Thought-Provoking Commentary for the Lawson Software Community
It’s the Real Thing
January 1, 2003Posted by on
Not a Lawson story, per se, but an important one nonetheless. As you’ve probably figured out by now, I’m a stickler for meaningful business value, and purposeful processes. Hence, my disdain for the short-sighted management policies and trends that seem to have become a way of life.
During the mid-to-late 1990’s, we—as American businesses, and the investment community at large—lost our way. We began to focus on short-term gains, at the expense of long-term results. Such was the fascination with the stock market, and the frenzy surrounding the dot-com boom era. We were lured into opportunities simply for their quarterly gains rather than what they held for the distant future.
I won’t waste our time by recounting the number of times I kept telling people (including myself) that this couldn’t be happening. I grew up in the times of double-digit inflation and 20% interest rates, and was raised to understand that a 5% return was a sound investment.
The fervor a few years ago over companies that had no profits–some without even a product to sell–made me nervous, and dispelled my faith in what was ingrained into me since I was a child. You have to work hard–and be honest–to earn a living. "Free money" was, and still is, a fantasy.
So, my excitement level skyrocketed this past month upon reading an announcement by Coca-Cola that it would no longer publish "earnings expectations" on a quarterly or annual basis. (http://www2.cocacola.com/presscenter/nr_20021213_corporate_strategic_approach.html)
No more luring investors into thinking something is good, or bad, and then having this speculation drive the market. Focus on what is good for the long-term, not on a quick quarterly gain.
A quote from Douglas N. Daft, Coca-Cola CEO:
"We are quite comfortable measuring our progress as we achieve it, instead of focusing on the establishment and attainment of public forecasts. Our shareowners are best served by this because we should not run our business based on short-term ‘expectations’. We are managing this business for the long-term."
You may remember a few months ago, when I chided Lawson for some layoffs that were, in my opinion, shortsighted. I felt that the point of these layoffs was solely to send a message to shareholders that Lawson would "do what it takes" to produce a "clean quarter", and in the process, dispense with its long-term objectives.
So, the announcement by Coke made my day. I hope that Lawson and all other public companies pick up and carry this trend. We, as business people—whether for-profit or non-profit—all need to send a message: We are re-focusing on the long-term. The days of the shortsighted quarterly mentality are over.