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People are focused on the short-term by nature. It kept our prehistoric ancestors focused on the important things, keeping us safe from predators.
And despite our abilities to think ahead, short-term thinking persists today. This is because long-term thinking is easier to believe in than to accomplish.
In How to Do Long Term, investor and author, Morgan Housel writes, "Most people know it’s the right strategy in investing, careers, relationships – anything that compounds. But saying “I’m in it for the long run” is a bit like standing at the base of Mt. Everest, pointing to the top, and saying, “That’s where I’m heading.” Well, that’s nice. Now comes the test.
Long term is harder than most people imagine, which is why it’s more lucrative than many people assume. Everything worthwhile has a price, and the prices aren’t always obvious. The real price of long term – the skills required, the mentality needed – is easy to minimize, often summarized with simple phrases like “be more patient,” as if that explains why so many people can’t."
To do the long term right, he cautions that you have to appreciate a few points.
1) The long run is just a collection of short runs.
2) Your belief in the long run isn’t enough. Your investors, coworkers, spouses, and friends have to sign up for the ride.
3) Patience is often stubbornness in disguise.
4) Long term is less about time horizon and more about flexibility.
Part of the reason that we struggle to pursue long-term goals is that the ‘now’ demands so much more attention. We have an unlimited access to knowledge and our standards of living have mostly never been higher – but it is increasingly difficult to look beyond our seemingly urgent emails, the constant news cycle, the competitive landscape we're operating in and keeping up with the many demands of the modern day life.
We have a weakness in our thinking called "present bias", which favours short-term payoffs over long-term rewards. For example, people are more likely to accept an offer of £8 today, rather than a guarantee of £10 in a week; to smoke cigarettes despite a shortened life; to consume large amounts of sugar despite the known negative side effects.
Morgan Housel, cautions that while there are obvious benefits of long-term thinking, every great idea can be taken too far. He rightly points out that it’s only possible to make the long term gains if you protect the short term, “Microsoft could focus on the next 10 years not in spite of, but specifically because it managed its short-term finances so conservatively. A recession or a huge mistake wouldn’t be a fatal blow, and wouldn’t require selling strategic assets just to stay alive. Google, Facebook, Cisco, and Apple are similar. They hold hundreds of billions of dollars in cash that earns virtually no return. But by doing so they have the flexibility and endurance to earn much higher long-term returns on other assets, without the risk of having to firesell strategic assets in a pinch. The only reason the long term works is because the short term is so protected. There is a graveyard of investors and companies who were fully invested in the honorable name of long-term thinking but learned the hard way that their I’m-not-focused-on-the-short-run attitude has its costs.”
A valid point for sure. Despite the obvious challenges of pursuing a long-term approach, there are real benefits to doing so as long as you don't forget to protect the short-term. Published in 2018 by Wharton Digital Press of the University of Pennsylvania’s Wharton School, Go Long: Why Long-Term Thinking is Your Best Short-Term Strategy combines expert voices from Korn Ferry, Fortune magazine, The Wharton School and McKinsey & Company to make the case that CEOs should adopt a long-term mindset and pursue long-term strategies as an alternative to the standard corporate focus on short-term results—a focus that repeatedly comes at the expense of future growth.
With powerful stories from industry leaders who chose to go long, the authors present a compelling case, spelling out the problems associated with short-term thinking against the wisdom of a long-term vision. For instance, Co-author Rodney Zemmel is Managing Partner at McKinsey & Co. says, “I spent probably my first ten or 15 years with the firm in some of the most long-term focused industries around, which were pharmaceutical and biotech R&D.” That perspective informed Zemmel’s work on Go Long. “What I realize and what our firm has realized over the last few years is there is an increasing challenge with companies that feel pressured to make decisions that are good for the short-term and aren’t necessarily in the long-term interest of the company.”
He continued, “I’ve heard an activist investor very passionately argue that there is no action a company can take that is good for the short term, that isn’t also good for the long term, and that the long-term really is the sum of successful short-terms. That is certainly an intellectually valid point of view. But as we look at decisions around making R&D and capital investments versus just maximizing short term financial results, you can see companies making decisions that are right for the short term but wrong for the long term.”
The study identifies significant evidence that suggests many American investors are putting enormous pressure on CEOs to make short term gains.
And yet, studies continue to underscore the benefits of the opposite approach. Go Long found that shareholders do benefit from a long-term approach. Research by McKinsey published in 2017 compared the performance of short and long-term focused companies. “Among the firms we identified as focused on the long term, average revenue and earnings growth were 47 percent and 36 percent higher, respectively, … and total return to shareholders was higher, too. The returns to society and the overall economy were equally impressive. By our measures, companies that were managed for the long term added nearly 12,000 more jobs on average than their peers from 2001 to 2015.”
The long-term focus has so many advantages. With everything you do, there are disproportionate returns in the long run.
