Tag Archives: long-term value creation

Does a long-term view really pay off?

by Cydney Posner

In this February 2017 article in the Harvard Business Review, “Finally, Evidence That Managing for the Long Term Pays Off,” a team from McKinsey and associated consultants attempt to prove empirically what has often seemed intuitively must be true — that companies that manage for long-term value creation, those that can put aside the pressures of quarterly expectations, actually deliver superior results.  What did they find? That if the whole economy had performed at the same level as the companies in their study that followed a long-term strategy, “U.S. GDP over the past decade might well have grown by an additional $1 trillion [and the economy would have] generated more than five million additional jobs over this period.” Continue reading

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Filed under Corporate Governance

BlackRock CEO’s annual letter asks companies to address impact of changes in global environment

by Cydney Posner

This year, in his annual letter to corporate CEOs, Laurence D. Fink, CEO of asset manager BlackRock, challenges companies to address the impact of significant political, economic, societal and technological changes on their current strategies for long-term value creation: “As BlackRock engages with your company this year, we will be looking to see how your strategic framework reflects and recognizes the impact of the past year’s changes in the global environment. How have these changes impacted your strategy and how do you plan to pivot, if necessary, in light of the new world in which you are operating?”

What are these changes?  To Fink, dramatic changes — such as Brexit, global upheaval and the new administration in the U.S. — could affect assumptions underlying many companies’ long-term strategic plans, such as plans for continued international expansion.  At “the root of many of these changes,” he contends, is the “growing backlash against the impact globalization and technological change are having on many workers and communities.” Although he continues to believe that, on balance, globalization provides benefits, “there is little doubt that globalization’s benefits have been shared unequally, disproportionately benefitting more highly skilled workers, especially those in urban areas.” In addition, technology, while creating new jobs for highly skilled employees, is eliminating millions of jobs for other workers, many of whom face “retirement with inadequate savings, in part because the burden for retirement savings increasingly has shifted from employers to employees.” The political and economic consequences of these dynamics, he asserts, “impact virtually every global company.” Continue reading

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Filed under Corporate Governance, Securities