3 Keys to Successful Long-Term Leadership

Here’s how a patient leader can resist impatient shareholders.

Klaus Schwab has put the heft of the World Economic Forum, which he founded, behind the rising plea for longer-term thinking among business leaders. In his book The Fourth Industrial Revolution, he argues that managing for a more distant future is the somewhat counterintuitive key to success in a light-speed digital economy. Schwab joins a chorus of influentials, including McKinsey chief Dominic Barton and BlackRock blk CEO Larry Fink, who argue that short-termism is rampant and destructive to the broader economy. Most CEOs agree, though only some say so publicly. But how to fight back? Won’t Wall Street massacre you for missing your quarter? Not necessarily. The best business leaders are biased toward action, and on this issue there’s a lot they can do. Specifically:

1. Manage for what counts (not earnings per share).

Research has found that stock prices don’t track EPS nearly as well as they track “economic profit,” a measure that spreads value-creating expenses such as R&D, marketing, and employee training over years rather than letting them dock profits all at once; it also includes a charge for capital. The metric explains the mystery of Amazon amzn stock, which has defied short-termism by marching upward even during quarters of little or no EPS. Amazon’s economic profit (as calculated by consulting firm EVA Dimensions) has risen steadily for 15 years, just like its share price. CEO Jeff Bezos’s successful long-term management is actually no mystery.

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2. Don’t forecast short-term performance.

Many CEOs and CFOs think Wall Street will punish them for quitting the guidance game, but it isn’t so. If you want to stop investors from freaking out over your quarterly results, step one is to stop predicting those results. Unilever ul CEO Paul Polman stopped giving quarterly guidance in 2009, for example, and bluntly told investors that if they didn’t “buy into this long-term value-­creation model,” they should take their money elsewhere. The stock has nearly doubled since then. Berkshire ­Hathaway brk.a CEO Warren Buffett has never given guidance of any kind, and his record is hard to argue with.

3. Don’t ignore doubters.

The success of Bezos, Polman, Buffett, and others shows that investors aren’t uniformly hostile to long-term leadership. A disturbing implication is that if they don’t like your long-term plans, maybe the problem is you, not them. Making a persuasive case for a long-term vision may be easier in some businesses than in others. Researchers at Harvard Business School found that in industries with which investors are familiar—such as energy, aerospace, and pharmaceuticals—“publicly held firms will be able to make very long-term investments. But when firms seek to invest in novel long-term projects with which neither they nor their investors have much experience, they are likely to find it difficult.” True pioneering will never be easy.

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