Risks of Short-Term Management
The basic problem with the short-term management technique is that it simply can’t work. For example, if we were to manage our finances with a short-term mentality, we would be living paycheck to paycheck and sometimes even in debt. It is unsustainable because it cannot produce the long-term good results that are necessary for success. Short term means short sighted and therefore doesn’t produce anything of value in the end.
It is important to remember why we make decisions with a long term perspective: because at some point you will die! If you make decisions trying to view the present situation through the lens of your finite life span, then just about everything looks very different.
If you are going to work for a company, it makes more sense to choose one that has a long-term outlook for success. If the company is focused on short term profit and nothing else, then it is not worth your time or efforts.
A family should have a long term vision of its own future. Short term thinking leads to short sighted decisions that will probably also bring pain and regret in the future.
If you are managing your personal life and your investments, then it would be wise to make decisions that will lead to success over the long term. Not only that, but a financial plan based on a long term perspective will help you earn money more consistently over time, which means it is also more likely to be less subject to short term risk.
In business, short-term thinking is not good for performance. But most importantly, short-term thinking does not tend to produce sustainable results for the organization. In fact, many of our problems with our economy today are caused by a failure of businesses and big companies in general to think along those lines as explained by Jordan Sudberg.
There is a lot that goes into making good decisions, but the fact remains that when we only think about things for a short period of time, we are not being realistic about the future and are virtually assured of making mistakes.
Short-term thinking can be dangerous for the future health of our economy and society. Everyone is busy focusing on short term results because we are afraid to let go of our jobs, schools, marriages and other relationships that are threatening to become obsolete. We also tend to concentrate on the things that will make us money at this moment in time because we are afraid to let go of things that might not produce profit in the future. We rush through life trying to make things happen quickly so we can look good for each other and the world around us. We want to look smart, but naturally that does not come cheap. The result is that we never get to the point where we can make intelligent decisions with a long-term perspective in mind. According to Jordan Sudberg, short-term thinking is not good for business. The best way to get a good reputation is to endeavor to be the first with the best, not the cheapest. We must compete in quality rather than price, and that takes planning and long-term commitment. For example, if you only concentrate on production for one quarter at a time, then you lose focus on quality control, which leads to lower standards of excellence that cannot be sustained forever and will actually hurt your business in the end.