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Goodbye Quarterly Targets?, Business Week:
On March 14 the Commission on the Regulation of U.S. Capital Markets in the 21st Century, a project of the U.S. Chamber of Commerce, urged executives to stop issuing their short-term goals. The practice is a “self-inflicted wound by American CEOs,” says commission member Robert Pozen, chairman of MFS Investment Management, a Boston fund manager.
Debate over this issue has simmered for years. Indeed, dozens of companies, including Coca-Cola and McDonald’s, have quit publicizing quarterly earnings targets. Now the issue has become urgent, the Chamber argues, as U.S. companies face growing long-term competition from overseas, where such projections are not widely made.
Learning that a fixation on short term profits is bad for the organization is a good step. Deming talked about this problem over twenty years ago in seven deadly diseases of western management one of which was: the emphasis on short term profits.
Related: Life Beyond the Short Term - Dell Falls Short - Constancy of Purpose
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April 1st, 2007 at 3:06 am
The prime example of this is, of course, Toyota who applied Deming’s ideas to ultimately create the Toyota Production System, ie lean manufacturing). They strive for long term supplier relationships, and realise that if you just think about the profit, and if you only think about focusing on customers but you don’t take care of the community.
Rob
July 19th, 2007 at 11:53 pm
What he was trying to prevent is what many see every day, such as managing to quarterly earnings targets. There are several problems with numerical goals but in here lets focus on one. The change from managing for what is best for the business to managing to hit a target…