5 Ways Responsible Companies Can Avoid the 90-Day Mentality

5 Ways Responsible Companies Can Avoid the 90-Day Mentality

Image CC licensed by Flickr user Frankie Roberto

I previously lived in a small town in Wyoming where winter temperatures often reached 20 degrees below zero.  Many residents only lived there for the summer.  The locals called them "90 Day Wonders," somewhat disparagingly. How much can you contribute to community, the thinking went, if you move on to the next thing in 90 days?
 
Many CEOs are forced into a similar "90 Day" mentality. When pressed on why a mindset of sustainable growth is challenging to adopt inside large companies, many mention the same thing: pressure to meet quarterly expectations. It is hard to promote sustainable growth and make decisions for the long-term benefit of a company, and the planet, when analysts are not interested in much beyond the next 90 days.

Is this a concern for companies? Yes. Businesses that don't peer past the immediate horizon end up more like Blockbuster or Kodak than Berkshire Hathaway or Kellogg's. 

Is this a concern for the United States? Yes. Approximately half of our economic activity (GDP) is driven by public companies. Many remain under pressure to meet short-term results within a system that does not fully internalize public costs such as greenhouse gas emissions.

Moreover, both company and country suffer when a sustainable growth mindset is de-prioritized, since we lose the accompanying competitive advantage, cost savings, and innovations.
 
One solution is that more companies remain private and take the lead, unburdened by the next analyst call. Unfortunately, we can't all become Yvon Chouinard and found a company like Patagonia overnight,  although I must admit I spend most of my waking hours trying to figure out how to do exactly that.

So where does that leave a CEO of a public company, trying to do the right thing? How can you buck the "90 Day" mentality?  For those in the hot seat who seek sustainable growth, here are some avenues for action:

1. Stop Paying Your Employees with Stock

Stock price is not based on the health of your company. It is based on how outsiders think your company will perform in the future. Paying your employees in stock options spreads obsession of short-term thinking throughout your organization. Since I began consulting almost ten years ago, the number of companies who display their stock ticker in the lobby has grown dramatically. That ticker is both irrelevant and distracting. If you want to motivate employees, introduce year-end profit sharing, and run a live Twitter or Facebook feed in the reception area, displaying how your customers think about your company now.

2. Focus on Stakeholders, Not Shareholders

Most shareholders are gamblers making quick bets and looking for hasty returns, not people who understand your business, your executive team, your market, and your long-term aspirations. You don't consult roulette players at the Bellagio before implementing your renewables strategy, so why care what gamblers on the stock market think? Focus on the true stakeholders, and ignore the rest. Paul Polman, CEO of Unilever, said it best: "… if you buy into this long-term value-creation model … which is sustainable, then come and invest with us. If you don't buy into this … don't put your money in our company."

3. Spin Out Longer-Term Initiatives or Programs

Morph these broader social or environmental considerations into a corporate foundation, giving them more time to generate returns. Note the great example of Panera Bread here

4. Find Your Special Purpose

There are alternatives to traditional corporations emerging. The Corporate Flexibility Act of 2011, California Senate Bill 201, would allow you to combine profitability with a broader social or environmental purpose (a "Special Purpose"). Sounds a long way off? It just passed the State Senate of California, 37-1.

5. Link Your Growth to Sustainable Products and Processes

Lengthen your runway by setting a long-term vision with sustainable growth at the core. Unilever is going to double the size of its business while halving its environmental footprint by 2020
 
Sustainable growth does not need to remain a myth. The 90-Day mentality, whether for a citizen, company, CEO, or country, is a choice, not a destiny.

Image CC licensed by Flickr user Frankie Roberto.