“It took me 17 years and 114 days to become an overnight success.” Lionel Messi
Seth Godin, marketing and business leader, said, “There’s always someone who is more willing to play the short-term game than you are. Someone who is willing to cut more corners, send a more urgent text, borrow against the future, ignore the side effects, abuse trust and corrupt the system–somehow justifying that short-term hustle with a rationalization (usually a selfish one) about how urgent it is. On the other hand… There’s plenty of room to win as someone who takes a longer view than the others.”
And Seth Godin is of course not the only famous business leader to express this view. Business leaders, Cathie Wood, Elon Musk, Warren Buffett and Jeff Bezos to name a few, are all known to be long-term thinkers.
Musk wants to live on Mars, one of the most long-term initiatives anyone could work on. Jeff Bezos' strong commitment to the long-term is highlighted in his letter to Amazon shareholders from 1997 when the company went public, it's a manifesto about the benefits and approaches to long term thinking.
Cathie Wood, a star investor is also known for her long-term thinking. Since Wood started her own Ark Investment Management in 2014, she has averaged over 31% returns per year. In 2020, she was named best stock picker of the year by Bloomberg. Arthur Laffer, a renowned economist and a former professor at the University of Chicago, couldn’t foresee that she would go on to start ARK Investment, a $50 billion asset management firm that’s disrupting the investing industry, but he had a feeling Wood would be one of the students who would go on to do something really big.
“She was heavily driven, ambitious,” Laffer says in a phone interview with Quartz. “The thing that’s amazing about Cathie…even back then, her horizon was forever. She wasn’t in it for next week or next month or next year. She was in it for the long haul.”
The value of long-term thinking is not limited to the business world. In fact, long-term thinking is a powerful mindset when it comes to business, relationships, health, learning and anything meaningful in life. Successful businesses have taken years to get there and every successful person has put in the time.
The surest way to achieve success is to stay committed to your long term goals, protect the short-term and respect the process. In fact, throughout the process of doing this, you will most likely discover that you start to enjoy the journey more and are less concerned about the exact outcome.
“A lot of errors happen when you try to speed up what’s naturally going to happen. The lack of patience changes the outcome.” Shane Parrish
So we understand that it's important but how can we cultivate a long-term mindset?
Here are some tips that have proven successful for countless leaders:
1) Focus on building your character and skills. To do this, invest in courses, reading, your physical and mental health, coaching, journaling, developing self-awareness. The better you become, the more opportunities you'll see for yourself, and the more likely you will be to work towards the vision you have for yourself.
If you don’t know where to start, start small. For inspiration, you can look to Warren Buffett and Marc Cuban and start a daily reading practice.
“Read 500 pages…every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” Warren Buffett
“I would continuously search for new ideas. I read every book and magazine I could. Heck, 3 bucks for a magazine, 20 bucks for a book. One good idea that led to a customer or solution and it paid for itself many times over.” - Marc Cuban
When you start to invest in one area of life, other areas will start to improve too. New ideas will present themselves and you’ll slowly start to feel more connected to the higher vision you have for yourself.
2) Consciously practice long-term thinking. Set aside time to think about and visualise the future you may want. Jeff Bezos left two days per week in his schedule for unstructured time so that he could free his mind and come up with creative and innovative ideas.
3) Take constraints out of your thinking. Allow yourself to dream about exactly what it is that you want, free of constraints. Journal and identify what is actually meaningful to you. Many of us are programmed to chase “success” which we haven’t clearly defined for ourselves.
4) Embrace a growth mindset. Once you have a clear vision and you understand why it’s meaningful to you, it’s important to believe that you can achieve it and commit to it.
“As far as I can tell, it’s just about letting the Universe know what you want, and working toward it, while letting go of how it comes to pass.” – Jim Carrey
Believing that you can achieve your vision is easier said than done for many but you will be better positioned for success by embracing a growth mindset, thoughtful reflection, self-compassion and a commitment to live your vision.
Expert Carol Dweck coined the terms fixed mindset and growth mindset to describe the underlying beliefs people have about learning and intelligence. She found in her research that when students believe they can get smarter, they understand that effort makes them stronger. Therefore they put in extra time and effort, and that leads to higher achievement.
Here are some ways that you can cultivate a growth mindset:
Acknowledge and embrace imperfections. Everyone has them. The sooner you can accept them as part of life, the better off you'll be. And remember, people are drawn to people's imperfections. Rather than turning people off, if you can accept your imperfections, you will be able to form deeper connections with people.
View challenges as opportunities to learn. And "failures" as stepping stones towards success. You simply can't achieve anything great in life without many rejections along the way. These failures and challenges, teach you important lessons and you will become better throughout the process.
Read stories about famous people who courageously believed they could do something that wasn’t initially obvious. This will be everyone but there are a few people that stand out. In an interview in Norway, Elon Musk, highlighted the importance of a growth mindset, “You should take the approach that you're wrong. Your goal is to be less wrong.” By "wrong," Musk isn't saying that you should abandon your business idea because it's bad. Instead, he's highlighting the importance of a growth mindset. You obviously believe in your idea if you're willing to put in the work needed to try and make it a reality, but Musk's words are a caution against letting that belief and optimism cloud your ability to think objectively and look for improvement. Another person you can look to for inspiration is Michael Jordan who didn’t make his varsity high school basketball team.
