Long-term investing — in people, products, and corporate cultures — is something I reflect on quite often. For a very simple reason: This is the triangulation of every successful business.
My views are shaped by a lifetime of experiences, starting with my decision in the 1980s to create a consulting firm driven by Fifth Seat principles. The Fifth Seat, in case you are not familiar, refers to the fifth advisor (or “seat”) in the boardroom, the other four seats being occupied by the client’s banker, lawyer, management consultant, and accountant. The Fifth Seat is focused exclusively on the CEO and other C-suite executives, specific to matters surrounding public trust. Much in the same way some characters in movies are stand-ins for the audience, the person sitting in the Fifth Seat speaks for the public.
That firm, of course, was Public Strategies, now a part of H+K Strategies. As for the Fifth Seat, 30 years later those same principles are still the prime drivers of the practice.
My time in the business trenches has taught me many things. Chief among them is this: Don’t ever mistake short-term wins with long-term success. The former is but a momentary blip on the trajectory of an ongoing business concern; the latter is measured in years, not quarters.
Business history is littered with the tombstones of companies that couldn’t discern the difference between these two. The clever ones could achieve short-term wins, certainly. But none of that mattered in the end, because they didn’t have the fundamentals right — around their people, products, and cultures. On the flip side, some long-term players can fumble the ball in the short-term. But they ultimately survive and prosper because the three legs of their stool (people, products, culture) are rock solid.
To be clear, short-term performance matters — investors count on it, and so do employees. But make no mistake: The long term is where the real magic happens. Some of the more notable long-term performers, including AT&T, Ford, and GE, have truly changed the world. And others — modern tech giants like Apple, Facebook, and Google — come to mind. You get the idea: It’s all about the long-haul play.
Hill+Knowlton Strategies also takes the long view. That’s just part of our DNA, I would add. In case you are not familiar with the story: H+K was founded in 1927, the same year Charles Lindbergh completed the world’s first solo transatlantic flight in the Spirit of St. Louis. Back then, we had one office, in Cleveland, and two clients.
That was 90 years ago.
Lindbergh’s New York–Paris flight, which captured the world’s imagination, is now regarded as a global symbol of America’s can-do spirit. And H+K, I’m proud to say, is also a recognized pioneer and embodies that same spirit. With more than 3,000 employees in 80 offices on six continents, H+K today is one of the largest communications companies in the world. Among them is an office in Washington, D.C., located just a few blocks from the National Air and Space Museum, where the Spirit of St. Louis hangs on display.
The larger lesson of these stories: Time horizons matter. Quarterly profits are important, certainly. But you can’t focus on that to the exclusion of long-term planning and performance. The first measure is to a large degree subject to the cyclical nature of business; the latter is the truer yardstick, in that it is depends on a crush of factors that only become obvious with time. This includes, notably, the inspiration and engagement levels of your people, the workforce. If the passion and commitment is missing, you’re not going to make it long term, or deliver financially, certainly — history has proven this.
Companies with a clear-eyed focus on the long term understand what it takes to deliver, and as a result they go a long way to make sure that their cultures enable and inspire people, as opposed to stultifying and beating them down, which is the surest way I know to drive a company straight into the ground. This is based on studies, I would add, that consistently shows that happy employees are also far more productive employees.
A 2015 study by economists at the University of Warwick found that “happiness” led to a 12% improvement in productivity, while “unhappy” workers were 10% lessproductive. “Positive emotions appear to invigorate human beings,” the research team posited. According to Fast Company, the lack of meaningful engagement at work — unhappy workers, in other words — cost U.S. companies $450–$550 billion annually in lost productivity.
Trying to improve a balance sheet by merely cutting costs can be a quick-fix for the moment, or quarter. But it does nothing to address the underlying fundamentals that drive long-term success — namely, boosting employee productivity, making product/service improvements, and creating internal cultures that draw, nurture, and support talent.
Shawn Anchor, author of The Happiness Advantage, has explored this linkage in depth. “Happy” workers, he has concluded, are far more creative, energized, and positively engaged. This also tends to make them better at collaborating.
The upside for employers is equally impressive, as he told a TedX audience: “Happiness is an incredible competitive advantage.”
Seizing the competitive high ground isn’t for the faint-hearted, because once you plant the flag you have to keeping charging, quarter after quarter, year after year. There’s always a new hill to climb; it never stops. That’s also the fun part, I would add, and the main reason I wanted to raise this topic. We might be at the 90-year mark here at H+K, but as far as I’m concerned we are just getting started.
This article was originally posted on LinkedIn