Deeper, Longer-Term Thinking Will Lead Us to Better Days

Because public companies which do not do well in this metric are punished by Wall StreetAnd C suites who deliver this metric are rewarded with money on the scale we historically associate with the kings of old partially through stock optionsbuybacksWhy do we want to improve upon this situation Because for one thing the current situation is driving a wedge in our society increasing the income gap between the top 1 and the other 99 That leads to anger which tends to boil over wherever it finds an outletThe present system is eroding longterm brand value the amount of money a company can get by selling a brand in an acquisition by another company who wants to own produce and market that brand The shortterm focus of the current rewardpunishment system generally induces companies to shift money from communications about value and values to price discounting known to marketers as quotpromotionquot Discounting also discounts the perception of a brand39s value The future is mortgaged by shifting money from value communication advertising and brand messaging to promotion This keeps up quarterly sales and creates the illusion of prosperity for as long as it lasts and as Norm Hecht points out the top line sales tell one story while even in the current quarter discounting does not help the bottom line Norm however points out that discounts low prices private labels provide value to the consumer which is significant in terms of the everenlarging group of people who cannot make ends meetSecondly the focus on shortterm earnings growth appears to be a manifestation of the ancient idea of a get rich quick scheme By making a small number of people a lot of money fast the overall distribution of wealth is made more askew to people in position to benefit A greater and greater sized majority is screwed more and more as the system runs amok over time Rather than put quarterly earnings back into the company innovating paying dividends too often the C suite executives maximize their own wealth by stock optionsbuybacks mentioned to me by both Norm Hecht and Carl ErmelbauerWe love our kids and yet the more we set our goals based on the next quarter39s analyst39s call the more we are shafting them because they benefit from the longterm at least a hundred times more than they benefit from the next quarterOur collective actions at scale seem to belie the fact that we love our kids It39s not that we don39t love them we don39t connect the dots enough And as individuals we don39t believe we can ever change the way things are Even in a democracy we think What can my family39s few votes do we consider ourselves wise to decide not to quotfight city hallquot and to assume no responsibility to try to make what appear to be Don Quixote attempts to make things better in a big wayAnd yet with the amplification power of the Internet in fact each of us can potentially cause changes that until a few years ago were out of the reach of any but a handful of privileged individuals in each generationIt is shameful to not even make the attemptUnAmerican We set up America to achieve equality and freedom to pursue happiness Those goals are our philosopher39s stone We can39t just leave it up to elected and appointed officials Socrates taught that each citizen must be dedicated to the goals of the state in which one has citizenship or else choose to leave itInstead of sole focus on quarterly sales and earnings we should consider changing the rules of the game so that companies aim at a balanced set of metrics including an objective third party measure of equity across the brands owned by a company Longterm brand equity has the additional virtue of reflecting the good will that a company enjoys among its constituencies including its customers employees suppliers partners and newreturning customer prospects Which means that the social good a company does quotprints outquot in the brand equity metric It does not quotprint outquot in the quarterly earnings metricThe balanced set of metrics collectively should reflect dividends in a larger sense actual dividends paid to stockholders and social dividends paid to the whole world Sure include EBITDA Earnings Before Interest Taxes Depreciation and Amortization quarterly earnings for short but don39t give it 100 of the weight in the Balanced Success Metric BSMUntil we do something like this we are waving the red flag at the bull and bear of getrichquick selfishness and will receive what we deserve for tolerating such an unsophisticated worldviewClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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Deeper, Longer-Term Thinking Will Lead Us to Better Days

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Bill Harvey

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

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