Try different learning tactics. We all learn differently so take the time to understand what works best for you.
Follow the research on brain plasticity.
Replace the word “failing” with the word “learning.” and “I have to” with “I get to.”
Stop seeking approval. It’s impossible to make everyone happy. At the end of the day, you have to live with your choices so the sooner you can start living life on your terms, the better.
Value the process over the end result.
Cultivate a sense of purpose. When you have a sense of purpose and you’re working towards something meaningful you’ll be less likely to let things stand in your way.
Another thing you can do to believe in your ability to achieve your goals, is to write them down and then journal about whether you have any doubts about achieving them. Be honest with yourself. Most people will have some particular beliefs that hold them back from achieving their goals. It's possible to overcome them but in order to do so you have to have to be aware about it. By being honest, you are taking the first step towards healing or finding a more empowering belief. Once you’ve identified it and you see it written down on paper, you will likely see that it’s not as “true” as you might have initially thought. Then, you can slowly work through all the limiting beliefs and move forward.
For instance, if you want to write a book, you can ask yourself if you have any doubts about doing it. Likely, things like, “I’m not a good enough writer,” “I don’t have the time,” or “I’m not the type of person who publishes a book” will come up. Address each one. This may look like the following:
I doubt I can become a published author because I’m not a good writer.
Then write back to it: “Ok, maybe that’s true now but everyone had to start somewhere. If I commit to writing a little every day, I will slowly become better. All published authors before me faced the same doubt and managed to publish and get better over time. Like everyone before me, I am capable of learning and becoming a better writer.”
In Ralph Keyes book The Courage to Write, he writes, “Writing fears are nearly universal. But because they’re seldom discussed openly, we feel alone with ours’.” You can replace ‘fears’ with ‘rejections’ and take out ‘nearly.’ Even industry leaders—Stephen King, Maya Angelou, Hemingway, Bradbury—have received their own healthy stack of rejection letters:
Carrie by Stephen King was rejected by 30 publishers. “We are not interested in science fiction which deals with negative utopias. They do not sell,” one letter said. It was finally published in 1974. When the paperback version was released a year later, it sold over a million copies in 12 months.
4) Divorce yourself from other people's thinking. If you have decided to start an E-commerce website and to make it big, that’s it. You've made the decision. Now, commit to it and work on it until you get the results you want.
Most people are affected by other people's opinions. They let people talk them out of their dreams and goals.
Successful people, in contrast, know what they want, and they keep working towards it. When people tell them that their dreams are impossible, they ignore them.
In her book Extreme You, inspiring business leader, Sarah Robb O’Hagan writes about cultivating extreme independence. As important as creative thinking and hard work are, she writes, you will also need what psychologists call “field independence”–a willingness to do what you intuit is possible, what you love in your heart and feel in your gut–and to ignore the doubts and overcome the obstacles of those who don’t feel it.
When she thought about all the “extremers” that she knew, what they all had in common was being told repeatedly by experts and people with power over them that they were wrong. “Dead wrong. Wasting time and making a terrible mistake.” And they had to insist that they were going to play their game, their way, anyway.
When faced with a challenging decision, her coach told her “Stop worrying about whether you’ve made the right decision with the transformation, Sarah–just make that damn decision right!”
Remember, as hard as it is, you don’t have to listen to other people’s opinions. No one has done exactly what you’re trying to do so be very mindful of who you take advice from.
6) Be patient but also recognise when you're just being stubborn. Stay focused and committed to your goals; however, pay attention to when you may be being stubborn.
Morgan Housel writes, "Doing long-term thinking well requires identifying when you’re being patient or just stubborn. Not an easy thing to do. The only solution is knowing the very few things in your industry that will never change and putting everything else in a bucket that’s in constant need of updating and adapting. The few (very few) things that never change are candidates for long-term thinking. Everything else has a shelf life."
Like anything worth pursuing, there are no one size fits all approaches to guide you towards long-term thinking. Instead, you have to apply a combination of critical thinking, reflection and your intuition to gain clarity on what sort of approach to short and long-term thinking will work best for you and the goals you aim to achieve as well as the courage and confidence to be able to move forward despite the many doubts you will face.
Here are some inspiring quotes around patience to refer to when patience is what's needed.
“Patience is a key element of success.” Bill Gates
“He that can have patience can have what he will.” Benjamin Franklin
“All great achievements require time.” Maya Angelou
“Patience is hard because it’s important. It’s the core ingredient to most people’s success. Who’s affirmation are you looking for? Take a breath and be grateful [for what you’ve already accomplished]. [Then], put your head down for a decade and put in work.” Gary Vaynerchuk