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The ‘time’ machine…

March 22, 2012

Corporates need to consider short-term impacts but look at past quarterly financial results before making important decisions. They should know that maximizing shareholder value is not the same thing as maximizing quarterly profits. And they also need to recognize that proper analysis of some issues, including many environmental challenges, requires longer timelines.

It has been the general trend that companies make long-term business decisions all the time. They spend their pockets on R&D when the potential payoffs down the road are, at best, uncertain. They also enter tenuous new markets with the hope that business will boom. And they invest in leadership training to build up ‘bench strength’ and prepare future executives.  An Eco-Advantage Mindset would require that companies bring the same long-term perspective to environmental strategy.

How long is the strategic term for planning environmental returns? To answer that question for you, I have to leave you with a relative front – depends on business! It may be a year or two or much further out.

In the late 1960s, executives at Royal Dutch/Shell began looking out for ways to prepare an increasingly unstable oil market. The result was a planning group that focused on painting pictures of possible futures-scenarios that would help the company think about what its business might look over the long term. Among other futures the team famously imagined was the rise of OPEC and the fall of the Soviet Union.

You need to ask yourself, what long-term environmental pressures could sink your business? And which of them might offer opportunities for growth? Until you find answers to those questions in a serious and systematic way, the future will control you instead of the other way around. Big difference…

You need to broaden the scope of your ‘Time Machine’. Great, you might say, but taking the long view can create seemingly very tough choices now. And the market can be quite unforgiving in the short term. The trade-offs can look especially ill advised if you consider only the financial costs. Changing or retooling longstanding production processes or reformulating successful products often cost a bundle of money upfront. But not paying to changing circumstances and newly built up entropy in the system, including environmental ones can cost you a fortune more….

So time to ‘tweak’ your ‘time machines’??!!

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