Companies that invest in the long term gain +47%
Posted: Sun Dec 22, 2024 8:58 am
I recently wrote an article reflecting on the eternal dilemma regarding short- and long-term management of a company , or in other words, deciding to focus efforts on generating short-term sales and the strategy that will lead us to refocus the company and achieve greater benefits .
I just found a 2017 study conducted by McKinsey and FCLT Global analyzing the results of American companies between 2001 and 2014, in which the main result observed is that companies that focus on the long term outperform their competitors in almost all important financial metrics (revenue, profit, economic benefit, market value, etc.).
Companies focused on the long term earn 47% more revenue than the rest
If we look at the uk telegram number graph with the main results of the study, we see how in the period studied (2001-2014), including the crisis of 2007-2009, the differences in the main financial indicators are spectacular:
But we also see that they created 12,000 more jobs. If we applied these ratios to the US economy, its GDP would have increased by 1 trillion dollars (1 trillion in European figures), and 5 million additional jobs would have been created.
Obviously we are talking about estimates, but the results are at least something to think about, right?
Results of companies focused on the long term Study 2017 Mckinsey and FCLT Global
It is more than clear that the smart bet is for the long term.
This does not mean that we are leaving aside the short term, only that we are going to launch projects that help us improve our results in the medium and long term, and that these are going to be a priority in our company.
Why do companies invest in the short term if it means less profit?
But the reality is different. We see every day how companies prioritize short-term results (focus on sales) and leave aside medium- and long-term projects due to lack of time, budget, etc.
But, as we see from the results of the study, the paradox is that:
Those who bet on the short term are achieving exactly the opposite effect to what they are looking for. That is, they bet on short-term sales so as not to sacrifice the company's turnover and profit, and what they are doing is sacrificing +47% and +36% respectively.
And we can see this with data from another study by FCLT Global , which shows that 71% of company executives and managers would cut non-essential expenses (in our case: advertising, marketing, etc.) to avoid compromising annual profits, and 55% would delay projects .
I just found a 2017 study conducted by McKinsey and FCLT Global analyzing the results of American companies between 2001 and 2014, in which the main result observed is that companies that focus on the long term outperform their competitors in almost all important financial metrics (revenue, profit, economic benefit, market value, etc.).
Companies focused on the long term earn 47% more revenue than the rest
If we look at the uk telegram number graph with the main results of the study, we see how in the period studied (2001-2014), including the crisis of 2007-2009, the differences in the main financial indicators are spectacular:
But we also see that they created 12,000 more jobs. If we applied these ratios to the US economy, its GDP would have increased by 1 trillion dollars (1 trillion in European figures), and 5 million additional jobs would have been created.
Obviously we are talking about estimates, but the results are at least something to think about, right?
Results of companies focused on the long term Study 2017 Mckinsey and FCLT Global
It is more than clear that the smart bet is for the long term.
This does not mean that we are leaving aside the short term, only that we are going to launch projects that help us improve our results in the medium and long term, and that these are going to be a priority in our company.
Why do companies invest in the short term if it means less profit?
But the reality is different. We see every day how companies prioritize short-term results (focus on sales) and leave aside medium- and long-term projects due to lack of time, budget, etc.
But, as we see from the results of the study, the paradox is that:
Those who bet on the short term are achieving exactly the opposite effect to what they are looking for. That is, they bet on short-term sales so as not to sacrifice the company's turnover and profit, and what they are doing is sacrificing +47% and +36% respectively.
And we can see this with data from another study by FCLT Global , which shows that 71% of company executives and managers would cut non-essential expenses (in our case: advertising, marketing, etc.) to avoid compromising annual profits, and 55% would delay projects .