January 5, 2021

Short term thinking - Part 2 - More big examples

Yesterday I started a series on Short term thinking that included Netflix because it is a recent example of how Short term thinking undercuts capitalism (as well as other things).  But there are other examples as well.  Before I continue with other aspects of the dangers of short term thinking I wanted to include some other examples because it's important that people understand, what Netflix is doing is not an isolated example.  This is a common problem with a common and undesired result.

Kodak, Blockbuster, Xerox are a few examples of companies that had an advantage that they squandered. But MySpace is a great example of trying to be quicker to market than potential competitors like Facebook, but in the process, limiting your own longer term potential by avoiding using open source code:

There are of course other examples.  Many of the ones in the below video offer other reasons for business failures, such as lack of vision, there are examples like Schlitz that clearly are a result of short term thinking.

Whether the short term thinking is to please investors or to squeeze as much profit out of a drying up revenue stream or some other reason does not matter.  The fact is that short term thinking is often fatal. Obviously not always; the stock market is dominated by companies releasing their latest quarterly results.  These companies do not all die off. True.  But many do die and are replaced by others.  Just because they do not all die off at once, does not mean they won't eventually die as a result of their short term thinking.  It's practically inevitable that companies die off.  That happens for a number of reasons - not responding to changing market conditions, not respecting their customers, prioritizing immediate profit over long term growth.   

But when you look at it objectively, all of those reasons come down to short term thinking. Do companies that rise do so by not putting customers first?  Do they start by something other than responding to market needs (i.e. changing market conditions)?

Short term thinking is deadly for business. It's deadly for individuals as well, and for governments as we will see in future episodes.

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