Reasons Companies Are So Focused on the Short Term (1)

高钙麻花 March 27, 2019, 11:16 p.m.

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The Real Reasons Companies Are So Focused on the Short Term (1)

This has been a remarkable year for the markets. The S&P and the Dow indexes are up 18% and 19%, respectively. But this run-up isn’t based on solid business foundations. Quarterly profits have only increased 5% since 2012, but investors’ valuations of those profits (as measured by earnings per share) has increased 59% over the same period. What’s behind the disconnect? Some argue that profits are stagnant because of short-termism—that decades of focusing on current profits over long-run innovativeness has resulted, now, in companies that are hollowed out.
Indeed, a study by Rachelle Sampson and Yuan Shi found that company short-termism is negatively correlated with innovativeness, measured as RQ (“research quotient,” a measure of the return on R&D investments). Investors punish companies with a short-term orientation by applying higher discount rates to them, which increases the cost of capital for those companies. In contrast, companies with a long-term orientation are rewarded with a lower cost of capital, which allows them to afford more innovation—a virtuous cycle.
Most attempts to combat short-termism are flawed because they focus on changing CEO behavior through some combination of pleading and incentives. While well-intentioned, these efforts fail to recognize that CEO behavior is largely by firm structure. In particular, there are three widespread, interrelated structural trends that have fostered short-termism and reduced corporate innovativeness: increased hiring of outside CEOs (particularly from the late 1980s through the 2008 recession); the decentralization of R&D (over a similar time frame); and a focus on the “development” side of R&D rather than the “research” side. Below, I’ll expand further on these trends and explain how reversing them would reduce short-termism and revive growth.
Instead of hiring outside CEOs, hire insiders—or at least CEOs with domain expertise.
One trend that has contributed to short-termism and lower innovativeness is the increased prevalence of outside CEOs. From 1970 to 2004, the percentage of CEOs hired from outside the firm increased from 12% to 39%.
While outside CEOs are valued because they bring new perspective, my colleague, Trey Cummings, and I believe they impose a hidden cost to innovation at firms whose growth derives from R&D (roughly 49% of firms). We came to this conclusion through interviews with CTOs across a range of industries, which we conducted as part of an to identify factors explaining differences in firms’ RQ.
A recurring theme in those interviews was bemoaning major changes in R&D strategy that occurred as a consequence of new, often outside, leadership. In these stories, firms shifted from an orientation of “R&D as a driver of growth” to “R&D as an expense.” What was reported to happen as a consequence of this shift was a steady decline in firms’ R&D intensity (R&D/Sales) and a corresponding decline in firms’ R&D capability. In other words, the new leader’s disinvestment cut meat as well as fat.

企业极其注重短期效益的真实原因(1)

今年对市场来说意义非凡,标准普尔指数和道琼斯指数分别上涨了18%和19%,但这轮上涨并非基于坚实的商业基础。自2012年起,每季度利润只上涨了5%,但同期投资者估值这些利润(通过每股收益测量)已增长59%。造成这种差距的背后原因是什么呢?有些人认为,利润的停滞是由于短期主义—由于过去十几年,公司只注重眼下的利益而非长期的创新,所以公司自食恶果。
确实如此,Rachelle Sampson与Yuan Shi的研究表明,通过衡量RQ (研发除数,用于衡量研发支出的回报)发现企业的短期主义与创新力呈负相关。而投资者惩罚企业的短期倾向则是通过更高的贴现率,从而增加其资本成本。相反,有长期倾向的企业则拥有更低的资本成本,从而能负担更多的创新,这是个良性循环。
然而大部分尝试克服短期主义的方法都有缺陷,由于他们专注于通过恳求与激励去改变CEO的行为,但是,友情提示,这些努力的举措都没有意识到CEO的行为很大程度上受限于企业的组织架构。有三种特别广泛的,相关联的架构趋势促进短期主义而降低了公司的创新:不断外聘CEO(尤其是从80年代末到2008年经济衰退期);研发部门的分权趋势(在类似的时间范围内);更加注重研发的“发展”而非“研究”。下面我将展开讲述这三个趋势,并解释如何逆转他们来减少短期主义,恢复增长。
内聘CEO而不要外聘—至少是领域内专家。
造成短期主义降低创新的原因之一就是外聘CEO的风潮。从1970年到2004年,外聘CEO的比例从12%增长到39%。 外聘的CEO备受重视的原因是他们带来了新的视角,我和我同事Trey Cummings 一致认为,对于研发驱动增长的公司(大约49%的公司)来说,他们施加了一个隐形成本在公司的创新中。我们达成这个结论是通过与许多行业技术总监的访谈,这也是NSF研究的一部分从而找到不同的因素解释公司间RQ的差距。
访谈中永恒的主题就是感叹由长期缺席的新领导导致的研发政策的重大变化。在这些故事中,公司从“由研发驱动增长”到“研发是比费用”。这个转变使研发密度(研发支出/销售额)稳步降低,从而公司的研发能力也跟着下降。换句话说,新领导的撤资不仅减少了肉还有油水。

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